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October 21, 2022

Why Manufacturers Leverage SOLOCHAIN WMS/MES to Minimize Inventory Shrinkage

Manufacturers are often uneasy when it comes to addressing the issue of inventory shrinkage in their company. After all, it involves implementing solutions to prevent items from mysteriously disappearing from inventory when, too often, there’s not much mystery about the way they came to disappear. However, rare are the manufacturers who can afford to leave that issue unattended.

Every year, American businesses alone lose up to $50 billion dollars or more through inventory shrinkage. In the manufacturing world, shrinkage is usually the result of mishandled materials and components that become unusable as a result, administrative/clerical errors, and, yes, theft.


The U.S. Chamber of Commerce estimates that 95% of businesses suffer from theft in the workplace and that 75% of employees have admitted to stealing from their employers at least once. It’s important to keep in mind, however, that if theft in the workplace is one of the leading causes of inventory shrinkage – accounting for over 30% of shrinkage costs – it is not the only one. Manufacturers must therefore implement the right solutions if they want to root out all the causes of shrinkage in their operation.

What Can Manufacturers Do to Minimize Inventory Shrinkage?

There are various things manufacturers can do to prevent inventory shrinkage and limit its impacts on their margins. By taking the time to thoroughly vet all potential employees, employers can, in theory, avoid many of the problems and costs associated with theft in the workplace. However, not only does that not do anything to solve the other problems that cause shrinkage, but with the extreme labor shortages manufacturers are experiencing everywhere, such a hiring process may well amount to wishful thinking. If only there was a way for manufacturers to address inventory shrinkage and overcome the workforce shortage…

As it turns out, there is! A well-adapted WMS solution like SOLOCHAIN WMS/MES gives manufacturers the means to eliminate the main causes of inventory discrepancies and reduce their dependence on a large workforce. Don’t believe me? Read ahead to find out how the SOLOCHAIN WMS/MES achieves all that.

How SOLOCHAIN WMS/MES Optimizes Inventory Management

Common sense readily suggests that if a manufacturer experiences discrepancies between the inventory shown in their accounting records and that which is physically in their warehouse, that manufacturer needs to improve their inventory management.

SOLOCHAIN has been ranked by Gartner as one of the most powerful and agile WMS/MES solutions of its category. With SOLOCHAIN implemented in their facilities, manufacturers gain access to highly detailed and accurate inventory data. The WMS/MES solution also enables them to manage and record the flow of items across their operation in real time – from the moment items are received, at every step of the production process, up until they have been shipped.

If SOLOCHAIN can do all this, it’s in part because it can be implemented on mobile handheld devices. In that way, the WMS can direct processes and automate inventory management across a manufacturer’s operation. Employees are instructed and supported in their tasks through intuitive interfaces on the mobile devices.

Added bonus: the handheld devices are usually not unlike the mobile phones that employees use in their everyday life. This, it turns out, facilitates the onboarding of new employees, and fosters a work environment more attuned to the younger workforce, which leads to better employee retention.

How SOLOCHAIN’s WMS/MES Capabilities Minimize Shrinkage

Let’s recall the main causes of inventory shrinkage that manufacturers must address: Unusable components, parts, and ingredients theft (most commonly committed by employees but also, sometimes, by third parties such as suppliers, manufacturing partners, 3PLs, etc.)

Clerical/administrative errors

Thanks to its integrated WMS and MES capabilities, SOLOCHAIN helps manufacturers avoid losses due to mishandled components, parts, or ingredients. Easy to read displays on mobile devices inform employees, for instance, of how inventory must be handled relative to FIFO, FEFO, LIFO, LEFO, environmental conditions, fragility, etc. Obviously, this goes a long way toward preventing fragile components or perishable items from becoming impossible to use during the production process.

Meanwhile, every time an item, case, or pallet is handled, employees must use their device to scan the appropriate barcode. This keeps SOLOCHAIN informed of all changes to inventory status, condition, or location in real time. Whether it’s before, during, or even after assembly, management can precisely track a component’s every movement through its operation. That information is immediately recorded by the system, which creates reliable event logs and audit trails – and makes it difficult to lose parts in the warehouse!

Of course, one of the benefits of that kind of visibility is that it enables manufacturers to make agile and targeted recalls when need be – which minimizes its operational and financial impacts. But another no less significant benefit is that SOLOCHAIN’s precise event logs make every employee along an item’s journey far more accountable. Furthermore, once employees understand that the company is using a powerful system that rigorously monitors the movement of goods, the temptation to steal goods rapidly dwindles.

Through integration with the manufacturer’s other systems, the tracking capabilities of a WMS can extend beyond the warehouse, which helps prevent rare cases of third-party fraud. However, the real power of SOLOCHAIN’s integration with the company’s ERP is that it eliminates the clerical or administrative errors that cause shrinkage. Automated data transmission between systems gets rid of the human errors and omissions that cause discrepancies between the physical reality in the warehouse and a manufacturer’s accounting books. It enables manufacturers to rely on the WMS’s accurate inventory information, updated in real time, across all their systems, as the one source of truth about their inventory.

Beyond Minimizing Shrinkage

Being able to rely on such high levels of inventory accuracy benefits a manufacturing company well beyond minimizing shrinkage. For instance, with precise knowledge of inventory on hand, manufacturers can implement an Available to Promise supply chain strategy, which helps maintain a leaner inventory and achieve higher rates of customer satisfaction.

And these are just some of the ways in which the SOLOCHAIN WMS/MES leads to a more agile, efficient, and resilient operation.

Learn more about SOLOCHAIN WMS

To learn more about what eCommerce-specific capabilities can do in a WMS, visit the Generix Group SOLOCHAIN WMS page, or download the SOLOCHAIN WMS Product Sheet.


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