Monday, March 7, 2011

Retail 101: Controling Paper Shrink!

Because there are different kinds of shrink there are different ways to control it.  There are three kinds of shrink, Paper, internal and external.  Large companies have Loss prevention departments who's job it is to stop shrink.  The truth is the best defense to control shrink is education and training. 

Retail Crime, Security, and Loss Prevention: An Encyclopedic Reference                                       Loss Prevention in the Retail Business

Paper shrink is a mistake made on paper that causes a loss of money.  Putting the wrong price on an item and giving it to the customer at that price is a loss of money.  I hear all the time on TV news such and such  store was caught scamming people because the items are marked one price and the register scans another.  Every retail manager who hears this knows the store didn't do this on purpose. Somebody didn't do their price changes correctly.  Worse management didn't follow up and check to see that price changes were done correctly. 

A good manager audits the price changes to make sure they are being done correctly.

Signing for merchandise unseen is a major way to cause shrink.   When merchandise is received it needs to be checked for discrepancies.  Then the Bill when received must be checked again for price and quantity.  Make sure your only paying for what you got.  Even if your a large company who automates the check in process of company packed deliveries, mistakes happen. 

One mistake many retail stores make goes unseen a lot of the time. 

Example #1: You receive a case  packed 12 mini boom box radio's which scan at $9.99 each.  The Distribution center labeled the box pencils packed 144 with price labels $1.99 each.  No big deal you think just change the price stickers to read $9.99.  But you just lost $168.68 in paper shrink. 

Why?  You sell the 12 radios for  $119.88  your company bookkeeper thinks you received 144 boxes of  pencils and sold them for $286.56.  When you do inventory at the end of the year your short $168.68 and think it must of been stolen. 

Now what if that happens 10 times a year?  Well now that's $1,686.80  in shrink.  This happens every day.  If you don't find the errors and correct them you will shrink on your inventory. 

Train your employees to receive merchandise correctly.

Example #2: The meat department manager in a grocery store needs to transfer hot dogs from another store to his store.  So he goes to the nearby store asks for 5 cases of hot dogs to transfer.  He goes to the managers office and tells the manager he needs to transfer 5 cases of hot dogs to his store. 

The store manager takes out a manual transfer book and fill in the information. 

Without ever looking for himself he asks what are your transferring?  Hot dogs. How many? 5 cases  packed 12 each = 60 pieces total.  How much does it retail for?  $2.99. 

The department manager goes back to his store and hands in the transfer slip with out anyone ever checking in the merchandise.  Only the hot dogs are packed 10 to a case and the correct price is $4.99.  on sale for $2.99. 

So now two stores inventories are off.  One short and one over by $70.10.  

Train your employees to do paper work correctly.  Lead by example and never assume some one else did it right.  If you don't check it your self never sign your name to it! 

Last make sure you get a good count on your inventory.  If your stores a mess you will not get a good count.  You have to be organized, have not only your merchandise in order but your paperwork as well. 

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