Page 353 - Accounting Best Practices

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Inventory Best Practices
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16–16 TRAIN THE WAREHOUSE AND ACCOUNTING STAFFS
IN INVENTORY PROCEDURES
The underlying problem behind the bulk of all inventory record errors is a lack of
knowledge by warehouse workers in how to process a variety of inventory transac-
tions. As a result, cycle-counting teams waste time investigating errors; the materials
planning staff must order parts on short notice due to unexplained materials shortfalls;
the company incurs express delivery charges to bring in parts on short notice; and the
accounting staff must record unexplained losses related to inventory adjustments.
Many of these problems can be mitigated by creating a procedures manual for all
inventory transactions and by continually training both the warehouse and accounting
staffs in their use. Examples of common inventory transactions are as follows:

• Back-flushing
• Consignment receipts and deliveries
• Cycle-counting adjustments
• Inventory storage in rack locations
• Issuances
• Issuances of additional parts
• Kitting
• Loaning inventory to departments
• Receiving
• Receiving customer returns
• Removing defective parts from the production process
• Returning defective parts to suppliers
• Returning stock to the warehouse from the shop floor
• Shipping completed customer orders
• Staging for shipping
• Transferring between inventory locations

It is not enough to simply create a handsome procedures manual and issue it
to the staff. On the contrary, all employees involved with these transactions should
go through regular refresher training, while new employees should be trained sev-
eral times early in their employment and be certified by an experienced coworker
as to their knowledge of the procedures. Further, any procedural change calls for
a complete retraining of the entire staff on that topic. Only by enforcing the cor-
porate commitment to training in inventory procedures can a company reduce its
incidence of inventory transaction errors.

Cost: Installation time: