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Lost inventory, or Inventory Shrinkage, is one of the most frustrating occurrences that can happen in warehouses, distribution centers, and retail outlets. It is, unfortunately, something that every inventory manager has dealt with at least once. The reason lost inventory is a common problem is because there are bound to be human errors while handling, storing, or counting the inventory.

This is a huge problem especially for warehouses that store large amounts of goods that amount to millions of dollars. The warehouse inventory shrinkage statistics can raise alarms for warehouse managers. In the US alone, inventory shrinkage, due to various reasons, cost the retail industry $46.8 billion (source).

3 Proven Ways to Reduce Inventory Shrinkage in Warehouses

To a large extent, inventory shrinkage, especially in warehouses, can be minimized by reducing dependency on manual labor and instead adopting different methodologies and technologies such as:

Inventory Management Platform:

Inventory Management Platform

It is safe to say that almost every warehouse has a Warehouse Management System (WMS) in place, and it is not uncommon to see warehouses using more than one platform for different operational features, such as for receiving and put-aways, or yard management. Today’s WMS platforms are more sophisticated than ever, covering all aspects of the warehouse operations, and data in a single place.

From a long-term perspective, a WMS not only improves the efficiency of data transfer or migration but is also helpful in identifying operational gaps, while delivering good ROIs to warehouses. A good inventory management system can track the end-to-end life cycle of the inventory, thus giving clarity over the workflow.

Security Systems:

Warehouse thefts are unfortunately a common occurrence, with Loss Prevention Media reporting that Cargo theft is a $15-30 Billion-dollar problem each year in the United States.

Whether it is deploying multiple security cameras or maintaining a strict security protocol at the warehouse, there are several options to increase the security and surveillance inside the warehouse.

For warehouses storing high-valued goods, inventory loss due to theft can cause a large dent in the finances. Also, having more than one person responsible for important tasks such as signing invoices, stock reports, and purchase orders will increase security. Decentralization of tasks can ensure transparency without a lot of investment. Double-checks can also help identify if the existing processes need to be fixed or improved, thus giving additional benefits to warehouse managers.

Automating Inventory Counts:

Despite the best security measures and implementation of a powerful WMS, counting errors by manual labor can cause a large discrepancy in inventory data. Counting inventory is a repetitive process, and extending this to thousands of SKUs increases the likelihood of inventory data error.

drones for inventory counting

Deploying an automated inventory counting solution can reduce this problem since an automated system boosts accuracy while being time and cost-effective. For example, autonomous inventory drones are able to scan inventory across all the pallet locations, without requiring any manual intervention or any changes in the existing warehouse operations.

What’s Next?

With warehouses increasingly switching to Very Narrow Aisles (VNAs) and tall racks, many of the pallet locations are difficult to access, thus increasing the likelihood of counting errors and risk to worker safety. Automation can fill this gap while ensuring increased efficiency.

We at FlytWare boost inventory counts in warehouses and distribution centers with the help of our autonomous inventory drones. This has helped warehouses conduct their inventory counts in a time and cost-efficient manner, which is useful to identify the extent of inventory shrinkage and fix it.


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