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When coming to control and monitor particular items, consider that stocks follow the Pareto principle, also known as the “80/20 rule”, the “law of the vital few”, or the “principle of factor sparsity”. This principle states that roughly 80% of consequences come from 20% of the causes (the “vital few”), which applied to inventory management is translated to: 80% of the movements are from 20% of the list of items. Identifying this 20% of “high-turn” items is vital for an optimal inventory management.

Physical Inventory

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Inventory
Inventory
To ensure that records are consistent and aligned with the stock physically on hand, it is recommended to regularly reconcile stock records with actual physical counts. This process is referred as "physical inventory". The frequency of physical inventories may be determined by the number of stock movements, by the value or nature of the stored goods, the frequency of visits to partner or remotely managed locations, or by donor requirements for a specific project.

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Only a full physical inventory will tally the total numbers of all items on hand. If counters find loss or mislabeled cargo during random spot checks, additional investigation may be required to understand the full problem.

Corrective Actions

In cases of loss, spoilage or damage:Counters should reinspect items and conduct additional counts if required. If loss or damage still persists, then a loss report must be filled out, and warehouse ledger must be updated. The owner of the cargo must be informed of the loss.
In cases of mislabeled or unidentified cargo:Counters and warehouse staff should correctly link cargo to consignments/anticipated deliveries. Mislabeled cargo should be properly labeled, an updated stock card placed with the items and warehouse ledger updated. Unidentified cargo should be linked to a consignment, and properly labeled in the warehouse and updated in the warehouse ledger. If no information on the cargo exists, warehouse staff must investigate where the stored items may have come from.
In cases of surplus cargo:Counters and warehouse staff should reconcile cargo movements with stock on hand. If there is no explanation for additional items discovered, warehouse staff must investigate where the stored items may have come from.
In cases of mismeasurement:Newly corrected measurements – weights and volumes – should be updated in the warehouse ledger.

Follow Up

The frequency and number of inaccuracies should be regularly monitored for each warehouse location. Any stock discrepancy should be reported and analyzed and corrective actions should be taken to reduce the risk of further inaccuracies. The logistics team should record the results of general inventories in a file specific to that warehouse location. If a warehouse continues to perform below the acceptable standards, corrective action or training may be required.

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