Inventory Adjustment Overview

Overview

In any warehouse management application, there must be a capability to adjust inventory. Inventory requires adjustments for several reasons varying from improperly recorded inventory transactions, to lost products and unexplained shrinkage. For the application to effectively manage the warehouse, deviations in the application records must be adjusted to match the actual inventory on hand.

Adjustments to inventory grow in complexity as the level of tracking of the inventory increases. If you are only tracking stock balances, a relatively small number of adjustments should suffice. As tracking gains in complexity, the number of adjustments required to maintain the complex relationships will increase.

Adjustments must be tracked in a history for the stock to substantiate balances and provide the information necessary to successfully defend balances during audits. Inbound receipts, adjustments within the warehouse, and outbound shipments are the three essential transactions required to reconstruct the current stocking level.

Types of Adjustments

WDLS allows entry of different types of adjustments used to have different impacts on the inventory record. Most of the adjustments allowed in WDLS are dual-sided adjustments. This means that for each quantity adjustment in inventory there is an offsetting and equal adjustment elsewhere in the inventory. You must also at times be able to increase or decrease the inventory when an error is identified. This is done through a one-sided adjustment. The three main types of adjustments affect 1) Stock Balances, 2) Stock Condition, and 3) Location.

Stock balance adjustments are used when you are increasing or decreasing the quantity on hand of an item or lot. They can be dual-sided, such as when a mistake is identified and the wrong item or lot was recorded. A dual-sided adjustment is made to reduce the on-hand balance of the mistaken item and increase the on-hand balance of the correct item. Adjustments to the on-hand balance are critical to reconciliation with the clients’ books.

Stock condition adjustments are always dual-sided. They transfer a quantity of an item from one stock condition to another. The on-hand balance of the item is not affected. Depending on the use of stock conditions, these adjustments may or may not be critical to reconciliation with the clients' books.

Location adjustments are dual-sided. They are used to update the location of a particular quantity of products. They have no impact on stock condition or on hand balances. Generally, they are only important for warehouse operations and are not critical to book reconciliation.

Dual-Sided Adjustments

Dual sided adjustment is used for several functions within WDLS. Although the net quantity is maintained, certain varieties can have a significant impact on book value. WDLS breaks the adjustments into separate processes based upon the nature of the adjustment, rather than presenting one complex "anything goes" adjustment panel. This is intentional so that the authority to perform various adjustments can be specifically granted to individuals or to hierarchical groups within the user community.

One-Sided Adjustments

One-sided adjustments are separate functions within WDLS. These types of adjustments always impact book value and should be secured to user profiles that have high levels of authority.

Adjustment Reason Codes

WDLS requires a reason code for each adjustment that is made to inventory. These reason codes simplify the communications processes necessary to synchronize the inventory with the book of your client. They also allow you to track what types of adjustments are being made in inventory and produce management statistics.

In addition to these reason codes, all WDLS adjustment processes support recording of an adjustment description. These descriptions appear in all activity reporting. This combination of reason code and description is generally sufficient to streamline the audit process during inventory reconciliation.