Taking a Physical Inventory

 Best Practices

Daily Procedures to improve Inventory Control

• Use of the picking ticket will ensure that proper warehouse procedures are being performed to both disperse and return inventory.
• Set and enforce a policy of using picking tickets. Nothing leaves the warehouse without being properly documented on a picking ticket. 
• Ensure warehouse management and support staff follows picking ticket rules. 
• Document all inventory discrepancies such as shortages on the picking ticket. Route back to the appropriate person to make an inventory adjustment. 
• Ensure that all roll goods in the warehouse have computer generated roll tags on them.
•  Ensure that all items in the warehouse have computer generated item tags on them. 
• Periodically check items and rolls for tags between count cycles. 
• Enforce a neat and well organized warehouse.

Pre-inventory Procedures

Inventory

• Ensure that all items and roll goods in the warehouse have computer generated roll tags on them. 
• Determine how the inventory will be marked as counted to prevent duplicate counting. Will a specific colored marker or stickers be used? Mark each as counted. 
• Print undelivered sales. Make sure all jobs that can be job costed. One report for this is Sales Reports>Open Orders. 
• Segregate any material that has been returned as excess materials from a job site or a cancelled job, but not checked back into inventory. This material should be excluded from counts. 
• Segregate any material that has been cut, but is still in the warehouse. This material should be excluded from counts.

Range Print Reports

Inventory>Reports>Roll Inventory Range Report

• Range print inventory for balances starting at below -.01. This will search RFMS for any negative balances. Research any large balances. Correct all to a zero balance as needed. 
• Range print roll balances for amounts from .01 to say 3 feet. Management should select any amount at which roll goods are not saleable. Adjust these to zero as needed.
• Range print cut and delivered inventory. Review with the warehouse manager. Verify all inventory has actually left the warehouse or is in a staged area to go out. This will eliminate the chance of counting inventory on a picking ticket that has not yet been physically taken to the stage area.

Materials Analysis Report

Sales Reports>Materials Analysis

Print a Materials Analysis report. This will allow confirming the status of individual order lines. Improper line status during physical inventory can cause serious issues, such as inventory doubling.

Sort Order: Sales Rep

This allows giving this report to the individual reps to review.

Line Status: Select only Cut and Delivered

We want to review these orders and determine why these are in this status and confirm they are correct.

Product Codes: All

Sales People: All

Customer Type: All

Fiber: All

Accounts Receivable

Accounting>File>Accounts Receivable>AR Reports

Print all open orders and review. Confirm all orders are in the proper status. 

Run by Salesperson and all stores.

Physical Inventory Cycle

Print Inventory Physical Reports as follows. Depending on the number of teams, consideration must be given as how to print the inventory count lists. Tag or mark all inventory when counted. Keep the following reports for a period of time per your CPA.

Roll Inventory Options

Inventory>Reports>Roll Inventory Physical Report

Stores-

If inventory for all stores in one warehouse tag all and combine.

PC-Select Carpet and/or Vinyl

Can be used to separate teams

Sort Order-

If locations are recorded this is best.  If not roll number is a good option.

Date Received-

Leave at default

Hide All Amounts–Ensures a blind count so counters have to actually check amounts.

Item Inventory Options

Inventory>Reports>Item Inventory Physical Report

PC–Good selection for items 

Stores- If inventory for all stores in one warehouse tag all and combine. 

Date Received- Leave at default

Physical Count 

Perform the physical count. Write counted balances on the count sheets. Do not allow inventory to move from an area until it is counted and marked on the count sheets. 

Once all inventories have been counted, perform the following checking procedures.

1. Visually scan the physical inventory to ensure that all rolls and items have been marked as counted.
2. Scan the count sheet for any inventory that has not been counted. Investigate as to why the inventory was not counted. Was it missed, not marked as counted or is it missing.
3. Once satisfied the count is complete, begin the adjustments process in RFMS. At this point all discrepancies should have been investigated.
4. Printout the adjustments report. Scan for obvious keypunch errors. Review total adjustment amount for reasonableness.

Inventory Adjustments

Inventory>Roll or Item Inventory>Adjustment Button

Scrap, Shortage, Sample, Replacement: simple adjustment to fix available quantity.

Transfer: allows various options.

Item Inventory: Allows moving the roll (all or some of the balance) to a new record in item inventory.  (Useful for remnants)

Another Roll, Another Item: move some or all of the quantity to a new roll or item.

Remove from Inventory: zeros out available quantity.

Another Store: transfer some or all of the quantity to another store code. 

After the count has been completed the count sheets must be updated in RFMS using the adjustments tool. Adjustments can be viewed from the Inventory>File>Adjustments. Reports of adjustments can be run from the Inventory>Reports>Inventory Adjustments. It is recommended that someone review inventory adjustments at least monthly to determine if all adjustments are valid.

Alternate Method:

Enter an order in the system, to record adjustments to materials. This prevents any confusion about if the adjustment is made for inventory that has not yet been costed and the consequences of that gain/loss to the general ledger.

The best practice for inventory adjustments for a gain/loss of material is to follow procedures for releasing goods from inventory including a picking ticket and explanation of what or why the material was given away, lost or sampled in the line notes of each record. These pick tickets can be gathered and the order job costed each month. This is especially important for use tax states as it allows the system to calculate the tax liability for loss of material automatically.

Bar-coded Physical Inventory

Bar coding of inventory can’t be any easier in RFMS. Start by printing inventory tags as materials arrive. When it’s time to perform the count, use the tri coder to scan the barcode on each tag and input the quantity on hand. When the spot check or complete inventory is finished, upload the data from the tri coder into RFMS. The tri coder will automatically make the inventory adjustments! This saves a tremendous amount of time when performing inventory counts. To learn more, contact your RSA or read more about the tri coder at: 

https://rfmsinc.zendesk.com/hc/en-us/articles/201621736-Barcoded-Inventory-User-Guide

Track excess materials

Materials are often returned after a job is completed and that inventory needs to be accurately accounted for. Before inputting back into RFMS you need to decide if the customer’s order will receive credit for the material or not. Simplest way to track is to use picking tickets (yesterday’s as materials were released) and handwrite in it the materials returned.

1. To NOT charge that material the customer’s order, simply edit their order in order entry by either adding an additional line at a negative quantity. If they are getting credit, input a dollar amount for the line. If not, leave the dollar amount as zero.