Inventory adjustments

Inventory adjustments
See also

Inventory adjustments are done to match inventory levels so that amount of stock in system records or papers is covered with physical count of stock. Adjustment means here decreasing of increasing amount of stock [1]. Many companies decide to perform monthly cycles of inventory adjustments which takes a lot of time and money [2]. The inventory adjustment process is different in phases of the business cycle [3]

Inventory adjustment documents[edit]

Inventory adjustment might be controlled. It should be supported with proper documentation and follow proper policy within an organisation. Documentation should include evidences such as numbers, codes and other related papers [4]:

  • stock number,
  • quantity,
  • document number,
  • condition code,
  • management code,
  • approvals,
  • transactions,
  • related history of transactions,
  • other supporting documentary,

Reasons for inventory inaccuracies[edit]

Root causes of all inventory inaccuracies should be identified. The reasons behind might be[5]:

  • accounting errors,
  • not having enough employees,
  • wrong receipt assignments,
  • system errors,
  • improper storage,
  • wrong reporting,
  • shipping inaccuracy,
  • wrong count on vendor side,
  • mistakes in bills,
  • unreported scrap,
  • lack of data input and data output control,
  • lack of knowledge how system works,
  • lack of discipline,
  • wrong materials requirement planning (MRP),
  • other human errors.

Improvements in inventory control methods[edit]

Innovations in inventory control might decrease relative stockout costs. First of them were introduced in 1980s like just-in-time techniques or bar coding [6].

System steps in adjusting an inventory[edit]

In practise inventory adjustments are done with support of the proper inventory system. To set proper number of stock, usually steps that user has to do in the system are[7]

  • Adding an adjustment,
  • Choosing the adjustment form,
  • Selecting reason of the adjustment,
  • Writing down notes about the adjustment (if any),
  • Choosing if the adjustment will increase or decrease quantity of item.

Footnotes[edit]

  1. TeachUcomp Inc., (2008), p. 78 - 79
  2. McDonald S. C. (2009)
  3. McCarthy J., Zakrajsek E., (2000)
  4. Kvasnicka D., (2013) , p. 4 - 6
  5. Kvasnicka D., (2013) , p. 4 - 6, McDonald S. C. (2009)
  6. McCarthy J., Zakrajsek E., (2000), p. 2 - 21
  7. DLCPM Enterprise, (2018), p. 13 - 15, TeachUcomp Inc., (2008), p. 78 - 79

References[edit]

Author: Anna Bodura