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Total Impact of Best Practices on the Inventory Function
16–17 VERIFY THAT ALL RECEIPTS ARE ENTERED 343
IN THE COMPUTER AT ONCE
There is nothing that throws a wrench into a company’s production planning
and accounting more than the delayed entry of warehouse receiving into the
computer system. When this happens (or rather, when it does not happen), the
purchasing staff does not know if materials have arrived and they begin a series
of frantic calls to suppliers to determine when items are to be shipped. Like-
wise, the production scheduling staff decide not to produce something because
they do not see any receipt in the computer system. Finally, the accounting staff
has a very difficult time determining what was really received at the end of the
accounting period, resulting in the reporting of inaccurate inventory figures in
the financial statements. All this because someone in the warehouse is slow in
entering receipts.
The obvious best practice is to make the warehouse staff make their receiving
entries as soon as they receive any parts, but the solution is not quite so simple.
The underlying reason why receipts are not being entered at once is probably
because the staff is too busy to do it, and so this chore waits until a slow period,
perhaps at the end of the day. Thus, to make them enter receipts more quickly, one
must find a better way to enter the receipts, one that is so simple and easy there is
no excuse to delay the process. One way is to require all suppliers to attach a bar-
coded sheet to all shipments, allowing the receiving staff to scan this sheet directly
into the computer system, thereby recording the entry. This is a quick and easy
way to approach the receiving data-entry task. Another is to restructure the receiv-
ing data-entry screen so that one only needs to enter the purchase order number
upon which any receipt is based. The purchase order then comes up on the screen,
and the receiver quickly notes the quantity received. This latter approach is also a
good way to pay customers without the extra effort of using the accounts payable
staff (see Chapter 3). The latter approach carries with it the added benefit of forc-
ing suppliers to provide only the purchase order number with their shipments—
many suppliers resist having to bar code the information on their shipments. Either
technique is an effective way to reduce the time needed to enter receipts, thereby
eliminating a host of downstream problems.
Cost: Installation time:

TOTAL IMPACT OF BEST PRACTICES
ON THE INVENTORY FUNCTION

The impact of the best practices described in this chapter on the inventory func-
tion is a considerable increase in the accuracy of inventory information. They
are not designed to directly improve the functions of the warehouse, since this
book only deals with accounting improvements. Nonetheless, it would be surprising