Stock Inventory Control
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Stock Inventory Control
Inventory Control is designed to support the requisition processing, inventory management, purchasing, and physical inventory reconciliation functions of inventory management through a set of highly interactive capabilities. The design of Inventory Control is based on the following key objectives:
Ø To provide information on the availability of stocked items and the status of stocked requisitions
Ø To facilitate timely requisition processing
Ø To automatically record and service backorders
Ø To help minimize inventory investments consistent with service objectives by basing purchasing decisions on usage history
Ø To provide automated tools to assist servicing, purchasing, and management of the inventory
Ø To improve financial control of the inventory by periodic reconciliation of the inventory balances with the physical counts
Inventory Control utilizes a set of user-maintained master tables, a set of system-maintained master tables, transaction document types, and offline programs to meet these objectives. It also creates inventory control management reports.
Inventory Objectives and Standards
The objectives of an inventory control system are:
Ø to ensure sufficient quantities of goods are on hand to meet anticipated needs;
Ø funds are not needlessly tied up in excessive inventory stockpiles;
Ø inventories are safeguarded from loss due to deterioration, obsolescence, and pilferage; and
Ø supplies and materials are acquired in economic lots and maintained at the lowest cost commensurate with the risks of loss.
Each inventory control system should incorporate the following standards:
Ø All supplies and materials received by an agency must be counted and inspected upon receipt, with any discrepancies promptly reported;
Ø Issuances from inventory must be supported by signed requisitions;
Ø A periodic physical count must be taken of all items in inventory;
Ø Perpetual inventory records should be maintained; and
Ø Storage areas should be properly secured to restrict unauthorized access.
Proper inventory procedures mandate a complete and correct item count. You must ensure that the total quantity of each item is determined as accurately as possible. Keeping in mind that inventories are conducted to bring stock and stock records into agreement, you can see the importance of a complete, accurate, and legible inventory. Promptly upon completion of the physical inventory and before matching inventoried quantities against stock record balances, review the inventory documents to ensure that:
Ø all items scheduled for inventory have been counted or verified as nonexistent,
Ø quantities counted are legibly recorded and compatible with related units of issue,
Ø all locations applicable to the inventory segment have been checked,
Ø "added" items are adequately identified and legibly recorded,
Ø items are documented in National Item Identification Number sequence, and
Ø documents are dated and initialed.
a. All stock will be maintained and inventoried annually/monthly at a time scheduled by the manager or any departments concerned. Material Resources personnel will conduct the stock count with the assistance of shop/plant personnel.
b. The stock will be on physical count and must assure that it should be accurate from the beginning of the month until it is balanced to the end of the month.
c. The stock should be kept inside a warehouse or locked room. The key of the room is handed to the person that is assigned for the day.
d. The priority of the stock keeper is evaluating the used materials and determining the useful life of any material before changing it to the new one.
e. There should be a monitoring sheet for the materials that determines the quantity and kind of items.
f. The documents (e.g. sales receipt, official receipt, freight charge, etc.) should be kept to determine how much expenses incurred to eliminate the unnecessary cost.
g. The stock room should be kept clean and organize. Also, the materials should be sorted according to their kind.
Inventory Control includes various management and planning reports. These reports are identified by a report ID consisting of the letters IN followed by a two-digit number. Inventory Control reports are normally run monthly or semi-monthly, although they may also be run on request.
Entering a Stock Requisition (SR) Document
The user enters the information in the header section of the document indicating the responsible organization, the warehouse used, and specific details about the delivery; for example, the recipient of the items, when the items are to be delivered. The accounting lines detail the expense budget lines responsible for payment. The item lines detail the Stock Item Number, its Description, the Requested Quantity, and the Unit Price. If the item being reserved has a backordered quantity greater than zero, these items will be placed on backorder even if an Available quantity exists.
This kind of inventory report typically use computer and stable template derived from a database system. The assigned person will only have to enter any value and the computer will process and compute the desired information. By this kind of technique, there are few chances of loss materials. And by the end of the day the company can reconcile and balance the materials. And another beneficial factor is that the used materials can be separated to the unused ones.
With the use of spreadsheet or computer inputs, the assigned person can determine what is entirely needed in the company and what should be the material to eliminate. The recognition of the cost of many materials can be analyze and the minimization of the consumption.
Physical Plant Operating Policy and Procedure (2003). Inventory Procedures. [Online] Available at: http://www.state.ky.us/agencies/adm/mars/advantage/users/Mug11Inventory.htm [Accessed 12 Aug 2009].
Asset Control and Management: Policies and Procedures (2009). Supplies and Material Inventory. [Online] Available at: http://www.doa.virginia.gov/Admin_Services/CAPP/CAPP_Topics/30515.pdf [Accessed 12 Aug 2009].
Stock Inventory Procedures (n.d.). [Online] Available at: http://www.tpub.com/corpsman/305.htm [Accessed 12 Aug 2009].