Memo SCILaid

From: Francois Damba

Date: 22 February 2021

RE: UNIT 2 – TASK 9 – STOCK CONTROL AND RECORDS

John Rudd, at his meeting, informed you that he is expecting a visit from the SCILaid
auditors

1. How would you verify the stock physically held at the Chagong warehouse?

- Inventory verification exercise is a very important exercise to the warehouse operation

and to me as the warehouse manager and to SCILaid as an organisation. I will make
sure that this exercise is given much priority and all necessary tools, equipment and
competent manpower it deserves. If available I would use inventory scanners or other types
of stock counting technologies. But traditionally I will employ physical inventory count system
which is done with a pen and paper. The staff can use a physical inventory count sheet to tally up
the products and reconcile the data in their system. While this method can get the job done, it’s
highly inefficient and it requires double entry. Features like simultaneous stock takers allow the
use of multiple devices to count stock faster and Vend’s quick scan mode function enables
warehouse inventory team to count inventory by using their barcode scanner. In this case if I
am going to find teams to count inventory I must find a competent team of the seasoned
employees mixed with new people with fresh eyes those who are not really familiar with
the warehouse and the products, the reason being that if I only use the experienced
people who has been in the warehouse for some time I may not get good results they
are so -familiar with the different location of the good and are familiar with the polices ,
the experience may over look some small issues and details which may cause a
distorted inventory report but the new people may be of benefit will definitely do the
counting by book which may provide the correct information.
- Before the count start I must make sure that the highest of order is achieved starting by
making sure that all the staff are well informed about the warehouse inventory counting
dates and times and signs displayed at the entrance and exit so as to minimize traffic in
and out of the warehouse.
- The other thing I must do is to make sure walk around the warehouse and see if there
are no items lying around out of their correct location and place them back to their
correct locations so that when counting starts every item is found at the correct location.
I would also map the warehouse and share with the counting team for the sake of
organized navigation during counting avoiding haphazard movements and allocate
every member items and location of counting inventory. To avoid some confusion and
duplication I must find out about the un-usable goods which may be still in the
warehouse not quarantined as well as the outstanding orders and those in transit from
suppliers.
- During counting I must make sure that marking of every item, shelve and sealed boxes
is religiously done to avoid duplication.

© 2017 Logistics Learning Alliance Ltd – ‘Supply Chain Improvement through Learning’
 - After all the counting is complete and before updating the stock levels data is carried out,
to achieve satisfactory results of our warehouse inventory the team would double check
the inventory figures together and then make a final update.

2. What could be the reasons for a variance between the physical stock and the
stock records, and how would you investigate these variances?

- There are quite a number of variance reasons in the warehouse which are not just
limited to clerical errors, wrong addition, wrong recording and interpretation of
figures. During receiving and packing if goods receiving and recording up to storage
is not well coordinated, this is also one of among other points of inventory records
errors which if goes un noticed during warehouse operation this will definitely create
false report. There may be goods received and placed in wrong locations as well as
incorrect data entry during inbound and out bound, such inventory may be also
known as lost inventory due to its availability in the warehouse but not available for
use when its needed because it’s not found in its location.

- But not ruling out loss of inventory due to theft, sometimes the warehouse will be
experiencing these variances through theft during transit and supplier fraud and the
receivers may fail to notice especially the sealed boxes and cartoons as well theft
being perpetrated from within the warehouse by staff members.

- And one of the major cause of these warehouse inventory variances is due to the
lack of warehouse good practices of frequent inventory record system updates and
random stock taking, Inadequate handling of damaged and expired goods which
may easily be included during active inventory counting.
- To investigate the variances recorded after a complete inventory counting but yet the
numbers are not matching, my first step to rectify this discrepancy is re-counting of
the inventory which is has recorded a discrepancy there could be a very minor error
during the first counting process. During this time we must physical check if the
inventory exist in their location which they are supposed to be, and if there is a
number of inventory missing we must double check if they are not stored
somewhere other than the warehouse coded inventory location. Probably there
could be some purchase of orders made and are still in transit from the suppliers.
During the investigation I must make sure that the correct unit of measure was used
by everyone who participated in the process because there could have some people
who counted using for example in liters and pounds when in actual it’s supposed to
be a number of boxes or units. Someone may also mistake for a similar product as it
is a common error which can occur in inventory counting when team staff may not
realise that a variation in size or color is technically a different product with different
identification. I must also check and make sure that the description in our inventory
management system is matching with the inventory we are counting.
- There is also need to double check if there is not missing paperwork which may
have not been entered into the system and after all the above is done and no logical
reason for loss of stock is found we have to further investigate if the staff and
beneficiaries including the transporters were not been stealing the inventory. If we
suspect theft we would consider tight preventative measures.

3 What procedures would you put in place to ensure accurate and up to date stock
and pipeline data for inventory control and accurate reordering?

- For me to ensure that accurate and up to date stock and pipe line data for inventory
control and accurate recording is achieved, I must make sure that the following tools
are in place.
- Maintain a well-organized warehouse, my making sure that the warehouse must be
clean the inventory location must be clear and well labelled inventory location well
demarcated on the floor or isle, and shelves.

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 - I must establishment a good inventory naming and labeling practices, mapping of
the warehouse for easy goods access and safe navigation in and out of the
warehouse. I must define and adhere to efficient storage and receipt processes and
policies procedures
- Stock identification must not be difficult I must make sure that each and every item
in the warehouse is given a code which can follow a prescribed format that is
defined by SCILaid along with more details of the inventory.
- On receipt I must make sure that every inventory held has a stock card associated
with it and this stock card may be in the form of a physical paper recorded or a file
held in the computer system which will be administered by myself as the warehouse
manager. The stock will be containing the following information
- Description and item ID, Pack quantity, storage location in the bulk storage area,
including inventory control information such as re-order and level or maximum stock
level.
- I also need bin cards, this is a specific document related to one batch of an item in
the inventory it identifies the specific batch of an inventory or item, and it is a good
practice that a new one is created for each and every new orders which also carries
information of new stock and old stock and their expiry dates of every stock and
item. I make sure that these bin cards are placed on or next to the particular
inventory so that it will be easily read in the warehouse area. I must schedule for
some physical random stock taking to reconcile the balance with the physical stock
and stock balance in the records than to wait for a long period of time without
reconciliation this helps to rectify identified gray areas before they become major
problem.
- Frequent stock check also helps to identify some goods which may have been
damaged whilst being handled or during storage in the warehouse. For example
during packaging of bulk goods some grains may be lost or damaged during
repacking affecting the quantities of that particular commodity. To have a good
inventory records all the losses, damaged or lost must be properly recorded and
clearly explained and these goods should be removed from the active inventory and
stored away in a selected area of breakages. Once the processes above are
followed we will find it easy to achieve great stock records every time we conduct
inventory reconciliation.

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