It’s the end of one year and now we all begin looking forward to the next year. But first, many retail stores will take a physical inventory over the next 60 days to see how their Shrink/LP Program fared in 2022. Hopefully, you will be pleased with the results.
Inventory shrinkage improvement rarely, if ever, simply happens! Experience teaches us such progress is usually the result of a formal shrinkage improvement program, implemented by the company, and complied with by the stores. These programs usually cover the loss prevention basics (access/egress controls, providing good customer service, locking-up or securing high value/highly pilferable items, cash handling, POS controls, merchandise receipts, etc.). One of the more critical aspects of an effective LP/Inventory Shrinkage Control program, is the requirement that management in each store creates their own store-specific “Plan of Action” to reduce their vulnerabilities to loss.
While similar inventory shrinkage problems may exist from store-to-store (which a formal company Shrink Program typically addresses), it is important to recognize that each store is unique, their staff is unique, and so are the characteristics of its customers and even the thieves that prey on their store. Therefore, to effectively impact inventory shrinkage, each store should be required to develop and implement a store-specific “Plan of Action” (POA). In your highest loss stores the location’s DM and LP representative should assist in the development of this plan.
A store’s POA should address the location’s highest loss departments, classifications or specific items. What is the store going to do to get losses down within these highest loss areas? The POA should address issues pertaining to the three major shrinkage causing factors (External Theft (shoplifters, vendors, drivers, outsiders), Internal Theft, and Operational issues. However, the POA should not contain action points/solutions that are already defined as company policy, or requirements listed in the company’s Shrink/LP Program. The reason for the store-specific POA is for management to think outside-the-box, and identify specific shrink concerns that directly affect their store due to its design/layout, geographic location, workforce, sales volume, etc.
When developing a store-specific POA it is important to involve the entire management team and to solicit their shrink concerns and recommendations. Consider the following when developing your store-specific POA:
. Meet with store associates and discuss the store’s losses and the three primary shrink causing factors (External Theft, Internal Theft and Operational Issues). Ask for their thoughts and ideas to controlling losses. Before a formal plan can be created management needs to identify and analyze their high loss areas/products/departments and related improvement opportunities.
. Actively involve the store’s management team, as it truly takes a “team effort” to reduce inventory shrinkage.
. Assign each management team member specific tasks/issues when developing your POA. Be certain to reach an acceptable completion date with all involved.
. Be sure the POA is realistic, adequately addresses the store’s loss issues, and contains ‘target dates’ for the completion of each action point/solution (some actions could be continuous or ongoing).
. Upon completion, the stores DM and/or LPM should review the POA and sign-off on its content and commitment to reducing the store’s losses.
The POA should be reviewed monthly by store management to ensure action points/solutions are being adhered to. In addition, a store’s POA should be a ‘live’ document which can be changed or updated during the year as store conditions change. All changes should be approved (signed-off) by the DM and/or LPM in advance.
(Editor’s Note: In a future article we will discuss specific items related to External Theft, Internal Theft and Operational issues which should be considered when creating a store-specific “Plan of Action”.) $
