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Material handling
1. Stock Shrinkage
Shrinkage is the difference between what stock you should have and what you actually have. In
other words Shrinkage is the difference between recorded and actual inventory. Shrinkage can be
either known or unknown.
Known shrinkage is where the retailer can identify and record what happened to the goods.
Unknown shrinkage is unrecorded loss, generally where theft is the major contributor.
The loss of inventory that can be attributed to factors including employee theft, shoplifting,
administrative error, vendor fraud, damage in transit or in store and cashier errors that benefit the
customer.
Causes of stock shrinkage
The percentage of loss of products between manufacture and point of sale is referred to as
shrinkage, or sometimes called shrink. The average shrink percentage in the retail industry is
about 2% of sales. Here are the four major causes of inventory shrinkage in retail.
1. Employee Theft
According to the National Retail Security Survey, the number one source of shrinkage for a retail
business is internal theft. Some of the types of employee theft include discount abuse, refund
abuse and even credit card abuse. Unfortunately, this is one loss prevention area that generally
doesn't receive as much monitoring as customer theft.
2. Shoplifting
Coming in at a close second is shoplifting. Customer theft occurs through concealment, altering
or swapping price tags, or transfer from one container to another. While shoplifting remains a
smaller inventory loss source than employee theft, stealing by shoppers still costs retailers about
$10 billion annually.
3. Administrative Error
Administrative and paperwork errors make up approximately 15% of shrinkage. Simple pricing
mistakes due to markups or markdowns can cost retailers quite a bit.
4. Vendor Fraud
The smallest percentage of shrink is vendor fraud. Retailers report vendor fraud occurs most
when outside vendors to stock inventory within the store.
2. Industrial engineering
Discipline of utilizing and coordinating humans, machines, and materials to attain a
desired output rate with the optimum utilization of energy, knowledge, money, and time. It
employs certain techniques (such as floor layouts, personnel organization, time standards, wage
rates, incentive payment plans) to control the quantity and quality of goods and
services produced.
Industrial engineering is the design of situations for the useful coordination of men, materials
and machines in order to achieve desired results in an optimum manner. The unique
characteristics of Industrial Engineering center about the consideration of the human factor as it
are related to the technical aspects of a situation, and the integration of all factors that influence
the overall situation.”
“Industrial engineering is concerned with the design, improvement, and installation of integrated
systems of men, materials, and equipment. It draws upon specialized knowledge and skill in the
mathematical, physical, and social sciences together with the principles and methods of
engineering analysis and design, to specify, predict, and evaluate the results to be obtained from
such systems.” Industrial engineering can be better understood through these following points in
a simpler manner
Industrial engineering has provided a systematic approach to streamline and improve pro
ductivity and efficiency in the business world.
IE’s provide leaner, more efficient, and more profitable business practices while
increasing customer service and quality.
IE’s make the work environment safer, faster, easier, and more rewarding.
They provide a method by which businesses can analyze their processes and try to make i
mprovements to them. Staying focused on optimization ‐ doing more with less ‐ which he
lps to reduce waste in society.
IE’s help reduce costs associated with new technologies, thus allowing more of the popul
ation to better their lives by being able to afford these advances.
3. “Industrial engineering is that branch of engineering knowledge and practices which
1. Analyzes, measures, and improves the method of performing the tasks assigned to
individuals,
2. Designs and installs better systems of integrating tasks assigned to a group,
3. Specifies, predicts, and evaluates the results obtained.
It does so by applying to materials, equipment and work specialized knowledge and skill in the
mathematical and physical sciences and the principles and methods of engineering analysis and
design. Since, however, work has to be carried out by people; engineering knowledge needs to be
supplemented by knowledge derived from the biological and social sciences. Industrial
engineering is concerned with the design, improvement and installation of integrated systems of
people, materials, information, equipment and energy.
“Industrial Engineering is Human Effort Engineering. It is an engineering discipline that deals
with the design of human effort in all occupations: agricultural, manufacturing and service. The
objectives of Industrial Engineering are optimization of productivity of work-systems and
occupational comfort, health, safety and income of persons involved.
Here are a few examples of Industrial engineering
As a management engineer in a hospital, an IE may help doctors and nurses make the bes
t use of their time in treating patients. As an ergonomist in a television manufacturing pla
nt, an IE may change the tools workers use to assemble televisions to reduce the risk of re
petitive stress injuries.
As an operations analyst for an airline, an IE may design a bar coding system for identifyi
ng and transporting passengers luggage to ensure that it does not get lost.
As a quality engineer for a public gas and electric company, an IE may improve customer
satisfaction by designing a process to schedule service calls around availability of the cus
tomer.
Manufacturing firms and service industries hire a significant number of IE’s.
Today, more and more businesses hire IE’s in areas like sales and marketing, finance, informatio
n systems, and personnel. Other industries employing IE’s are hospitals, airlines, banks, railroads
, and social services.
4. Material Handling
Material handling is the movement, protection, storage and control of materials and
products throughout manufacturing, warehouse, distribution consumption and disposal. In
other words Material handling refers to managing the physical movement of materials into,
through and out of the firm.