Stock losses

Your stocktake is showing some significant errors, why?

This question, I get a lot of because there are so many causes for missing stock, the main categories are listed here in order of highest to lowest.

Employee/internal theft

One bad apple is all it takes. No-one knows your control systems better than your staff, and some do take advantage of you. In my experience, this is nearly zero or nearly 100% of the problem. One retailer told me after he caught someone who took him for over $40,000, "we trusted her because she was so good..." I saw a retailer in tears when he saw his best friend who worked for him after seeing video footage of his friend stealing from him crying "I have known him since primary school."


This is why you need to look at missing stock by location. Try to identify high-risk areas.

Sales errors, administrative and paperwork errors

People often do not have time, are careless as they know they can get away with it as you will not notice for quite awhile. What tends to happen is people when entering items into your point of sale software make mistakes. You need to make sure that your staff do ring up items and not just use department keys. You need to check that you did receive what you are listed as getting.

Vendor fraud or error

Unfortunately, it happens. The supplier either on purpose or in error makes mistakes and it does not seem to matter whether they are big or small. Once their mistakes get into your system there will be problems. This problem is getting worse with the growing use of electronic invoices.


Now once you are ready, please do the following calculation.

Shrinkage% = ((Ending Stock Value)-(Physically Counted Inventory Value))/(Sales) x 100%

Generally, it will be about 1.4%, but it varies a lot. One client reported after doing this calculation that he got less than 0.1%, conversely, I have seen a shop which recorded 6%.