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Asset Protection


Inventory shrinkage is a reduction in physical inventory caused primarily by shoplifting and employee theft. It is most frequently reported as a percentage of total annual sales. To put it more simply, inventory shrinkage is the decline of an item’s quantity on hand.

Inventory shrinkage usually falls into four main categories:
~Employee Theft.
~Administrative Errors.
~Vendor Fraud.

Shrinkage Reduction
Employee Theft
~Random inspections.
~Checking account purchases.
   -Accounting for everything that customers buy (ex. checking for items inside other larger items).
~Customer service   
   -Keeping a close eye on suspicious customers. Communicating on the radio of a “Code 4” situation.
Administrative Errors
~Double checking.
Vendor Fraud
~Check in merchandise.

Shrinkage Performance
On every budget, the company writes off a certain percentage of sales for unknown losses such as shrinkage. In terms of ACE Hardware, the percentage is two. In terms of Ben Franklin Crafts, the percentage is three.

Shrinkage Best Practice Scenarios
~An item is broken in the store and discarded.
   -When a broken item is found in the store, initiate physical inventory to change the count and log to shrink.
~An item was temporarily borrowed for a store display and was not accounted for in the system.
   -Establish and use a house charge account for store-use items.
~A customer shoplifted an item from the store.
   -When it is discovered that an item has been stolen, initiate physical inventory to change count and log to shrink.
~A customer entered the store empty-handed, brought an item from the shelf to the point-of-sale and returned it.
   -Always handle returns at the front of the store. Returns without a receipt should be approved by a manager or head cashier.
~A cashier created fictitious returns and pocketed the money.
   -A manager or head cashier must approve returns without a receipt.

Accessing Loss Prevention Services
~Log on to ACENET
~Click on the News & Info tab.
~Click on Ace Communities.
~Click on Loss Prevention Services, Inc. under Loss Prevention.
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