Stock Shrinkage

Shrinkage is the difference between what stock you should have and what you actually have. In other words Shrinkage is the difference between recorded and actual inventory. Shrinkage can be either known or unknown.

Known shrinkage is where the retailer can identify and record what happened to the goods.

Unknown shrinkage is unrecorded loss, generally where theft is the major contributor.

The loss of inventory that can be attributed to factors including employee theft, shoplifting, administrative error, vendor fraud, damage in transit or in store and cashier errors that benefit the customer.

Causes of stock shrinkage

The percentage of loss of products between manufacture and point of sale is referred to as shrinkage, or sometimes called shrink. The average shrink percentage in the retail industry is about 2% of sales. Here are the four major causes of inventory shrinkage in retail.

1. Employee TheftAccording to the National Retail Security Survey, the number one source of shrinkage for a retail business is internal theft. Some of the types of employee theft include discount abuse, refund abuse and even credit card abuse. Unfortunately, this is one loss prevention area that generally doesn't receive as much monitoring as customer theft.

2. ShopliftingComing in at a close second is shoplifting. Customer theft occurs through concealment, altering or swapping price tags, or transfer from one container to another. While shoplifting remains a smaller inventory loss source than employee theft, stealing by shoppers still costs retailers about $10 billion annually.

3. Administrative ErrorAdministrative and paperwork errors make up approximately 15% of shrinkage. Simple pricing mistakes due to markups or markdowns can cost retailers quite a bit.

4. Vendor FraudThe smallest percentage of shrink is vendor fraud. Retailers report vendor fraud occurs most when outside vendors to stock inventory within the store.

Industrial engineering

Discipline of utilizing and coordinating humans, machines, and materials to attain a desired output rate with the optimum utilization of energy, knowledge, money, and time. It employs certain techniques (such as floor layouts, personnel organization, time standards, wage rates, incentive payment plans) to control the quantity and quality of goods and services produced.Industrial engineering is the design of situations for the useful coordination of men, materials and machines in order to achieve desired results in an optimum manner. The unique characteristics of Industrial Engineering center about the consideration of the human factor as it are related to the technical aspects of a situation, and the integration of all factors that influence the overall situation.”

“Industrial engineering is concerned with the design, improvement, and installation of integrated systems of men, materials, and equipment. It draws upon specialized knowledge and skill in the mathematical, physical, and social sciences together with the principles and methods of engineering analysis and design, to specify, predict, and evaluate the results to be obtained from such systems.” Industrial engineering can be better understood through these following points in a simpler manner

Industrial engineering has provided a systematic approach to streamline and improve productivity and efficiency in the business world.  IE’s provide leaner, more efficient, and more profitable business practices while increasing customer service and quality.  IE’s make the work environment safer, faster, easier, and more rewarding.  They provide a method by which businesses can analyze their processes and try to make i

mprovements to them. Staying focused on optimization ‐ doing more with less ‐ which helps to reduce waste in society.  IE’s help reduce costs associated with new technologies, thus allowing more of the population to better their lives by being able to afford these advances.  

“Industrial engineering is that branch of engineering knowledge and practices which

1. Analyzes, measures, and improves the method of performing the tasks assigned to individuals,

2. Designs and installs better systems of integrating tasks assigned to a group,

3. Specifies, predicts, and evaluates the results obtained.

It does so by applying to materials, equipment and work specialized knowledge and skill in the mathematical and physical sciences and the principles and methods of engineering analysis and design. Since, however, work has to be carried out by people; engineering knowledge needs to be supplemented by knowledge derived from the biological and social sciences. Industrial engineering is concerned with the design, improvement and installation of integrated systems of people, materials, information, equipment and energy.

“Industrial Engineering is Human Effort Engineering. It is an engineering discipline that deals with the design of human effort in all occupations: agricultural, manufacturing and service. The objectives of Industrial Engineering are optimization of productivity of work-systems and occupational comfort, health, safety and income of persons involved.

Here are a few examples of Industrial engineering

As a management engineer in a hospital, an IE may help doctors and nurses make the best use of their time in treating patients.  As an ergonomist in a television manufacturing plant, an IE may change the tools workers use to assemble televisions to reduce the risk of repetitive stress injuries. 

As an operations analyst for an airline, an IE may design a bar coding system for identifying and transporting passengers luggage to ensure that it does not get lost. 

As a quality engineer for a public gas and electric company, an IE may improve customer satisfaction by designing a process to schedule service calls around availability of the customer. 

Manufacturing firms and service industries hire a significant number of IE’s. 

Today, more and more businesses hire IE’s in areas like sales and marketing, finance, information systems, and personnel. Other industries employing IE’s are hospitals, airlines, banks, railroads, and social services. 

Material Handling

Material handling is the movement, protection, storage and control of materials and products throughout manufacturing, warehouse, distribution consumption and disposal. In other words Material handling refers to managing the physical movement of materials into, through and out of the firm.