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GUARDING YOURSELF AGAINST THEFT AND ERROR
2© 2016 RICS Software
When it comes to managing your inventory, preventing inventory shrinkage should be on the top of your list. Whether you’re dealing with theft or human errors, inventory loss can turn into one of your top inventory costs. But what if we told you there were ways to prevent massive loss?
With the right system in place and an effective buying strategy, you can ensure your inventory is manageable and reduce loss. A more manageable inventory load means less room for mistakes and even less room for inventory to go missing unnoticed.
Read on to find out why you’re finding increased inventory shrinkage and how to prevent it!
3© 2016 RICS Software
Who?
4© 2016 RICS Software
One of the first things to examine when it comes to inventory shrinkage is who is causing your inventory to go missing. In reality, shoplifting is just one reason you’re experiencing inventory loss. There’s several places you should be looking to ensure you’re safeguarding yourself against shrinkage.
FOUR MAIN AREAS RESPONSIBLE FOR INVENTORY LOSSAccording to the National Retail Federation’s National Retail Security Survey 2015.
38% 34.5% 16.5% 6.8%
Customers shoplifting inventory Internal theft from your employees Internal errors (administrative and paperwork errors)
Vendor fraud and mistakes
5© 2016 RICS Software
Why?
6© 2016 RICS Software
After you’ve reviewed who could be causing your inventory loss, it’s time to start identifying why it’s possible for that to happen in the first place.
LACK OF TECHNOLOGYOne of the biggest reasons for human error in your inventory management is because you’re lacking the right inventory management system (or any system at all). Technology has taken center stage in retailing, and it’s an important part in effectively managing your inventory. If your POS and inventory management system is out of date, or you’re still using spreadsheets to manage your inventory, you’re opening yourself up to increased human error and theft.
LEAVING YOURSELF OPEN TO THEFTMany retailers who experience high inventory loss from theft have made themselves easy targets. The wrong layout of your store, overstocking inventory, and even poor employee training leave many retailers open to increased inventory loss.
POOR EMPLOYEE SELECTIONIt’s imperative to vet your employees thoroughly before trusting them to be a part of your team. Your employees are the gatekeepers to your store (and your inventory) when you’re not around. You need to make sure you hire employees who are trustworthy, have positive references, and pass a trial period before they are left alone in your store.
YOU DON’T AUDIT VENDORSIt’s easy to believe that vendors and brand reps are doing everything by the books. In reality, you can’t trust anyone else with the wellbeing of your business but you. Make sure that you audit inventory that vendors deliver to identify missing and non-sellable materials right away.
7© 2016 RICS Software
Tips
8© 2016 RICS Software
So now that you know who could be causing your inventory to shrink and why it might be happening, it’s time to look at how to prevent it.
STORE IMPROVEMENTSInvest in a POS and inventory management systemIf you’re lacking an inventory management system, or any at all, you’re already more likely to experience loss due to theft AND human error. The right POS and inventory management system enables you to execute a successful strategy and eliminate losses by giving you visibility into your inventory.
Conduct physical inventoriesEven when you have the best technology in place, physical inventory is still a necessary part of every retailer’s process. Doing a physical count once a month will make you quicker at surveying your inventory and will also catch any errors you might have made while inputting new inventory over the past month.
Install sufficient securitySecurity is also an important part in updating the technology of your store. Not only will it help deter customers from stealing, but you’ll also be able to pinpoint who is stealing from you if things go missing.
Keep your store tidyA tidy store does more than just provide a pleasing aesthetic. When your store is organized and tidy, you don’t have tons of inventory overflowing your shelves. Too much inventory on the floor can make it hard to keep track of everything, leaving yourself susceptible to theft. If you’re not doing physical inventory every night, it’s best to keep only a few of each item on the floor and the rest of your inventory in the back.
Keep high target items in plain sightYou know which pieces are your most valuable, and which ones are high targets for theft. Make sure to keep items that you know are valuable, or go missing easily locked up in a case or in plain sight. When inventory is hidden in a back corner, it’s easier for someone to conceal it in their bag than if you have it out in the middle of the store.
9© 2016 RICS Software
EMPLOYEE IMPROVEMENTSBe more selective in your hiringIt’s important to realize that when you hire an employee, you’re hiring someone to take care of something you’ve worked day in and day out to make successful. Should you really just trust anyone with that responsibility? Spend time contacting a potential employee’s references and really get to know them before hiring.
Better trainingEmployees can be key in avoiding inventory loss through human error. Taking the time to really train your employees on using your POS and inventory system can make a huge impact on the amount of mistakes they make. If an employee is just thrown on the floor, without sufficient training, how can you expect them to input inventory the way you want?
Stricter theft policiesIf you don’t have strict policies in place for theft, you may want to consider updating and displaying that policy in your store. When employees know you take action against those who steal from you, they will be less likely to even attempt to take inventory.
Greeting customersYour employees should greet each and every customer that walks through the door. Even have them ask what they are shopping for and how they can help. Not only does this offer your customers a more personalized experience, but it also gives each customer an identity. A shoplifter is less likely to steal from you once they’ve been called out and recognized in your store.
Don’t get stuck behind the counterSometimes employees only stay behind the counters, leaving your store more open to theft. When employees make a point to be more active in the store and walk around to interact with customers, they’re offering that personalized experience but can also keep an eye out for suspicious activity.
10© 2016 RICS Software
VENDOR ACCOUNTABILITYInvoice matchingDon’t just trust that your vendor’s invoice matches what you received. Make sure to double check an invoice against what you received before making the payment. Use your inventory management system to cross reference your order, what you received, and what you’re being charged. Your vendor may not be trying to cheat you, it could be just an honest mistake. But don’t let a mistake (or a fraudulent vendor) cost you.
Auditing your ordersIt’s important to audit your inventory when receiving it from a vendor. You want to make sure that everything you requested is there and that it’s in good condition. If you find you’re missing inventory or that you’ve received inventory that’s not in good condition, make sure to account for that in your inventory system and request the vendor to make it right. You don’t want to pay for merchandise that you didn’t get or that is damaged and you can’t sell.
