Hubbell Policies

records in lieu of an annual physical count.

Cycle Count Errors

Statistics for reporting the accuracy of the perpetual inventory records must be based on part number/location pairings (quants). Count differences are recorded as errors. Also, if a part is located, but is in the wrong location, it is treated as an error (i.e. erroneous bin location).

Miscellaneous Audits

In addition to regular cycle counts, miscellaneous audits are required to be performed by the cycle counter (s) and the results must be documented and reported to management at least monthly. Any adjustments or errors identified as a result of the miscellaneous audits outlined below, must not be commingled with the normal cycle count results. Statistics associated with these activities must be reported separately. • Location Audits - Throughout the year, Location Audits must be performed. Location audits are verification that the correct part numbers are in the correct inventory storage locations. Other than a reasonableness test, quantities do not need to be verified as part of the location audits. The purpose of conducting location audits is to identify inventory that is not recorded in the perpetual inventory records (and therefore would never be subjected to selection for the normal cycle counts) or that is part of the records, but not located in the reported stores location. The audits may be conducted from the perpetual inventory records to the floor or from the floor back to the perpetual inventory records. Management must determine the most efficient method of conducting the audits. Quantity adjustments made as a result of location audits are not included in the normal cycle count results. To ensure that all inventory locations are tested whether they exist on the perpetual inventory system or not, a zone approach is the preferable method used to conduct location audits. • Sealed Carton Audits - On a test basis, sealed cartons from outside vendors must be opened and physically counted; banded coils must be weighed, etc., in order to agree the part numbers and quantity to that reported on the carton labels or other pertinent documents. Management must determine a reasonable number of cartons to test dependent on the volume of outside vendor cartons coming into the location.

• Empty Bin Audits – All empty bins must be verified at a minimum, monthly (in SAP, t-code LX01).

• Shipping Error Validations (SEVs) – To assist on customer claims, SEVs must be verified by confirming bin quantities and if required, reconciling inventory transactions. The cycle counter(s) are not required to perform these validations, operation may perform these validations.

D. Cycle Count Reporting

Reporting Format & Frequency

Cycle count results should be accumulated and reported by individual stores area (i.e. Raw Materials, Finished Goods, Receiving / Inspection, etc.) and in total if all areas are certified.

• Accuracy rates normally vary by stores area due to the nature of the items stored and the volume of transactions. By reporting cycle count results by individual stores area, documentation will exist to

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