Inventory Control System Procedures

By Dan Antony, eHow Contributor

updated: March 8, 2010

Inventory control goes well beyond counting what is on your shelf.

An inventory control system does far more than keep count. It is a tool that an organization uses in
accounting, production planning, replenishment and forecasting. So, a company's accounting group,
and operations, production and logistics departments all rely on accurate inventory control. An
automated and software-based system provides the greatest accuracy and visibility; every employee
and customer who is invested in the inventory may tap into a network-based system. A best-in-class
system relies on some key features and procedures.

Establishing Scope
1. A company that is implementing inventory control must select which types of inventory it will control.

The three kinds are raw materials (for example, fabric); work-in-process inventory (like blue jeans on
a production line); and finished-goods inventory (the finished, ready-to-sell product).

Manufacturers typically control all three types of inventory. Retailers need only control finished
goods, and typically call their inventory "stock." A clinic similarly controls its inventory as stock.
Costing
2. An inventory control system should provide a snapshot view of the cost of all inventory (including
raw materials, work-in process, finished goods or stock). This is not its value; it includes overhead
costs like movement, handling, storage and other non value-added activities. It may also account for
loss where that is common, by such factors as pilferage and natural disasters.
Billing
3. An inventory control system somehow triggers billing for a shipment, or for use. At a manufacturer
supplying subassemblies to Ford Motor Company, a shipment alerts Accounting to send an invoice
to Ford. At a hospital, billing may be triggered by use of stock like a dosage or a medical device like
a heart stent.
Vendor-Managed Inventory
4. In this case, an inventory control system stretches beyond an organization's four walls, to control
inventory at third-party storage and logistics providers. This usually requires secure Web-based
portals provided by the storage or logistics provider, or some system of secure Internet-based
reporting and alerts.
Forecasting
5. Ideally, an inventory control system forecasts demand for inventory. This may be based simply on
historic demand; For example, Wal-mart may predict that it require 40 percent more children's
bicycles in the two months approaching Christmas, based on sales from the prior three years.
Invoicing
6. An inventory control system may include advanced shipping notice capability, whereby the supplier
alerts the customer as to when a shipment will arrive. This enables the customer to allocate
resources (like shelf space and inbound shipping personnel)

Read more: Inventory Control System Procedures |

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procedures.html#ixzz180TXvvYb

Traker Systems
 Traker Systems is an inventory management system software program allowing you to track and
control your inventory. With this software management system, you can track and control purchasing,
invoicing, product recalls, shipping and receiving, ordering and all other aspects of inventory
management. The software comes with a full system of reports allowing you to have the status of your
inventory at your fingertips. Some of the forms available with Traker Systems include packing slips, bills
of lading, invoices and inbound receipts. Analysis reports include analysis summary, allocation reports,
products lists, inventory summary and inventory history. The operating system required to use Traker
Systems is Windows 2000, Windows XP or Windows Vista.

Read more: Types of Inventory Management Systems |

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systems.html#ixzz180UuEonV

Stock cards are used for more complex systems. Each type of stock has an associated card, with
information such as:

• description

• value

• location

• reorder levels, quantities and lead times (if this method is used)

• supplier details

• information about past stock history

More sophisticated manual systems incorporate coding to classify items. Codes might indicate the value of
the stock, its location and which batch it is from, which is useful for quality control.

 Travel transactions are allowed on the pcards. These transactions include

hotel/motel, airfare, rental vehicle, registrations. Please remember that
personal purchases during a hotel stay such as internet, long distance, room
service, etc. are not allowed on the pcard.

 Office, classroom and lab supplies

 Books

 Small purchases less than $1,000

 Award plaques & trophies

 Professional association membership dues – Organization’s mission/goal must

be directly related to the department’s mission/goal. Additional
documentation is required to be kept with the receipt: Supervisor approval
and a justification for the membership.

Departmental subscriptions mailed directly to the University

 Furniture is not allowed on the purchasing card. Furniture is under

contract to several vendors. Please contact the Purchasing Department if
you need to purchase furniture.

 Foundation/Development purchases. This includes gifts, greeting/holiday

cards, contributions/sponsorships, gift certificates/cards, clothing, etc. Please
see the Discretionary Spending Policy found on the Controller’s website for a
complete listing.

http://www.wku.edu/Dept/Support/FinAdmin/Spending%20PolicyII.pdf

The purchasing cards are to be used for items that can only be paid through
state funds. They are not to be used as a convenient way to make Foundation
purchases which are reimbursed after the fact.

 Printing/Copying Services. Printing services are under contract. The

contract vendors can be found on the Printing Services website. You can also
place your printing request on the website.

http://www.wku.edu/Dept/Support/StuAffairs/CSF/printing/Home.html

 1099 Reportable Services. To determine the 1099 reportable status of a

vendor, go to the FTMVEND screen in Banner. Query for the vendor. The
status is located on the Text (right click on the first screen). Contact the
Pcard Admin. if there is no reporting information on the vendor.
Capital Equipment and complete Computer Systems. These items must be
purchased through the requisition process in Banner so that they are tagged
appropriately by Inventory Control

 Receipts and invoices must be itemized. This includes the quantity,

description of item, unit price, total price for item, and the final payment
total.

 Credit card machine tapes showing only the vendor and credit card
information and the total amount of the purchase are NOT considered
receipts! Itemized receipts must be maintained.

 Receipt tapes from stores such as Wal-Mart, Lowe’s, Best Buy, etc. are heat
sensitive and are likely to fade over time. The best practice for these
receipts is to make a copy of the receipt then attached the original to the
printed copy before filing.

 Rosters must be maintained for food purchases. This should include

the faculty/staff member(s) present as well as the guest/prospective
employee. An easy idea for events involving large groups is to invite the
guests to sign a guest book.

 Always add transaction notes to the transaction. Be brief but specific.

For example, if you have purchased airfare, add notes that state the
conference name and dates and the individual who is going. Add a detailed
explanation for any unusual purchase and how the items will be used. Also, if
you have more than one index on your PaymentNet Index drop down, it’s a
good idea to add the index to be charged in the notes – especially if you work
with many grants, AA/PD accounts and/or Sponsored Programs internal
grants.

 Retention Guidelines
 Each department/center is required to designate an individual who will be responsible for all P-Card
documentation. This person will work closely with the Purchasing department to coordinate the
collection of P-Card documents for storage, retrieving documents and ultimately destroying
documents once they have met the retention period.
 The department records coordinator should have the appropriate knowledge of and access to all the
P-Card departmental records

Record Retention and Retrieval

Rensselaer is required to keep all official Rensselaer P-Card (Purchase/Travel Card)records for a period of
ten (10) years according to record retention requirements.
Rensselaer has implemented a policy requiring all departments to store all cardholder documentation in a
central location within the department. This would include cardholder statements, purchase transaction logs
and vendor documentation.
• Documents for the three most current fiscal years, including the year in progress, are considered
“active” records and must be stored in a central location within the department.
 • Documents older than the three most current fiscal years are designated “inactive” records.
Inactive records will need to be packed and sent to Iron Mountain, Rensselaer’s contracted vendor
for offsite warehouse storage.
• Transaction documents for Fiscal Year 2004 forward, at a minimum, should be filed alphabetically
by Fiscal Year, Department and Cardholder Name

Finance Mission Statement

The Mission of the Department of Finance is to promote excellence, quality and efficiency by enhancing
the ability of our employees to serve our internal and external customers in an outstanding manner. We
will strive to promote a considerate, positive and informed workforce.
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