# Interest group forums > Food Industry Forum > [Question] Stock Control - Shortages

## AmithS

So we do stock control and count all our stock...

Now the question is, we find 1 sausage or 1 fish or 1 can short??? What do we do?

Do we deduct a portion from each staff member or is stock take merely to scare staff and keep shrinkage to a minimum?

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## Justloadit

I thought part of stock taking is a requirement in your balance sheet, as your profit could be lying in stock and not in the bank. With out a stock take you have no idea.

With reference to deduct from staff is something which I believe you can not do,  but I stand to be corrected here.

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## Dave A

If you deduct from staff for petty shrinkages, do you pay them out when you're over too?



> Now the question is, we find 1 sausage or 1 fish or 1 can short???


Over what sort of period?

I suggest you set a budget for shrinkage and consider it a business expense. If the shrinkage seems unreasonable, time to think about improving your control systems or installing cameras.

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## Neville Bailey

> I thought part of stock taking is a requirement in your balance sheet, as your profit could be lying in stock and not in the bank. With out a stock take you have no idea.


That's assuming you are running a periodic stock system as apposed to a perpetual stock system.

A periodic stock system only reflects your true stock quantities and valuation when and if you perform a physical stock count periodically.

A perpetual stock system (which many accounting software systems run, like Pastel) keeps a running, or perpetual, record of your stock quantities and valuation, as and when you purchase and sell items. Obviously these are theoretical figures, which need to be physically verified from time to time, by means of a physical stock count.

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## tec0

Access control and security camera’s is almost the only way to go here. You will have a horrible time proving that there wasn’t just an error in stock tacking itself. Or that you yourself didn’t take whatever is missing. 

I know of a situation that existed about 6 years ago now. The company I worked for said I stole a CPU and people where absolutely positive it was me. I had a BS disciplinary hearing and was fired. Not too long after my dismissal my senior was found red handed stealing a GPU and a few strips of memory. As I understand it, the secretary spotted him and alerted the boss. 

Now if there was a proper security camera and proper access control things would have been different... I could have been a senior myself by now. It was a good company and it was a good job...

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## adrianh

I've spent a lot of time in restaurant kitchens. They steal anything that isn't bolted down. Cutlery is a favourite, they just "forget" it in the front pocket of the apron. Another thing that they do is to cook more food than required and simply snack off the plate. Most of the restaurants have serious video cameras - they mean nothing - there is simply too much hustle and bustle and who is going to sit for 8 hours straight and monitor multiple video cameras on the off chance that a cook eats a steak that "as he might say- wasn't cooked properly". Many of the cameras are "accidentally" wetted during washdowns, with obvious results.

I agree with Dave, its a part of life in a kitchen and unless you have a head chef with a very strong fist you will not stop it.

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## tec0

I don’t know, Casino security is expensive but you can take tips from them. Search your employees before they leave. Implement the bonus system. If nothing gets stolen a small but adequate bonus can help with motivation. “if 1 person steels from you and the other 5 knows about it and they lose money because of him/her you can safely bet they will rat him/her out eventually” Camera’s can be useless if not properly used but honestly I rather have Camera’s and access control it does help a bit. 

Rotation and monitoring is a very intelligent way to figure out who is steeling what, and more importantly work small losses into your budget “Everybody that ever owned a business will tell you one thing; you will always have them regardless. It can be theft or a power failure or just bad luck but you will suffer those losses eventually."

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## AmithS

Thanks guys for all the input, some food for taught here.  

I want to install cameras in my store soon. 

I was also thinking about a small bonus system like tec0 mentioned i like this idea.

Thanks again

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## AmithS

Hi Everyone,

I have started a serious stock control system in my store where stock is counted on a daily basis and down to the last item.

The problem is that i am now picking up big problems with packs of items going missing!!!!

The latest is today when our calculator was actually stolen  :Mad: 

So my question is to those who can give some advise what things can i implement to get this problem down to a minimal level like,

Cameras (Waiting for some funds)
Lockers and bags at work?  are these a requirement that i provide lockers and can i implement a rule of no bags at work ?
Should staff just be charged for shortages ?

Thanks in advance...

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## bjsteyn

Hey JWalker, I am just wondering what system are using for tracking stock, Pastel or just books?

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## adrianh

Maybe you should offer fat reward for an employee who catches a thief. (Make it really worth their while) People are always motivated by reward.

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## AmithS

Hi,

I looked around at stock control software looked at the costs, the features i would use how use full would all the features be used by me.

So in the end i developed a excel spread sheet that is specific to my store and accomodates for my specific needs in terms of how i would like to count my stock for input in the easiest way i know and easily adapts to my sales reports, etc...

it takes me about 15 mins to input the whole weeks data and get out the report.

It took me about 4 hours to complete and test the spreadsheet.

Hope this helps.

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## bjsteyn

My Order & Stock Management System does the following in regards to managing stock. This system is for rep and delivery based sales.
->  Calculates the On Hand Value of Floor Stock At Any Time. 
->  Add and Keep Track Off Stock Purchases
- > Print Stock Take Sheets
- > Stock Takes overwrite the Calculated Stock Value
- > Low Stock Warnings
- > Suggested Stock Purchases based on Sales Trends
->  Stock Variances Report to view the differences between calculated value and the value of stock that was accounted for in a stock take
->  Busy adding so that stock take sheets can be arranged by rack numbers

I am thinking of creating a simple stock management system for store owners and maby even store mangement software for store owners using till based sales. Just wondering why you didn't decide to use stock management software. What i get from your response is that what you whould get out of it wasn't worth spending money for or that the features werent really meeting your needs .

If their was worthwile SM software, what feautures whould it have out of your needs? The software whould be developed in microsoft access and whould be very customizeable.

Thanx
BJ

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## AmithS

Hmmm as a small business owner i want just the basics, to be able to see if stock is going missing or not to be able to track when it was, narrow down the shift and find the suspects.  All in all to keep shrinkage to a min and know whats going on in my business at a glance.  Reason being is a small business that i feel does not require more effort than that.  If it was a larger investment then yes by all means i would like more features.

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## Pap_sak

One thing that has worked for me is that if a staff member wants an item, they get it at cost price, not only that, they each have account. When they get a bonus (last month my staff in the one shop got an extra 70% of their monthly pay - just for january! - did about the same for December) I expect quite a bit to come of their account. I also found out that in the last couple of weeks, they have at least on 3 occasions kept the shop open for an extra hour or two, because they new customers where coming from other towns to shop...I've said they can open the shop late one morning this week and I'll sponsor breakfast at the local Spur.

On a side point, I have 4 full time staff, and work the holiday and sick leave cycle from Feb to Feb. Between them they have had 3 days sick leave over the whole year, pretty good I think. What I tell them though, is they officially get 16 days leave, but am very flexible and happily give them around 20 - 22 if they do not abuse the sick days. Unplanned sick days are a bit of a pain when the shops are 75km away.

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## bjsteyn

> Hmmm as a small business owner i want just the basics, to be able to see if stock is going missing or not to be able to track when it was, narrow down the shift and find the suspects.  All in all to keep shrinkage to a min and know whats going on in my business at a glance.  Reason being is a small business that i feel does not require more effort than that.  If it was a larger investment then yes by all means i would like more features.


Sounds like I whould be wasting my time from what i gather, will look into a different project.

-->> Once a thief, always a thief -->> Maybe do some background checks

A Variance Report may be of value. Just not sure how it whould be implemented as you whould need to now your sales per item between stock takes.
-->> Previous Stock Take minus New Sales plus New Stock purchases -->> Will give you the amount of stock you should have on hand -->> Minus Current Stock Take -->> Will Give You The Variance -->> If it is a minus then stock is missing -->> If it is a plus then Father Christmas has been visiting your store

Can be done on stock count aswell as value.

Hope this is usefull.

Cheers
BJ

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## sterne.law@gmail.com

Couple of pointers -
There is a balance between control and staff morale. regretfully stealing is a BIG problem in many businesses and particularly restaurants.

Keep all stores locked. Only you should open them. Do not stand outside of a freezer go in with the staff or issue yourself.
If you have a manger that has keys, have some checks over the manager (managers also steal).
Never leave the back door or any store room unattended!!!!
You can ban bags - it makes sense to have facilities for people to keep stuff.
Have a set entry and exit point for staff if possible. Make it a disciplinary offence to leave by any other exit/entrance.
Use searching. If you do not want to search every day or every person use random system. (Bag with 2 different colour objects, if you draw red you get searched)
SEARCH YOUR DUSTBINS!!!! every day - this is a common method of stealing but also checking your bins may point you in the direction of other problems. Go with staff to empty out bins.
If you can, have your outside dustbins locked - in this way the bin method is almost eliminated. Even if they get it out the bins being locked creates a problem.

If doing any stock variances, do daily. End of the week tells you what you already know - there is shrinkage!
Weigh and portion - if you issue bulk stock before packing away balance it up. Eg if I give 2kg mince for burgers, when they are finished prepping, check that you get 2kg back. Also if it is 200 gram portions that this also balances, i.e 10 portions(variances often picks up other problems)
As to if there are stock shortages - if you do not take action, it will  continue. Obviously catching people who are stealing bulk stock is very different from a person eating a burger, but it all starts small.
You can charge the staff on duty. Many will now say who must pay, but the fact remains that it is almost impossible for people to steal/eat without colleagues seeing, hence they are as guilty. (This being said, having a confidential method to report stuff helps - the fact is we must understand the fear to report people - a shoe box or post box concept can work)

On incentives a simple method i have used is notice board. At the beginning of the month an amount is put on board, say R3000. Every time there is a food problem (complaint/burnt/etc) deduct the SELLING VALUE from the R3000. Likewise brocken plates and glasses etc. you can develop it to any level (amount over budget for cleaning, shrinakge etc) at the end of the month the balance is paid out to ALL staff preferably equally.

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AndyD (23-Feb-11), Dave A (23-Feb-11), roryf (25-Feb-11)

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## roryf

I worked in casino surveillance as a CCTV Tech and used to do all the covert work for the Investigations department.You will not believe how much stuff gets stolen even when good controls are in place.

I then took over a food manufacturing company that was battling, and used some of my experience to sort out the stock losses.Some of the things I used are as follows:

1)Undercover agent for 3 months to find out who the suspects were.
2)Took keys away from likely suspects
3)Made a list of the guilty people and worked them out 1 at a time on various different charges eg.Clocking,poor work performance.
4)Installed cameras.
5)Changed bin liners from black plastic to clear.
6)Got our security company to do 'stop and searches'.
7)I took away staff discount as it was being ABUSED badly.
8)Offered rewards to informants.
9)Started proper stocktaking.
10)Introduced basic Stock Control forms to our shopkeepers,so that they are able to tell me how much stock they should have at any one time.
11)Introduced a security guard.He gets tested often by us!

I saw quite a big change in my GP over just a few months.I don't think any of us actually realise just how bad the theft situation is in SA.I think many of would be shocked as to how much stock marches out of our premises with us watching!

Look sharp and watch your GP increase!

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Dave A (25-Feb-11)

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