Prevent Shoplifting This Year

January 7, 2015 by Leave a Comment

shoplifting3The shoplifting figures in the United States are nothing to laugh about. Billions of dollars are lost to shoplifters every year and the detrimental effect they have on business is serious. Loss prevention personnel are at risk every time they stop a shoplifter, and the solution to this problem has evaded the retail industry with costly consequences. Retailers spend millions of dollars in loss prevention systems, and studies show that these businesses benefit from the investment. The shoplifting is still there, but retailers are able to maintain and keep track of the inventory more easily. For more news about shoplifting, follow the links below.

Shoplifters Costing Businesses Billions

GREENSBORO, N.C. — Shoplifting is a crime police say affects all types of businesses, and it’s costing a fortune.

WFMY News 2 went to several Triad businesses Friday. Owners at those businesses said shoplifters are crippling their day-to-day operations.

One Greensboro store manager said shoplifters cost his business anywhere from $10,000 to $15,000 each year.

“If somebody really wants to steal something, they’re going to steal it,” he said, “Ain’t nothing you can do about it.”

He’s frustrated, and he’s not alone.

Nationwide, shoplifters steal about $13 billion in merchandise every year, according to the National Association of Shoplifting Prevention. The same organization reports one in 11, or 27 million people in the U.S., are regular shoplifters.

KCSO shoplifting task force makes record number of arrests

KNOXVILLE — A Knox County Sheriff’s Office holiday shoplifting task force made a record number of arrests for 2014.

KCSO’s Safe Holiday Task Force made 372 arrests between Nov. 24 and Dec. 29, according to the Sheriff’s Office. The team was credited with 342 arrests during the same time period in 2013.

While the majority of the 2014 arrests were for shoplifting, they also included 35 felony theft charges, 12 DUI arrests and two fugitive captures.

The annual operation also recovered a record amount of stolen merchandise, totaling $65,614 worth of goods, and located two stolen vehicles. About $50,000 worth of stolen items were recovered in 2013.

Drug habit fuels shoplifting ring in Richmond and around Macomb County

A shoplifting ring has targeted Richmond stores for more than two years, according to a detective with the Richmond Police Department. Thieves steal easily marketable goods to fuel drug addictions, particularly heroin addiction, the detective said.

“What we have seen — and what our counterparts in Chesterfield and at the Macomb County Sheriff’s Department have seen — is a loose ring of individuals shoplifting certain high-priced items like Enfamil baby formula, Red Bull and Crest White Strips, and then either taking these directly to the drug house and trading them for drugs or selling them back-door to another store for cash to buy drugs,” said Det. Julia Frantz.

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The 80/20 Rule

January 5, 2015 by Leave a Comment

shoplifting2The 80/ 20 rule for retail is actually a series of rules, or guidelines to how and where your inventory shrink comes from. Once you drill down to see what is actually driving your shrink, you have the ability to implement much more efficient anti theft and anti shrink strategies.

The first part of evaluating the 80/ 20 rule is to determine a generalization of how your store is incurring losses. There are three main areas of shrink loss that all shrink can be categorized as. They are Internal, External and Operational shrink. As a rule of thumb, internal shrink is explained as asset losses intentionally carried out by an employee of the store. Employees who are stealing merchandise drive internal shrink.

Operational shrink, on the other hand, is merchandise losses carried out by an employee unintentionally. These are the store’s operational errors that end up causing losses. Did an employee accidentally miss an item when they checked a customer out? Did an employee pull some glass cleaner from the shelf to clean their workstation, but not record it on a store use log? Did an employee break an item of merchandise beyond repair and threw it in the trash without letting anyone know?

These are all everyday examples of how an employee can unintentionally cause losses. These are not theft related actions that we would arrest and prosecute and employee for, but the end result is still the same. We are now showing missing merchandise and our bottom line has suffered from the shrink loss. Unidentified items missing from freight shipments also fall into this category.

External shrink losses are created by anyone outside of the company. These are non-employees who steal our products- the shoplifters. The average shoplifter steals much less per incident than an employee does. Even if you have a higher frequency of shoplifters in your store, employee theft will still outweigh the losses caused by shoplifters over time.

While it is really up to you to determine the actual breakdown in your store, most retailers average about 40% of their losses from internal theft, 40% from operational errors, leaving only 20% to external theft. Obviously these numbers can change based upon your location, kinds of goods sold, and staffing sizes. Overall, these numbers equate to about 80% of your shrink is derived in house (by your employees), and 20% comes form external sources.

Next you want to drill down even further into your losses by looking at departments, and the individual items that are being stolen. Ideally you want to have an inventory system that allows you SKU level accuracy. By drilling down to the actual item number that is shrinking out, you can create an action plan suited specifically to that item. At the very least, you should know which departments and product assortments are the highest losses.

Once you determine your highest shrink items, you should know the quantity and/ or dollar amount lost. You can then put your efforts into where the biggest losses are. You might be loosing 100 packs of gum that cost $1.00 each, or you could loose one handbag worth $200. Frequency versus actual dollar amount lost might dictate a closer eye on your handbags, than the multiple losses in packs of gum.

By taking a look at the highest dollar losses, you should see that about 80% of your total shrink losses are coming from only about the top 20% of your shrink items. This drill down approach further streamlines your anti shrink strategies. Now, instead of focusing on every little loss that occurs in your store, you can focus on only the top items. By creating feasible reduction strategies on only those items, you can create a significant reduction in your store’s overall shrink losses.

 

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Building Partnerships

January 5, 2015 by Leave a Comment

law-3Every store should have a way to build reliable partnerships with local law enforcement. For some jurisdictions, that could mean the sheriff’s department, city or county police. In some rural areas, that might even mean the state police department. There are many was to build these partnerships, and your store’s safety and security will benefit greatly from those partnerships.

What you are looking for is to have periodic visits from these law enforcement officers. Ever wonder why you see police at a donut shop? For one, the shop owners frequently give free or reduced prices on coffee to these officers. It is a nice gesture to these officers, but also an incentive to get them to frequent the shop. The more often police are in the shop chatting, drinking coffee etc, the less likely the shop is to be robbed.

Coffee and donut shops are often open late, and have only one or two people working. This makes them prime targets for robberies. Having an increased police presence helps to reduce the risk. If something were to happen, the police would quickly respond not just because that is their job, but also because they are probably on a first name basis with that shop owner and its employees. For these businesses, a cup of free coffee is a small price to pay for that kind of security and peace of mind.

Depending on the kind of store you have, giving product out for free or at a discount may not be feasible. That doesn’t mean you can’t make it worth it for local law enforcement to stop by periodically. Even though most departments shy away from case quotas, officers who do produce cases are given raises and promotions over those who don’t. By building partnerships with officers you can get some extra help with your suspected shoplifters, reduce losses, and help out your local community by giving local law enforcement tips on suspected criminal activity in your store.

Most law enforcement agencies have a community resource officer. They would be one of the first points contact to start building a relationship with. Asking if they would be willing to do a safety or security presentation for an employee meeting is a good way to break the ice. It is the first step in letting the local police know they are welcome in your store.

One of the next ways is to see if there is a retail anti theft task force set up. If so, ask if they would be interested in putting your store on their list. These task forces go into local businesses, in particular around busy holiday shopping seasons, and look for shoplifters, credit fraud, and other criminal scams. The task force will send officers into stores, generally in plainclothes, to watch cameras or do floor surveillance to spot any criminal activity.

These task forces are a free service to their retail community. While these officers are in your store, you can talk to them about what kinds of thefts you are experiencing. It also gives you an opportunity to connect with the officers and get to know who they are. These officers can become invaluable resources even after the task force is done for the season.

You now have specific officers that you can call if you have a shoplifter in your custody, or experienced a high dollar theft. The officers might be more willing to do some investigative legwork on your case, if you have built a partnership with them. Of course, part of the partnership is showing restraint and professionalism to these officers.

It is not suggested that you call them for every low dollar shortage that walk out your door, or for people who “seem suspicious” but you have no corroborating evidence. There are still laws that must be upheld regarding liable and slander. If you consistently show poor decisions about which cases to call on, you will tarnish your reputation negating any usefulness of your partnership. Remember, there is a difference between offering viable leads to confirmed inventory losses, and crying wolf over every gut feeling you have.

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Loss Prevention

December 18, 2014 by Leave a Comment

shoplifting3During this time of year the number of shoplifters visiting your store is more than at any other time of the year. Stores across our nation invest millions of dollars in loss prevention, and still billions of dollars are lost due to this crime. Some of the measures retail stores use to prevent shoplifting are the use of video surveillance, security guards, and special tags that are attached to the merchandise and are set off when leaving the store without paying. These are some of the many other prevention measures that help retailers deterred shoplifters from entering their stores. Are your loss prevention measures adequate? Do you need to do more to prevent loses? Read the articles below for more news about shoplifting.

Police conduct holiday shoplifting operation, 19 arrests

ST. PETERSBURG, FLA. —

Yesterday plain clothed detectives with the Department’s Economic Crimes and

C.O.T.A. Units conducted a one day operation with loss prevention officers at

the Wal-Mart Store located at 201 34th Street North.

The purpose of the operation was to address the problem of shoplifting that increases during the holiday season.

A total of 19 individuals were arrested, mostly on charges of retail theft although several had outstanding warrants and one juvenile was in violation of court ordered home detention for a previous burglary charge. Of those arrested, 9 were adults and 10 were juveniles.

Great Falls merchants go on guard against shoplifting

Downtown Great Falls’ Amazing Toys owner Dave Campbell said his staff noticed that a $350 Legos set was missing from its perch. They searched the store and found the valuable toy stashed near the front door where a thief planned to retrieve it later.

Dragonfly Dry Goods owner Alison Fried said her staff warmly greets customers, which most shoppers welcome. But some folks, possibly with bad intentions, turn around and walk out the door. She said she has a good camera system inside and outside the store that videotapes 24 hours a day. Fried lets other downtown merchants know who to look for if her store has been hit by a shoplifter.

“We use the team approach,” she said. “We’re a cooperative community downtown.”

“Shrink,” a business concept that includes shoplifting, employee or supplier fraud and administrative errors, cost the retail industry around $42 billion in sales in the United States last year, according to the latest Global Retail Theft Barometer. Worldwide, those factors cost businesses $128 billion.

Man Accused Of Abandoning Child While Shoplifting Speaks Out

A Lexington couple who allegedly abandoned their child while fleeing from loss prevention officers at Walmart say that the police have it all wrong.

Eric Powell and his girlfriend Samantha Barker are accused of shoplifting and taking off leaving behind their 9-month-old child.

Powell says that is not at all what happened.

“We was at Walmart shopping she was at the store shopping and I was by myself looking at magazines and stuff,” says Powell.
He says when they went to check out, he realized he couldn’t pay for the diapers they were trying to buy.

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Conceptualize Dishonesty Using the Fraud Triangle

December 16, 2014 by Leave a Comment

shoplifting7Honest people can have a hard time perceiving and understanding dishonesty in others. Because they have a difficult time conceptualizing it they have a difficult time detecting it. A common lament among managers who have discovered fraud among their employees, vendors and clients is, “I don’t understand how he could do this to me. I had no idea it was happening. I’m just too trusting.”

People too often identify themselves as being trusting, when they’re really being naive. Don’t be naive, protecting your business is vital, many small businesses have been closed due to the fraudulent behavior of their employees, venders or clients. If you don’t want to be taken advantage of it’s important to understand the 3 key factors of the Fraud Triangle.

Before discussing these factors it’s helpful to define fraud, people often have misconceptions about it. According to “Black’s Law Dictionary” fraud is “a generic term, embracing all multifarious means, which human ingenuity can devise, and which are resorted to by one individual to get advantage over another by false suggestions or by suppression of truth, and includes all surprise, trickery, cunning, dissembling, and any unfair way by which another is cheated.”

The 3 factors, which make up the Triangle, are typically present when someone commits fraud. Understanding these elements will help a manager spot dishonesty easier and earlier, because a person who exhibits these thoughts and characteristics is at great risk for deceitfulness.

1. The perceived pressures the person believes they are under.

2. The perceived opportunity the person has to commit fraud.

3. The person’s rationalizations for committing the fraud counter-act their innate integrity.

Here’s an example of how the Fraud Triangle works. Mrs. K has never stolen from her employer and is indigent when others do. She wants to take her immediate family to an expensive reunion. She can’t afford it, but all of her extended family are attending. Mrs. K perceives this as a personal and financial crisis (1st side). She’s the company’s bookkeeper and there are no fiscal controls in place (2nd side). Mrs. K rationalizes that she’ll “only borrow” the money for the trip and then pay it back (3rd side).

She embezzles the money, gets away with it and keeps on stealing. Because usually, once all 3 components are present, when people commit and get away with fraudulent acts they continue the behavior. Also, they may continue behaving dishonestly if they get caught but have no or too few consequences. This is why many managers have found that giving someone “a break” usually backfires on them.

When you understand the Fraud Triangle, and use it as a touchstone for conceptualizing people’s dishonesty, it becomes easier to formulate a defense against deceit. There are many ways to mitigate each of the 3 factors, which can greatly reduce or eliminate the possibility of being taken advantage of. After all, your honesty should be an asset to your business not a liability.

Nicole Abbott – writer, educator and psycho-therapist

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Is Shoplifting More Prevalent During The Holiday Season?

December 11, 2014 by Leave a Comment

theft (12)Do you know the shoplifting laws in your state? Shoplifting is a crime and many businesses Do prosecute the shoplifter regardless of the amount they stole. Retail businesses and communities across the United States are more vigilant during this time of year due to the number of shoppers and merchandise they have in their stores. If you think you can steal without any repercussion, think again. People that are prosecuted for shoplifting can be charged with misdemeanor theft, and face up to $1,500 fine and six months in jail, although if it is their first offense the fine is usually less. For more news about shoplifting follow the links below.

2 Charged with Shoplifting from Coon Rapids Kohl’s 

Two Anoka County residents are facing charges after allegedly shoplifting from a Coon Rapids Kohl’s and attempting to flee police.

Officers were called to the Kohl’s on the 12700 block of Riverdale Boulevard around 6 p.m. on Black Friday on a report a shoplifting in progress. A loss prevention employee said a woman seemed to be putting merchandise in her purse.

An officer arrived and found a black Ford Taurus driving slowly through the parking lot, which eventually stopped at the front of the store. The suspect woman was then seen leaving the store and getting into the Taurus, according to the criminal complaint.

The officer turned on his squad car’s emergency lights and started issuing commands to the people inside the vehicle, but the driver of the Taurus allegedly continued to try to get away, getting repeatedly blocked by the officer’s squad car before giving up.

The driver of the vehicle was identified as 42-year-old Randal Anthony Daher of Fridley, and the woman was identified as 34-year-old Jennifer Jane Stoffers of Blaine.

The officers said they saw the Kohl’s merchandise in plain sight in the vehicle, the value of which was $594.98.

Norwalk Woman Charged With Shoplifting From Whole Foods

FAIRFIELD, Conn. — Police arrested a Norwalk woman on charges of shoplifting from Whole Foods in Fairfield, adding to a growing number of arrests at the grocery store.

Amanda Maxwell, 54, of Westport Avenue, was spotted shoplifting by Whole Foods’ Loss Prevention on closed-circuit television and was stopped in the parking lot of the store at Kings Crossing Shopping Center on Grasmere Avenue, police said.

According to Loss Prevention officials, Maxwell emptied a full cart of food items into reusable plastic bags while shopping near the fish market, police said. She then attempted to leave with $155.46 worth of groceries without paying, according to police.

Great Falls merchants go on guard against shoplifting

Downtown Great Falls’ Amazing Toys owner Dave Campbell said his staff noticed that a $350 Legos set was missing from its perch. They searched the store and found the valuable toy stashed near the front door where a thief planned to retrieve it later.

Dragonfly Dry Goods owner Alison Fried said her staff warmly greets customers, which most shoppers welcome. But some folks, possibly with bad intentions, turn around and walk out the door. She said she has a good camera system inside and outside the store that videotapes 24 hours a day. Fried lets other downtown merchants know who to look for if her store has been hit by a shoplifter.

“We use the team approach,” she said. “We’re a cooperative community downtown.”

“Shrink,” a business concept that includes shoplifting, employee or supplier fraud and administrative errors, cost the retail industry around $42 billion in sales in the United States last year, according to the latest Global Retail Theft Barometer. Worldwide, those factors cost businesses $128 billion.

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Employee Theft This Holiday Season

December 9, 2014 by Leave a Comment

theft (2)Billions of dollars are lost every year due to shoplifting every year in the United States. Many retails stores prosecute every incident and some others choose not to contact the police. According to research, 64% of small businesses that have experienced employee theft, only 16% have reported the incident to authorities. One of the main reasons not to prosecute the employee according to the research is because the expense of hiring attorneys outweighs the theft committed by the employee. You can read more news about shoplifting by following the links below.

Shoplifters pepper spray Walmart employee during attempted toy theft

SAND SPRINGS — Police are searching for two women who used pepper spray on a Walmart employee while attempting to steal toys from the store Monday morning.

The robbery attempt happened about 1:30 a.m. when two women tried to leave the store with several toys, Sand Springs Deputy Police Chief Mike Carter said.

One of the women used pepper spray on an employee who intervened before they fled the area in a black or navy blue Chrysler PT Cruiser, Carter said.

Detailed descriptions of the shoplifters were not provided.

Anyone with information about the crime is asked to call the Sand Springs Police Department at 918-245-8777.

5 ways to avoid employee theft and fraud at Christmas

Christmas: a time when many businesses celebrate the harmony between carols and cash registers. But while Christmas may be a cash cow for some, the combination of temporary staff, increased business activity and financial pressure on staff can move your business from booming to busted.

Employee fraud and theft have fast become a major problem for small businesses in Australia. According to KPMG, workplace fraud more than trebled between 1997 and 2012, costing businesses millions of dollars.

While employee fraud and theft happen all year round, the hectic nature of Christmas produces the perfect environment for staff, both long-standing and new, to become opportunistic.

You see, opportunity is one of the key drivers of employee theft. In a recent global survey by the Association of Certified Fraud Examiners, 85 per cent of respondents admitted that they would commit a fraud if the ‘right’ circumstances existed.

Employee Theft Is More Widespread Than You Think

Think of all the ways stores lose money.

Pricing Errors. Damaged Goods. But what about when employees steal merchandise? It’s actually a lot more common than you would think.

There’s a reason your average shopper doesn’t know about this problem.

“It’s kind of an embarrassing topic,” says Richard Hollinger. He’s a criminology professor at the University of Florida and he’s been studying why and how employees steal for more than 25 years.

It all started when he was 16. He was working at a small grocery store just south of Macon, Georgia.

“Some of the guys around me, they would graze or eat their way through the store. And I asked them: ‘Stealing food and eating it while you’re at work: isn’t that theft?’ And they go, ‘No, that’s part of your fringe benefits package.’”

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Shoplifting And The Law

December 2, 2014 by Leave a Comment

law-3Shoplifting has become a “silent crime” people want to ignore, and regardless of the time of year or the amount stolen, shoplifting is a serious crime that many states are finding hard to ignore. States across the United States are changing the law to prosecute shoplifters, and the charges can run from an “infraction,” or a misdemeanor, to felony charges. Shoplifting is a serious crime that we all need to take seriously. Read more news about this by following the links below.

Sales lure shoppers — and shoplifters

As shoppers finalize plans for a big weekend of holiday gift buying, retailers and law enforcement officers are making preparations to ensure merchandise is paid for before it leaves stores.

“It’s the Super Bowl of our year,” said John Leatherman, loss prevention leader at Scheels in West Des Moines’ Jordan Creek Town Center. “We’ll have a lot of people in here, and that makes our job that much more difficult.”

Retailers throughout Iowa and the nation have hired additional off-duty law enforcement officers to help patrol stores and parking lots during the annual Black Friday shopping bonanza, which attracts crowds of shoppers and shoplifters annually. In addition, police and sheriff’s departments have either staffed more officers or rearranged patrol routes Thursday through Sunday to keep tabs on potential traffic tie-ups, shoplifters and vehicle break-ins.
Individual stores such as Scheels beef up staffing in their loss prevention departments.
“Just because it’s a big shopping day doesn’t mean we won’t have shoplifters,” said Leatherman, whose team watches shoppers on a bank of monitors that are fed from

Retailers, cops prepare for holiday ‘shoplifting season’

Once the Thanksgiving turkey is wrapped in cellophane and days of leftovers lie ahead, stores prepare to be inundated with shoppers, as the Christmas shopping season begins.

As the number of shoppers goes up during the holiday season, the number of shoplifting cases increases as well.

In response, store security personnel prepare to be extra vigilant and police officers are prepared for an increase in shoplifting related calls.

“There is just that many more shoppers in the store,” said Layton Police Lt. Travis Lyman.

People feel pressure that time of year, Lyman said, and their dollars are spread a little more.

Each year, retailers lose millions of dollars in theft.

Utah has been hit by organized retail theft rings, which move from state to state, but for the most part, theft during the holiday season is a matter of volume.

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Is Your Store Equipped To Handle Shoppers and Shoplifters?

December 1, 2014 by Leave a Comment

shoplifting6Loss prevention personnel across the country are busy this holiday season.  Every year, shoplifters take advantage of this time of year to steal millions of dollars in stolen merchandise in the United States, making the retailer to lose profits and consumers like you and me to pay for the stolen goods by paying higher prices.  As a society, the loss of sales tax shoplifters take from communities are harmful to everyone. Read more by following the links below.

Tough penalties for shoplifting

Question: Is shoplifting a serious crime?

Answer: Yes. Every year, during the holiday season, shoplifting becomes a more common occurrence. In Louisiana, shoplifting is considered theft and does not require the item to be removed from the store, as explained by the statute itself.

According to LA R.S. 14:67.10, Theft of goods is the misappropriation or taking of anything of value which is held for sale by a merchant, either without the consent of the merchant to the misappropriation or taking, or by means of fraudulent conduct, practices, or representations. Intent to deprive the merchant permanently of whatever may be the subject of the misappropriation or taking is essential and may be inferred when a person:

•Intentionally conceals, on his person or otherwise, goods held for sale.

•Alters or transfers any price marking reflecting the actual retail price of the goods.

•Transfers goods from one container or package to another or places goods in any container, package, or wrapping in a manner to avoid detection.

•Willfully causes the cash register or other sales recording device to reflect less than the actual retail price of the goods.

•Removes any price marking with the intent to deceive the merchant as to the actual retail price of the goods.

How a Master Shoplifter Stole Thousands of Dollars’ Worth of Merchandise

As long as there have been shops, there have been shoplifters. Some are the grab-and-go types, others work in orchestrated teams, but few can compare to Michael Pollara.

Pollara is a Shakespeare of shoplifting, a maestro in the criminal art.

The 46-year-old has strolled out of hundreds of stores with at least $1 million dollars’ worth of merchandise over the course of his criminal career, according to Florida authorities. Easter Island, China, Africa—Pollara claims to have traveled around the world 25 times, but he says he paid for it all with travel points, not cash from stolen goods.

Pollara would hit toy stores, pharmaceutical stores, department stores, shopping mall specialty stores, just to name a few, according to police. He admitted to police that he worked with many “fences” — a name for criminals who traffic stolen goods, but he also sold some of what he stole on eBay, and he had shoplifting down to a science.

“There’s only five methods,” he said. “Either it’s on you, either, if you’re a female, it’s in the purse, either it’s in a bag or it’s in a shopping cart or it’s in a box.”

Pollara’s favorite shoplifting trick was to empty a box of its contents in a store and then refill the box with many expensive items. He would then purchase the box without the attendants realizing he was actually walking out with stolen merchandise inside the original box.

‘Shakespeare of Shoplifting’ Depicts His Many Retail Store Heists‘

This is a video link.  Follow it by clicking the link above.

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Negative On Hands

December 1, 2014 by Leave a Comment

shoplifting2When you are conducting perpetual inventories, you are constantly assessing your stock levels. By maintaining accurate stock levels, you are ensuring your customers will have access to the merchandise they are looking for. This creates consistent customer service and maximizes your store’s sales potential. Having an accurate on hand inventory also helps you to reduce your cost of goods by eliminating erroneous inventory orders, as well as identifies potential theft issues more readily.

To have an accurate on hand inventory, you need to have a system in place that captures your inventory movement at the SKU level. This system should recognize any time an item comes in or goes out of your store. This should include receipt of product from the vendor, sales, customer returns, returns to vendors, and miscellaneous usage like damages or store use. You should also have a way to manually make inventory adjustments through processes like cycle counts or inventory replenishment audits.

By maintaining these counts and processes, you should be able to look at any given product and know exactly how many of this item you have. This helps you prepare for sales and special promotions, or to satisfy a larger than normal quantity purchase by a customer. Cycle counts are an invaluable tool in ensuring these counts are up to date and accurate.

A cycle count is a manual count done by a store employee to determine if what the store’s computer system says you should have on hand matches with what you actually have on hand. For example, you are preparing an end cap to be filled with “Item A” for an upcoming sale this weekend. Your on hand inventory says you should have 20 of the item, so you go and look to find all 20 pieces. After searching the sales floor, you discover that you can only find 15 pieces. So you take those 15 to the end cap and enter a cycle count adjustment into the computer system to subtract the missing 5 pieces. Your computer now says that you only have 15 pieces, and you have a shortage of five pieces.

After the weekend is over, all of “Item A” was sold. Your inventory tracking system shows that you have -5 on hand. Negative 5? That indicates that you sold more than what you physically had on hand. Hmm. Something is very clearly off.

One very likely possibility is that when the employee was looking to fill the end cap, they did not look in the back stock room to see if there was any merchandise there. During the weekend, another employee found the missing 5 pieces and restocked the end cap for the sale. Because the employee had cycle counted and adjusted the items out of the inventory, a negative was created when the “missing” five pieces were sold.

This is one example of why it is important to maintain an accurate inventory, even when a manual adjustment is made. When the employee made the adjustment, there was the potential to accidentally order more product than what was needed. If the computer system thought that there was less than what you actually had, an order could have been generated to get the stock levels back to where your store should be. Because the product was physically still in the store, you could have been left with extra product that you didn’t need.

Having a negative on hand of an item means that a recount should be made quickly to determine what the error was and have it fixed. Adjusting your inventory back up to the actual stock levels will not create an overage.

This is not extra product that you didn’t have before. Think of it like loosing a five-dollar bill and not knowing where it went. Then the next winter, you pull out your coat, reach into the pocket and find a five-dollar bill. That money did not magically appear. It was your money that you misplaced and later found.

Fixing your negative on hands does not add extra to your inventory, or your bottom line. It fixes your inventory where a shortage was previously created in error.

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