Accounting Best Practices, Fifth Edition

16–44. Eliminate Redundant Part Numbers

When a company consolidates multiple locations in an effort to streamline its engineering and purchasing functions, a common problem is the discovery of duplicate part numbers, since each location has assigned a different part number to the same part. Part duplication is also common when many new products are being launched at the same time, since multiple engineers are needed at the same time for design work, and they may not be aware of part designations being made by their counterparts. It also occurs when a company switches to a new supplier, since the person assigning part numbers may not be aware of existing designations. Whatever the reason may be, redundant part numbers typically result in a considerable increase in the amount of on-hand inventory.

The key task in eliminating redundant part numbers is finding these parts. There are several methods for doing so. One is to simply ask the warehouse staff’s cycle-counters, who have the best knowledge of what parts are currently on hand. Though this approach will highlight some duplicates, it will not spot everything—cycle-counters are frequently assigned to specific warehouse aisles and so have no knowledge of what lies elsewhere in the warehouse. Also, they frequently count sealed containers and have no idea of their contents.

Another possibility is to audit a sample of the inventory, ...