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Where oh where has all our inventory gone?

Do you have salespeople who take sample products out of your warehouse without recording that they have taken them to show a customer? They probably think that they are doing the right thing – it’s all about getting sales isn’t it. Without sales nothing happens. Fair enough, but your computer system doesn’t know that the item has been removed, the stock on hand and stock available isn’t adjusted for the stock in the salesman’s car.

The result is:

A customer may be promised the item because the computer shows that you have it in stock. The customer drives 40km to your warehouse to pick it up, then you discover that it has gone AWAL.

Then there will be discussion around – it’s not me, it’s the ERP. This excuse works because the ERP isn’t able to defend itself, it can’t talk, but the real problem is the sales people, who are in a hurry to close deals or your techies who borrow parts.

This is what you need to do to keep your stock accurate and to track the stock in the possession of each sales person.

Create a customer account for each sales person

Record each sample taken by a sale person or a technician on a new Sales Order. As a result of entering the order, the available stock is reduced. Don’t process this order, just yet.

When the item is returned to stock, reduce the line item quantity to “0” on the sales order, make a note or comment on what occurred then process the order to close it out.

On a regular basis print or email the Open Sales Order List for each sales person and inquire as to the whereabouts of the loan stock, and when it will be brought back to the warehouse.

You need to establish a rule, a very simple rule. NOTHING LEAVES THE WAREHOUSE WITHOUT PROPER PAPER WORK! Violators of this policy face immediate termination, or they may have to undertake some arduous task.

In a similar vein, you need to stop your counter people “swapping out” one item for another with out paper work or a transaction taking place.

Go through all your procedures and see that they meet the test described in detail above. Most distribution companies have established policies & procedures for processing the following types of transactions. Review yours.

Normal Stock Receipts

Unexpected Stock Receipts

Requisitions for internally consumed products


Order to be delivered

Orders to be picked up

Cash Sales

Direct Drop Shipments

Order for Non Stock Items

Transfers to other warehouses

Work Orders for Assemblies

Bin transfers

Returns of Stock items

Returns of non-Stock items

Returns of damaged items

Returns to your supplier

Adjustments to Stock on Hand Levels

Scrapping & writing off stock

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