Warehouse Shrinkage Control Systems: A Brief Explanation

Inventory shrinkage is the loss of inventory, whether that be by means of theft, or stock getting lost due to bad management and stock control systems. The smaller a business is, the easier it is to keep track of one’s inventory; however, as a business grows and stock increases it becomes increasingly more difficult to manage inventory, if a good shrinkage control system has not been implemented.

In this article, we will discuss what inventory shrinkage looks like in a warehouse setting and how detrimental it can be to a company, as well as what warehouse shrinkage control systems can be implemented for best results.

What Is Shrinkage In a Warehouse?

Ultimately, warehouse shrinkage is the same as normal retail shrinkage, only on a larger scale and it takes place within a warehouse. Shrinkage is usually noticed when the inventory that has been noted in a company’s accounting books does not match the inventory that is present in the warehouse. There are a few commonly identified causes of warehouse shrinkage. These causes include:

• Miscounting in stocktake.
• Stock theft due to staff or break-ins.
• Goods being damaged.
• The wrong orders being sent out.
• Shipments that have gone missing.

How to Reduce Warehouse Shrinkage

The first step every company should take to reduce warehouse shrinkage is to implement a warehouse shrinkage control system. This will allow you to easily keep track of stock as well as where the fault occurred when the stock went missing. Once the fault has been identified, one can improve on that aspect to prevent it from occurring again in the future.

There are many ways one can implement a warehouse shrinkage control system. Some of the strategies and procedures one can implement include:

• Scannable Credential Badges: This will ensure that only employees can enter the warehouse and that burglars will find it hard to get to your stock in the first place.
• Warehouse Access Ranking System: As employee theft is a very real possibility, it is advisable to reduce the number of people with access to a warehouse. This will make the pool of suspects much smaller if employee theft does occur.
• Inventory Tracking: It is advisable to implement a system such as RFID that is able to track your inventory at all times, as this will ensure that you very rarely lose stock. It will even be able to alert you as stock is being stolen if theft is the cause of your shrinkage issue.

RFID As a Warehouse Solution

Radio Frequency Identification (RFID) is perfect for warehouses as it can track stock movement inside and even outside of the warehouse. Thus, your stock will never be misplaced within the warehouse, stock take is always accurate, and you can track stock up until it reaches its end destination safely. It also speeds up the stocktake and inventory management process. RFID improves tracking, accuracy, locating, and shrinkage of stock.

To find out more about the benefits that RFID can offer you within a warehouse environment, contact us at Milestone.