The short answer: reduce shrinkage by first measuring it (compare recorded stock to counted stock), then tackling its main causes — theft, administrative error, damage and supplier shortfalls — with tighter processes, barcodes and accountability. You can’t reduce what you don’t measure.
What shrinkage is
Shrinkage is the gap between the stock your records say you have and what’s actually there — inventory lost without a matching sale. It comes straight off your profit, and because it’s invisible at the till, it often goes unnoticed until a stocktake reveals it.
The main causes
- Theft — external (shoplifting) and internal (staff).
- Administrative error — miscounts, wrong receiving, untracked transfers.
- Damage & spoilage — breakage, expiry, mishandling.
- Supplier shortfalls — paying for more than you received.
Practical steps to reduce it
- Measure it. Regular counts and reconciliation reveal where and how much.
- Tighten receiving. Check deliveries against the invoice — supplier shortfalls are pure loss.
- Record transfers and damage. Untracked movement looks exactly like theft.
- Use barcodes to cut miscounts and mis-picks.
- Create accountability. When staff know stock is tracked and counted, internal loss drops.
Find the pattern, fix the cause
The goal isn’t to eliminate every unit — it’s to find where loss concentrates. If one category or one shift keeps coming up short, you’ve found a specific problem to fix, rather than a vague worry.
Keep stock honest
RushFlow gives you reconciliation, reason-coded adjustments, receiving checks and tracked transfers, so shrinkage is measured and its causes are visible. See the live demo, or read how to do a stocktake.