OpenPro Application Guide - Inventory Control Physical Inventory (IC)
Guide to Physical Inventory
OpenPro Inventory Control has a physical inventory process for counting and updating inventory.
OpenPro physical inventory may be a time and resources consuming procedure, and so it requires proper planning. Planning helps you to make your annual inventory count more effective. You should have a written policy regarding the inventory count process (inventory plan, inventory instructions). In this policy you determine a date of conducting the physical inventory, assign responsible persons and describe the methods to be used.
You can use different approaches (full inventory count or cycle count) to count different types of inventory; for example, one method for finished goods, and another method for work-in-process (WIP) or for raw materials. You should also publish the procedures and policies regarding recording the counts, reconciling discrepancies, unknown items, emergency or rush shipments, and auditor's approval requirements. Establishment and documentation of counting procedures will allow you to control and supervise physical inventory properly.
It is beneficial to plan and prepare a physical inventory in advance:
- Determine a date and time of conducting a physical inventory.
- Form a counting team with some training guides.
- Choose a method of conducting a physical inventory. Where to start counting, tagging process, etc.
- Make adjustments or changes from the Physical Count to the Perpetual count.
Physical Inventory Methods
Method
Bar-code Readers
Description
Use of bar-code readers allows readers reading and recording the counts directly to a computer.
Advantages
The most efficient method. Makes the physical inventory process more simple and accurate.
Counters can quickly read and record information.
Reduces human error; eliminates counting in teams; minimizes shutdown time.
Disadvantages
Expensive; special computer software and bar-code labels are required.
Method
Count cards/tags
Description
Index cards with information about individual products and location are used during counting.
Advantages
Not so expensive as barcode readers; help discover lost and misplaced material.
Disadvantages
More advanced preparation is needed (all cards must be in the warehouse before the count begins).
Method
Count sheets
Description
Pre-printed lists (usually generated by company's software) are used to record on hand counts.
Advantages
The easiest and cheapest of inventory method.
Disadvantages
More time consuming (searching, counting, comparing). No logical order of items in count sheets.
A lot of time spent to find a particular item during “wall to wall” counts.
Items not in the listing or not in their place could be missed.
Physical Inventory Preparation
It is important to ensure all transactions have been recorded before you prepare the physical inventory.
Prepare the warehouse(s) and make sure inventory is put in the proper place before starting the physical count. Identify that damaged goods, returns, and obsolete items are properly tagged before starting the process.
If you spend enough time on the preparation of the count, you will have less work at the end with re-counts.
Physical Inventory
Physical inventory process starts with creating the request. This is done in the menu Begin Physical Request.
Creating a request takes a snap shot of the inventory defined by the search. You will still be allowed to do inventory transaction. When adjustments are completed, adjustments will be based on when the request has been created.
You can do physical using part number range, class, category, stores for selection process.
It is best if you can enter in the notes for why this counting process is being done.
Physical Inventory Tag reporting
Physical tags can be generated to keep track of counts in the warehouse.
To generate a tag report, go to Physical Tag Report and select the number of the physical inventory report.
The tag number is a reference when you are ready to enter the counts into the system, it can be easily identified.
Physical Inventory Entry
When you are ready to begin entering the physical counts, go to Enter Physical Count.
Select the physical number you wish to enter counts for.
Enter in the amounts. You can also use csv file to import the counts, follow the format provided on the top of the screen for the import and select Submit.
Once you are done entering the amounts, select Update at the bottom left of the screen.
Physical Inventory Cost Reporting
Costed variance reports will be used to analyze the physical inventory. When you have discrepancies, those items can be recounted and their differences recorded.
This report can be sorted by cost difference and used to recount higher priority items.
Go to tag reporting, select Costed Report.
With this report you can sort by the cost difference and use those items for recounting.
Go to Physical Inventory Count, run the costed report for your physical process.
Physical Inventory Adjustment Processing
To begin adjustment via the physical count, go to Physical Count Close.
This process is broken down into 3 steps.
First step is to go to Move Inventory.
Movements will move inventory indicated in the Enter Physical Count. This process is recommended if inventory BINS are turned on and bin information has been changed in the enter physical count process.
If bins are not used, you can skip this process.
Next step is to use the Consume Negative Inventory.
Since OpenPro allows to go negative, the consume process will make adjustments to the negative inventory to go to 0.
This will also create general ledger entries and create ic history.
The last step is to go to Adjust.
Adjusting will make the final adjustments per quantities entered in the enter physical count.
Select the rows you wish to adjust then select Adjust Inventory.
You will then get a success message.
To view the adjustment report, select Report.
.
The report will show you all the adjustments made. When complete, Select Close to close the physical count process.
[Last Review Date October 2018]