System record
Receipts, issues and transfers recorded against the correct item, unit, warehouse and location.
ERP Guides
Warehouse and inventory control guide
How to Organise Inventory Management and Stocktaking
Reliable inventory information depends on accurate item and warehouse records, timely recording of every receipt and issue, and controlled resolution of physical count variances. This guide provides a practical control workflow from count preparation through approved adjustments.
Inventory control loop
Connect records, physical quantities and adjustments in one flow
Physical count
Usable and blocked quantities physically present in the warehouse for a defined cutoff time and scope.
Reviewed adjustment
An inventory adjustment posted with a document after the variance has been investigated and approved.
Count preparation
Clarify warehouse controls before counting
Scope and locations
- Define warehouses, shelf/locations and item groups to be counted.
- Separate quarantine, quality-blocked, consigned and customer-owned stock.
- Check item code, barcode, variant and unit-of-measure mapping.
Movement cutoff
If warehouse movements continue during the count, define which transactions before what time belong in the counted balance. Ensure the count team and inventory-record owner use the same cutoff for receipts, issues and transfers.
An open transfer or unposted receipt can appear as a variance even when the physical quantity is correct.
Counting and reconciliation
Investigate count variances before adjusting stock
- 1
Assign count lists and counters
Assign count areas and owners. If blind counting is used, do not show system quantities to counters.
- 2
Record physical quantity and condition
Record count time, item/location, unit and inventory status together. Do not merge damaged or blocked quantity into usable stock.
- 3
Reconcile with system movements
Separate receipts, issues and transfers after the count cutoff; investigate posting errors, wrong locations or unit conversions.
- 4
Recount and obtain approval if needed
Verify critical or unexplained variances with a second count. Record the cause and adjustment approver.
- 5
Document approved adjustments
Post only investigated and approved variances through the appropriate stock-adjustment transaction; retain the count document and explanation.
- 6
Reduce recurring variances at source
For recurring variances by item, warehouse or transaction type, review controls at receipt, picking, transfer and posting steps.
Example variance review
Recorded in the system, missing from the shelf
When physical quantity is below the system balance, first check nearby locations, open picking work, orders awaiting dispatch and unposted transfers. If the variance remains, recount; create an adjustment document only after recording the cause and obtaining approval.
Review sequence
1Item code, variant and unit
2Warehouse, shelf and nearby locations
3Open receipts, picks and dispatches
4Transfer records at source and destination
5Recount, cause and adjustment approval
Ongoing control
Do not rely on year-end counts alone
A business can establish a cycle-count schedule based on item criticality and movement volume. Define how often items are counted; review both frequency and process controls when variances recur.
Critical inventory
Materials that could stop production or customer delivery.
Fast-moving inventory
Items with frequent receipts/issues where posting errors can accumulate.
Recurring-variance items
Items with prior count variances that need process review.
Frequently asked questions
What should be done when a stock count variance appears?
Before immediately converting a variance into an adjustment, verify item code, warehouse and location, unit, open movements and count scope. If a recount or owner approval is required, hold the variance with its explanation; post approved adjustments with a traceable document.
Should stock movements stop during a count?
This depends on the counting method and operational requirements. If movements cannot stop, set a cutoff time and record receipts/issues during the count separately so quantities can be reconciled at the correct timestamp.
Can warehouse transfers affect count variances?
Yes. Recording transfer-out and transfer-in at different times can make the same quantity appear short or overstocked. Check that both sides of the transfer document and its movement timing are complete.
Who should approve a count adjustment?
Approval authority should follow variance size, item criticality and the company’s segregation-of-duties policy. Where practical, separating the counter and adjustment approver strengthens control.