Welcome to the MedLibrary.org Wikipedia Supplement on Shrinkage (accounting) -- Please Click to Return to Front Page

Items lost to shrinkage

In financial accounting the term inventory shrinkage (sometimes truncated to shrink) is the loss of products between point of manufacture or purchase from supplier and point of sale. The total shrink percentage of the retail industry in the United States was 1.7% of sales in 2001 according to the University of Florida's, National Retail Security Survey.¹

48.5% of shrinkage is due to employee theft and 31.7% due to shoplifting.² The prevention of this type of shrinkage is one reason for security guards, cameras and security tags. Also, some shrinkage is due to damage in transit, administrative errors such as shipping errors, warehouse discrepancies, and misplaced goods, and vendor fraud. When dealing with perishable goods, such as produce, natural spoilage becomes a source of shrinkage.

In the United States, the National Retail Security Survey is published annually as part of the Security Research Project at the University of Florida. The Security Research Project endeavors to study various elements of workplace related crime and deviance with a special emphasis on the retail industry.

One effective measure to prevent against loss due to shrinkage is to implement an inventory management application offered by a third party vendor. These applications allow for better control over inventory and will alert companies of the source of the inventory shrinkage. A more accurate picture of inventory also provides significant cost savings for companies as costs associated with stock-outs or excess inventory are eliminated.

References

1. ^ National Retail Security Survey (2002) University of Florida
2. ^ National Retail Security Survey (2002) University of Florida

See also

• Loss prevention

Wikipedia content modification information:

• This page was last modified on 10 November 2008, at 20:57.

Wikipedia Authorship and Review

Wikipedia content provided here is not reviewed directly by MedLibrary.org. Wikipedia content is authored by an open community of volunteers and is not produced by or in any way affiliated with MedLibrary.org.

Wikipedia Usage Guidelines

This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia article on "Shrinkage (accounting)".

The URL for this specific entry is:

• http://medlibrary.org/medwiki/Shrinkage_(accounting)

All Wikipedia text is available under the terms of the GNU Free Documentation License. (See Copyrights for details). Wikipedia® is a registered trademark of the Wikimedia Foundation, Inc.