11.5 Inventory - Physical count
| Inventory - Physical count|
|Performer:||Logistics Officers, Logistics Assistants, Warehouse staff|
|Role:||Logistics & Warehouse roles|
|Transaction :|| WingsII – LI01N, LI11N, LI20, LI21,
LX17, LX22,MI21, MI24, LX02, MB59
The exercise must be undertaken for all stocks – be those kept on-line in the WMS as well as those tracked off-line, due to integration issues with other WFP systems or other technical problems. For stocks available on-line, Physical Count Results must be recorded in the WMS by each Hub. A consolidated report of the Physical Count will be produced for the entire Network and submitted to the Network Coordinator. For stocks tracked in manually-maintained spreadsheets, Physical Count Results must be recorded in the same spreadsheets, carefully annotating pre- and post-count figures in the remarks column (plus related dates), before changing the Excel line-item data itself.
To avoid conflicts of interest, Storekeepers and other staff who are directly involved in daily warehouse activities should not be appointed to the Inventory Count Team. It would rather be preferable to use administrative staff for this periodic task; alternatively, external candidates should be identified and employed – on a temporary basis – for the given dates of the exercise.
Minutes on both Physical Count activities and ensuing results should be produced, countersigned by all members of the Inventory Count Team, the Storekeeper(s) and relevant Logistics Officers, Supervisors and Managers. These should be shared with the Support Office who will consolidate the results into a simple report for the Network as a whole. All correspondence and official documentation prepared, used and generated by Physical Count exercises should be maintained in a dedicated file, both in the physical warehouse and in the relevant administrative office(s).
In the event that major discrepancies are reported as a consequence of the physical count, the Hub Manager may launch an investigation in order to assess the causes, with results potentially being escalated to the Network Coordinator for any actions required vis-à-vis residual discrepancies.
A Physical Count implies a series of Process and System steps (some of which are one and the same). Below is a broad overview of the key steps in the process, each one denoted with a ‘P’ and/or an ‘S’ (for Process (P), System (S) or both (P/S), depending on the nature of the step) and is delegated to hub (H) or Support Office (SO) levels:
- Plan for Inventory Count (P) (H)
- Appoint Inventory Count Team(s) and communicate schedule and participants to all concerned. (P) (H)
- Extract stock quantities/values as at 31 December of current year and send to Finance, prior to initiating count (P/S) (SO)
- Identify the storage location(s)/area(s) to be counted (P/S) (H)
- Block the identified area and communicate to all concerned (S) (H)
- Print inventory list and distribute together with other useful documents (see later in this section) (P/S) (H)
- Perform count (P) (H)
- Enter the data collected into the system (S) (H)
- Analyse eventual differences and clear in system (alternatively, a re-count may be requested, which would cycle as far back as point 1 above, for re-execution of all required steps) (P/S) (H)
- Unblock the storage location(s) (S) (H)
- Consolidate and produce Physical Count report/minutes (P) (H)
- Submit to Hub Manager and then to Network Coordinator for signature and forward to Finance (P) (H)
Each counter should be provided the following reference documents upon initiating count activities:
- UNHRD WBS structure that provides names of stock owners at current system set-up;
- Warehouse structure (provides description of storage locations and storage types); and
- Inventory list for continuous inventory so that appointed counter records the quantity found for each item on the list, indicating exact storage locations if missing.
Activate Inventory record
Physical inventory takes place at storage type level. Some materials may have been recorded in the system under ‘generic’ locations (TRANSFER and SCHROTT primarily). Physical counts cannot be activated in these locations. Hence, materials recorded in such areas would need to be moved into proper bins before the exercise begins (bins in the warehouse where the items physically located), allowing counters to capture physical count data properly/timeously.
All storage bins needs to have the current content counted at least once a year. An inventory document can be only activated if all transfer orders for the selected storage bins have been confirmed. A separate physical inventory document can only refer storage bins in one storage type. In order to start the inventory count in the system, Inventory Records have to be activated. Best practice is to activate group of bins (where same materials are stored, e.g. blankets, or grouped by ownership) otherwise single bin can be activated. It is recommendable not to exceed the max number of 25 lines per Inventory Record; anyhow systems allows to enter all the bins available in a storage type. Go to transaction code LI01N or follow the path below:
Logistics > Logistics Execution > Internal Whse Processes > Physical Inventory > In Warehouse Management > Physical Inventory Document > Create
On the following screen fill in the Warehouse number, the Storage Type and the planned count date:
Click on [[File:1.5_1.png]
On the following screen insert the name of the Counters(s) (free text), and the storage bin; enter more storage bins (one per each line) if a inventory counts of groups of bins have to be activated in an unique inventory record (e.g. blankets). Click on
The system will activate the inventory record by prompting its number which is reported on the warning bar on the left- bottom side of the window):
Use transaction LI02N in case changes are required on the Inventory record created –i.e add or remove bins. To do so deactivate the Inventory Record:
To change the information entered in the field related to the Counters, deactivation of Inventory Record is not needed. Inventory Record can be displayed thru transaction LI03N.
Warehouse Inventory List for Physical Count
Got to transaction LX22 to print the” WAREHOUSE INVENTORY LIST FOR CONTINUOUS INVENT.” sheet that will be handed over to the Counters(s) to perform physical inventory. One list will be printed out from each Inventory record. Nevertheless, the system will allow to print out multiple lists by entering a range or a list of Inventory numbers.
Follow the standard SAP procedure to print the list; the system will print out the Inventory list with the following format:
The Counter(s) perform(s) the physical inventory against the bin(s) pointed and will hand-write the quantity counted in the empty space next to the batch number (see above circle in red).
The print out does not report the quantity in stock, so that the Counter(s) will be not required to report shortage or surplus. Conversely if any discrepancy will be noted in the storage information (e.g. wrong storage bin or storage type), it will be reported on the Inventory List itself.
The Warehouse Inventory List has to be returned duly signed and dated by the Counters(s)(s) (bottom left side of the sheet – see excerpt directly here-under):
Recording of Inventory Count
When a set of Inventory List is returned, the Recorder will enter the quantity counted in the system by accessing transaction LI11N. On the screen below insert the warehouse number and the Inventory Record and hit on :
To be noted that one Inventory Record can only be processed individually.
In case of zero quantity counted, insert a match in the “zero” column circled below. Make sure that “ea” is reported in the AUM column and that unit quantity is entered. Once all the quantity of the Inventory Record has been entered click on Save button. The system will confirm on the Warning bar that the recording of inventory count results has been added against the Inventory Record:
The recorded has to sign the WAREHOUSE INVENTORY LIST FOR CONTINUOUS INVENT. and hand it over to the Logistics Officer/hub Manager to be included in the Physical Count package of documents:
Clearing of Discrepancies
The clearing of discrepancies counted, have to be recorded in Warehouse Management (MA) first and then in INVENTORY MANAGEMENT (IM). Best practice is to recount eventual discrepancies by addressing the task to an alternative counter. Anyhow clearing can be started only once the formal authorization has been collected from the Hub Manager. Any material document issued by the clearing process has to printer and included in the Physical Count package of documents. To clear the discrepancies type transaction code LI20. On the following screen enter the warehouse number and the Inventory Record (also this time they can be processed as individual entry); hit on :
The system will list the results of the count against the inventory record entered.
WM clearing: The example below lists a 100% discrepancy against material B35667102 (shortage of the entire quantity that should have been be counted) and the value of the shortage:
Before to perform the clearing, to allow the eventual second round of count, export the List of Differences as a basis for a second count, which would serve as verification of the first round. Click on the printer icon on the top of the window (see circled in red below):
If result of second count is negative (all expected quantity found), re-edit the Inventory Record by entering the second quantity counted; otherwise, if second count confirms the shortage, and if authorization to proceed has been collected from the Hub Manager, re-enter in the transaction code LI12N, select the storage bin on which the difference is reported and click on Write off button. On the warning tab the system will confirm that bin has been cleared in WM:
IM clearing: In case of discrepancies, to clear the IM type transaction code LI21. On the following screen enter the Warehouse number and Storage type 999, change the Document Date and the Posting Date to the deadline for physical count (e.g. 31.12.20XX) and hit :
NOTE: verify very careful the posting date entered in the screen above: this is a crucial entry for financial closures and must reflect the closing period, if the entries relate to that period. In fact, the system always defaults the current date but, if the transaction being posted refers to a previous month or year, staff must overwrite the date proposed with 31.12.20XX instead (during annual financial closures).
Once this step is completed, the material involved in the stock adjustments is moved to storage type 999 by the WM clearing.
HINT: Before running of clearing, check that storage type 999 and bin SCHROTT are empty, to avoid wrong clearing of other documents than Inventory records (see items circled in blue below). This storage bin might contain other documents than Inspection Record in case of materials not completed processed by transfer posting. To perform the above check, the best transaction to be used is LX03 and in case storage type 999 and bin SCHROTT is not empty, run transaction LT10 to move the materials in any other storage type/bin.
Select from the list returned by LI21 the Inventory Record(s) processed with the WM clearing (circled in red below). Best practice is to process the inventory Record by single posting (e.g. one Inventory Record activated against one Clients stock). In case it is required, multiple selection of Inventory Records is allowed for single posting (e.g. in case several Inventory Records have been activated against one single Clients stock and unique clearing posting is required to obtain a single document per ea owner:
NOTE: ensure that only the Inventory Record line is selected.
Once the Inventory record(s) have been selected, click on the Write off button. The system will move automatically to the Log for Difference Clearing:
Double click on the Mat. Doc. Number, then click on Accounting Documents button:
Click on first Doc. Number listed in the dialog box that appears (i.e. the accounting document):
The print shot below has to be copied in a document and has to be included in the Inventory Count package of documents:
WM clearing: The example below lists a 1.25% of surplus against material B27163204 compared with what should have been counted and the value of the surplus generated:
Also in this case, before to perform the clearing, a second round of count should be performed by exporting the list of differences as described for the surplus. If result of second count is negative (expected quantity found), re-edit the Inventory Record by entering the second quantity counted; otherwise, if second count confirms the surplus, and if authorization to proceed has been collected from the Hub Manager, re-enter in the transaction code LI12N, select the storage bin on which the difference is reported and click on Write off button. On the warning tab the system will confirm that bin has been cleared in WM:
IM clearing: In case of discrepancies, to clear the IM type transaction code LI21 and follow the IM clearing process for surplus described above. Also in this case the Financial documents that the system will produce has to be include in the Inventory Count package of documents.
No differences: WM clearing: The example below lists a 0.0% of discrepancies against the entire Inventory Record compared with what should have been counted; of course the value of difference is zero:
Nevertheless, the WM has to be cleared by clicking on Write Off button. To be noted that the IM does not require to be cleared at all.
Check the inventory post entries
To check the entries posted by the system thru the clearing process, run Transaction MB59, enter your plant and enter the movement types below, enter the posting date and then Execute:
If the system outcomes are in line with the physical counts results, move on with minutes. Otherwise ask for BP&CS units support to fix the wrong posting:
How to Display the List of Items by storage length of time
Go to transaction LX02 (or LX03) or follow the path below:
Logistics > Logistics Execution > Information System > Warehouse > Stock (or Storage Bin for transaction LX03)
Enter the Warehouse number and filter the GR date fields by entering the appropriate range of dates:
NOTE: the system allows to list the Warehouse Stock by entering one warehouse number per time.
If the query requires to pull off the list of items exceeding 24 months of storage for Year-end Inventory Exercise, count 2 years from the date of reference (e.g. from 01.01.2019 to 31.12.2021).
The system displays the list of stock items filtered by GR date accordingly with the criteria entered:
Reporting and Other System Actions
As per standard practice in UNHRD and best practices in data management, any system entries/changes should be backed by valid supporting documentation. Towards this end, any postings that will be generated by the Physical Count, especially in terms of count differences, whether for Internal (WFP) or External items (NO WFP), must be supported by a signed Note for the Record called Inventory Physical Reconciliation Report explaining the way the whole exercise was completed and the reasons for the inventory differences recorded. This memo should provide details of any discrepancies found between system stocks and stock levels documented through the Physical Count exercise. The reasons for the differences (e.g. pilferage) should be declared in the cover memo itself, ideally per Hub. The Hub who produces the NfR, must then upload the scanned/signed document to the relevant system transactions, via WINGS’s attach document functionality. Template of Inventory Physical Reconciliation Report is available on UNHRD Physical Inventory Exercise Team Channel. Also the signed memo has to be uploaded on TEAM Channel to be made available to UNHRD Network Coordination Cell and UNHRD Finance.
Beside the above overall Inventory Physical Reconciliation Report, further reporting is applicable, for both Internal and External Partners, i.e. a memo signed by UNHRD Management should be issued at the end of the reporting period (see periodicity above). At the end of the process, any discrepancies identified should be communicated to the relevant Stock owner(s) through UNHRD’s Customer Service inbox by UNHRD Network Coordination Cell. In addition, the inventory exercise may include a general review of the condition of goods stored; as such, proposals for disposal may be submitted to Stock owners at the end of the process as well. A list of ageing for the items stored at the UNHRD has to be provided too. This information has to be provided to Externals by issuing a Memo to each Partner. The template of this memo is available on Physical Inventory Exercise Team Channel while the signed memo has to be uploaded on TEAM Channel to be made available to UNHRD Network Coordination Cell
NOTE: For the UNHRD, unless there has been a major incident/catastrophic event (warehouse fire, hurricane, etc.), the Physical Count would generally not yield a significant difference with respect to latest system records. In the case of minimal differences, a general statement to this effect would suffice, together with the Physical Count List being attached to the memo.