WAR-025 Warehouse Inventory Management Procedure

If using the Forklift cage to conduct the Stock Count, ensure the Pins are securely in place.

1. Introduction

The inventory Count and reconciliation is a stock checking method.  This involves a cyclical physical check of stock items, which exist in Warehouse locations against the stock recorded in different forms like GRS form, MTO form and Bin sheet.

1.1. What gets counted?
All warehouse storage locations and storage bins are counted, with the exception of nominal locations. Nominal locations are interim or transfer locations only where stock is not located physically.

1.2. There are three (3) storage locations in which materials are stored and issued. These locations involve in warehouse periodic counting or stocktake.

CR        COOL ROOM – WAREHOUSE

FS        FLAMMABLE STORE – WAREHOUSE.

BS        BULK STORE – WAREHOUSE

Quarantine and Reject Cage areas are not counted.

1.3. Some Standard Auditing Requirements

Audit procedures require that activities such as Stocktaking include the following provisions.

1.3.1. Separate personnel should do counting with the forms and physical counting.

1.3.2. If differences will occur a second recount will be done. If differences still occur after a second recount of a specific storage bin, the entire batch for that material must be counted in an attempt to locate the error.

If then the difference is still evident, the entire stock of that material must be counted.

1.3.3. All count hard copy data is to be filed in an appropriate folder with sections for the different data.  This is to be organised by the month and kept in the various areas that conduct independently.

2. Procedure

Note: A Deviation Report, (DR) MUST be raised for if there is a Variance between book value and count value.

2.1. Stock Counting Classification (ABC’s)

ABC’s.  These are a set of stock categories, which are determined by value and business criticality.  The most expensive/critical items receive an A classification and are counted once a month.  The B items are less critical and are counted once every three months and the C items are the least expensive/critical to the business and are counted once, annually.

2.2. All Raw material are classified as category A and counted by monthly. All packaging materials are classified as B and counted Quarterly. All non component goods like production consumables and goods which are not related to production processes can be classified as C and counted annually.

2.3. Counting by Material Code

2.3.1. At the beginning of each month all raw materials are counted for the previous month. Warehouse authorised staff print out a copy of Warehouse Periodic Inventory Count Sheet (Form-050). Write the month and year for which the counting will be done. Write the balance of the material brought forward from the previous month and the corresponding Laboratory Batch Number for the material as shown in the example below.

2.3.2. Collect all the GRS, MTO, MTO-Return forms generated during the month from the warehouse office cabinets. Collect the Warehouse Periodic Inventory Count Sheet (form-050) for the previous month.

2.3.3. For the particular material code pick the quantity received, date received, GRS number and the Lab. Batch number from the GRS forms and start to fill up from the second row of the Warehouse Periodic Inventory Count Sheet. Write the date of the material issued, quantity issued, MTO number and Lab. Batch number from the corresponding MTO forms.

2.3.4. While filling up the form special attention should be given to ensure the logical sequence of date and Lab. Batch number is maintained throughout the form. GRS number can be cross checked from the MTO reference.

2.3.5. On each row determine the balance by using the equation “Available stock plus received qty. minus Issued qty.” In no time the balance can go negative. Determine the balance of the material and corresponding Lab. Batch number at the end of the month and write on the sheet. Print the person’s name who prepared the form, sign and date.

Note: Since the inventory system in Sydco follows FIFO (First in First Out) rule the earliest batch number will be issued first and the month end balance will be from the latest batch available.

EXAMPLE: Warehouse Inventory Count for material 999 in the month of May 2006

2.4. Reconciliation by Bin Sheet

2.4.1. Each time a material is received one bin sheet is printed per pallet and attached to the pallet until the pallet is consumed fully (see SOP WAR-005). After the pallet is consumed fully the bin sheet is collected and filed in the warehouse cabinet on a monthly basis. Collect all the completed bin sheets finished and filed during the month for which the material needs to reconcile.

2.4.2. Print a copy of Warehouse Bin Sheet Reconciliation Form (Form-045). Write the material code, month and the year on the form. Arrange the bin sheets chronologically from earliest to latest completed in that month. Collect data e.g. bin sheet no, storage type, storage bin, date issued, lab. batch no. and the total quantity issued for the month.

2.4.3. Determine the quantity received during the month from all the GRS forms for the material. Deduct the issued quantity from the received quantity to get the remaining balance of the stock.

2.4.4. Note: According to our example three bin sheets were consumed fully and one bin sheet by partly during the month of May for the raw material 00999. The first one was consumed after the issue of 1000kg from the batch no. 06.04.000040. The last one was completed after the issue of 1000kg from the batch no. 06.05.000110. Total quantity issued during the month was 12,500 kg. Total quantity received was 12000kg. Quantity brought forward from the previous month was 1000kg which was actually consumed at the first issue of the month. Quantity returned from production from batch number 06.05.000080 was 500 which was reissued in the next Transfer Order. Therefore, the balance is 1000kg form the batch no. 06.05.000110 for which a new bin sheet (#4) was issued sitting in storage bin A-02-07. The reconciliation will be successful with no deviation if the physical count of the current stock in the storage bin A-02-07 will be found 1000kg from the batch no 06.05.000110.

A. Quantity brought forward from April: 1000

EXAMPLE: Bin Sheet Reconciliation for material 999 in the month of May 2006.

2.5. Conducting the Physical Count

The count is a physical check of the stock quantities in each bin/compactus space, etc.

2.5.1. From the Warehouse Periodic Inventory Count for material 999 and Bin Sheet Reconciliation for material 999, it was found that our current stock for the material 999 is 1000kg from Laboratory batch no. 06.05.000110. This need to be physically checked by counting the current storage bin and the bin sheet in the warehouse

2.5.2. Print out the copy of Physical Inventory Count Form (Form-040) and enter the data after counting the storage bins physically for all the material. Take care to correctly identify the goods and count the correct quantities.

2.5.3. Use a Blue or Black pen only to fill in quantity and stock data.  Each page must have the count date, your initials and your signature in the space provided.
Note: The physical count must not be done by the same person who enters the data in the Warehouse Periodic Inventory Count form and Bin Sheet Reconciliation forms.

2.6. Difference Counted versus Book value

2.6.1. It is important to note if you still have a difference between your count and the book value you must investigate the reason prior to clearing the differences.

2.6.2. Investigation includes reviewing all previous receipt and issued transactions on that material code, any entry error, any discrepancies occurred during receipt, issue, reject and return for this material.

2.6.3. Then, if the error is found, fix accordingly, (e.g. transfer the materials into right bin, etc.).

2.6.4. If still not found, raise a Deviation Report (DR) and contact warehouse and Accounts Manager to clear the stock difference.

3. Stock Gain or Loss

3.1. In case of a stock gain or loss, raise a Deviation Report (DR).

The following items must be listed in the DR:

 – The Material & Batch Number

 – The Quantity

 – The exact value of the stock (extremely important).

 – The month and date of the stock count

 – Whether the stock is a loss or a gain.

 – A decision is then made by the Authorised personnel in the Laboratory as to whether the material can be passed for use or rejected.

4. Filing

4.1.       File all your Warehouse Periodic Inventory count Forms, Bin Sheet Reconciliation Forms,    Physical Inventory Count Forms and the copy of Deviation Reports (if raised) in the designated cabinet in warehouse office on a monthly basis.

5. Summary of Changes