Difference between revisions of "11.5 Inventory - Physical count"

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== Warehouse Inventory List for Physical Count ==
 
== Warehouse Inventory List for Physical Count ==
  
Go to transaction ZWMF001 to print the [https://wiki.unhrd.org/wiki/index.php/File:Warehouse_Inventory_list_ZWMF001.pdf “INVENTORY RECORD”] sheet to be handed over to the Counters(s) to perform physical inventory. One list is printed out from each Inventory record.   
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Go to transaction ZWMF001 to print the '''[https://wiki.unhrd.org/wiki/index.php/File:Warehouse_Inventory_list_ZWMF001.pdf “INVENTORY RECORD”]''' sheet to be handed over to the Counters(s) to perform physical inventory. One list is printed out from each Inventory record.   
 
On the screen below insert the Warehouse number and the Physical Inventory Record generated above and click on [[File:Execute.png]]:
 
On the screen below insert the Warehouse number and the Physical Inventory Record generated above and click on [[File:Execute.png]]:
  

Revision as of 14:37, 5 September 2021

Inventory - Physical count
Performer: Logistics Officers, Logistics Assistants, Warehouse staff, other non-Logistics staff
Role: Logistics & Warehouse roles
Transaction : WingsII – LI01N, LI02N, LI11N, LI20, LI21, LX17, LX22, LX02, MB59, ZWMF001, ZSCLSR064


Overarching Principles

The Physical Inventory Count is an exercise of counting of stock inventories managed and tracked by UNHRD. The process involves a team of UNHRD staff going through warehouses and counting for each commodity.

During the physical inventory, warehouse activities should be stopped, and all the storage types locked in the system.

Physical inventory count should be completed at the end of September, for WFP NFIs and at the end of December, for all UNHRD Inventory stock. If for any reason it cannot be completed exactly the last day of the month, a limited tolerance can be accepted. The duration cannot exceed the 5th day of the following month and, it must be therefore completed and captured in WMS before the 5th of the following month (for September PIs) or the 15th (for December PIs). To the extent possible, the warehouse count should be planned accordingly and executed at the same time with the other warehouses and operation must be frozen. The exercise must be undertaken for all stocks: those kept on-line in the WMS, those in-transit, 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. 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.

A proper plan should be prepared to perform the physical inventory for all warehouses. The following condition/checklist must be followed:

  • Organize inventory exercise and identify all the locations (i.e., WMS storage types) that contain stocks
  • Confirm the attendance of the count team members
  • Plan the operations in function of the upcoming physical count activity
  • Decide the date and time for the execution of the count considering the dispatches/arrivals planned
  • When all the above has been established, a communication must be sent to all interested parties to notify the Freeze Operations period when no commodity movement activities will be performed (e.g., receipts, dispatches,) to allow executing the count.

Inventory Records to perform Physical Count activities should be produced from the system, countersigned by all members of the Inventory Count Team. In case of no discrepancies the Historical Physical Inventory should be produced countersigned by the Logistics Officer; in case of discrepancies ensuing results of Physical Count have to be reported thru a dedicated Memorandum to be countersigned by relevant Logistics Officers, Supervisors and Managers. These documents 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 as a soft copy in the Logistics repository place.

In case of discrepancies, the Memorandum has to be attached in the document posted in the system as justification for the inventory adjustments posted. 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 the hub:

  • Plan for Inventory Count (P)
  • Appoint Inventory Count Team(s) and communicate schedule and participants to all concerned. (P)
  • Verify that all open procedures related to Logistics activities, either related to Inbound and Outbound flows, are duly processed (P/S)
  • Identify the storage location(s)/area(s) to be counted (P/S)
  • Block the identified area and communicate to all concerned (S)
  • Print inventory list and distribute together with other useful documents (see later in this section) (P/S)
  • Perform count (P)
  • Enter the data collected into the system (S)
  • Analyse eventual differences and clear in the 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)
  • Unblock the storage location(s) (S)
  • Consolidate and produce Physical Count report/minutes (P)
  • Submit to Hub Manager and then to Network Coordinator for signature and forward to Finance (P)

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 RECORD for continuous inventory so that appointed counter records the quantity found for each item on the list, indicating exact storage locations if missing.

Preliminary actions

Physical inventory takes place at storage type level. Some materials may have been recorded in the system under system locations (i.e. materials with storage type 999 and bins “TRANSFER”, “AUFNAHME” and “SCHROTT”) when manual postings are entered e.g. decrease of Supplier Stock, manual uploads, etc. Physical counts cannot be activated in these specific and generic locations.

The above applies also to any material listed under receiving or shipping area (i.e. material with storage types 902 – “GR Area External Rcpts” and 916 – “Shipping Area Deliveries” respectively).

Hence, materials recorded in such areas would need to be moved into proper bins before the inventory exercise begins (i.e. bins in the warehouse where the items are physically located), allowing counters to capture physical count data properly/timely. To perform the preliminary actions and verify that all open procedures related to Logistics activities, either related to Inbound or Outbound flows, and any other internal warehouse movements are duly processed, a preliminary check thru the UNHRD Alert page to check if there are materials in the shipping area waiting for Good Issue or ant Outbound Delivery that requires to be created from Sales Order and have Good Issue posted, in case of material already dispatched from HRD Warehouses. Run below transactions to check if there are any entries to be completed:

  • run transaction LB10 to check if there is any Transfer Requirement to be processed
  • run transaction LT23 to check if there are Transfer Orders not confirmed
  • run transaction MB52 to check if there are materials under Storage Location 0003 related to opening or closure of Loan & Borrowing postings
  • run transaction LX02 to check from negative quantities

Activate Inventory record

All storage bins need to have the current content counted at least once a year, while WFP Inventory Stock has to be inventoried twice a year. As common practice, yearly Inventory Count is performed in December while WFP Inventory Stock has to be also inventoried in September.

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 list 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 system allows to enter maximum 50 bins available in a storage type per each Inventory Record in groups of 25 bins each. It is recommendable to enter also empty bin to eventually count any item that might result stored in there.

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

Fill in the Warehouse number, the Storage Type and the planned count date:

Inv01.png

Click on 1.5 1.png

Insert the name of the Counters(s) (free text), and the storage bin; enter more storage bins (one per each line) if an inventory counts of groups of bins have to be activated in a unique inventory record (e.g. blankets). It is recommendable to copy all the bins from transaction LX03 in an excel table to copy and paste the bins in groups of 25 each. Click on ACTIVATE.png to activate the Inventory Record.

Inv02.png

The system activates the inventory record by prompting its number which is reported on the warning bar on the left- bottom side of the window:

Inv03.png

Use transaction LI02N or follow the path below in case changes are required on the Inventory record created –i.e add or remove bins. To do so deactivate the Inventory Record first by clicking on ACTIVATE.png.

Logistics > Logistics Execution > Internal Whse Processes > Physical Inventory > In Warehouse Management > Physical Inventory Document > Change

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.

NOTE: The system blocks the storage bins selected for physical inventory for other stock movements until the inventory process is completed.

Warehouse Inventory List for Physical Count

Go to transaction ZWMF001 to print the “INVENTORY RECORD” sheet to be handed over to the Counters(s) to perform physical inventory. One list is printed out from each Inventory record. On the screen below insert the Warehouse number and the Physical Inventory Record generated above and click on Execute.png:

[file: PINew1.png]

The system prompts with below screen which allows to both access a preview of the inventory count list and to print it directly. Click on [[file: PREVIEW.png] to check the contents on the form before printing, if required:

[file: PRINTPI.png]

Follow the standard SAP procedure to print the list by selecting the appropriate WINGS printer, or entering PDF1 as virtual printer and click on [[file: PRINT1.png] button to print the Warehouse Inventory List with the following format:

[File:PINEW3.png]

The Counter(s) perform(s) the physical inventory against the bin(s) pointed and will hand-write the quantity counted in the column named “Quantity *Number of units)”.

It is not required to fill in any further information on other empty column. 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) (bottom of the sheet).

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 or following the path below:

Logistics > Logistics Execution > Internal Whse Processes > Physical Inventory > In Warehouse Management > Count Results > Enter

On the screen below insert the warehouse number and the Inventory Record and hit on 1.5 1.png:

Inv10.png

To be noted that one Inventory Record can be only processed individually.

On the adjacent screen enter counted quantity per bin, the name of the counter per each line item and hit on 1.5 1.png:

Inv11.png

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. In case of discrepancy, system prompts to confirm single result by indicating the if the discrepancy is a surplus or a deficit thru a msg on the bottom of the page:


File:PINEW5.png

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.

In case of discrepancy, system prompts to confirm single result by indicating the if the discrepancy is a surplus or a deficit thru a msg on the bottom of the page:

Inv12.png

If count enter is correct the recorded hit on 1.5 1.png and the system moved to the next discrepancy, if any. In case the deficit result as a zero quantity, enter “0” as counted quantity and hit on 1.5 1.png:

PINew6.png

In case any material is found on an empty bin, enter the material code, the batch number, the plant, the quantity counted and “EA” as Unit of Measure:

PINew7.png

In that case the system processes the single result and recorded has to enter the storage location, Special Stock indicator “Q”, WBS element, the GR date, and the expiration date, if applicable and then hit on 1.5 1.png:

PI7.1.png

In case the empty bins are not included in the Inventory Record and any material is counted in such bins, the recorded can enter the new bin by clicking on “New item”, and follow above steps:

PINew8.png

Once all the quantities of the Inventory Record have been entered, click on Save button. The system confirms on the Warning bar that the recording of inventory count results has been added against the Inventory Record:

Inv12.png

When results of inventory count are entered in the system, the count recorder has to sign the WAREHOUSE INVENTORY LIST and hand it over to the Logistics Officer/hub Manager to be included in the Physical Count package of documents.

Once the first count has been entered, run transaction LX17 or follow the path below:

Logistics > Logistics Execution > Information system > Warehouse > Physical Inventory > With Bin Inventory Management

Insert the warehouse number, the storage type, select the Layout /UNHRD and hit on Execute.png:

File:PINEW4.png

The system displays the result of the counts per storage type:

File:PINEW9.png


Export the report by clicking on [File:PINEW9.1.png]] and follow standard instructions to save the report locally, to list the discrepancies and submit the results to the Logistics Officer or Senior Warehouse staff who might request to carry the second count.

The teams recount only the bins that show the discrepancy using the first Inventory Record printout and return it back to recorder to enter the second count results in the system. Best practice is to recount eventual discrepancies by addressing the task to an alternative counter. The recorder runs transaction LI12N to enter only the result of second count considering that only the results on bins recounted have to be entered.

Clearing of Discrepancies

The clearing of discrepancies counted, have to be recorded in Warehouse Management (WM) 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.

WM clearing

To clear the discrepancies type transaction code LI20 or follow the path below:

Logistics > Logistics Execution > Internal Whse Processes > Physical Inventory > In Warehouse Management > Clear Differences

On the following screen enter the warehouse number and the Inventory Record (also this time they can be processed as individual entry); hit on 1.5 1.png:

Inv14.png

The system will list the results of the count against the inventory record entered.

Shortage

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:

Inv15.png

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):

Inv16.png

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:

Inv25.png

IM clearing: In case of discrepancies, to clear the IM go to transaction code LI21 or bollow the patch below:

Logistics > Logistics Execution > Internal Whse Processes > Physical Inventory > In Warehouse Management > Clear Differences

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 Execute.png:

Inv18.png

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 transaction 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:

Inv19.png


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:

Inv20.png

Double click on the Mat. Doc. Number, then click on Accounting Documents button:

Inv21.png

Click on first Doc. Number listed in the dialog box that appears (i.e. the accounting document):

Inv22.png

The print shot below has to be copied in a document and has to be included in the Inventory Count package of documents:

Inv23.png

Surplus:

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:

Inv24.png

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:

Inv25.png

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:

Inv26.png

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.

NOTE Posting of Inventory adjustments, both surplus of deficit, are not allowed on Supplier Stocks

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:

Inv27.png

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:

Inv28.png

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:

LX011inv.png

NOTE: the system allows to list the Warehouse Stock by entering one warehouse number per time.

Click on Execute.png:

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:

LX012inv.png


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.