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Shrink, workforce, store systems, and consumers are the most influential factors for reducing your inventory management costs.
By Erin Harris, editor for Integrated Solutions for Retailers Magazine
Inventory can represent the largest asset on a retailer’s balance sheet, accounting for 60% to 80% of retailers’ total assets. Effective inventory management can have significant impact on the company’s overall financial success. Dave Haller, VP sales and marketing at WIS International, explains how retailers can lower costs associated with inventory and how to improve the inventory process.
What costs do retailers incur in carrying inventory, and how can they lower these costs?
Haller: One of the most significant expenses associated with inventory in retail locations is shrink. Shrink occurs in two primary areas – administrative error and theft. Theft results from both internal and external sources. The first step in controlling shrink is to understand where and how it is occurring. An accurate physical inventory provides a solid starting point to begin this analysis. With an item-level inventory, a retailer can compare actual inventory to system inventory and identify departments, product classes, and items that account for the highest levels of shrink. This information will allow more targeted analysis to assist in identifying and eliminating the root cause of the shrink. Products with high levels of shrink can be packaged, merchandised, and distributed differently to help reduce losses associated with shrink. Loss prevention efforts can also be focused on areas of the store with highest levels of loss associated with shrink. Read full article
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