Is your business one of the over 2 million retail stores in the U.S?
Whether you’re an eCommerce or brick-and-mortar store, the heart of your operations is your inventory or stock.
Like most retail business owners, a significant chunk of your capital goes into acquiring the goods you’re selling. But what if you’re incurring stock losses that are cutting into your profits?
There are a number of reasons for stock shrinkage, from theft to inefficient record keeping, to shipping errors. To help you prevent stock losses, we’re sharing a handful of tips and strategies you should implement.
Let’s get into it:
1. Keep Proper Records
Proper inventory management starts with accurate recordkeeping. It’s also the first, and most important, step when you want to minimize or avoid stock losses. With good recordkeeping, you’ll always have a clear picture of your inventory at all times.
Stock recordkeeping doesn’t start when goods arrive at your store or warehouse. It starts from the supplier side.
When stock arrives, ensure it tallies with what’s on the delivery note. Sometimes suppliers can deliver fewer or more items, and if the mistake goes unnoticed, there will be consequences later on.
The best way to ensure your business is staying on top of stock recordkeeping is to hire a stockkeeper. This professional’s primary role is to maintain an accurate record of your business’s inventory.
In addition, invest in stock keeping technology, like this online inventory management software. With the automation of most stock-keeping tasks, you’ll encounter fewer clerical errors.
2. Prevent Theft
Selling physical products comes with the risk of theft. If you’re a brick-and-mortar store, both employees and customers can steal some of your stock. If you’re an online-only business, you won’t worry about customer theft, but employee theft will be a constant worry.
Heck, even burglars can break into your store and steal your merchandise!
As the business owner, you have a responsibility to prevent any stop losses that may occur due to theft. There are a number of measures you can take, including installing surveillance systems in your warehouses and trying your best to hire trustworthy employees.
If your business serves walk-in customers, shoplifting may be an issue. Depending on the nature of the product you’re selling, you may be able to use anti-theft tags and sensors.
If your business owns stand-alone premises, consider hiring a security services provider to man the property. Along with installing surveillance systems along the perimeter, having security personnel will go a long way in deterring burglars.
3. Work With Reliable Vendors/Suppliers
Most retail businesses have vendors who supply them with finished goods. A mistake some small business owners make, and one which can lead to inventory shrinkage is failing to vet various vendors before making a purchase. This is especially the case when the vendor in question is a large corporation, so naturally, the retail business owner gains their trust.
While large vendors might not have the intention to defraud you, they might have rogue employees. Such employees can engage in fraudulent activities without the employer’s knowledge.
This is why it’s vital to choose suppliers who have a strong reputation for reliability and being trustworthy. Read online reviews and establish whether there are negative complaints from the vendors’ clients. When you’re satisfied that a vendor meets your criteria, you can be confident that you’ll always receive your goods as ordered.
4. Damage Prevention
Stock damage can result in significant losses. Obviously, you put a lot of effort into ensuring your goods are handled with great care. However, there might be cases where you have little control.
For example, if a storm or other natural disaster strikes your warehouses, or a pipe leak causes a lot of flooding, you might not be able to protect your goods from water damage. In another instance, your goods can be damaged in transit, either from the vendor’s warehouse to your business or from your business to your customer’s address.
Stock damage can also occur when your employees are handling the goods on your premises. A forklift can fail and drop packages. Other machines in your warehouses can ram into the goods.
To minimize stock losses arising from physical damage, always inspect all the goods delivered from your vendors and take note of their condition. Damaged goods should be replaced by the vendor.
Also, train your warehouse employees and provide them with specialized equipment to handle the goods. And if your business ships orders to customers, work with a quality shipping partner. Customers will return goods that arrive damaged, which is something you want to avoid.
5. Audit Your Inventory Regularly
Even when you’ve implemented the right loss prevention measures, it’s still possible for loss to occur. An innocent recordkeeping error, for example, can cause a big inventory problem.
You can arrest such nasty surprises by performing regular inventory audits. Counting the stock manually and comparing your finds with what’s in the stock report, for example, can reveal inconsistencies.
From these audits, you will pick up data that you can use to improve your stock management practices.
Keep Stock Losses Low
In the course of running a retail business, incurring stock losses is inevitable. It’s your job as a business owner or manager to find ways to minimize these losses; otherwise, you’d lose so much stock and put the business at risk. Implement the strategies above and you’ll see a big difference