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HOW BIG IS YOUR SHRINK PROBLEM?
The first step in the shrink prevention process
involves accurate measurement of the causes,
effects, and costs of shrink as they are recognized.
Companies often expend great amounts of time,
energy, and expense in their attempts to reduce and
prevent shrink, but sometimes fail to adopt basic
operating disciplines that enable them to know
precisely how much shrink they actually have.
First companies must adopt a proactive prevention
posture that includes training, best practices, and
cultural discipline concerning store shrink. Secondly,
retailers must know exactly how much shrink they have,
where it is, and what is causing it. This is a revealing
activity that often results in a short-term increase in
reported shrink, but in reality only exposes true—or
actual—shrink. Implementation of this first step
creates a fresh, new starting point.
To determine exactly how big their shrink problem really
is, several significant financial areas must be
addressed and remain under constant monitoring and
control to obtain the clearest possible picture. These
areas are incoming gross margins, management of
inventory turnover, control of known loss, sales record
keeping, and the periodic audit of inventory.
SIX STEPS TO MEASURE SHRINK ACCURATELY
1. Incoming DSD Gross. Beginning in the back room,
46%—on average—of all dry grocery goods are
delivered by manufacturer direct store delivery
(DSD) vendors, and provide an incoming gross
margin of 27%-38%. According to survey respondents,
According to survey respondents, 83% of all
supermarkets utilized computerized receiving
technology to monitor and manage incoming DSD
gross margins, manage the accuracy of incoming
product costs, and ensure authorized item variety
and inventory levels. These systems are now a
staple of store control culture and, when properly
used, can reduce store shrink by approximately 21%...
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