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Unit 12: Warehouse Management
form having columns for ‘quantity as per bin card’, ‘quantity as per physical count’, ‘difference’ Notes
and ‘remarks’.
An alternative method is to check the stocks and the results are recorded on the bin card. The
stock-verifier records the bin card balance, the result of physical count and difference, if any, and
puts his remarks regarding reasons for difference and obtains the signature of the storekeeper.
Where result of stock verification is recorded on the bin card itself, the stock verifier puts his
initial and date against the balance quantity, if the latter agrees with the physical count.
Periodic Stock Verification
In case of periodic stock verification, normally inventory tags are used. Inventory tags are
serially numbered and contain stores description and code no., location, unit code, quantity,
signature of stock verifier and date of verification, and have two identical portions with
perforation in between, so that after verification, the lower part can be taken by stock verifier
while the upper part remains attached to the bins.
Inventory tags are used for every material at each of the bins, racks in the stores, sub-stores and
in the shop-floor for unused stores and work-in-process. Tags are sent to raw material, packing
material and engineering stores and production departments well in advance.
When tags are tied up with all items, the stock verifier starts picking up the tags from one end
and completes verification of every section without break. Quantities are then totaled up and
recorded in the stock sheet, showing physical stock, book balance and difference.
Under periodic stock verification system, all the items of stocks are to be verified once a year at
the time of preparing annual accounts resulting in the following difficulties:
(i) Loss due to stoppage of production for stock-taking.
(ii) Shortage of experienced stock-verifiers, if all items of stores are to be verified at a time.
(iii) Thus, quality of verification suffers.
(iv) Discrepancies revealed during verification are rectified only at the end of the year.
(v) Element of “surprise check” which helps to detect irregularities are absent.
Stock Discrepancies
The discrepancies between physical stock and stores ledger balance may occur due to various
reasons. Some of these are normal, natural and unavoidable, such as,
(i) Breaking bulk,
(ii) Evaporation loss, shrinkage and drying loss or absorption gain,
(iii) Volume fluctuation due to temperature,
(iv) Units of purchase and issues being different i.e. purchased by weight, but issued by quantity.
The avoidable causes of discrepancies are as follows:
(i) Incorrect entries in bin cards.
(ii) Storage in wrong bins.
(iii) Short or excess issues or wrong issues of material.
(iv) Excess or shortage in packages or bundles not checked at the time of receipt.
(v) Pilferage and theft.
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