Shrink

Last Updated: Jun 7, 2019

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Short for “Inventory Shrinkage.” This term describes the loss of inventory during a production process, or any loss incurred between receiving the manufactured goods from an inventory vendor and selling them to the end buyer. This loss can be due to clerical errors, goods being damaged/lost/stolen, or any other reason that would cause inventory on hand to decrease without an actual sale of the product. Obviously a small margin of Shrink is unavoidable for a company, however a company must make sure controls are in place so they are not losing a significant portion of inventory attributable to "shrink."