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Shrinkage refers to the loss of inventory that can occur due to theft, damage, administrative errors, or supplier fraud, leading to discrepancies between recorded and actual inventory levels.
Shrinkage happens when the actual inventory is less than what is recorded in the system, often due to theft, damage, or errors. This can result in financial losses and operational inefficiencies. In 3PL logistics and warehousing, shrinkage impacts profitability and inventory accuracy, making it essential to monitor and control.
Shrinkage is managed by identifying and addressing its root causes, such as theft or errors, through improved security measures, staff training, and accurate inventory tracking. Reducing shrinkage helps your business maintain accurate inventory levels, minimize financial losses, and enhance operational efficiency. In logistics and warehousing, this translates to better customer service and higher profitability.
Buske Logistics is a Top 40 3PL with over 35 warehouses across North America, specializing in warehousing, transportation, and value-added services. We provide tailored logistics solutions serving major Fortune 500 companies.
Shrinkage is a significant issue for businesses as it directly affects profitability by reducing the amount of sellable inventory. High shrinkage levels can indicate underlying problems in security, process management, or supply chain inefficiencies.
For instance, a 3PL warehouse managing large volumes of inventory must implement strict security measures and accurate inventory tracking to minimize shrinkage. By doing so, they ensure better inventory control, reduce financial losses, and provide more reliable service to their clients.
