Goods in Transit and Cut-Off: Counting While Stock Moves

Counting a large warehouse can take two days, and the warehouse does not stop during them. Trucks arrive and leave, pallets are unloaded and others loaded, so the figure taken for one item on the morning of the first day cannot be compared with a figure taken for another item on the evening of the second, since each belongs to a different moment. The answer is to tie the whole count to one declared moment and to account cleanly for the movements around it. That keeps the figures honest even though the stock moves during the count. Many disputes after a count are in truth disputes about timing.

A written cut-off

Before the count begins, write down the date and the hour at which the stock will be measured, and have both sides sign it. Record at that moment the numbers of the last documents: the last receiving note, the last dispatch note and the last internal transfer document. Every document with a higher number counts as later than the cut-off and is treated differently. This way nobody has to argue about "was this delivery before the count or after?", because the document number answers.

A movement log during the count

Assign someone at the dock to record every movement after the cut-off: its time and type, the document number, the item and quantity, the location, and whether it happened before that location was counted or after. To keep the log simple, set aside a temporary staging area for goods received after the cut-off, mark it "post cut-off", and do not move the goods onto the racking until the places they will go to have been counted. Once a location is counted, close it with tape or a label so that nothing is added to it. If movement can be suspended for the whole of the count, that is the best solution, since counting at night or on a day off costs less than tracing a hundred movements. It also helps to review the log with the operator at the end of each half-day, so that its errors are corrected while fresh and not discovered on the day the report is written.

The simple formula

Stock at the cut-off = the quantity counted + what left the location after the cut-off but before it was counted − what entered the location after the cut-off but before it was counted.

In other words: what left before we reached the location was there at the cut-off, so we add it back; what arrived before we reached the location was not there, so we subtract it. Movements that occur after a location has been counted do not change its result. Apply the formula item by item, not to totals.

A worked example (conditional figures)

The team counts an item and finds 5,000 units. The movement log shows that 300 units of this item were shipped after the cut-off and before its location was counted, and that 120 units arrived and were put into its location before it was counted. Stock at the cut-off is therefore 5,000 + 300 − 120 = 5,180 units. The books at the cut-off say 5,200. The difference is 20 units, about 0.4 percent, which is small and can be traced. Had the raw figure of 5,000 been compared with the books, a shortage of 200 units would have appeared, and people would have searched for a loss that never occurred.

Goods in transit

Three kinds of "goods in transit" need separate treatment and should not be merged silently into the main figure:

• Between two locations of one owner: the goods are in neither the first nor the second. Count both locations together and record the transfer document.
• Dispatched but not yet delivered: who carries the risk at this moment, and when ownership passes, depend on the terms of the contract, so ask your legal adviser. In the report they appear on a separate line with their documents.
• At the gate and not yet unloaded: record a waiting truck and what is on it according to its documents, but do not let it into the figures until it is actually received.

In short

Tie the count to one written moment, keep the movement log, apply the formula and show goods in transit on a separate line. WarehouseDepo works this way when the warehouse keeps operating: it fixes the cut-off with the operator, records movements during the count, adjusts the figures by the formula and reports the result together with what it was built on.