5 Easy Tips to Reduce Your Inventory Shrinkage

Written by
Stocktake Struggles? Here's all you need to know about effective stocktaking with our top 20 inventory tips. Download your ebook now.
Written by
2 Minute Read
Share Blog:

When your physical stock in the warehouse doesn’t agree with the inventory on record, you’ll have a problem on your hands. You now have the onerous task of figuring out where the rouge inventory went so you can reconcile the numbers. This is what we call inventory shrinkage. It occurs where inventory disappears or cannot be sold and creates a mismatch between physical stock counts and what is showing in the inventory management software.

How low can you go?

With inventory shrinkage being such a problem for businesses, why not make it a challenge to reduce the cost of shrinkage as much as possible? Here are some tips to consider in order to turn the tables on inventory shrinkage.

Check, check and check again

Introduce a double-checking system where two pairs of eyes reconcile all inventory at every point throughout production from receipt of incoming goods all the way to sale. This reduces inherent errors as well as providing a system of accountability.

Track each product

One way of deciphering quickly and accurately which products have gone rogue is to track each product through a unique identifier such as a barcode or RFID. Not only does the introduction of unique identifiers make it easier to identify missing products but it also creates an easier stocktaking process.

Choose your staff wisely

Since a large proportion of inventory shrinkage is due to employee theft, it makes sense to ensure you only have trustworthy people working for you and handling your stock. Create a more rigorous employee vetting process where you consult past employers and referees for recommendations.


There are many reasons why automation benefits inventory management. There are so many options available which are designed to streamline the inventory management process and optimise sales and revenue.

Monitor and improve

The key to improvement is to monitor progress over time and create measurable, attainable goals. This also applies to inventory management and reducing inventory shrinkage to improve a business’s operational success. Therefore, create metrics to ascertain shrinkage and analyse trends and improvements over time. Communicate this to employees and create a culture of best practice and continuous improvement where everyone aims to better inventory management and reduced shrinkage.

More about the author:

Share Blog:
Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

More posts like this

Subscribe to receive the latest blog updates