Monitor Shrink

Mango's Shrink & Efficiency Trend chart helps you track inventory shrink and counting efficiency over time. Using this chart is part of your Operational Level 3 - Shrink and Operational Level 4 - Efficiency checklist. The chart page has three sections: 

  • Shrink & Efficiency Trend Bars and Lines

    This chart portion of your Shrink & Efficiency page shows monthly inventory shrink dollars (vertical bars, left axis) and the number of inventory SKU counts and variances (horizontal lines, right axis). This is a dual-purpose chart where you can monitor both Operational Level 3 - Shrink and Operational Level 4 - Efficiency. The underlying SKU-level detail for the current month is found in your Shrink Report.

    • In this example (below), we will review the vertical blue, gold and red shrink bars which correspond to the left Shrink Dollars axis.


      Bullet #1 - The report covers the twelve trailing months prior to and including the report date.
      In the example below, the report is showing inventory variance and shrink activity during October 1, 2015, through September 30, 2016.

      Bullet #2 - Months are shown along the top of the chart.
      Let's look at shrink that occurred during the month of October 2015.

      Bullet #3 - The black square and data label show adjusted shrink for the month.
      The example store below saw -$289 in net adjusted shrink for October 2015. This means inventory value (at replacement cost) was reduced by $289 due to inventory variances discovered while counting.

      Bullet #4 - The blue shrink bar shows net shrink dollars for variances made to SKUs not reported on Mango's Count Sheets.
      In the example below, the blue bar is above $0 indicating positive shrink (called inventory swell). The net dollar effect of counting variances attributed to SKUs not on Mango's Count sheets was slightly positive (added value to inventory), around +$100.

      Shrink & Efficiency Trend Example 1


      Bullet #5 - The yellow shrink bar shows net shrink dollars for variances made to SKUs reported on Mango's Count Sheets.
      In the example above, the yellow bar is near -$500, indicating $500 inventory value loss attributed to the store processing its Count Sheets. Note: it is common to see SKUs reported on Mango's Count Sheets account for a significant portion of a store's overall shrink.

      Bullet #6 - The red hash portion of the shrink bar shows the net dollar amount of excluded shrink (fasteners, bulk, closeouts, etc.) for the month. This is shown for informational purposes only and is not included in your Operational Level 3 - Shrink metrics. 
      In the example above, we see around -$200 in inventory reduction due to excluded shrink. SKU level detail of these exclusions is found in your Shrink Report.

      Bullet #7 - The legend below the chart will help remind you what the different shrink bar colors mean.

    • In the example (below), we will review the various horizontal lines that show the number of SKUs counted and variances (changes) made. These lines use the right Number of Changes axis.

      Shrink & Efficiency Trend Example 2

      The lines in this chart excluded SKUs classified as excluded shrink (fasteners, bulk, closeouts, etc.).

      Bullet #1 - The black line shows the number of SKUs counted (received an updated Last Physical Inventory Date). 
      In the example above, we see around 600 SKUs (right axis) were counted during the month of October 2015.

      Bullet #2 - The blue x-line shows the number SKUs which received net a quantity-on-hand variance for the month (change). 
      In the example above, we see about 300 SKUs received a variance (right axis).

      Bullet #3 - The red •-line shows the number of SKUs receiving a downward (or shrink) change.
      In the example above, around 175 (right axis) had a quantity-on-hand change that reduced inventory value (shrink).

      Bullet #4 - The purple *-line shows the number of SKUs receiving an upward (swell) change.
      In the example above, around 125 SKUs (right axis) had a quantity-on-hand change that increased inventory value (swell).

      Bullet #5 - The green +-line shows the number of quantity-on-hand changes attributed to SKUs listed on the store's Mango Count Sheets.
      In the example above, about 100 SKUs had a variance which can be attributed to the store processing its monthly Mango Count Sheet.

      Please see more Efficiency examples in Operational Level 4 - Efficiency Help: Monitoring Efficiency

  • Adjusted Shrink (and Defectives) by Time Period

    The middle section of your Shrink & Efficiency Trend page sums up shrink by time period: 

    • MTD = Month to date (last month).
    • YTD = Year to date (starting January 1st).
    • TTM = Twelve trailing months (over the past year).

    Let's look at each column:

     

    • Bullet #1 Shrink Dollars - this column shows net shrink dollars after excluded SKUs (fasteners, bulk,  closeouts, etc.) have been adjusted out.  In the example above, we see -$212 for month to date shrink. The negative sign in front of the 212 indicates a reduction in inventory value as in breakage and theft. Pay attention to the TTM (twelve trailing months) number, the example store above is showing -$5,157 in adjusted shrink over the past year. This TTM value is a component of your Operational Level 3 - Shrink metric.
    • Bullet #2 Percent of Sales - this column shows Shrink Dollars as a percentage of sales for the time period. The TTM time period is your Operational Level 3 - Shrink metric. In the example above, we see a TTM metric of -0.5%, this means the dollars reported in the Shrink Dollars column (-$5,157) when divided by the store sales by the same period, equals -0.5% of sales. For a store to advance past Operational Level 3, its TTM metric must be between -0.5% and 0.1%. 
    • Bullet #3 Percent of Inventory - this column is the same as the Percent of Sales except it divides the period Shrink Dollars by average inventory value for the period rather than by sales. It shows, as a percentage of inventory value, how much has theft and breakage affected inventory value. In the example above, shrink has affected inventory value by -1.4% over the past year.
    • Bullet #4 Defective Returns - this column shows (at the SKU's replacement cost) how many dollars have been returned via point-of-sale (or posted via PIP using the defective shrink type). Defective items represent a special type of shrinkage since it is assumed the defective cost will be generally reimbursed by its vendor.
    • Bullet #4 Defective Percent of Sales - this column expresses your defective return dollars as a percentage of sales and can be used as a gauge to compare to other stores. normal values are between -0.5% and -1.5%.

  • Efficiency Detail Section

    This section of your chart page shows details having to do with your Operational Level 4 - Efficiency metric. Two rows show SKUs Counted and SKUs Changed for various time periods, along with a targeting section you can use to tell how high your store might be of your efficiency target.

    Time periods

    • MTD - Month to Date (for the reported month). 
    • YTD - Year to date (since the beginning of your fiscal year).
    • TTM - Twelve Trailing Months (over the past year).

    Rows
    The numbers in the rows below are taken from adjusted (non-excluded) inventory counts and changes (variances). The numbers show unique counts and changes. For example, if a SKU was counted 5 times and changed 3 times over the period, it will only show as one count and one change.

     

    • SKUs Counted - shows the number of SKUs in your store for the time period which received a Last Physical Inv update (were counted). 
    • SKUs Changed - shows the number of SKUs that received a net variance for the month.
    The Target section shows the maximum number of counts and changes for the MTD and TTM time periods to achieve Level 4 - Efficiency in your store. These can be used to gauge how much more counting and changing activity your store is employing compared to your optimal maximum threshold. In the example above, we see the store is counting just above the target but changing below target. This is a signature of a store that can save labor by counting less!

  • Lower Section - Count Sheet Processing Information

    The lower section of the Shrink & Efficiency Trend page shows statistics related to Mango Count Sheet processing in your store.

    Time Period

    • MTD = Month to date (last month).
    • YTD = Year to date (starting January 1st).
    • TTM = Twelve trailing months (over the past year).
    • Bullet #1 SKUs Counted - shows the number of SKUs counted via Mango's Count Sheet Report for the period. 
    • Bullet #2 SKUs Changed - shows the number of SKUs from #1 that received a net quantity-on-hand variance in the month it was counted. 
    • Bullet #3 Percent Changed - shows the percentage of SKUs Counted which also received a quantity-on-hand variance.
    • Bullet #4 Net Shrink - shows the adjusted shrink dollars for the variances in #3.
    • Bullet #5 Percentage of Shrink - shows the percentage of Mango Count Sheet shrink (#4) to all counts adjusted shrink. 
    • Bullet #6 SKUs Recovered - shows the number of SKUs zeroed out and reordered as a result of your store processing its Mango Count Sheets.
    • Bullet #7 Recovered Sold - shows the dollar amount of sales attributed to SKUs in #6 for the twelve trailing months.