Shrink management is arguably one of the toughest things to control in retail stores because of how diffused inventory is, and how many factors can have an impact on inventory shrink. Trying to find the causes behind inventory shrinkage can be even more problematic across multiple locations. And keeping on top of what happens to your inventory is downright impossible if you're still using antiquated software.
Even worse is if you rely strictly on a paper-based system, emails, and phone calls to relay information about inventory management issues. As a retail store, you've probably found it frustrating trying to address those issues collaboratively with your suppliers. In many cases, you may not know what really caused your inventory loss and whether it was actual theft or just processing errors.
Many progressive retailers and suppliers have discovered how technology to facilitate scan-based trading can help to drive effective shrink reduction strategies.
Using Automated Processes to Improve Shrink Management
Many retailers want to manage data using automated systems to avoid having to enter data manually, while also eliminating human error that tends to occur with an antiquated process.
By using software with automated features, you have all the information you need about your inventory in one centralized database. Meanwhile, a cloud platform makes it accessible to both your suppliers and your retail team from anywhere they have an Internet connection. It also offers real-time data so you can find out how much inventory you have left at each store location with enough time to avoid out-of-stocks.
Most importantly, you'll have more accurate reporting which will allow you to better collaborate with your suppliers to analyze and understand inventory issues. Whether your inventory shrink is due to paperwork inaccuracies, theft, or even fraud, both of you can know the truth without blaming each other. From there you can use this reporting to formulate, track and optimize a shrink reduction strategy.
Better Invoice Processing
By using e-invoice systems, you get better access to supplier invoice and payment history. Gone are the days when you had to work through stacks of paper invoices to reconcile them with payments you may or may not have made already. Electronic invoices stored in a centralized platform are accessible to both the retailer and their suppliers.
Powerful filters enable quick searches of invoices based on key reference points such as:
- Invoice #
- Invoice Date
- Sale Date ranges
- And even Invoice Amount.
Industry-leading platforms also provide efficient drill-down capabilities so you can view invoice line item detail with just one click.
SEE ALSO: Take Control of Your Inventory: How Scan-Based Trading Helps
All electronic invoices can be downloaded into excel or PDF formats for further research or reference. The best solutions will retain the electronic records at minimum for the duration that is required by law, or longer based on client requests. This gives you peace of mind that your data is always protected and preserved.
Better Shrink Reconciliation
Your suppliers have to deal with shrink reconciliation, yet may end up with financial mistakes without properly communicating with you. The best software lets them find all the details they need, including driver and route detail to pin down when inventory shrink irregularities may be occurring.
Having this insight helps track what really happened to your inventory and whether something going missing was deliberate or an honest mistake. With theft reportedly being the biggest cause of shrinkage, both you and your supplier can pinpoint the root cause and formulate a shrink reduction strategy for the path forward. This ultimately prevents any blame games or accusations with no actual evidence.
When the time comes to settle any shrink arrangements between the retailer and supplier, having transparent reporting of shrink liability is essential. A platform that can reconcile shrink liability based on agreed upon terms can help to streamline the settlement process, while also providing the means to research any outliers that may skew the settlement itself.
Using Thorough Analytics to Practice Shrink Reduction Strategies
Holistic supply chain analytics can pull together often disparate pieces of data, such as:
- Product orders and deliveries
- Inventory counts
- Shrink projections
- Reconciliation histories
This provides a more comprehensive view of your retail business that may tell a more complete story of what is happening at the store and product levels.
Inventory management and assortment optimization analytics provide insights allowing you and your supply chain partners to seize every sale with better in-stock position while developing incremental sales opportunities based on improvements to assortment.
Contact us to learn about how our SaaS software can help you use scan-based trading to bring a more collaborative approach to shrink management.