Stock Control
Stock Control
Stock Control
your stock book, one, or a combination, of the following events may have taken
place:
! The quantity of purchases recorded in your stock book for the period may be
overstated (you need to check that each delivery of stock in the period since the
last stock count is correctly recorded).
! The quantity of goods actually received by you during the period may be less than
that recorded in the stock book (e.g. the actual deliveries made by your suppliers
may be less than the amount recorded on the delivery notes issued by them, to you
it is important that each delivery, and the accompanying delivery note, is
consistent).
! The transfer of goods from the stock room to your various departments during the
period may be understated (it is good practice to have a stock transfer form, or
book, completed each time a transfer is made from your stock room).
! Stock may have been pilfered, damaged or be out of date and have been disposed
of without any record of this in your stock book (in the case of damaged or out of
date stock).
The key point is that you will have to pay for the purchases you make (and which
are recorded on the delivery notes - whether they arrive into your stock or not). In
circumstances where your actual stock level is below the stock level shown in your
records, your cost of sales will be increased and your profitability will be reduced.
Without a regular stock count, it is impossible to establish if you have a stock
problem and when the problem arose. While the stock counting process may not
pinpoint the nature of the problem, if a problem does exist, regular stock counts will
provide sufficient warning to you to investigate the matter further.
Third party stock control
Many small businesses leave the stock taking process to their auditors. However,
this is likely to be undertaken on an annual basis only and may give rise to a
number of problems:
! If your Gross Profit Margin for the year is less than anticipated, and the deficiency
in the Gross Profit Margin is caused by an increase in your cost of sales (and you
have not lowered your selling prices), it will be difficult to identify when the profit
margin began to deteriorate in the absence of monthly stock count records. It may
also be difficult to identify those stock items that are giving rise to the deterioration
in profit margin.
! The risk of theft (e.g. pilferage) may be increased as stock will not be checked on a
frequent basis.
! Stock may not be utilised before its use-by date (in particular, fresh food) as it
will not be physically checked on a regular basis. Ideally, stock should be used on a
first in, first out (FIFO) basis.
Detailed steps
1. Post all transactions for the year.
Make sure that all Invoicing transactions, Sales Order Processing transactions, and
Inventory transactions for the current year have been entered and then posted
before you close the year. This is true so that historical information is accurate for
the year you are closing, and year-to-date amounts are accurately stated for the
new year. If you want to enter future-period transactions before closing the year,
create a new batch that has new transactions. However, do not post the batch until
after the year has been closed.
2. Reconcile inventory quantities.
Reconcile quantities for all items by using the Reconcile Inventory Quantities
window to make sure that your Inventory Control data has not become damaged
during the year. To open the Reconcile Inventory Quantities window, follow this step:
b. The Stock Count Cycle Assignment window can be used if you want to assign one
stock count frequency to many items. To open the Stock Count Cycle Assignment
window, point to Inventory on the Cards menu, and then click Count Cycle
Assignment.
c. Create a Stock Count Schedule. A Stock Count Schedule is a list of the specific
items at a specific site that will be counted during a specific count. When you start a
stock count schedule, the quantity on hand for each line in the stock count schedule
is captured. Later, the actual count number quantities will be compared to the
captured values to create default variance transactions. Stock Count Forms can be
printed during this process. To open the Stock Count Schedule window, point to
Inventory on the Transactions menu, and then click Stock Count Schedule.
d. Use the Stock Count Entry window to enter information about the results of your
stock counts. When you process a stock count, variance transactions are created. If
the Autopost Stock Count Variances check box is selected, the transactions will also
be posted. To open the Stock Count Entry window, point to Inventory on the
Transactions menu, and then click Stock Count Entry.
Instead of following step 3, you can manually create your adjusting entries. To do
this, print a Physical Inventory Checklist by using the Inventory Activity Reports
window, and then perform a physical count of your Inventory Items to verify that
quantity on hand amounts are accurate for all Items. To open the Inventory Activity
Reports window, point to Inventory on the Reports menu, and then click Activity.
If there are any differences, enter the necessary adjustments in the Item
Transaction Entry window, and then post the transactions. To open the Item
Transaction Entry window, point to Inventory on the Transactions menu, and then
click Transaction Entry.
4. Print additional reports.
Print any additional reports that you will need for planning or for your permanent
records. The suggested reports are as follows: Stock Status Report
To access the Reports palette, point to Inventory on the Reports menu. Use
selections from the Inventory Reports palette to print these reports. If you plan to
remove sold purchase receipts during the year-end closing process, we recommend
that you print the Purchase Receipts Report to review the receipts that will be
removed.
5. Make a backup.
Make a backup of all company data. This is true so that you will be able to recover
quickly should a power fluctuation or other problem occur during the year-end
closing procedure.
6. Close the year.
Closing a year performs the following tasks:
If you click to select the Discontinued Items check box, all discontinued Items that
have a zero balance will be removed during the year-end closing process. Items can
be designated as discontinued by using the Item Maintenance window. Discontinued
Items that have a quantity on hand of zero (except for kit components) and have no
unposted transactions will be completely removed from the Inventory module. If you
use the Service Call Management module, determine whether any discontinued
items exist on any unposted service documents. If discontinued items exist on any
unposted service documents, the documents must be posted before you continue.
The Sales Order Processing report, the Invoicing report, or the Purchase Order
Processing report and inquiries will still be able to display information about these
discontinued items. However, you will be unable to perform a lookup on the Item
Number because it has been removed from the Item Master table. If you want to
print a report or inquire on the discontinued Item, you must include the item within
the Item Number range.
Note If you select this option, you will remove the discontinued items. Additionally,
you will remove all inventory history for the items. You will be unable to drill back on
the inventory history for these items.
If you click to select the Sold Receipts check box, all sold receipts whose quantity
received amounts and quantity sold amounts are equal will be removed. This is an
optional step, and it may not be a procedure that is performed every year-end.
These values may help when items are returned through Invoicing. Therefore, you
may not want to remove the purchase receipts from the file.
In Microsoft Dynamics GP, remove: Sold Receipts and Cost Change History Prior To.
Click to select the Sold Receipts and Cost Change History Prior To check box to
remove all sold purchase receipts and historical cost changes for items that use
Average Perpetual, Last In, First Out (LIFO) Perpetual, or the First In, First Out (FIFO)
Periodic valuation method, and then you enter a date. The sold receipts, quantity
sold details, and historical cost changes with dates that come before the date that
you entered will be removed.
If you click to select the Sold Lot Attributes check box, values for completely sold lot
numbers will be removed. For example, you can remove the value red for the lot
attribute Color if you have sold all lot numbered items that have been assigned the
value red.
If you click to select the Item's Standard Cost check box, the Standard Cost for any
items that have been assigned the FIFO periodic valuation method or the LIFO
handle lost product well. If you have a random storage warehouse and are
counting by item, your count program will tell you when youre missing something
but does nothing for locating this lost product. You will need some type of location
auditing process in conjunction with this to find the lost product or change your
program to be based on location rather than item. Meanwhile your count
administrator must be making decisions on variances and determining when to
make adjustments. In many operations, an adjustment is made one day to deduct
the missing product and an offsetting adjustment made a few days later when it is
found. The problem with this is the effect this has had on materials management.
When the product was deducted, a new purchase order was probably generated to
order more product and production schedules and manufacturing orders may have
been changed due to the unavailability of this item. Even though the product
turned up just a few days later youve still caused additional work, disrupted the
production schedule, and may now end up with excess inventory on this item. A
good count administrator should be able to determine if a variance is due to a
process issue or is lost. Adjustments for lost and found inventory should be
avoided whenever possible. Creating a variance location to move lost" and
found product to and from is a great way to have visibility to the variances
without the havoc created by the adjustments. These variance locations must be
closely monitored and you must have an aggressive program for finding the
product. An aggressive location auditing process will prove to be far more effective
than sending someone out to look for the lost product. Obviously, tightening up
the processes to avoid missing product in the first place makes this less of an issue.
Now Id like to say that your count program doesnt need to be this complicated,
however, in many operations a complex count program will prove to be the most
effective method of dealing with a complex inventory. A good count program
combined with solid inventory practices will prove to be a significant asset to any
organization. You may still have specific counting demands placed on you by
outside sources such as customers and financial institutions. Demonstrating the
success of your counting program and inventory practices should reduce or
eliminate the need for these special inventories.