← Equipment management glossary
Also called: shrinkage, equipment shrinkage, stock loss.
The figure came out at three per cent and the meeting turned to security. Most of it was two skips of scrapped hand tools that nobody had taken off the register.
Treating the whole figure as theft is the most common and most expensive misreading, because it points every intervention at security when most of the gap is usually administrative.
Shrinkage rate
Shrinkage rate = ((Recorded value − Actual counted value) ÷ Recorded value) × 100
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Recorded value
What the register says you hold.
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Actual counted value
What a count actually found.
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The gap
Four causes, needing four different responses: theft, administrative error, damage and loss, and unrecorded disposal. That last one is frequently the largest for equipment — and it is a records problem being counted as a financial one.
For equipment, count items not just value
The standard formula is value-based, which suits retail stock. For equipment it is worth also tracking the count of items unaccounted for, because a single missing excavator and forty missing hand tools produce similar value figures and describe completely different problems.
What goes wrong without it
Attributing all shrinkage to theft leads to spending on security while the real cause — usually unrecorded disposals and administrative error — carries on unaddressed.
How Itefy handles it
Itefy reduces the administrative share directly: custody is recorded at handover, locations have a changelog, and disposal archives the item instead of leaving it in the register. Read more.