Stock Take Standard Operating Procedures (SOP)

Objective



The objective of this procedure is to describe the activities involved in making the inventory take at the warehouse, offices and consignment locations.\


Scope

The scope of the activities defined in the procedure is applicable to all self owned / 3PL Warehouses.
The inventory in the retail stores (consignment locations) is outside the scope of this SOP.  The stock take procedure will be followed the stock take instruction manual.



Inputs

KPI defined for Inventory and discrepancies resolution.  KPI for stock discrepancy allowance :

1. Warehouses – 0.5% of total inventory level
2. Consignment – 3% of total inventory level

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Responsibilities

Group Operations Manager (GOM) and Chief Operating Officer (COO) are responsible for managing the whole process in coordination with concerned departments. (Operations, Sales, Finance, IT Support, warehouse and 3PL parties).
All concerned Departments should cooperate with Finance Department to ensure the audit can be completed as earliest as we can in a smoothly way.

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Activities

Yearly planning of stock take to be done beginning of each year of the financial year, & three months in advance of the schedule finance inform operations to work out the plan.  Operations prepares plan & provide for finance review. (All tasks “Operations & Finance review to be completed within one week time max).



Plan should include:

1. Information about promotional activities if any (need to create buffer location)  (coordination with sales team).
2. Number of locations + draft map + Physical Inventory Worksheet.
3. Pending or issues related to GRN’s not yet captured due to system problems or due to missing PO’s or returns having problems or missing documents.
4. List of counting team + control team from operations & finance available for support.
5. Team that need training (counting team) & the training schedule.
6. Operations provide locations available in warehouses & relation to Netsuite inventory  (mapping of locations in warehouses).
7. Finance to ask for modification of Operations proposal & forward back within 48 hours.\


4 weeks before stock take

1. Operations Department will send Notification Letter to marketing team to issue EDI to all Sales Channels to inform them about the cut off schedule for the stock take and exact date of stock take, informing the customer no orders to be proceed during the stock take period.
2. Receive plan of stock requirements of retail shops (build up of stock level) “deliveries will be done during the stock take period if the order is submitted to the warehouse before the stock take cut off date”.
3. Receive plan of buffer location requirements for retail if any (in case of launch promotion taking place during stock take & supplier stock arrival taking place within stock take period).

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Two weeks before stock take

1. Operations Department sends update to finance for remaining pending issues.
2. All concerned departments work on solving these issues & rectifying the problems within the same week.
3. Inter-company reconciliation should be done to insure no inter-company invoices are missed.
4. The inventory transactions for all delivered sales orders and transfer orders must be completed in Netsuite.
5. Operations prints all incomplete transactions from Netsuite in addition to the unclosed sales orders “back orders”, unclosed transfer order done in Netsuite & not yet confirmed in warehouse or not transacted in warehouse, inter-warehouse transfers (local or outside the country) & put plan with Operations to insure all stock collected or delivered have been posted to the system. Moreover, print all backorders still pending & work with Sales/Operations to close these orders.
6. Operations insures matching in both Netsuite & WMS and IT insures there is no move order transacted in NETSUITE not transacted in WMS or Vic versa.

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7 days before the stock take day

1. Operations Department will send reminder Notification Letter internally to inform them about the stock take date to insure that retail store finalize their ordering. Buffer zone for retail & wholesale created (if part of the plan).
2. Finance print all pending transactions in addition to the unclosed sales orders “back orders” and unclosed transfer order, in Netsuite & not yet confirmed in warehouse or not transacted in warehouse, inter-warehouse transfers (local or outside the country) & update plan with Operations to insure all stock collected or delivered have been posted to the system (No pending document should be accepted if older than 3 days). Moreover, print all backorders still pending & work with Operations/Sales to close these orders.
3. Operations insures matching in both Netsuite & WMS and IT insures there is no move order transacted in NETSUITE not transacted in WMS or Vic versa.

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6 days before the stock take day

1. All customers returns to be stopped to insure enough time given to warehouse.
2. Sales Department will communicate with Operations Department in order to secure all delivery orders have been placed to the warehouse for pick and pack process for delivery before the financial year end date.

Note:  the period of stock take is 4 days (3 days for stock take + 1 day for auditor count).

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3 days before the stock take day

1. Sales & Operations Department shall stop all stock transfer from warehouses to Retail Sales 3 days prior the day of the stock take.
2. Operations Department shall collect all Goods Receipt Notes (GRN) from the warehouse.
3. Finance prints pending transactions report in addition to the unclosed sales orders “back orders”, unclosed move order in NETSUITE & not yet confirmed in warehouse or not transacted in warehouse, inter-warehouse transfers (local or outside the country) & no pending items should be available.

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2 days before the stock take day

1. Finance Department shall stop all manual wholesale invoices 2 days prior the day of the stock take if the delivery cannot be sent on/before 31st December. Insure all manual invoices have been captured into Netsuite.
2. Finance Department will make sure that all whole sales invoices / sales return are captured in the Netsuite without any backorders.
3. Finance Department will perform customer reconciliation for all top customers and identify any double invoicing or missing sales return.
4. Operations reviews the first draft of the location map per warehouse & insures that the stock preparation is taking place (Arrangement of the products per location).
5. Also, control that all damaged items are segregated & placed in different zone (damaged zone).

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1 day before the stock take day

1. Finance Department shall stop all whole sale invoices 1 days prior the day of the stock take. Insure all manual invoices has been captured into Netsuite.
2. In case of pending transaction orders in addition to the unclosed sales orders “back orders”, unclosed move order, in Netsuite & not yet confirmed in warehouse or not transacted in warehouse, inter-warehouse transfers (local or outside the country), GRN’s not sorted, or any other issue not fulfilled as per the plan, those pending orders will be bringing forward to 2016 transaction to resolve the problem to avoid pending order issues.
3. Operations send the stock as per SKU’S from warehouse (soft copy) to track differences prior to stock count (vs Netsuite).
4. Operations stock in charge will compare the quantities of warehouse with Netsuite & keep records for review.

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Day of the Stock Take (this could complete in 1 day)

1. Chief Operating Officer review the final locations map & confirm matching to the actual stock locations.
2. Auditor will pick the samples of the SKUs to be counted.
3. No items to be cleared from customs on the day of stock take if any.
4. Warehouse and Operations Department will keep all new arrivals in the pending zone area which GRNs will not be raised in both WMS & Netsuite.
5. COO & GOM assign specific locations & provide reports for each inventory team (the assigned accountant will be the team leader for his group).  Assigned stock take team should attend stock take process.
6. a) All stock counted should be done by manual & the counting should be from left to right per pallet & top to bottom (Z type not snack type) zone by zone (left to right top to bottom).

b) Report generated should be numbered plus should be available as hard copy by warehouse with location details.





• Information available on the location list as follows



Location number --- Count status --- Difference between counted quantity & system --- variance report --- final confirmation status.

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1. At the end of each zone controlled & final stock agreed inventory team member will sign the final physical count report with auditor’s representative & warehouse’s representative and submit to COO.
2. GOM will work out the discrepancy list to COO for approval on Inventory Adjustment in Netsuite.  Discrepancy allowance to the warehouse should be 0.5% of total inventory quantity.
3. Generate first draft result of stock take after approval.



One Day after the Stock Take day

1. COO will send notification to IT support team to enable all users’ access and inform all concerned departments to resume the operations.
2. Outputs

Final Stock Take Report
Update stock on NETSUITE System
Update stock on WMS

3. Monitoring and Measurement

NETSUITE Variance Report
Discrepancy Report