Loss is a loss, a loss that does not arise from the purchase, sale or production process. Loss is caused by crime (such as shoplifting) or inaccurate behavior. Think of a wrong checkout, wrong purchases or not noticing a theft.
What forms of loss are there?
Criminal loss
This is shrink that is of a criminal nature and this is also the most common variant of shrink. A criminal offense is being committed, such as fraud or stealing. The goods that have disappeared can no longer be sold. This creates extra costs, but also loss of turnover. The consequences of criminal loss are, for example: stock problems, costs for the damage caused, lower net profit, costs for preventive measures, distrust of the staff and, in the worst case, an entrepreneur can no longer keep his head above water and the loss results in bankruptcy. .
Non-criminal shrinkage
Non-criminal seems to be less serious, but again there are financial consequences. The severity varies greatly by industry. Non-criminal loss is the result of structural or incidental employee errors. These errors can be divided into three categories, namely: administrative errors, control errors and work errors. Administration errors can be, for example: packing slip not properly compared with the invoice, entering the wrong code, calculation errors and ordering wrong quality or quantities. Checking errors can be: not properly comparing delivered packages with the accompanying documents, not properly comparing the quality or numbers received with the quality and numbers on the packing slip and poor checking for damage. Work errors can be, for example: recording the wrong number of goods, damaging goods, incorrect application of the FIFO system (first in, first out), forgetting goods in the warehouse and returning them without a return slip.
Other types of loss
- Direct and real. This means that there is a clearly demonstrable loss. The cause is never economic. Criminal shrinkage is always direct or real shrinkage.
- Indirect and apparent loss. This means that the loss is less clearly identifiable. This may have an economic cause. Sometimes part of, for example, a shipment has to be returned, resulting in extra costs.
- Inexplicable and explainable loss. In retrospect it is often difficult to determine exactly what happened. If the reason for the loss is known, there is an explicable loss. If the reason for the loss is unknown, it is said to be unexplained loss.
Prevent loss
There are several types of security measures retailers can take to increase security and prevent shrinkage. One of the most common measures is installing security cameras. These cameras can not only deter thieves, but can also help identify shoplifters. It is important that the cameras are placed in strategic locations, such as at store entrances, cash registers and aisles where unattended products are located.
In addition to security cameras, shops can also opt for it hiring security guards. Guards can better recognize suspicious activity and intervene quickly if something goes wrong. A security guard can also serve as an example for other employees and customers.
Another aspect of store security is to implement an 'integrity' program. This program focuses on encouraging employee loyalty and honesty. Employees are trained in the correct handling of products and are encouraged to report abnormal behavior of others. This could, for example, mean that employees are coached on how to assist customers without endangering the store. This program ensures that employees are aware of their responsibilities and that they understand the value of the products.
Basically, through various security measures such as installing security cameras, the hiring security guards and implementing an 'integrity' program can prevent losses in a store. It is also important to invest in good training for staff and stock management. By combining all these measures, retailers can create a safer and more efficient shopping environment while also preventing financial damage.
Loss control plan
An effective shrinkage plan helps the business owner prevent items from disappearing without payment or being damaged. Such a plan is more than just securing the exit or hiring additional personnel. It is a systematic approach to all aspects that influence shrinkage.
A shrinkage plan may include the following steps:
- Identify the problem: Determine where the shrink is coming from. Is it theft by customers, store employees or suppliers? Or is it a problem with administrative errors or damage to the products?
- Analyzing data: Evaluating sales figures, trade-in percentages, production and production costs, inventory data, employee and customer data to identify potential shrink causes and patterns.
- Introducing measures: Based on this analysis, determine which measures will be introduced to combat shrinkage. This may include investing in security measures, training store staff to deal with theft or improving stock management to gain better insight and control.
- Monitoring and measuring the effects: A continuous process in which the progress of the plan is regularly monitored and evaluated. In this way, adjustments can be made and any new problems can be solved in a timely manner.
By means of a loss control plan, an entrepreneur can draw up and implement an effective plan to prevent loss. As a result, the entrepreneur can ensure more income, fewer losses and a safer working environment.