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Performing the physical inventory

Physical inventory preparation

Responsible: Finance responsible assigned with inventory manager
Reference:Inventory check-list 
Together, the Finance responsible assigned and the inventory manager: 

  • Organize a preparatory meeting with the operational team to:
  • Define which warehouses and products are included in the count,
  • Review counting instructions,
  • Define roles and responsibilities,
  • Ensure availability of information systems, printers and fork-lift trucks.

 

  • Notify affected parties providing adequate lead time to plan appropriately:
  • Notify suppliers for which deliveries will not be accepted during this time,
  • Advise customers in advance of the shut-down period,
  • Inform employees to allow them sufficient time to plan for the activity.

 

  • Prepare the storage area:
  • Arrange items so that they can be easily counted,
  • Ensure there are no hazards in the warehouse that could be dangerous during the inventory count,
  • Clearly mark package quantities if necessary,
  • Clearly mark items that will not be counted with "DO NOT INVENTORY".

 

  • A finance representative supervises off-site physical inventory when its value is above 400k€. Below that threshold, any Rhodia employee or any person delegated by Rhodia can take part in the physical inventory.

Perform an accurate count

RCS procedure: 
Warehouses in IM: IM_004 Creating an IM physical inventory
Warehouses in WM: IM_003 Performing a WM inventory 
Intranet: Doc / EN English-Anglais / P2P Purch.2Pay & InventoryMngnt / 7 Internal Storage Processes 
A complete count requires that the inventory being counted, includes all the items that should be present and does not include items that are not part of the inventory. It requires that: 

  • No inventory movements (receptions, shipments or transfers) may be recorded in the inventory register during the physical count of the warehouse:
  • Everything is shipped before the physical inventory begins,
  • No movement of material is made during the count process,
  • No order is filled or material is received during the count process.

 

  • It is recommended to count when production is stopped or during a period when there is limited movement of inventory.

 

  • Any items shipped and not picked up or receipts that come in are segregated and labelled "do not inventory". 
  • Blind counts are performed. The physical inventory is made without the knowledge of the quantity in the inventory records: 
  • Batch number, item code, description, location, and other information necessary to perform the count are printed on the counting sheet but not the item quantity information.

 

  • Each count team has an assigned zone to count. Counting team progression should be as linear as possible. They receive count sheets and tags. In the absence of bar-coding / scanner device, it is recommended that counting is performed by team of two persons:
  • One person counts the item and attaches a tag to the inventory items that were counted,
  • The second one records on the inventory document the actual quantity counted.

 

  • At the end of and during the inventory count process, the finance responsible assigned and the inventory manager walk through the warehouse and visually inspect that a count tag is attached to every inventory item to check that all inventory items have been counted and also ensure that the inventory is not counted twice. 

Input the results of the count & validate the inventory discrepancies

  • Check that all count sheets are collected and that they are input into the system. 
  • Recording of count results is made with dedicated functionalities of the inventory management system. 
  • A list of inventory discrepancies calculated automatically by the inventory management system is printed. 
  • The Finance responsible assigned identifies items that require a second count according to the rules defined in the site procedure. As far as possible, it is a different count team who performs the second count. 
  • The results of the second count are recorded, and if necessary a third count can be asked. Otherwise a definitive list of inventory discrepancies is sent to the inventory manager. 
  • Finance responsible assigned validates the physical inventory with the dedicated transaction (MI07 in RCS) or by signing the discrepancies list. 
  • The inventory documents (count sheets and discrepancies list) are archived by the inventory manager. 
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