Logistics Operational Guide (LOG)

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A basic tool for inventory control is the stock card and bin card, both of which record  any movement of physical quantities for each SKU and are stored next to the item in the warehouse, while the inventory ledger tracks inventory transactions in a central location. 

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All goods received in the storage facility should be accompanied with a Waybill or a Delivery note describing the supplies details and its origin. If the supplier or transporter does not provide the waybill or a delivery note, the storekeeper should fill in a goods received note. A copy of the signed document should be retained by both the recipient and person delivering the goods.

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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 real stock situation, it is recommended to regularly reconcile stock records with actual physical counts. This process is also referred as Physical inventory. The frequency may be determined by the number of stock movements, by the value or nature of the stored goods or by donor requirements for a specific project.

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When general physical inventory happens, the warehouse should be locked down during the whole inventory period. Depending on the The overall size of the warehouse and the number quantity of items stored , this period can take from 1 day to 1 weekwithin it will determine the length of time required to complete a full count. A small facility could be completed in a just a few hours, while a large facility might take several days. Humanitarian agencies should consider their storage setups when planning a stock count system. In such events, it is recommended to inform in advance to all potential requesters, so they can place forward their requests. In order to mitigate the chance of human mistakes and bias, it is recommended that two separate teams count the same set of items without any information exchange. In addition, Stock cards can be made unavailable for the counting teams. Inventory sheets, tags or cards can be used for this purpose. Some agencies prefer to have an appointed person to oversee or manage the counting teams. Agencies may also choose to employ the “stock tag” system to facilitate counting. 

While on demand or random spot checking may occur as needed, it is strongly advised that a full stock count should be conducted at least once a year, if not more frequently depending on the size of the facility and the overall volume of throughput. The standard accepted best practice for a full stuck count is called “double-blind”, and follows the below steps:

Double Blind Counting Procedures 
  1. Two teams of two persons each (four persons total) are identified in advance. These two teams will conduct the count sequentially. All four persons should ideally come from different parts of the organization, and not have direct control over the stock or direct financial incentive to tamper with stock counts.
  2. Warehouse activities are completely halted during the time of the stock count. This means that no cargo goes in or out, and stored items are not moved around the facility. Ideally, only counters should be let inside the facility during counting.
  3. The two team should meet in advance to ensure all parties understand the process.
  4. The first two-person team starts at one far end of the warehouse/storage facility and begins counting, using a pre-defined common understanding (example: Piece count per shelf, piece count per line item, etc). The first team member counts, while the second team member records on a pre-defined recording system.
  5. The second two-person team begins after the first two-person team. The second count can begin after the first count has ended, or even by waiting for only a few minutes.
  6. The second team will count using the same agreed upon common understanding. The second two-person team can start from the same location as the first team, or start from the opposite side of the warehouse.
  7. Once the full warehouse/stockroom has been counted fully by both parties, both parties compare counts. Any place where there are discrepancies between the two counts, both parties must go to that stock location and reconcile the differing counts.
  8. Only after both teams have come to a mutual agreement on the stock numbers can the count be considered closed.



Inventory SheetStock Tags

(Bragg, 2005)


In any case, consider Consider 5-10% of total working hours for a location as a fair time to spend on counting.

The frequency and number of inaccuracies should be regularly monitored. Any stock discrepancy should be reported and analysed analyzed and corrective actions should be taken to reduce the risk of further inaccuracies. In case that the real amount is less than the amount in the records, a loss report should be completed.

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