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If the company conducts stock inventory and finds the stock on hand to be $95,000, the amount of stock shrinkage is $5,000 ($100,000 – $95,000). The shrinkage percentage is 5% [ ($5,000/100,000) x 100]. Causes of Inventory Shrinkage. The National Retail Security Survey outlines the following five factors as the leading causes of inventory ...
Nov 28, 2023 · Internal theft by employees is a significant contributor to inventory loss. When employees pilfer inventory items, it results in a direct loss. While the previous causes of shrinkage can be reported, with the items written off, theft is something that can only be discovered through inventory audits and investigations. Shoplifting.
Aug 22, 2023 · Typically, shrinkage as a unit is used to measure the loss of a single product, while shrinkage as a percentage is used to measure loss across your entire inventory. Acceptable retail shrink rates typically fall between 1% to 2%, with the industry average landing at 1.4% in 2021 .
Sep 26, 2024 · Simple human mistakes can also cause inventory shrinkage. An example would be if a cashier miscounts the number of items a customer purchased. It could also occur when your warehouse double-ships an order. Inaccurate Inventory Tracking. Your inventory counts are only as good as the inventory management system you use to keep track of them.
- Chuck Fuerst
Apr 10, 2023 · The Bottom Line . Shrinkage is the loss of inventory or cash from a business due to factors such as theft, damage, or administrative errors. Shrinkage can have a significant impact on a company's ...
- Will Kenton
This loss can occur due to various factors such as theft, damage, spoilage, administrative errors, supplier issues, or inaccurate forecasting. Inventory shrinkage is often expressed as a percentage of the total inventory value and is an important metric for evaluating operational efficiency and profitability. Causes of inventory shrinkage
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Shrinkage is an inventory loss that comes straight off the bottom line. It can impact production and result in lost sales, affecting profit margins. To mitigate the risk, businesses must track shrinkage and use the insights gained to improve their inventory systems.
