Business
Reducing shrinkage: a practical playbook for small businesses
“Shrinkage” is the gap between the stock you should have and what’s actually on the shelf. It comes from theft, yes — but more often from honest mistakes. The good news: most of it is preventable without locking everything down.
First, measure it
You can’t reduce what you don’t track. Capture a snapshot, count, and record the difference as a shrinkage rate (value lost ÷ value sold). Now you have a baseline.
Find the real causes
Before assuming theft, rule out the usual suspects — which are far more common:
- Receiving errors — deliveries counted wrong on the way in.
- Unrecorded usage — stock used or sold without being logged.
- Damage and spoilage not written off.
- Mis-picks and miscounts from manual entry.
Fix the process, not just the symptom
- Count deliveries against the order at receiving — tie it to order tracking.
- Make logging usage a one-second QR scan so it actually happens.
- Record damage as a deliberate adjustment, with a reason.
- Keep a change history so a wrong number can be traced to who/what/when.
Count often enough to catch it early
Rolling cycle counts catch shrinkage while the trail is fresh — a discrepancy found this week is solvable; one found at year-end is a mystery.