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Digg It - Shrinkage Control
What has been your store's shrinkage experience for the last two years? What will it be this year? If it has not been as good as it should have been, now is the time to analyze the possible causes and take steps to keep shrinkage in line this year.
WHAT IS SHRINKAGE?
The difference between the perpetual book inventory and the physical inven
WHAT IS SHRINKAGE?
The difference between the perpetual book inventory and the physical inven
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
tory count is called shrinkage. The book inventory is a record of what ought to be on hand in view of what has been received, what has been sold and price changes. Physical inventory count is the volume and value of all the goods actually on hand.
CAUSES OF SHRINKAGE
Shortages can and will occur at every point where merchandise changes hand
CAUSES OF SHRINKAGE
Shortages can and will occur at every point where merchandise changes hand
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
or paperwork is created or processed. Proper systems with built-in controls must be put in place to eliminate or reduce these shortages. While there is not enough room to list all the specific causes of shrinkage, we will give several examples of each of the three general causes: paperwork errors, internal theft and shoplifting.
PAPERWORK
PAPERWORK
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
ERRORS
Paperwork errors can happen almost anywhere in the merchandising cycle. For example:
* Marking goods at a price lower than the retail price recorded on the receiving record.
* Failure to record all markdowns.
* Miscounting physical inventory.
* Clerical errors causing the book inventory to be higher than it should be.
* Timing is
Paperwork errors can happen almost anywhere in the merchandising cycle. For example:
* Marking goods at a price lower than the retail price recorded on the receiving record.
* Failure to record all markdowns.
* Miscounting physical inventory.
* Clerical errors causing the book inventory to be higher than it should be.
* Timing is
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
of particular importance. When comparing the actual physical inventory count to the perpetual book inventory, care must be taken to ensure that every invoice representing goods that have been received before the physical inventory count is included in the calculation of book inventory.
INTERNAL THEFT
While internal theft can be anything from
INTERNAL THEFT
While internal theft can be anything from
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
taking merchandise to taking cash or store supplies, we will focus on those instances of internal theft that pertain to merchandise. Some examples are:
* Writing up a cash sales slip for merchandise but destroying the ticket after the customer leaves and pocketing the cash.
* Recording a false cash refund and pocketing the cash.
* Taking me
* Writing up a cash sales slip for merchandise but destroying the ticket after the customer leaves and pocketing the cash.
* Recording a false cash refund and pocketing the cash.
* Taking me
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
rchandise without paying for it.
* Extending unauthorized discounts or credit card refunds for friends.
SHOPLIFTING
Shoplifting can occur at any time. Anyone can be a shoplifter; a regular customer who never intended to steal but gave in to temptation and opportunity, or a seasoned professional.
OVERAGES
Although shortages are normally ex
* Extending unauthorized discounts or credit card refunds for friends.
SHOPLIFTING
Shoplifting can occur at any time. Anyone can be a shoplifter; a regular customer who never intended to steal but gave in to temptation and opportunity, or a seasoned professional.
OVERAGES
Although shortages are normally ex
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
ected, it is not logical to have counted in the physical inventory more than the book figure indicates. Goods are stolen, but not donated to the store. Therefore, overages are due largely to errors in record keeping, although they may be due to an employee trying to cover up the theft of merchandise. Some examples are:
* Recording markdowns
* Recording markdowns
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
without actually reducing prices on price tickets.
* Overstating the physical inventory.
* Including in the physical inventory count merchandise that has not yet been recorded in the book inventory.
HOW TO REDUCE SHRINKAGE
There are several factors that affect the reduction of shrinkage.
* Whether or not you have a stated shrinkage goal t
* Overstating the physical inventory.
* Including in the physical inventory count merchandise that has not yet been recorded in the book inventory.
HOW TO REDUCE SHRINKAGE
There are several factors that affect the reduction of shrinkage.
* Whether or not you have a stated shrinkage goal t
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
work towards.
* Top management's commitment to reduce shrinkage. If top management gives shrinkage control top priority, it will invariably be reduced.
* Whether or not proper procedures that contain built-in internal controls have been set up for each transaction or event in the flow of merchandise from the time it is ordered until it is p
* Top management's commitment to reduce shrinkage. If top management gives shrinkage control top priority, it will invariably be reduced.
* Whether or not proper procedures that contain built-in internal controls have been set up for each transaction or event in the flow of merchandise from the time it is ordered until it is p
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
rchased by your customer. And whether or not these procedures are being followed.
* The record keeping system being used. The Retail Inventory Method can help keep losses down. The fact is that shrinkage declines when it is measured, and the Retail Inventory Method generally provides the best measurement of shrinkage.
PREVENTION OF PAPERW
* The record keeping system being used. The Retail Inventory Method can help keep losses down. The fact is that shrinkage declines when it is measured, and the Retail Inventory Method generally provides the best measurement of shrinkage.
PREVENTION OF PAPERW
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
ORK ERRORS
Paperwork errors can be controlled by use of a good, well-documented system containing built-in checks and balances. This is an area in which we have helped many retailers by conducting internal security checks and developing written procedure manuals. But a good system is not enough. All employees (receiving clerk, salespeople,
Paperwork errors can be controlled by use of a good, well-documented system containing built-in checks and balances. This is an area in which we have helped many retailers by conducting internal security checks and developing written procedure manuals. But a good system is not enough. All employees (receiving clerk, salespeople,
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
uyers, office personnel) must be properly trained. They must be told the importance of following the proper procedures. And, of course, management must follow up to see that the proper procedures are being followed.
PREVENTION OF INTERNAL THEFT
The retail store by its very nature presents many day to day temptations to employees who handle
PREVENTION OF INTERNAL THEFT
The retail store by its very nature presents many day to day temptations to employees who handle
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
the merchandise and money of the company. It is the responsibility of managers to remove as many temptations as possible thereby helping to keep employees honest. This is done by setting up procedures containing good internal controls and by seeing that these procedures are followed without exception. For example:
* Require management appro
* Require management appro
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
al on all refunds and credits.
* All employee purchases should be rung up and checked by the owner, manager or another designated person.
* Keep strict control over refund authorization slips, sales tickets, gift certificates or any other types of forms which can be used by an employee to obtain cash or goods.
* Know your employees. When hi
* All employee purchases should be rung up and checked by the owner, manager or another designated person.
* Keep strict control over refund authorization slips, sales tickets, gift certificates or any other types of forms which can be used by an employee to obtain cash or goods.
* Know your employees. When hi
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
ing new employees make an effort to hire honest employees. This can be done through interviewing techniques, by carefully checking references and by the use of carefully developed written honesty tests.
PREVENTION OF SHOPLIFTING
How your merchandise is displayed can have an impact on shoplifting. For example:
* Keep small, expensive items
PREVENTION OF SHOPLIFTING
How your merchandise is displayed can have an impact on shoplifting. For example:
* Keep small, expensive items
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
behind a counter.
* Keep your store neat and uncluttered. Neat displays make it easier for alert salespeople to spot missing merchandise.
* Do not have blind spots on the sales floor. Try to avoid counters that are exceptionally high.
While the above can act as a deterrent to shoplifting, well-trained and attentive sales personnel are you
* Keep your store neat and uncluttered. Neat displays make it easier for alert salespeople to spot missing merchandise.
* Do not have blind spots on the sales floor. Try to avoid counters that are exceptionally high.
While the above can act as a deterrent to shoplifting, well-trained and attentive sales personnel are you
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
best defense. Alert, courteous salespeople can deter many would-be shoplifters by their presence. Make sure they are properly trained so they can spot suspicious behavior and know what to do if they see someone taking merchandise. Your local police department may have information concerning this or may be willing to present a seminar on the
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
prevention and detection of shoplifting.
SUMMARY
There is no one shrinkage solution for all retailers since every retail store is unique. Solid accounting procedures and systems must be developed specifically for your store and scrupulously followed at ALL levels. Employees must be properly trained to follow correct procedures. Management
SUMMARY
There is no one shrinkage solution for all retailers since every retail store is unique. Solid accounting procedures and systems must be developed specifically for your store and scrupulously followed at ALL levels. Employees must be properly trained to follow correct procedures. Management
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
ust follow up to see that procedures are being followed. In other words, good management will help reduce the temptation and conditions favorable for dishonesty and theft and reduce your shrinkage losses.
Shrinkage is a variable and controllable expense. Management's attitude toward and tolerance level for shrinkage is the controlling factor
Shrinkage is a variable and controllable expense. Management's attitude toward and tolerance level for shrinkage is the controlling factor
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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