Inventory Shrinkage
Quick answer
The gap between book stock and physical stock, caused by theft, damage, expiry or recording errors.
Key takeaways
- Operational errors (receiving, picking, returns)
- Damage and expiry (FEFO not applied)
- Theft and fraud
What shrinkage is
Inventory shrinkage is stock loss not recorded as a sale: internal/external theft, damage, expiry, receiving or picking errors. It's expressed as a percentage of stock value.
Why it matters to the board
Shrinkage directly erodes margin and distorts the stock data replenishment relies on. A 1-2% shrinkage can mean tens of thousands of euros lost yearly.
Sources
- Operational errors (receiving, picking, returns)
- Damage and expiry (FEFO not applied)
- Theft and fraud
How CRMconnect helps
CRMconnect reduces shrinkage through scanned receiving and picking, batch traceability, automatic FEFO and regular cycle counting, exposing loss sources per location and operator.
Real-world example
A warehouse with 1.9% shrinkage found, through CRMconnect cycle counting, that most losses came from receiving errors. Mandatory scan-in cut shrinkage to 0.6%.
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Frequently asked
How do I measure shrinkage?+
As (book stock - physical stock) / book stock, usually by value, assessed at stocktake or through continuous cycle counting.
Does technology reduce shrinkage?+
Yes. Scanning at receiving and picking, batch traceability and FEFO remove a large part of losses from errors and expiry.
Where CRMconnect fits
Related terms
Cycle counting
Continuous small-batch counting with no activity stops - modern alternative to annual physical inventory.
OperationsInventory accuracy
The degree of match between book stock (in the system) and physical stock (in the warehouse) - the operation's health metric.
OperationsStocktaking (physical inventory)
The process of physically verifying inventory and reconciling it with book records to establish the real asset position.
LogisticsBatch traceability
The ability to track a product batch across the whole chain, from supplier to end customer, for recall and compliance.