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Reducing wastage for your business

In most businesses, particularly retail based ones, there is wastage or shrinkage of products. This is the term used when stock has to be written off as unsalable for some reason or another.

Needless to say it is a very good idea to keep shrinkage to a minimum as if you are writing off too much stock rather then selling it, it will ultimately impact your bottom line – but how can you reduce it?

The answer is partially dependant on what it is you sell, for instance, if it is food that has gone bad – other than paying close attention to your stock and either reducing it before its best before/use by date to move it faster, or changing what stock lines you order in, there isn’t a lot you can do to reduce your waste.

However, if you are a clothes, toy or craft shop, there may be considerably more you can do to reduce wastage and improve your bottom line.

You should be able to check how much shrinkage you have written off fairly easily, as it should all be noted so your accountant/bookkeeper can factor it into your end of year accounts. It is a good idea to set a reasonable limit to how much you are willing to have written off in a set time period, make it realistic, if you are not sure what is a realistic figure, talk to similar businesses, or ask your accountant as they will probably have several customers with the same sorts of issues as you.

One of the most common reasons for the above mentioned type of business to have stock that can’t be sold is sun damage, the UV in the sun’s rays can cause items to fade, this can be reduced a number of ways, the first and perhaps, most obvious, is to regularly rotate the stock that goes into the window, ensuring it doesn’t have time to fade in the sunshine – however, this can be time consuming and costly in “man power” depending on the size of your windows and the location of your property. The author has known shops that have had to change their window displays completely every 2 – 3 days to prevent fading during the summer months.

Another alternative, which may seem less cost effective in the short term, but in actual fact it will save you hours of man time in the future and recoup its cost fairly quickly, is to install “solar film” on the inside of each of your windows. This film comes in a variety of shades including clear so needn’t detract from the look of your window displays, and will help reduce the UV which in turn will reduce the fading.

It has another advantage that it will help reduce the amount of heat in your store, allowing you to reduce costs on the air conditioning during the summer.

Another reason for wastage could be “shop soiled” goods, these are normally clothes or soft toys that are dirty or damaged either by poor storage in the stock room, or by getting food/drink stuffs on them whilst on shop floor - you may be surprised how much you can reduce your waste by putting in simple stock measures for the storage of your items before they go on sale, and putting a “no food or drink” rule in place.

Likewise, you can reduce breakages of delicate, fragile items by putting up signs requesting that people do not touch the stock, putting them in glass fronted cabinets which can even be locked to prevent curious fingers, or simply having a policy that if it is broken then the person who broke it pays for it (this would include docking wages of careless staff).

No matter how carefully you store or display items, there will always be some breakage or damage that will mean you will have shrinkage, but it is a relatively simple thing to reduce with some common sense policies.

 
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