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Advice for Businesses Struggling with Inventory Loss

Advice for Businesses Struggling with Inventory Loss

One thing businesses invest a lot of money into is their inventory. Whether it is products for consumers or materials to create those products, inventory is typically one of the largest assets a business has. Unfortunately, things can happen that can threaten your inventory and help to deteriorate your bottom line. Inventory loss can be a real drain on your finances. Thankfully, there are strategies you can use to stop it.

Security Camera Surveillance

Inventory shrinkage costs retailers nearly $50 billion a year. Of the different sources of inventory loss, theft is one of the most common. If you want to protect your inventory, you’re going to need to up your security. The main reason why inventory theft happens so often can probably be attributed to the negligence of warehouse managers and business owners. Theft will happen for a fact, and you need to come to expect it. The only way to ward off inventory theft is to make criminals assume they won’t get away with their crimes. Blanketing your warehouse with 24 hours a day security camera surveillance can do just that.

Asset Tracking

A second strategy you should use to fight inventory loss is the implementation of asset tracking. This refers to the use of software to track the status of particular business assets in real-time. If the asset being tracked is a piece of machinery, the software can be used to track the current status of that piece of machinery as well as information regarding its age, use, maintenance, repairs, and more. In regards to inventory management, you can use an inventory tracking service to track each individual piece of inventory at all times. This will reduce the need for performing in-person audits, and it will decrease the chance of inventory loss going unnoticed.

Temperature Control

Another common source of inventory shrinkage is spoilage. This usually occurs when a product, part, or material stored in inventory is ruined due to either getting too warm or too cold. This is a huge problem for grocery stores and other retailers that carry food. Even if your product is non-organic, it can still be destroyed by freezing or getting too hot. Overall, if you run a warehouse, you need to have an adequate temperature control system to prevent the spoilage of your inventory. You also have to keep in mind that the power could go out at some point due to the weather or some other issue. In that case, your system needs access to backup generators so that your inventory is still protected during the power outage.

Improved Training for Receiving

Sometimes apparent stock loss in inventory doesn’t actually happen while those items are stored in your warehouse. In many cases, those items were lost or ruined beforehand. In that case, the most likely culprit is your receiving department. Solving this problem requires training employees on how to better handle products as they come into receiving. In other cases, the supplier may be at fault and may have delivered damaged goods or been inaccurate or untruthful in regards to what they delivered. In that case, receiving employees must be trained on how to spot such issues and solve them before the delivery is put into storage.

Limited Access

In certain cases, it’s impossible to limit access to inventory as would be the case with retail store shelves. However, if your inventory is stored in a warehouse or some other facility apart from the store, limiting access to your inventory will be a lot easier. Consider a complete lock-down of the facility that will require actual ID scanning to gain access to. Unfortunately, theft by actual employees is a significant portion of inventory loss as well. You can limit access in that regard by tightening your hiring and recruitment strategies. If you are able to eliminate warehouse employees that may be more prone to ripping off their employer than others, you can also lower the threat of inventory shrinkage harming your bottom line that way.

Overall, in most cases, your inventory is your company’s greatest asset. It’s what allows you to sell your products to consumers. Do what you can to prevent inventory shrinkage by implementing technology and systems to accurately track inventory, control temperature, improve receiving, and prevent theft by both outsiders and insiders.

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by Victoria Smith // Victoria Smith is a freelance writer who specializes in business and finance, with a passion for cooking and wellness. She lives in Austin, TX where she is currently working towards her Ph.D. in Business Administration.

Opinions expressed by contributors are their own.