Reduce Inventory Shrink by Keeping Product Spoilage to a Minimum

Reduce Inventory Shrink by Keeping Product Spoilage to a Minimum

Reduce Inventory Shrink by Keeping Product Spoilage to a Minimum

Inventory loss can have a big impact on profitability in any retail environment. The key is controlling it. In recent blog posts we’ve discussed ways to curb employee and vendor theft. This post will touch on another aspect of shrink – damaged or spoiled merchandise. More to the point, it will touch on how to prevent merchandise from spoiling in the first place and how to identify where and how the spoilage is occurring.

To kick things off, we’ll start with some good, objective third-party advice. Although written more for the supermarket industry where perishable goods take up a lot more real-estate than they do in c-stores, we like the following tips offered in this This Profit Experts blog post “How to Prevent Perishable Shrinkage.”

  • Code Your Storage Cooler–Display goods on a first in first out basis.
  • Handle Goods Correctly – Enforce receiving policies and procedures, follow a strict cooler and display rotation policy, monitor goods regularly, and reduce prices before products meet their expiration date.

  • Monitor Refrigeration and Storage – Check refrigeration levels frequently.

  • Sell Rather than Lose – If products are nearing their expiration date, sell them at a discount rather than allow them to feed the dumpster.

Most of these points have one thing in common: inventory.  Stores that have good visibility into their inventory levels will be able to order smarter and know when to hold and when to fold in terms of markdowns. Cooler storage ties directly to inventory as well. With many of our customers, we’ve seen a direct correlation between how well organized a store is and how much shrink is occurring, and the cooler area is typically a very good barometer of the store manager’s levels of control.

The best way to get a true picture of your inventory levels is through regular audits. This will enable smart ordering and minimize overstocks and understocks.

What we’ve found at Quantum, however, is that good auditors can offer value that extends far beyond the count.  The reason for this is that when you are in a store day in and day out it can be easy to start to overlook slight infractions here and there. Little messes become big ones, someone forgets to rotate the cooler one day or check it the next, and all of a sudden you have a big loss on your hands. Your auditor, however, comes into the store with fresh, objective eyes. If he or she is trained on what to look for, the time spent counting can be much more effective.

That’s why at Quantum we train all of our auditors on our SPECS reporting process. In addition to counting, our auditors will look at everything from the condition of the cooler storage to the cleanliness of your restrooms.

The following are actual comments recorded by Quantum auditors.

There was $400 in single beer in the middle of the beer cave. There’s a box of damaged batteries and auto that has been here since the beginning of last year. It does not scan and they can’t sell it.
Everything was organized and looked great and was easy to count but there were 3 boxes (90 packs) full of packaged meat in the cooler.

The store is overloaded with tobacco. There is over $25,000 worth of it, and it gets very mixed up in the small amount of space they have for it.  Much of it is expired stuff that has been there for a very long time.

Novelty ice cream freezer not working properly.  I informed the manager and she pulled product before any loss.
Cooler has multiple crates of damaged beer and soda and other products that is damaged and out of date.  Cig room is very unorganized with product stacked and crushed into and on top of other product.

We know we aren’t the only ones paying attention how your stores are run – but wouldn’t an extra set of objective eyes be nice?

Catching shrink starts by identifying it.  That’s where the work Quantum Services does really comes into play. When you are looking for audit counts you can believe and value added information you can trust, there is no better resource than Quantum Services.  Give us a call at 800-777-9414 to find out how we can help you identify and tackle your stores’ shrink problems.

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