Shrinkage Analysis
The Shrinkage Analysis report helps you understand inventory loss patterns and identify potential causes by analyzing variance data from your cycle counts.
Navigate to Reports & Analytics > Shrinkage Analysis.
Summary Cards
At the top of the dashboard:
| Metric | Description |
|---|---|
| Total Shrinkage | Dollar value of inventory loss for the period |
| Shrinkage Rate | Percentage of total inventory value |
| Overages | Dollar value of inventory gains (more than expected) |
| Counts Analyzed | Number of completed cycle counts in the period |
Analysis Tabs
Overview
- Category Breakdown — Pie chart showing shrinkage by product category
- Top 10 Products — Bar chart of products with the highest shrinkage
- Category Table — Detailed table with expected value, actual value, variance, and variance % per category
Products
- Top Shrinkage Products — Products with the largest losses
- Recurring Issues — Products that show variance across multiple count periods (likely systematic problems)
Trends
- Shrinkage Over Time — Line chart showing variance trends
- Grouping — View by day, week, or month
Patterns
- By Day of Week — Which days see the most shrinkage
- By Employee — Variance by who performed the count
Details
Individual variance records showing:
- Product name
- Expected vs. counted quantities
- Dollar value of variance
Understanding Shrinkage
Negative variance = Less inventory than expected (loss/shrinkage) Positive variance = More inventory than expected (usually administrative error)
Common causes of shrinkage:
| Type | Indicators |
|---|---|
| Theft | High-value small items, no consistent pattern |
| Administrative errors | Consistent offsets, receiving area issues |
| Damage | Perishable or fragile items |
| Vendor shortages | Specific vendors, receiving count mismatches |
Filters
- Date range — Standard date picker
- Category — Focus on specific product categories
- Brand — Analyze by brand
Best Practices
- Count high-value items weekly — Focus shrinkage prevention where it matters most.
- Investigate recurring issues — Products appearing in multiple counts likely have systematic problems.
- Review by counter — High variance from one counter might indicate training needs.
- Target under 2% — Keep shrinkage rate below 2% of inventory value.
Next Steps
- Cycle Counts — Performing physical counts
- Sales Reports — Revenue analysis
- Demand Forecast — Reorder predictions