What is Shrinkage

Introduction
Shrinkage is the reduction of a commodity's quantity (mass) due to factors such as moisture, handling and waste, but does not include damaged commodity. Therefore, in stock management at sites and storage, shrinkage and its associated rates are an important factor to consider for accurate inventory and stock levels.

When is Shrinkage Applicable?

Applicable Scenarios

• OUTLOAD: Grower outloading from a site. 
• INLOAD: When a non-grower stock owner inloads or a title transfers from a grower to a non-grower. 

Non-grower to non-grower transfer will not incur shrinkage because it would've been applied during the initial inloads or when a grower transfers to a non-grower.

Special shrinkage rates can be set up for different customers. To set up special shrinkage, please follow the steps below:

1. Log in to AgriChain using your credentials.
2. Click on your profile/initial that is located in the top right corner of your screen.
3. Select 'Shrinkage' from the drop-down list. 
4. In the Shrinkage tab, select 'Special' to set up the special shrinkage rate according to different customers
   

Sites can also choose to apply shrinkage to themselves via the 'Special' Shrinkage set-up. 

Shrinkage will NOT be applied to all other operations related to stocks, such as Stock Update, Empty Stock, etc. 

How is Shrinkage Calculated?

Shrinkage is calculated as a percentage of the net weight (actual weight recorded at the weighbridge).

The following process outlines how shrinkage affects different scenarios:

Scenario 1: OUTLOAD (Grower Outload or Title Transfer)

• Net Weight: This is the actual load weight recorded at the weighbridge.
• Shrinkage Load Weight: On the platform, a separate load is created for the shrinkage, recorded against the BHC (Bulk Handling Company). The shrinkage load weight is calculated using the shrinkage rate (%) nominated at the site and the net weight.
  
• Stock Deduction: The owner's stock is reduced by the net weight minus the shrinkage load weight to give the load's final weight during outload.

Case 1: Grower Inloads 100 MT at a BHC that has set shrinkage at 0.3% per MT

• Inload: The grower views 100 MT in stock, with no shrinkage rate applied at this stage.
• Outload (99.7 MT): When the Grower outloads, shrinkage is applied, and so the grower will see 99.7 MT.

Scenario 2: INLOAD (Non-grower Inload or Title Transfer from Grower to Non-grower)

• Net Weight: This is the actual load weight from the weighbridge, unshrunk.
• Shrinkage Load Weight: On the platform, a separate load is created for the shrinkage, recorded against the BHC (Bulk Handling Company). The shrinkage load weight is calculated using the shrinkage percentage (rate) nominated at the site and net weight.
• Title Transfer to Non-Grower: The Buyer receives 99.7 MT after shrinkage.
• Stock Increase: The owner's stock is increased by the net weight minus the shrinkage load weight to give the load's final weight during inload.

Case 2: Non-grower Inloads 100 MT, or a transfer occurred from non-grower to all user type at a BHC that has set shrinkage at 0.3% per MT

• Inload: Shrinkage is applied during inload, so the Non-grower views 99.3 MT in stock.
• Outload (99.3 MT): No further shrinkage is applied during outload.
• Title Transfer to all user types: The Buyer receives 99.3 MT, whether they are a Grower or Non-Grower.

Non-grower to non-grower transfer will not incur shrinkage because it would've been applied during inloads or when a grower transfers to a non-grower.

FAQs

Currently, the Sites that our company manages apply Shrinkage Rates to all inloads by both Growers and Non-Growers alike. How do I go about managing this?

Currently, separate Shrinkage rules are applied for Growers and Non-Growers. 

To apply Shrinkage Rates for ALL inloads by Growers and Non-Growers alike at your Sites, please submit a ticket and request a Setting change. We will then have Shrinkage Rates applicable to all inloads regardless of entity type at your Sites.