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Are inventory procedures written and cascaded to inventory team?
How often should you take the physical inventory count?
Are discrepancies matched with actual count and inventory records?
Is it necessary to make a daily count of your inventories?
What other best practices that you know to make your inventory accurate or compliance with industry practices?
To properly manage or control your materials inventory the team or department handling the materials should have the following:
1) Written procedures on conduct of physical inventory.
2) Method of taking the inventory; FIFO (First-in-first out)..method suited in type of business or materials being handled.
3) All materials transactions must be documented; Inbound materials should be confirm received via Receiving Report (RR), outbound materials should be documented using (MIN) or (MT) Materials Issuance Note or Material Transfer.
4) Physical inventory count MUST be conducted on regular basis, i.e., weekly, monthly or yearly.
5) Actual count must be compared with inventory records and if not matched or with variance. Extra effort must be exerted to reconcile or make tally your inventory.
6) Any variance or discrepancies observe must be documented and reported to Financial officer for proper adjustments.
Daily Stock Inventory through Computerised System
Items in and out are properly managed.
Stock report on daily basis
Inventory will be conducted periodically on a daily,monthly & yearly basis.
ERP system ..mean inventory software
daily stock inventory through coputer
daily basics manitaing stock satus
You must always monitor the movement of the materials or product, all the movement of the product and materials must be recorded and documented. Physical Inventory count must be conducted regularly. Variance must be reconcile.
Controlling materials inventory in warehouse management requires a structured approach that balances efficient stock levels with operational demands. Here are the key steps and practices to control materials inventory _
1. Implement an Inventory Management System (IMS)
>Warehouse Management System (WMS): Use a WMS to track inventory in real-time, providing visibility over stock levels, locations, and movement.
>Barcode or RFID Scanning: Automate tracking with barcode/RFID scanning to reduce manual errors and speed up processes.
2. Categorize Inventory (ABC Analysis)
>A Items: High-value items with low sales frequency. >B Items: Moderate value with moderate sales frequency.
>C Items: Low-value items with high sales frequency. This helps prioritize management attention and focus on high-value items.
3. Set Inventory Levels
>Reorder Point (ROP): Determine the minimum level at which new orders should be placed to avoid stockouts.
>Safety Stock: Maintain extra stock to account for unforeseen demand or supply chain delays.
>Economic Order Quantity (EOQ): Calculate the optimal order quantity to minimize holding and ordering costs.
>4. Perform Regular Stock Audits
>Cycle Counting: Regularly count a subset of inventory to ensure accuracy without shutting down operations for full physical audits.
>Full Physical Inventory: Conduct periodic complete audits of the warehouse to verify the WMS accuracy.
>5. Use FIFO (First In, First Out) or LIFO (Last In, First Out)
>FIFO: Ensures older stock is used first, reducing the chance of obsolete or expired inventory (common in perishables).
>LIFO: Typically used in industries where pricing volatility is a concern (though less common for physical goods).
6. Forecast Demand
>Analyze historical sales data, seasonality, and market trends to predict future inventory needs. Accurate demand forecasting helps reduce excess stock and stockouts.
7. Optimize Warehouse Layout
>Ensure fast-moving items are stored near the front of the warehouse for quick access.
>Use vertical space efficiently with proper shelving, and designate clear pathways for equipment.
8. Vendor Management
>Work with suppliers to ensure reliable lead times and quality. Negotiate flexible terms where possible, like consignment stock or just-in-time (JIT) deliveries to reduce holding costs.
9. Manage Dead Stock
>Obsolete Inventory: Identify items that are no longer selling and liquidate them through sales or discounts to free up space and reduce holding costs.
10. Track Key Performance Indicators (KPIs)
>Inventory Turnover Rate: Measures how often inventory is sold and replaced over a period.
>Order Accuracy Rate: Tracks how often orders are fulfilled correctly.
>Stockout Rate: Measures how often items are out of stock when needed.
>Carrying Costs: Tracks the cost of holding inventory, including storage, insurance, and obsolescence.
>By following these practices, warehouse managers can maintain an optimal balance between inventory availability and cost-efficiency, ensuring smooth operations and customer satisfaction.
Only one thing i can say about inventory is that Inventory has to be updated end of the day on daily basis if your company is getting lot of business.
1. Material inward & consumption entries should be posted online so that MRP run will be accurate.
2. Rejected/ Expired goods to be handeled daily basis so that it will not impact MRP.
3. SOP should be available for material reconciliation. High value materials to be reconcile monthly basis and all materials inventory count to be taken yearly basis. There should be Excess/shortage limits to be defined in the SOP.
4. Reconciliation to be done at the end of each batch stock.
