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What is Shrinkage?

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Shrinkage is a supply chain term for theft or loss of merchandise between point of manufacturer or acquisition and point of sale. It is a global occurrence with average rates typically between 1% and 2% of goods that never reach their destination, depending on region. As such, it represents a significant global cost. Studies suggest that most shrinkage is due to theft. Other factors include administrative errors, damage in transit and expiry of perishable goods.
Overview: Shrinkage
Type
Business Costs
Definition
Goods that disappear between point of production and point of sale due to theft, damage, expiry or administrative errors.
Related Concepts
Holding Costs

Business Costs

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