Physical Control and Security of Inventory
Because inventory is tangible, items may lost, stray or stolen. It is not that people are dishonest, rather that they are forgetful. What is needed is a system that makes it difficult for people to make mistakes or be dishonest. There are several elements that help:
- A good-part numbering system.
- A simple, well documented transaction system. When goods are received, issued, or moved in any way, a transaction occurs. There are four steps in any transaction: item the item, verify the quantity, record the transaction, and physically execute the transaction.
- Identify the Item. Many errors occur because of incorrect identification. When receiving an item, the purchase order, part number, and quantity must be accurately specified. When issued, the quantity, location, and part number must be recorded.
- Verify Quantity. Quantity is verified by a physical count of the item by weighing or by measuring. Sometimes standard-sized containers are useful in counting.
- Record the Transaction. Before any transaction is physically carried out, all information about the transaction must be recorded.
- Physically execute the transaction. Move the goods in, about, or out of the storage area.
- Limited Access. Inventory must be kept in a safe, secure place with limited general access. It should be locked except during normal working hours. This is less to prevent theft than to ensure do not take things without completing the transaction steps. If people can wander into the stores area at any time and take something, the transaction system fails.
- A well-trained workforce. Not only should be stores staff be well trained in handling and storing material and in recording transactions, but other personnel who interact with stores must be trained to ensure transactions are recorded properly.
Courtesy: J.R.Tony Arnold, Stephen N. Chapman, Lloyd M. Clive