How you end up with missing stock

Do you have salespeople who take sample products out of your warehouse without recording that they have taken them to show a customer? Then you may have a missing stock problem.

They probably think that they are doing the right thing – it’s all about getting sales isn’t it? Without sales nothing happens.

Fair enough, but your computer system doesn’t know that the item has been removed, the stock on hand and stock available isn’t adjusted for the stock in the salesman’s car.

The result is…
  • The item is not re-ordered at the proper time because the system thinks there is more inventory in the warehouse then there actually is.
  • A customer may be promised the item because the computer shows that you have it in stock. The customer drives 40km to your warehouse to pick it up, then you discover that it has gone AWAL.

Then there will be discussion around – it’s not me, it’s the ERP. This excuse works because the ERP isn’t able to defend itself, it can’t talk, but the real problem is the sales people, who are in a hurry to close deals or your techies who borrow parts.

How to prevent missing stock

This is what you need to do to keep your stock accurate and to track the stock in the possession of each sales person.

  1. Personal accountability

    Create a customer account for each sales person

  2. Sales orders

    Record each sample taken by a sale person or a technician on a new Sales Order. As a result of entering the order, the available stock is reduced. Don’t process this order, just yet.

  3. Item quantity

    When the item is returned to stock, reduce the line item quantity to “0” on the sales order, make a note or comment on what occurred then process the order to close it out.

  4. Review

    On a regular basis print or email the Open Sales Order List for each sales person and inquire as to the whereabouts of the loan stock, and when it will be brought back to the warehouse.

You need to establish a rule, a very simple rule…

Nothing EVER leaves the warehouse without PROPER PAPERWORK

missing stock can drive you mad

Violators of this policy face immediate termination, or they may have to undertake some arduous task.

In a similar vein, you need to stop your counter people “swapping out” one item for another without paperwork or a transaction taking place.

Go through all your procedures and see that they meet the test described in detail above. Most distribution companies have established policies and procedures for processing the following types of transactions.

Review the following

  • Normal Stock Receipts
  • Unexpected Stock Receipts
  • Requisitions for internally consumed products
  • Sales
    • Order to be delivered
    • Orders to be picked up
    • Cash Sales
    • Direct Drop Shipments
    • Order for Non Stock Items
  • Transfers to other warehouses
  • Work Orders for Assemblies
  • Bin transfers
  • Returns of Stock items
  • Returns of non-Stock items
  • Returns of damaged items
  • Returns to your supplier
  • Adjustments to Stock on Hand Levels
  • Scrapping & writing off stock

There’s probably other transactions that you do that aren’t on this list.

The bottom line…

Inventory is valuable, keeping it properly is worth it.