10 ways for merchants to manage shrinkage (across the whole business)

How much is shrinkage costing your merchant business?

Every merchant knows that stock shrinkage costs money. But according to BMF "Shrink Academy" trainer Paul Winstanley, as quoted in a recent article in PBM magazine, there is a lot more to shrinkage than meets the eye – and it could be accounting for up to two thirds of merchants’ financial losses.

While stock shrinkage is a costly drain on a merchant’s bottom line, the implications run wider throughout the business. Shrinkage, suggests Paul Winstanley, applies to all processes and procedures within a business, meaning there are multiple pressure points within any merchant business where efficiency and accuracy failures could be leading to unnecessary losses.

It’s vital, he says, to engage with employees across the merchant business to get a true picture of what’s happening, not just in the board room or head office. Keeping in touch with what’s actually happening on the ground is essential – the theory of a process or management practice means very little if it’s not working for those in charge of actually carrying it out day to day.

So why are we talking about it?

Two reasons. Firstly, to highlight the very valuable training offered by the BMF for merchant staff, which can provide invaluable skills and approaches to implementing more efficient and effective methods.

And secondly, because we believe our software can help every merchant to identify opportunities and gaps for improvement, mitigate risk, flag concerns, and drive increased efficiency across the whole business. In fact, we’ve even developed unique features to help with this exact issue.

Here are 10 ways Merchanter can help address the issues of shrinkage:

1) Stock Confidence metric offers insight into stock-accuracy erosion over time. In short, it accounts for shrinkage and calculates the accuracy of a current stockholding figure. This effectively waves a warning flag to help you focus time and effort on the areas of stock which need more focus.

2) Perpetual inventory used to be almost impossibly time-consuming, but new technologies make staying on top of stockholding stats an awful lot easier. From bar code scanners to real-time, organisation-wide integration of data, the numbers you see are up to date, making it easier to spot discrepancies and identify risk further out.

3) Stock turn KPI help you to drive more efficiency in the value of your stock. In a nutshell, this nifty little metric tells you how hard each stock line is working so you can quickly and easily make smart decisions about how to boost profitability.

4) Built-in credit control and margin protection give additional peace of mind during price adjustments and customer or supplier negotiations, so you know your people are always working within acceptable tolerances and not incurring unnecessary risk.

5) Price tracking in the market helps the system flag up when replenishment costs are going to be an issue, helping you to stay on top of profitability.

6) Customer and supplier data helps you quickly see which are operating profitably and which are a drain on resource, effectively costing more to work with than they’re worth to the business.

7) Automation of time-consuming processes helps free up people’s time and focus to help drive productivity, leaving them able to focus on the areas which drive better value for the business.

8) Better reliability, availability and pricing helps secure better customer service and loyalty. Fewer disappointed or annoyed customers means fewer missed opportunities.

9) Comprehensive, relevant and easily accessible metrics for over 120 areas of the business help you stay on top of all the moving parts of the business at a glance, meaning you can make smarter decisions faster.

10) Being simple to use and quick to learn, there’s less room for human error and much faster adoption by your workforce, leading to better engagement and employee retention levels, enhanced customer service thanks to enhanced and up to date levels of accessible information, and more efficient business practice across the organisation thanks

We are developing many new features to help our customers manage business more efficiently, focusing on everything from logistics and transport planning to even more advanced stock control. If you have an idea for a feature that would make YOUR life easier, please get in touch - you never know, we might just be able to create it!

To read the original article at PBM, just click here

To check out the fantastic range of training courses available for members of the BMF, take a look here

And to register for 30 days’ free access to the Merchanter online demo system, just click here.