Value of inventory shrinkage as a percentage of cost of goods sold (COGS)

This measure determines the value of inventory shrinkage (i.e. costs associated with breakage, pilferage, and deterioration of inventories) as a percentage value of cost of goods sold (COGS). COGS represents the cost of purchasing raw materials and manufacturing finished products. This measure is part of a set of Process Efficiency measures that help companies optimize the performance of their "manage logistics and warehousing" process by minimizing waste and refining resource consumption.

Benchmark Data

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Measure Category:
Process Efficiency
Measure ID:
105251
Total Sample Size:
697 All Companies
Performers:
25th
-
Median
-
75th
-
Key Performance
Indicator:
No

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Compute this Measure

Units for this measure are percent.

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The business entity's inventory shrinkage as a percentage of cost of goods sold

Key Terms

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Cost of Goods Sold (COGS)

Cost of goods sold (COGS) is the amount on an income statement that represents the cost of purchasing raw materials and manufacturing finished products. This represents specific or direct manufacturing cost of material and labor entering in the production of finished goods. For merchandise companies, cost of goods sold represents the purchase price of items sold, as well as indirect overhead such as freight, inspecting, and warehouse costs. For service organizations, cost of goods sold may be referred to as Cost of Services.

Process efficiency

Process efficiency represents how well a process converts its inputs into outputs. A process that converts 100% of the inputs into outputs without waste is more efficient than one that converts a similar amount of inputs into fewer outputs.

Measure Scope

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Cross Industry (7.3.1)

  • 4.4.1 - Provide logistics governance (10338)
    • 4.4.1.1 - Translate customer service requirements into logistics requirements (10343)
    • 4.4.1.2 - Design logistics network (10344)
    • 4.4.1.3 - Communicate outsourcing needs (10345)
    • 4.4.1.4 - Develop and maintain delivery service policy (10346)
    • 4.4.1.5 - Optimize transportation schedules and costs (10347)
    • 4.4.1.6 - Define key performance measures (10348)
    • 4.4.1.7 - Define reverse logistics strategy (16905)
  • 4.4.2 - Plan and manage inbound material flow (20936)
    • 4.4.2.1 - Plan inbound material receipts (10349)
    • 4.4.2.2 - Manage inbound material flow (10350)
    • 4.4.2.3 - Monitor inbound delivery performance (10351)
    • 4.4.2.4 - Manage flow of returned products (10352)
    • 4.4.2.5 - Control quality of returned parts (12708)
    • 4.4.2.6 - Salvage or repair returned products (20109)
      • 4.4.2.6.1 - Perform salvage activities (10366)
      • 4.4.2.6.2 - Manage repair/refurbishment and return to customer/stock (14195)
  • 4.4.3 - Operate warehousing (10340)
    • 4.4.3.1 - Manage and track inventory deployment (10353)
    • 4.4.3.2 - Receive, inspect, and store inbound deliveries (10354)
    • 4.4.3.3 - Track product availability (10355)
    • 4.4.3.4 - Pick, pack, and ship product for delivery (10356)
    • 4.4.3.5 - Track inventory accuracy (10357)
    • 4.4.3.6 - Track third-party logistics storage and shipping performance (10358)
    • 4.4.3.7 - Manage physical finished goods inventory (10359)
    • 4.4.3.8 - Manage warehouse transfers (20957)
  • 4.4.4 - Operate outbound transportation (10341)
    • 4.4.4.1 - Plan, transport, and deliver outbound product (10360)
    • 4.4.4.2 - Track carrier delivery performance (10361)
    • 4.4.4.3 - Manage transportation fleet (10362)
    • 4.4.4.4 - Process and audit carrier invoices and documents (10363)
    • 4.4.4.5 - Process and audit carrier invoices and documents (10363)