Shrinkage Is Not Just Theft. Most of It Is Process Failure.

Manual Receiving With No PO Verification

Administrative errors from receiving processes where vendor shipments are not verified against purchase orders. Items counted in that were never delivered. Overcharges that go unchallenged.

POS Pricing Errors

Incorrect pricing in the POS system allows items to ring up below cost. Without routine diagnostic scans, these errors can persist for months across every transaction.

Return Fraud Without Controls

Returns processed without receipt verification or manager approval. Merchandise returned that was never purchased in the store, or returned at a higher price than it was bought.

Vendor Short-Shipping, Never Disputed

Vendors delivering fewer units than invoiced, accepted without count verification because there is no process to dispute it. Short-ship losses absorbed silently every reorder cycle.

Dead Stock With No Write-Off Process

Unsellable inventory accumulating in back of house that was never written off or returned to the vendor. It appears as an asset on the books while generating zero revenue.

No Cycle Count Schedule

Inventory variance discovered only at the annual physical count, months after it occurred. By then, the source is unidentifiable and unrecoverable.

Receiving and purchase order verification process

POS pricing accuracy and override logs

Return and refund authorization controls

Vendor dispute and short-ship claim history

Dead stock and write-off policies

Cycle count frequency and variance reporting

FIND

Identify the primary shrinkage source, process failure, theft, or vendor. Stop the most immediate and controllable losses first.

TRACK

Implement receiving verification, cycle count schedules, POS diagnostic controls, and return authorization requirements.

RECOVER

Renegotiate vendor terms to include dispute resolution clauses and short-ship credit processes. Close the recovery loop.

SUSTAIN

Standardize loss prevention protocols across all locations with consistent reporting and variance thresholds.

What We Find

Process-based shrinkage is often the most recoverable category because it requires systems fixes, not security investments.

Unlike theft, which requires physical security spend, process failures are fixed by installing controls, verification steps, and a reporting cadence, most of which cost nothing to implement.