Those of you who have been following the Fishbowl Blog for a long time will remember a blog post I wrote five years ago, explaining how inventory management software prevents theft. In that blog post I wasn’t using findings from a detailed study, but this time, I’m armed with more scientific findings from Software Advice, a company that researches and reviews inventory management software.
Thanks to their new study I’ve got a lot of information to explore, so let’s get started.
In 2011, retailers lost a total $34.5 billion worth of inventory to shoplifting. And an estimated 43.9 percent of this shrinkage was from employees stealing from their own company.
Talk about biting the hand that feeds.
Speaking as an employee, I think most people are good at heart and will make the right choice when placed in a moral quandary. But if men were angels we wouldn’t have any theft at all, so businesses have to protect themselves.
The Software Advice study offers several ways that inventory management software helps prevent stealing, and I’ve added a few of my own to this list:
- Cycle Counting – Detailed checks of inventory can be performed on a rotating basis, so companies don’t have to shut down their operations to double check how much inventory they have on hand.
- Integration with Other Software Platforms – By integrating inventory management software with point-of-sale and accounting software, leaders can spot discrepancies quickly rather than having to wait or just guess.
- Accountability – Since employees are compartmentalized, only a certain number have access to sensitive data.
- User Rights – Employees only have access to certain areas of inventory management software, so they can’t make big changes to areas that aren’t in their job description.
- Tracking Changes – You can see who made significant changes to orders and inventory counts.
Ignorance Isn’t Bliss
Companies that manage inventory on paper tend to think that theft isn’t a serious problem at higher rates than companies that track inventory with software. Most likely this doesn’t mean that people steal less from pen-and-paper companies, but that they are unable to gauge how big a problem it is.
It’s ironic because small businesses are the most vulnerable to theft. They can’t afford to let too many of their products be stolen. While big corporations can handle a certain level of theft without it affecting them too much, small businesses have much less inventory and resources to come back from major shrinkage.
Times have changed, and small businesses now have access to software and other tools that can help them reduce theft. It’s definitely time to realize ignorance isn’t bliss and start reaping the benefits of modern solutions to old problems.
Here’s a quote from Forrest Burnson, a market research associate with Software Advice, which sums up pretty much everything I wanted to say in this post:
“It’s important for all business owners to realize that inventory management software will save you time – and money – in the long run. It increases your inventory visibility by standardizing your records and it can help you identify where shrinkage is occurring when you perform cycle counts. While a computer program won’t necessarily deter employee theft, it will give you the resources to ensure that your inventory is properly accounted for. When your inventory is properly accounted for on a consistent basis, there’s less of a chance that bad behavior will be able to fly under the radar. Regardless of what kind of business you have, it’s important to protect your assets. Using inventory management software is an easy way to give you a better sense of security.”
Knowledge is power. By keeping tabs on your inventory, you have a better chance of avoiding crippling errors, theft, and other problems. It’s a smart investment in your company’s future.
Get a demo of Fishbowl to see how it can help your business overcome challenges.