Its use in the warehouse
The usual causes are damage in handling, expiration of products that did not ship in time, theft and recording errors discovered in a count. Recording shrinkage with its reason allows the causes to be separated and the most costly one to be addressed; shrinkage without a reason only shows that inventory decreased.
How Chainlink WMS applies it
In Chainlink WMS, shrinkage is recorded with a reason: an inspected return can be written off as shrinkage, and a count adjustment is applied by an Administrative user. FEFO picking reduces expiration losses because it allocates the lot that expires first.