Inventory self-auditing

Types of Inventory Record Errors

There are an enormous number of inventory transactions that must be recorded in an inventory tracking system, such as inventory receipts and picks. It is very difficult to record these transactions manually and without error, which results in a considerable amount of cycle counting and error correction. The types of errors discovered usually involve a keying error, quantity miscounts, the wrong items being picked, or the complete misidentification of the parts being recorded.

Inventory Self-Auditing

A possible technique for reducing the number of these errors is through the use of inventory self-auditing within the warehouse area. Essentially, self-auditing means that employees review the transactions recorded by each other, either through the review of a small inventory count or a full-blown transaction reconstruction. This approach is only feasible if there is a sufficient amount of excess staff time available for self-auditing.

Possible self-auditing methods include:

  • Cycle counting. Have the warehouse staff review any exceptions found by their fellow cycle counters. This can also include a mutual review of any changes made to the inventory database for location or unit count alterations.
  • Picking. Have inventory pickers compare what they picked to what is stated on their pick tickets.
  • Transaction entry. The data entry staff can compare the paper transactions from which information was entered to a log of entered information from the computer system.

While useful, it is difficult to enforce self-auditing, for several reasons. First, it is difficult to monitor auditing activities. Also, employees may pressure each other to not report any errors found. These issues can be reduced by paying a bonus to the warehouse staff that is based on the accuracy of inventory records.