Inventory Shrinkage: Why Stock Goes Missing (and How to Cut It)

Inventory shrinkage is the difference between the stock your records say you have and what's actually on the shelf when you count. In big retail it often means theft; for a maker, it's usually more mundane — and more fixable. Either way, shrinkage is real product (and real money) you paid for and can't sell.

Where a maker's stock actually goes

• Breakage and damage — items that crack, smudge, or get damaged in storage or shipping.
• Production waste — materials lost to offcuts, spills, and failed batches.
• Miscounts — stock that was never recorded accurately in the first place.
• Forgotten samples and giveaways — product that left without a sale being logged.

Why it's worth chasing

Small, untracked losses add up to a real dent in margin, and they distort your counts — so you oversell, misjudge reorders, and can't trust your numbers. Knowing your shrinkage tells you where money is leaking that pricing alone will never recover.

Shrinkage is the quiet cost of stock you paid for and can't sell — small per item, real by year's end.

How to reduce it

1. 1Record everything that leaves — samples and giveaways included.
2. 2Store products to prevent damage; fix shipping that breaks things.
3. 3Cut production waste with tighter recipes and first-expired-first-out.
4. 4Count regularly so miscounts surface while they're small.

Keep counts honest

Shrinkage hides in the gap between records and reality, so the cure is keeping the two close. Hivara lets you adjust stock with a reason when something breaks or is given away, and scan stock in and out so counts stay accurate — turning shrinkage from an unexplained mystery into a number you can see and shrink.