Inventory issues.

[STRAUBMAN]

Last year I did my annual inventory and came up about 20k short. 4 franchises 350k in combined inventory. My inventories for the past 10 years have been spotless and within $1500. Of course there were a lot of questions. Thieft is definatly not the issue. I dug through every account and found only some small posting errors. I still believe there is something much larger going on here(accounting). I started doing monthly reconciliations. I don't believe these are perfect by any means but they would at least give me some idea of where I am. Almost every month my figures are off by $1000 to $3000 and continued to climb. Now I do my annual and here we are again. $20k. My own inventory variance was only about $2000. I'm at a loss and maybe soon at a loss of my job. We are using R&R. Anybody have any ideas as to what I can look at. I have a great Controller and Office Manager but they are at a loss too. Thanks for any suggestions.

[Mike Nicholes]

Ah, the eternal dilemma; a shortage and it always seems to fall on the parts manager; the "accountants" are "never" wrong. Humbug!

I would suggest two things that would insure what I call "count integrity" which, simply put is prove your are right and make them prove you are wrong; it seldom fails.

1. Do a perpetual on the fastest moving 3-500 parts on a monthly basis. Reynolds has a great "Piece Sales Ranking Report" that will give you the numbers to count. You can also run the report with the generator and sort the selected numbers by bin location; ergo: a count sheet. When you prove the count in the bin matches the count on the shelf, your inventory is good.

2. Using a monthly reconciliation form; A copy can be obtained for free from www.partsconsulting.com as a download. Jeff Sacks made this for me a long time ago; it is still applicable today. It's not for sale, its free for the taking.

Do the reconciliation monthly. With the perpetual and reconciliation done, if there is still a discrepancy It may very will be in accounting and the coding they do. If you buy 5 and sell 3 and there are 2 in the bin; You are RIGHT; end of line.

Mike Nicholes

Having said that. You do need, and it looks like you did, sit down with the accountant, especailly the accounts payable clerks and make sure that 1) you are coding invoices to the right account and 2) they are inputing the data YOU posted to the right account.

Curious: Who does the annual? Outside firms are great if you are flush with money. It is the CPA's that want an "unbiased" version of what it is your have. the trouble is that most of the outside firms make one serious error; they net the minus adjustment against the plus adjustments and come up with a "NET"! Is somebody kidding? No overage in the word ever offset a shortage; especailly if it happens to different part numbers. the "discovery" of an engine does not give you 'dime one' to replace so called shortages. overages are only caused by paper flow issues. Shortages MIGHT, and I emphasize "MIGHT" be theft; but in all my experience only 5% of less of all shortages were theft.

Clean your own stable first then go after theirs.

[OLDPARTSGUY]

Maybe I am missing it here. Are you missing parts or dollars?

I read you are missing dollars not pieces. If so first place I would go is are your people adjusting the cost on what they pickup?

[Gerry Laughlin]

To get this straight, your pre-inventory against your own post-inventory was off $2000 (was that plus or minus?), but against accounting it is off $20,000?
Is there anything odd looking with your tire inventory or Gas,Oil,Grease inventory? Have there been any ongoing adjustments in these inventories? With GOG an adjustment is generally made each month against a physical. Looking back against previous years is there any sales acccount or discount account that currently has a higher gross profit than it used to? Are clusters and radios being sold and relieved properly? Are warranty charge backs or write-offs being charged against expense or are they going back against inventory (I have seen this more than once.)
If it was me I would get into AGRI (if you are ADP) and go through every single post into 242 (if you are GM) for a month. Most likely something is being put into 24200 without your knowledge. My assistant loves to tell about how the last place he worked was putting license plate frames for 3 different stores into the inventory for his store, he had fun finding that. The main thing is to go to the office manager or controller and make sure that from now on ABSOLUTLY NOTHING (even manufacturer invoices) goes into the inventory without your initials, you may need to get the DP on board for this, there can be no exceptions. Chances are an answer will come across your desk looking for an approval.
Good luck,
Gerry

[dpparts]

You also may want to check:
1. Make sure your warranty clerk is posting credits to the correct account. I had one posting core credits back to service.
2. I also had issues with the RO's and parts invoices posting to the wrong GL acct. In R&R you can check the invoices in 2571, I forget where you check the RO's, your controller should be able to help you there.
3. I agree with Mike in that anything that gets charged to Parts has to have your initials on it. I have had Sales try to charge brochures or other misc items to Parts. (unintentional I am sure)

Good Luck!!
DP

[gmcgrew]

Two area's previously mentioned that I have had bite me that cannot be found just looking at what was posted to the inventory are:

1. An outside purchase with a higher cost that was not adjusted. A couple of bucks here and a $100 bucks there and suddenly you are looking at a couple of grand a month.
2. When GM requests a warranty part that has a core the warranty clerk needs to file for the core charge. We changed warranty clerks and I was unaware that it was an additional step to get credit for the cores. Duramax fuel injectors can cost a bundle.

If you are doing the monthly reconciliation and your number doesn't agree with the office FIND THE ERROR NOW. Finding a discrepancy in the last month is much easier than digging through a whole year to find the issue.

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RIM- Oh what a feeling

[STRAUBMAN]

Gerry. Yes $2000 short my pre vs. post inventory numbers. About $17,000 short my number vs accounting. We do struggle with tire inventory numbers. All my tires are in 242T. I use source overides when we sell to other makes. As for posting. We dug through this last year and only found some small posting errors. I believe this is pretty tight as I code and initial everything. For the past 5 months my monthly reconcilliation numbers have been increasing(difference between my numbers and accounting) And I have to be honest I can't blame it on just one franchise. Every month it's something different. Mike. We do have outside people come in and count. The group is mostly made up of Parts Managers and counter people(some retired). I'm confident with the count. We check the variances twice. As for adjusting cost on outside purchases? Yes we do. I'm sure we miss one here and there, but major costing problems would show up in fluctions of gross profit percentages. We have none. I will be sitting down with the controller tomorrow and the search begins. Thanks for the advice on where to look. Will update soon.

[STEVEJ]

last but not least,are you running job 2161
at the end of each month so that your physical $ value matches what invoices
that are posted into accounting?


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[old dog]

I don't know what franchise you have but it's a very good idea to go into screen 0504
every month and see what's being charged into your inventory. I have what I feel are good people working for me and also in our office but I usually find one or two mistakes every month. Sort it by invoice number and something screwy will stand out because it's not one of your regular invoice numbers.

[PeterParts]

Do you code your own GM or other mftr invoices?
Or does accounting do it?

Do you take any evergreen or similar "bulk" program parts and post them in on the parts side as an "x" or other different part #, at the discounted price? (steel wheels, boxliners, anything?)
And if so does the full price goes to accounting as 242? and the discount to 687(GM)
while the discounted price is all that is going into "your" 242?