A manufacturer or retailer must have the expected merchandise on hand. Demand Media defined shrinkage as when the company has fewer products in their warehouse than what the business’s records indicate. Shrinkage is caused by misplaced stock, poor record keeping, shipping errors or theft.

Stolen inventory is a major problem for businesses with valuable products. Stolen merchandise prevents companies from fulfilling customer orders and it costs the business capital and materials. ERP data tools can prevent warehouse theft.

Backtrack loss
A company must have a system in place for dealing with products that go missing. Allied Inventory, a professional warehouse management service, advised businesses to treat physical merchandise like monetary assets.

Accounting software is able to detect discrepancies in company inventory, providing visibility. Microsoft Dynamics NAV solutions turn physical merchandise into observable data. A warehouse management system captures information and makes it accessible to anyone using the software.

When an inventory shortage is detected, constant reporting allows managers to backtrack warehouse processes to determine where the loss or theft most likely occurred. The system accounts for which employees had access to products and the time frame of the missing merchandise. Using tools that capture real-time data provides accurate information.

Cyclical counting
Regular inventory counts make companies aware of missing inventory as soon as it is lost or stolen. The U.S. Small Business Administration, however, suggested merchandise audits performed by managers will halt productivity and make employees feel like they are untrusted.

Auditing should not be an unusual event. Microsoft Dynamics NAV Add-ons make physical inventory counts simple. By employing bar code systems or other data technology in the warehouse, a company can make inventory counting part of its usual routine. Audits are performed in a regular, cyclic pattern. This means inventory is being accounted for everyday.

Managers gain constant visibility of process without calling for additional checks on supply. Software tools make audits part of the workflow as opposed to a strategy to use in times of emergency, causing employees to halt their duties.

Limit access to 
Companies prevent outside theft by securing their warehouses with alarms and strong locks. Internal theft is more difficult to safeguard against.

During the hiring process, a business must screen all applicants for criminal records or other red flags. A company determines which people it can trust with valuable merchandise and then assigns them a specific task. All Business, a small business information resource, recommended imposing separation of duties. Multiple employees are responsible for different parts of product storage and distribution.

Software tools allow each user to log their duties into the information infrastructure. Different workers are performing different jobs but the data is all working together. This facilitates communication between separated sections of the warehouse without constant visits. Only select employees handle certain pieces of merchandise and they report all product interactions.

Companies interested in acquiring greater visibility of their warehouse should download the White Paper: Warehouse Management for Microsoft Dynamics NAV to learn more about inventory visibility tools.

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