A stock loss is two words that no entrepreneur wants to hear. Yet, they’re a reality which anyone in business has to face at some stage. The fact is that waste, otherwise known as shrinkage, can cost upwards of $1billion across an industry. If you aren’t careful, it could soon eat up any profits you stand to see.
Typically, the phrase ‘shrinkage’ refers to any damaged products. It also relates to products and profits lost through theft. In short; if you aren’t getting money for that stock, it should count towards your shrinkage budget.
Of course, in some shape or form, a low level of wasted products is inevitable over the working year. Accidents happen, and uncontrollable conditions can also make an impact here. As such, you shouldn’t freak out if you do experience some small issues. Most times, accounting for this can more than makeup for the money lost.
But, if you don’t address this head-on, you could end up facing so much waste that it drags the rest of your business down. Lucky for you, we’ve got a few pointers which can help you to avoid that.
Put The Right Processes In Place
For the most part, excessive shrinkage tends to come down to improper processes. If the staff isn’t handling products correctly, for instance, the damage becomes more likely. Not having the right storage facilities and shelving units can also lead to problems. By focusing on your unloading and storage processes, you can reduce a great deal of risk factor. For one, you need to make sure that you’re training employees in proper handling processes. Then, focus on your storage itself. Does each item have its own shelf? Have you taken care of commercial refrigeration installation well before chilled products arrive in your warehouse? These are easy enough things to arrange, and they’ll make all the difference to the amount of stock you have to throw away.
Put Emergency Procedures In Place
Sometimes, a situation which is out of your control can cause untold amounts of waste. Mostly, this happens for food which needs to be temperature controlled. Food which is either hot or cold, for example, must not be out of those temperatures for longer than twenty minutes. That’s why you need to have emergency repair numbers for any fridges or hot plates. You could also benefit from having backups in place. That way, you never stand to lose a load of stock for no reason.
Trust No One
As sad as it seems, the majority of business shrinkage comes about as a result of employee theft. As such, your last attempt to avoid this should be to remember not to trust anyone. It doesn’t matter how well you look after or train your employees; they still pose a risk. Make sure, then, to implement CCTV through your storage facility. You should also carry out controlled security checks at least once every three months. If nothing else, these can dissuade anyone from taking stock straight out of your pocket.
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