How to Reduce Inventory Shrinkage
Educate and train employees properly., Secure your storeroom., Tighten your receiving practices., Install surveillance cameras., Monitor valuables closely., Separate duties among more than one employee., Utilize an efficient point-of-sale (POS)...
Step-by-Step Guide
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Step 1: Educate and train employees properly.
Run training and loss-prevention programs which clearly discuss the implications of theft with employees, such as limited pay increases, fewer opportunities for promotion, and layoffs due to the company’s financial instability.Loss-prevention programs show employees that you are paying attention to theft and that the company takes the issue seriously.In addition, these programs can help employees learn how to spot theft, whether among other employees or customers. -
Step 2: Secure your storeroom.
The easiest way to reduce the risk of employee theft is to restrict access to your inventory.
Only those employees directly involved with handling inventory should have access to inventory areas.
If you have some goods that are particularly valuable, consider further restricting access to the areas where these are kept., The receiving area of a warehouse is where a large amount of inventory theft takes place.
Employees might mark shipments as short or spoiled when they are not and claim the good for themselves.
You can prevent this by requiring an inspection of spoiled or damaged goods before they are thrown out.
You should also have an employee that works outside of receiving perform these inspections, along with a recount of the items received., Installing visible security cameras throughout the store and workroom is a proven deterrent to crime.Let your employees know in a subtle manner that the security cameras are working and checked often.
In addition, review the security cameras each night to monitor odd behavior associated with theft or shoplifting.
Cameras should be reviewed at least weekly, even if there are no indications of shrinkage.
For instance, while training employees, you can clearly show them where all cameras are located, show them the live recordings, and emphasize that the tapes are checked daily.
You can also post signs in the store and workroom warning against theft and the penalties associated with it. , Reduce the urge to steal by storing higher value items (whether goods or currency) in locations that require higher levels of authorization or access.
For example, store high priced items under lock and key and only provide keys to trusted managers or supervisors., Don’t allow the same person to handle inventory management, processing of receipts, and recording of receipts.
Having one person in charge of inventory and income makes it easier for theft to go unnoticed.
Instead, spread the duties among multiple people to have a “checks and balances” system that will deter theft., Require each employee to sign into the POS terminal with a unique password and username and review daily transactions through the POS terminal for suspicious behavior.
Study your daily profit margins report to locate questionable losses.
If there are substantial losses in one department regularly, you might need to investigate that department for employee theft.Examples of suspicious behavior include unnecessary and excessive access to the cash drawer, recorded refunds in small amounts, and product returns not matching the product.
Look for fake sales which is where an employee enters in a discount in order to pocket the money paid by the customer at full-price.
Set thresholds for discounts so that transactions will not go through if the discount appears to be too drastic.Limit what each employee is able to do when signed in to the terminal.
For example, you might require employees to call a manager to perform voids or product returns.
The failure to match posted prices with cashier prices can result in civil penalties and class action law suits. -
Step 3: Tighten your receiving practices.
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Step 4: Install surveillance cameras.
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Step 5: Monitor valuables closely.
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Step 6: Separate duties among more than one employee.
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Step 7: Utilize an efficient point-of-sale (POS) system.
Detailed Guide
Run training and loss-prevention programs which clearly discuss the implications of theft with employees, such as limited pay increases, fewer opportunities for promotion, and layoffs due to the company’s financial instability.Loss-prevention programs show employees that you are paying attention to theft and that the company takes the issue seriously.In addition, these programs can help employees learn how to spot theft, whether among other employees or customers.
The easiest way to reduce the risk of employee theft is to restrict access to your inventory.
Only those employees directly involved with handling inventory should have access to inventory areas.
If you have some goods that are particularly valuable, consider further restricting access to the areas where these are kept., The receiving area of a warehouse is where a large amount of inventory theft takes place.
Employees might mark shipments as short or spoiled when they are not and claim the good for themselves.
You can prevent this by requiring an inspection of spoiled or damaged goods before they are thrown out.
You should also have an employee that works outside of receiving perform these inspections, along with a recount of the items received., Installing visible security cameras throughout the store and workroom is a proven deterrent to crime.Let your employees know in a subtle manner that the security cameras are working and checked often.
In addition, review the security cameras each night to monitor odd behavior associated with theft or shoplifting.
Cameras should be reviewed at least weekly, even if there are no indications of shrinkage.
For instance, while training employees, you can clearly show them where all cameras are located, show them the live recordings, and emphasize that the tapes are checked daily.
You can also post signs in the store and workroom warning against theft and the penalties associated with it. , Reduce the urge to steal by storing higher value items (whether goods or currency) in locations that require higher levels of authorization or access.
For example, store high priced items under lock and key and only provide keys to trusted managers or supervisors., Don’t allow the same person to handle inventory management, processing of receipts, and recording of receipts.
Having one person in charge of inventory and income makes it easier for theft to go unnoticed.
Instead, spread the duties among multiple people to have a “checks and balances” system that will deter theft., Require each employee to sign into the POS terminal with a unique password and username and review daily transactions through the POS terminal for suspicious behavior.
Study your daily profit margins report to locate questionable losses.
If there are substantial losses in one department regularly, you might need to investigate that department for employee theft.Examples of suspicious behavior include unnecessary and excessive access to the cash drawer, recorded refunds in small amounts, and product returns not matching the product.
Look for fake sales which is where an employee enters in a discount in order to pocket the money paid by the customer at full-price.
Set thresholds for discounts so that transactions will not go through if the discount appears to be too drastic.Limit what each employee is able to do when signed in to the terminal.
For example, you might require employees to call a manager to perform voids or product returns.
The failure to match posted prices with cashier prices can result in civil penalties and class action law suits.
About the Author
Michelle Cox
Enthusiastic about teaching pet care techniques through clear, step-by-step guides.
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