2025 was dominated by many disruptions - inflation, supply chain disruptions caused by weather, unforeseen disasters, and rising costs. However, one area of the supply chain that continues to be overlooked is waste and inventory shrinkage in the supply chain.

The magnitude of global food waste is staggering. A new report indicated that food waste is costing retailers and suppliers over half a trillion dollars annually. Avery Dennison's report, "Making the Invisible Visible: Unlocking the Hidden Value of Food Waste to Drive Growth and Profitability," predicted that the cost of global food waste will reach $540 billion by end of 2026.

Manufacturing operations tend to have a better accuracy rate. They still have overall shrinkage rates around ~0.5 %–1.5 % of inventory value per year. This can cause Phantom inventory which refers to situations where inventory records show products that don’t physically exist or exist in the wrong quantity/location.

Industry benchmarks and reports make it clear which sectors tend to have the highest problems with inaccurate inventory and associated losses:

1. Retail (Especially Physical Retail Stores) - Average inventory accuracy can be as low as 63-65% meaning a large share of records don’t match actual stock.
2. Food and Beverage – Some food grocery operations report higher shrinkage than general retail, partly because of spoilage, waste, and miscounts.
3. Manufacturing – Tends to be better than general retail, though shrinkage still exists (1.5% of revenue)

Why does accuracy matter when it comes to revenue? Inventory inaccuracy doesn’t just inflate numbers; it leads to real revenue loss by causing:

• Stockouts – Tends to be better than general retail, though shrinkage still exists (1.5% of revenue)
• Overselling – canceled orders and returns
• Excess safety stock – higher carrying costs
• Supply Chain disruptions – delays and expedited freight

Is 2026 the year for your company to get real-time, accurate data from your supply chain partners? For more information about how Innovate’s Managed Services and Supplier Portal can help you receive the information you need, visit https://innovateec.com/what-we-do/ or contact me to discuss how we can help you get started.

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