Stock shrinkage is a major contributing factor to loss of business and business revenue in the workplace.
How can we curb this? And what is Stock Shrinkage?
Definition
Stock Shrinkage is the difference between the stock recorded and the actual stock on the shop floor or available to the public. This can occur in a number of ways, shoplifting, administrative error, damage and inhouse theft.
How does this effect the Company?
The reason why it will affect a company is that if a Company should have R1 million in stock and has a stock shrinkage of R500 000 the Company will be unable to recoup the price of the stock and/or make a profit, thereby being unable to maintain the standard of the Company.
Companies will thereafter only be able to recoup such losses by increasing the price of the items available in order to cover costs. Companies will also spending time and money in order to track down the source of the shrinkage, investing in more security or cameras, thereby increasing the cost to the Company.
Money, in its essence, will be spent in order to prevent this.
What is a Shrinkage Policy?
It is policy that the Company implements in order to address how to handle shrinkage within the Company, it will lay out the Disciplinary Processes, and how the company will be able to address the stock loss and how to recoup costs. This could be by ways of polygraph testing and/or searches.
1) What should a Shrinkage Policy contain?
A shrinkage policy should contain why the policy is being put into place; methods of reporting and trust of reporting and how they will go about addressing the Shrinkage of the Company such as searches, CCTV and disciplinary processes
2) When should you review such a policy?
This entirely depends on the company.
A Company should review their policy at least on an annual basis but like I said it is dependant upon the company. If the Company sees that a policy is not working and stock shrinkage is higher after the policy is implemented, then it should be reviewed in a closer time frame from a month or bi monthly period.
3) One size fits all?
No. A one-size fits all approach, to gain a generic shrinkage policy from a search engine, is not advisable due to the varying nature of businesses. A clothing store may need a more intricate policy then say a security company who doesn’t get that much stock into the company but does get equipment. It is advisable to have an expert draft a policy in line with your Company’s needs and requirements.
In conclusion. Shrinkage policies are a necessity in each company to not only protect stock but to also alert staff members as to the measures Company’s will take in order to prevent it from happening.
Is Your Business Protected Against Stock Shrinkage?
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