We perform quarterly Physical Inventories each year and we have very inconsistent results. We are trying to determine who is the right person for Inventory Management. Should this be a person that has the best understanding of the business such as the purchasing manager or someone that is more technical such as the IT Manager but does not know the ins and outs of the business? Can anyone provide some input or advice on Inventory Team personel?
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Inventory Team Personel 1
- Thread starter magicrjm
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Where do the inconsistent results occur? Is there a particular area or commodity where this happens? Do you have teams of people checking the count of the people counting? Have you asked your CPA firm this question?
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We are finding a majority of the issues are procedure issues and human error. As well as years of doing inventory one way without thinking outside the box. We do not have teams of people auditing the counting. Which should definitely be done (procedure issue). The CPA firm has not been asked, and I now plan on doing so.
I might add that if you want to do physical or cycle counts in Macola, you need to familiarize yourself with Macola's freeze inventory routines and use of frozen quantities in calculations. This allows you to continue processing transactions at a normal pace rather than slamming everything in, getting everyone out of the system, counting inventory, posting it, then finally allowing everyone in the system again.
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Software Sales, Training, Implementation and Support for Macola, Synergy, and Crystal Reports. Check out our Macola tools:
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my two cents worth:
Use people that are familiar with the parts they are counting. We have thousands of part numbers, some of which look very similar. It is important to be able to correctly identify what is being counted.
That said, some people are just bad at counting. You need to find them and make sure they are not allowed to count!! It sounds simple, but it has made a huge difference for us. There are some people that just should not be allowed to count!!
Use people that are familiar with the parts they are counting. We have thousands of part numbers, some of which look very similar. It is important to be able to correctly identify what is being counted.
That said, some people are just bad at counting. You need to find them and make sure they are not allowed to count!! It sounds simple, but it has made a huge difference for us. There are some people that just should not be allowed to count!!
JayTheGeek
MIS
As an IS Manager that manages the physical inventory count process company wide, I thought that I would speak on this issue.
I took over this task from the financial controller when Macola was implemented over three years ago. At that time, it made sense due to the changes in procedures and reporting that came with the software implementation.
It is my opinion that the hands on responsibility must go to the warehouse managers. And the corporate responsibility to a purchasing manager, or operational VP. In both cases key functional managers who have a significant stake in the accuracy of the inventory from an operational perspective - not a financial perspective.
Your original question and Don's comments (Freeze Inventory) do highlight one key fact: the count process can only be effective by combining understanding of the tools and the business. But that is at a management level.
A case can be made for having the count executed by outside staff with no knowledge of the actual products. (I do agree with randva1's point!) This puts the burden back on the operations staff to ensure products, bins etc. are distinct and clearly marked. That is a operational issue that will reduce errors down the road.
Review of the count results, inaccuracies in the count process and/or business issues that lead to inventory inaccuracies should include warehouse and production managers, support staff for your ERP solution and possibly a financial controller with some experience auditing operations.
My solution this past May/June was to inform the owners of the company that I promoted myself to 'VP of Operations' for the week of our inventory. That approach seemed to work well.
I do like this topic...
I recently asked some of our senior managers what they thought was the most significant deliverable of the physical inventory process.
I took over this task from the financial controller when Macola was implemented over three years ago. At that time, it made sense due to the changes in procedures and reporting that came with the software implementation.
It is my opinion that the hands on responsibility must go to the warehouse managers. And the corporate responsibility to a purchasing manager, or operational VP. In both cases key functional managers who have a significant stake in the accuracy of the inventory from an operational perspective - not a financial perspective.
Your original question and Don's comments (Freeze Inventory) do highlight one key fact: the count process can only be effective by combining understanding of the tools and the business. But that is at a management level.
A case can be made for having the count executed by outside staff with no knowledge of the actual products. (I do agree with randva1's point!) This puts the burden back on the operations staff to ensure products, bins etc. are distinct and clearly marked. That is a operational issue that will reduce errors down the road.
Review of the count results, inaccuracies in the count process and/or business issues that lead to inventory inaccuracies should include warehouse and production managers, support staff for your ERP solution and possibly a financial controller with some experience auditing operations.
My solution this past May/June was to inform the owners of the company that I promoted myself to 'VP of Operations' for the week of our inventory. That approach seemed to work well.
I do like this topic...
I recently asked some of our senior managers what they thought was the most significant deliverable of the physical inventory process.
As a matter of internal control, those who are responsible for inventory on a day to day basis, should not be involved in the physical inventory. I know this is impractical for most Macola level accounts, but just wanted to share this. The theory is that one reason to do a physical is to prove that what people are transacting is real. If someone has something to hide, allowing them to partake in the physical process, allows them to continue to cover it. I have always viewed physical inventories as a great opportunity for sales people, customer service, senior management, and others to familiarize themselves with items that a company buys, makes and sells. It is also an opportunity to visualize potential problems. When you have counted the same group of boxes 3 years in a row, perhaps its obsolete. Is the warehouse clean, are items logically placed....
Just my two cents.
Just my two cents.
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