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
- Record everything that leaves, samples and giveaways included.
- Store products to prevent damage; fix shipping that breaks things.
- Cut production waste with tighter recipes and first-expired-first-out.
- Count 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. Keepsel lets you adjust a material's stock count when something breaks or is given away, on every plan, and from the Maker plan a product's count too, and you can scan stock in and out so counts stay accurate. Shrinkage turns from an unexplained mystery into a number you can see and shrink.