Accounting Best Practices, Fifth Edition

16–24. Train the Warehouse and Accounting Staffs in Inventory Procedures

The underlying problem behind the bulk of all inventory record errors is a lack of knowledge by warehouse workers in how to process a variety of inventory transactions. As a result, cycle-counting teams waste time investigating errors; the materials planning staff must order parts on short notice due to unexplained materials shortfalls; the company incurs express delivery charges to bring in parts on short notice; and the accounting staff must record unexplained losses related to inventory adjustments.

Many of these problems can be mitigated by creating a procedures manual for all inventory transactions and by continually training both the warehouse and accounting staffs in their use. Examples of common inventory transactions are as follows:

• Back-flushing

• Consignment receipts and deliveries

• Cycle-counting adjustments

• Inventory storage in rack locations

• Issuances

• Issuances of additional parts

• Kitting

• Loaning inventory to departments

• Receiving

• Receiving customer returns

• Removing defective parts from the production process

• Returning defective parts to suppliers

• Returning stock to the warehouse from the shop floor

• Shipping completed customer orders

• Staging for shipping

• Transferring between inventory locations

It is not enough to simply create a handsome procedures manual and issue it to the staff. On the contrary, all employees involved with these transactions should go through regular refresher training, while new employees ...