No matter your industry, it’s likely that much of your profits goes towards a little something called shrinkage. In layman’s terms, this means wasted products and thus, lost money. For whatever reason, these are items you were unable to sell. If you aren’t careful, this can become a real sink hole in your business.
Most companies set aside a certain amount for shrinkage each year. Accidents happen. Plus, you may have to refund products for whatever reason. All of these expenses comes out of your shrinkage budget. If you’re losing significant amounts each year, it’s time to shrink those costs with the following pointers.
Keep perishable goods fresh
Perishable, fresh food forms a significant part of shrinkage, particularly in retail settings. Supermarkets lose massive amounts of stock due to customers leaving chilled items around the shop. Sadly, it isn’t only retailers who suffer. Even in factories, a broken fridge can spell a load of wasted stock. The trouble is that chilled food that warms up poses a health risk. Most companies chuck anything that has been out of the fridge for over twenty minutes. To reduce your risks, work with industrial refrigeration systems from M&M Refrigeration or other companies like them. Having reliable chillers in place can ensure breakdowns will be less likely. If you install a backup generator, even power outages won’t impact your stock. If you work in a retail environment, develop a plan for mitigating this issue. This could be as simple as doing a quick sweep of the store every fifteen minutes or so.
Don’t damage in transit
Damaged goods also form a significant part of shrinkage. If products arrive broken, you’ll have to send replacements free of charge. As well as being bad for business, this spells lost profit. However, this issue is easily avoidable by improving your packaging system. When sending pallets of stock to suppliers, make sure to wrap and pad everything. If merchandise leaves your warehouse perfectly packaged, you could argue that the fault is on the shipper’s end. When sending individual items to customers, make sure they’ll survive in the mail. Stiff-backed envelopes will stop things from getting bent. Such an eye for detail could make a huge difference. It’s also worth including protective packaging and fragile stamps where necessary.
Naturally, theft plays its part in your shrinkage budget. In many ways, this is the least controllable factor. There are steps you can take to at least try and tackle the issue. Installing security systems will deter, and also alert police to suspicious activity. It may also be worth hiring security guards who can keep an eye on things as they’re happening. Once a thief leaves the store, you have little chance of catching them. Bear in mind, too, that not all theft occurs outside. In-house thieves also play their part. As such, it’s worth doing surprise bag searches on staff intermittently.