Where stock goes missing, and how to find it
Every inventory has a gap somewhere. The system says 200. The shelf holds 187. Thirteen units went somewhere, and the question is where.
Retail people call this shrinkage. It sounds like laundry, and it is almost as dull as laundry once you know where to look. The first surprise for most owners is that the villain is rarely a thief. It is usually paperwork.
The usual suspects
When a count falls short, the cause is almost always one of a handful of ordinary things.
- Receiving mistakes: the delivery was short, or the wrong item arrived, and nobody counted it against the order.
- Picking mistakes: ten were picked and recorded as nine, or the wrong item was picked and corrected on the box but not in the system.
- Damage and waste: things dropped, spoiled, expired or used for samples, and never written off.
- Mislabeled or misplaced stock: the item exists, in the wrong bin.
- Theft, by customers, staff or suppliers. Real, and the smallest slice in many shops.
Notice that four out of five are about records, not behavior. That is good news, because records can be fixed.
An invented example. The point is that a gap usually has several small causes, not one dramatic one.
- Receiving mistakes35%
- Picking mistakes25%
- Damage and waste20%
- Misplaced stock15%
- Theft5%
An illustration. In many shops, records cause more of the gap than people do.
How to trace a gap
Start with the recent history of the item, not the total. Read the last receipts and picks in order. Does a delivery look short compared with the purchase order? Was a pick recorded twice, or not at all? Is there a stack of returned goods in the corner that nobody has put away?
Then walk the area. Look in the next bin over, on the receiving table and on any cart. Stock that is merely misplaced makes up a surprising share of what gets called lost.
Most missing stock is not stolen. It was never written down.
Write it off honestly
When something breaks or expires, record it the day it happens, with a reason. A reason code feels like bureaucracy until the day you want to know how much you lost to damage last quarter and the answer is sitting in a column.
Letting the system be wrong, to avoid admitting a loss, is the most expensive habit in stock control. A count adjustment that says 'damaged in transit, 6' is information. A silent shortage is just a mystery you will meet again.
When it really is theft
If the same item keeps disappearing, and receiving, picking and bins are all clean, then it is worth looking harder. Use the history to see who touched the item and when. The evidence is usually a pattern, not a smoking gun. Treat it as a question for a conversation, not an accusation in a spreadsheet.
- Receiving is cleanDeliveries are counted against orders
- Picking is cleanEach pick has an order number
- Bins are checkedThe stock is not just misplaced
- The history is readWho touched it, and when
A small routine that shrinks the gap
You do not need a loss prevention department. Four habits cover most of it, and none takes more than a few minutes a day.
- Count deliveries at the door, against the order.
- Write off damage and waste the day it happens, with a reason.
- Keep each item in one place, so a count has one place to look.
- Count the high-value items often, and look at the differences while the history is fresh.
After a quarter of this, take the gap between the system and the shelf and compare it with where you started. It will not be zero. It will be smaller, and you will know why it is not zero, which is worth more than the number.