The Number One Cause of Loss in a Warehouse: OS&D Claims
The biggest source of financial loss in warehouses comes from OS&D claims (Overages, Shortages, and Damages). These damage claims occur when shipments arrive to a customer incomplete, mishandled, or damaged, costing companies millions every year.
What’s worse is that many of these claims aren’t the original warehouse’s fault. But without solid proof, the producers end up covering the costs. This makes OS&D claims the top reason warehouses lose money and face disputes with both customers and carriers.
Why Damage and OS&D Claims Matter for Warehouses: Loss Prevention
OS&D claims can severely cut into your profits, even when the issue didn’t originate in your facility. Without solid shipment documentation, it’s nearly impossible to dispute a claim or shift responsibility to the carrier, or at the minimum, take up time and resources to dispute them.
The good news? These losses are preventable with the right approach and technology.
How Much Money Are Warehouses Losing to Damage and OS&D Claims?
Warehouses in the U.S. are losing millions annually due to disputed damage and OS&D claims. In 2023, manufacturers, distributors, and warehouses reported an average LTL (Less Than Truckload) damage rate of 1.94%, with each claim costing approximately $3,777. For large companies, these frequent damage and loss claims can add up to significant losses over a year, with some incurring up to $6.3 million in damage and loss claims.
Small businesses are especially vulnerable. One small interior design shop lost over $80,000 when a vintage item was damaged in transit. Since the shop had no photos proving the item was undamaged when shipped, they had to eat the cost. That single claim nearly wiped out a year’s profit, showing just how critical proof of shipment condition can be.
Industries Most Affected
These types of businesses suffer most from warehouse damage claims and OS&D losses:
- Retail and consumer goods
- Food and beverage distribution
- Manufacturing and automotive parts
- Electronics and appliances
Together, these industries lose hundreds of millions of dollars annually due to OS&D claims, impacting supply chain efficiency and profitability.
The Root of the Problem: Proving False Claims
The key to reducing these losses lies in documenting shipments to prove that false claims are indeed false (or that the product was shipped undamaged from your warehouse).
Many warehouse teams rely on forklift operators to step off of their trucks on or near the loading dock to take photos of each outgoing load using their phones. But this method falls short. It’s:
- Inconsistent: Operators might forget or skip the step when things get busy.
- Disorganized: Even if photos are sent to a manager, there’s no reliable system to match them to the correct shipments. Tracking them becomes a nightmare.
- Time-Consuming: OS&D claims can come months later. By then, managers are left digging through hundreds of unlabeled photos, hoping to find proof that may not even exist.
When a customer files a claim, finding evidence shouldn’t be a scramble. You need a system that makes proof automatic.
The Smart Solution: VerifEye Load Imaging System
The VerifEye Load Imaging System solves this problem with fast, seamless image capture during loading. Photos are automatically sorted and stored, ready for quick access if a claim arises.
How VerifEye Works:
- Forklift operators capture photos of every pallet right from their seat with a click on a touchscreen monitor.
- Images are automatically sent via Wi-Fi to your network storage or stored on a USB.
- Photos are tagged and organized with meaningful info such as date/time, pallet ID, order number, or truck number.
Why VerifEye Works Better:
- Creates reliable proof of shipment conditions.
- Makes it easy and fast to retrieve specific photos when a claim arises.
- Eliminates the hassle and errors of manual photo documentation.
- Enhances safety and warehouse productivity.
- The high-quality images provide crucial evidence defending that the product was undamaged when it was shipped.
A Positive Vision: What You Could Do with the Money You Save
Imagine reclaiming thousands of dollars each year that are currently lost to OS&D claims. That’s money you could reinvest into your business: upgrading equipment, expanding operations, training your team, or simply boosting your bottom line. By reducing false claims and streamlining your warehouse loss prevention strategy, you’re not just avoiding losses, you’re unlocking new opportunities for growth, innovation, and long-term success.
Protect Your Profits with VerifEye
Don’t let false damage and OS&D claims eat into your profits. The VerifEye Load Imaging System offers an easy, reliable, and efficient way to document every shipment, giving you the evidence you need to dispute false claims and protect your bottom line.
Want to boost your warehouse loss prevention and simplify your proof process?
Contact us today to learn more or schedule a demo.
