How to Prevent Inventory Loss from Low Product Quality

Retail businesses rely on large inventory to serve the customers, so inventory loss is one of the common risks to handle. In inventory loss, there are differences between the stock data and the actual amounts of the items. For example, a sportswear store shows 200 pairs of yellow running shoes in the data, but only 194 pairs of shoes are in the warehouse.

All good businesses need to incorporate inventory loss prevention as one of their strategies. Here is everything you need to know about it and how business owners can do it, even those who just started.

What is Inventory Loss Prevention?

Inventory loss prevention is a strategy to reduce the discrepancy between the inventory data and the actual stock. The goal is not to eliminate the loss but to reduce the amounts of preventable loss (shrinkage).

There are several common causes behind inventory loss. Thefts and frauds are common, both by employees and people outside the businesses who access the inventory. Low product qualities can also cause shrinkage in inventory because the products are damaged or deteriorate.

There are also cases of administrative error, mistakes in the inventory review process, or vendor fraud. Some customers may conduct return fraud, returning items to the sellers and claiming a refund despite the items not being qualified. Sometimes, the shrinkage is recorded as “unattributed losses” because the causes cannot be determined.

If businesses keep experiencing shrinkage in their inventory, the impacts will affect their revenues and customers. Many businesses or stores often make customers cover the shrinkage loss by increasing the prices, damaging customers’ impressions toward the businesses.

How to Prevent Inventory Loss

Since inventory loss has multiple causes, you need to conduct several strategies to reduce it. Here are some common steps to prevent shrinkage in the inventory:

1. Conduct Good Screening Process

Create a strong screening process for applicants, and make sure this is in the SOP. A good screening will reduce the risks of inventory loss caused by employee thefts.

Review and Install Security Measures to prevent inventory loss

2. Review and Install Security Measures

Investing extra money in security measures can impact your inventory significantly. Combine several security aspects such as coded locking system, security forces, CCTV, and integrated security dashboard. If losses keep happening, review your current security measures to see whether they are still adequate or not.

3. Conduct Multiple Checks on Inventory Flow

Multiple checks must be mandatory on inventor flow, such as during the going in and out processes. Everyone responsible for these tasks must double-check and compare the numbers with the current inventory record and invoices.

4. Screen the Vendors

If your business often deals with multiple vendors, make sure you screen each prospective vendor. Check the reviews of those vendors and make sure they are officially listed, without a history of legal troubles or criminal accusations. It is to reduce the risks of experiencing vendor fraud.

2022 F&B Strategy Plan for efficiency, Nimbly Webinar with Inti Prima Rasa
FREE Webinar with the director of Indonesia’s leading food solutions company.

Conduct Quality Control Measures

If the shrinkage is caused by deteriorating or damaged products, review your quality control measures. Quality control must also be done regularly to spot any defects or damages. Use the reports to review the products and improve the production and storage methods.

Checking the inventory and conducting quality control are complicated tasks because you must deal with large amounts of products in the warehouse or stock. You can make the tasks easier by using management software like Nimbly.

How Nimbly Helps with Inventory Loss Prevention

Nimbly is a management software with an issue tracker, a feature that automatically notifies users when defects or risk factors are detected. Business owners can adjust this feature so they can immediately notice problems in the inventory. The information can be shared with other people that have been approved in the network, like the managers, auditors, and quality controllers.


With this feature, business owners can notice problems even before entering the warehouse. Getting notifications about possible thefts, frauds, or inconsistencies in inventory can also help businesses find out about the causes sooner. You can also make the report immediately before sharing it with anyone in the company that needs the info.

In short, inventory loss prevention is something that must be the main part of every business activity. Reduce repeated losses by conducting various preventive acts, and use management software like Nimbly to track any issues and help you with quick problem-solving.

How to Prevent Inventory Loss from Low Product Quality

About Nimbly

Nimbly transforms manual operations audit processes into app-based checklists for front-line workers to generate reports instantly, centralize insights in real-time, and ensure thorough issue resolution.

Table of Contents

Limited Seat for this FREE Webinar for Food Manufacturing

FREE eBook 8 Powerful Ingredients for F&B Success in the COVID and Post COVID Era

Read this article in your native language!

Related Articles

September 22, 2021
4 Great Operational Challenges Tips in the FMCG Industry
what should you do to overcome the various operational challenges that exist? Don't miss out these 4 FREE Tips!
September 27, 2021
Easy Ways to Implement a Planogram
Product layout is a very important thing to do in your store, learn whether your plan is good or not through a planogram. here's how to implement a planogram
November 13, 2019
Tips Hadapi Tantangan Operasional di Industri FMCG
Bisnis Fast-Moving Consumer Goods atau FMCG merupakan salah satu bisnis yang sangat diminati. Namun, karena beragam dan luasnya faktor yang memengaruhi penjualan, marketing dan rantai […]
No more content to load.

Intelligent workflows for empowered teams.

Gain instant insights for long term success.
Nimbly brings you new opportunities.
© 2021 , Nimbly App Terms of ServicePrivacy Policy
© 2021 , Nimbly App Terms of ServicePrivacy Policy