Inventory shrinkage is a problem that vexes almost all facility managers, whether at a small community hospital, a sprawling shopping center or a factory warehouse. It refers to the gap between what the ledger shows should be on hand and what a physical count actually confirms is in stock.
Perhaps one of the reasons inventory shrinkage is so pervasive is that missing items can be traced back to some many different causes: theft, damage, improper counting at the time of acquisition or stocking, supplier fraud or receiving the wrong unit measure for the supply ordered. For facility managers that deal with liquid inventory, such as open drums of chemicals or cleaners, even simple evaluation can cause inventory shrinkage. Trying to stamp out each of these causes with an individualized strategy is a bit like swatting at a hive of angry bees—one bee at a time.
Savvy facility managers are turning to sophisticated inventory management software programs to carefully and accurately measure inventory across the life cycle—and reduce inventory shrinkage by 2 to 3 percent.
If the receiving department makes a mistake during inventory intake, such as not realizing that the wrong size unit has been delivered, entering the incorrect amount into the receiving log, or not noticing that a pallet is short, that mistake becomes hidden and hard to trace in typical inventory management. That's especially common for facilities that receive mixed pallets of goods.
Using an inventory management system, like InventoryEdge, allows receivers to track issues, receipts, returns, adjustments, orders and transfers against all transactions. That makes it easier to spot oversights and respond more quickly. Tracking count errors makes it easier to spot when there's a consistent supplier problem, and perhaps add a receiving audit to the intake process.
Consistent, Accountable Use
It's not uncommon for two workers to rely on different products and amounts of inventory to get the same task done—or for an unauthorized employee to dip into inventory reserves for an unexpected use, such as showing a customer a sample or completing a quick job without logging the issue. But those variations can make inventory management a frustrating and befuddling task.
Online tools establish rigorous tracking, so that there's consistent and accounted use for all inventory. InventoryEdge, for instance, allows facility managers to allocate certain inventory to a location ,project, work order or employee, and it integrates with a cloud-based work order platform to automatically allocate expenses associated with maintenance requests. That dramatically reduces the variation between workers and also accounts for every unexpected use that had previously contributed to inventory shrinkage.
A facility's inventory shrinkage can sometimes be tied back to expired items that simply didn't get used or moved before they have to be tossed. Striking a balance between having enough inventory on hand—yet not so much that dead inventory becomes an issue—is a tough task.
An inventory management software allows facility managers to strike a better balance, by providing data-driven ordering metrics around exactly how much inventory has been used in the past and is likely to be needed in the future. That makes predicting future inventory needs easier and positions the facility for less risk of inventory shrinkage moving forward.