What Is The Effect Of Inventory Shrinkage?

Most companies do not truly understand the impact of inventory shrinkage or loss on their profits. For example: If your company’s inventory shrinkage this year is $50,000, that’s $147 in shrinkage every day.

Is that the total impact on the bottom line?

Keep this in mind: For your organization with a 2% profit margin to simply recover or break even on a $50,000 inventory shrinkage, theft or loss, you would have to sell an additional $7,350 every day! ($147 divided by .02% profit margin) This is on top of your normal sales.

Think about it…how much more merchandise will you have to order, receive, count, mark, prepare paperwork for, stock, and finally sell just to produce these extra sales to just break even?
The fact is that inventory shrinkage really cannot be recovered. This is a major factor in why one third of US business failures are blamed on corporate theft.
The obvious solution is to prevent the causes of inventory shrinkage and loss in the first place.

For more information contact LPSI or call 1.770.426.0547

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