NCJ Number
121483
Journal
Security Management Volume: 33 Issue: 9 Dated: (September 1989) Pages: 190-192
Date Published
1989
Length
2 pages
Annotation
Inventory loss, referred to as shrinkage or shrink, results in a paper increase in cost of goods sold, thus decreasing gross profit margins; since shrink can result from a number of factors, loss-prevention representatives should work with operations representatives to address all factors involved in shrink.
Abstract
Shrink, as shown on paper, results not only from actual thefts of inventory but from errors in recordkeeping and inventory monitoring. Apprehension records help identify the amount of loss due to theft. Shrink not attributed to apprehended thieves may result from a number of factors. A multiunit retail chain should begin by examining procedures at its distribution center. One of the most important items to check is the clean cutoff of goods prior to inventory, such that records do not indicate inventory received which has not yet arrived. Also, by giving store managers tools to monitor the flow of merchandise, such as packing lists, inventory in hand can be checked against records of inventory received. Poor markdown administration is another cause of shrinkage on paper. Shrinkage may not be accurately represented when documentation does not note the proper dollar amount of markdown taken and credited to each store.