PHYSICAL INVENTORY AFLOAT

Physical inventories are conducted on a scheduled or unscheduled basis to determine the accuracy of, and adjust differences between, storeroom quantities and stock records. The frequency of inventories is dependent upon the category of material involved and the degree of validity of the stock records. Preplanning and accuracy are the key factors for an effective inventory management afloat.

Inventory Schedule

Physical inventories afloat should be scheduled to permit accurate and timely physical counts, preliminmy and causative research, and posting to the stock records. Regular inventories of small lots are preferable to occasional inventories of a large range of items. Physical inventories should be conducted at a time when storeroom transactions can be frozen, except for emergency issues.

An inventory schedule outlines, in progression order, the segments of material planned for physical inventory during a fiscal year. The schedule is prepared by the supply officer before the start of each fiscal year and lists the material categories and frequency as shown in table 5-1.

The inventory schedule for stock material in other than supply department custody should reflect the time frames jointly determined by the supply officer and the respective department heads. For each segment listed, the schedule must indicate the number of items to be inventoried, the applicable storerooms or storage areas, and the inclusive dates during which inventory of each segment is to be done. The schedule should also include a column for recording the accuracy rate of the stock records for each completed inventory.

The supply officer should exercise maximum control to make sure the inventory schedule is followed. Storage and stock control supervisors must coordinate the scheduling of inventories for each storeroom so that the y can be conducted at a time when storeroom transactions can be frozen (except for emergency issues), and so that the receipt and issue documents in process can be completed before the inventory begins. Refer to chapter 6 of NAVSUP P-485 or chapter 7 of NAVSUP P-567 for a sample of an inventory schedule.

Preparation for Inventory

Before the physical inventory, all outstanding receipts and issue transactions, suspense items, overdue receipts, and pending issues must be processed. Materials included in the stock segment to be inventoried are inspected and arranged accordingly. The supply department personnel or departmental custodians must ensure that the following actions are taken:

l Loose units of small items are packaged in standard bulk lots

. All items are properly marked, labeled, and tagged l Cartons and Containers are stored with labels or other identifying information plainly visible . Uniform-sized packages are stacked in rows and tiers to speed up the counting process originally packaged quantities are resealed l Containers with broken seals and full counts of

ADVANCE NOTICE.- At least one week before a scheduled inventory of stock material, the supply officer should publish an official notice (normally in the plan of the day) of the segment of stock to be inventoried and the inclusive dates during which the inventory will be taken. The notice should include a statement to the effect that while the prospective inventory is in progress, issue of items included in the material segment being inventoried is restricted to emergency requirements only.

INVENTORY PERSONNEL.- The physical inventory of stock material and controlled equipage in the custody of the supply department is the responsibility of the supply officer. The supply officer provides advisory assistance to other department heads during the physical inventory of material in their custody. The personnel in the inventory team are assigned by the supply officer. The inventories are normally performed by the material custodians provided they are considered properly qualified. In some cases, inventories for special items may be performed by the supply officer or a specifically designated person. Some of the special items are classified material, precious metals, narcotics, and so forth.

QUALITY ASSURANCE.- A quality assurance (QA) team should be established in the supply department. 'he team consists of a permanent group of trained personnel. The purpose of the QA team is to verify the accuracy of completed physical inventories and location audits. The QA team should sample at least 5 percent of the inventoried material. The accuracy of the physical count and location audit accuracy should be according to the requirements listed in table 5-1. If these goals are not reached, a complete physical inventory should be repeated.

Inventory Reconciliation

Reconciliation is the process of resolving all inventory discrepancies between the actual count of material and the stock record balances. The inventory reconciliation process depends on the type of material being inventoried, the cost of the material, and the circumstances responsible for the discrepancy. Procedures for reconciliations are discussed in the following paragraphs.