Stock Counts - Audit Finding Question

#11
If it were up to me, I'd probably do some research into what issues arise from having such poor inventory control. I could be wrong, but surely the company or their customers have seen some negative results from not having accurate inventory. It happens at home in the fridge/pantry, doesn't it?:lmao: Someone has to run out to get some milk, bread or similar, last minute..........:yes:

I would have found out from the management team what effects this situation has had, e.g premium costs to replace missing items etc.

Also, I would want to know what managements business objectives might be affected too. Do they really have customers who don't want the product quicker - i.e at a shorter lead time that it takes to get to replace the missing stock? If they don't have an objective of reducing lead time on their product, then this company is going to have a lot more to worry about than missing inventory.............:mg:

I might be missing the point, but what you grade this finding is relatively un-important, how management view this as a risk, it's impact on business performance to customers or business objectives and what they think should be done it is all that matters.:yes:
:2cents:
Andy
 
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S

Sajjad Chaudhry

#12
I agree with most that has been said about the inventory errors. The finding certainly has to be viewed in relation to its impact on business operations, particyularly customer-related. Though the inventory clerk 'sees' that counts are not too low, it is not clear that he does so by checking counts physically or in the system. He/she is definitely not reconciling the physical and System counts, otherwise there would not be this finding from auditor. If the clerk depends on physical counts, the company must have established very high 'minimum inventory level' to cater for a big 'surprise' order. How does customer service ascertain company's ability to supply an order before it is accepted? This aspect is a requirement of ISO 9000.
In short, I cannot determine if the finding is trivial, OFI or a non-conformance. It can be either.
 
#15
Re: Audit finding question - Stock Counts

This occurred as part of a surveilence audit.

James
So, if this wasn't an internal audit, what have the internal auditors being looking at??............:mg:
It's a pretty gross issue for an external auditor to be finding. I'd be wondering what kind of quality system this organization run, if they haven't been having concerns about stock accuracy;)

How long have they been registered.............:notme:

Andy
 
S

Sajjad Chaudhry

#16
Litmus test for any auditor wannabe. Without a requirement, thou shall not write up NC's! So, Sajjad, what requirement is being violated here?
ISO requirement "The ability of organization to meet the customer requirement before accepting the order" cannot be ascertained by order takers (e.g. cutomer service) if the inventory system is not effective to provide accurate counts. This is a non-conformance
 

Jim Wynne

Staff member
Admin
#17
ISO requirement "The ability of organization to meet the customer requirement before accepting the order" cannot be ascertained by order takers (e.g. cutomer service) if the inventory system is not effective to provide accurate counts. This is a non-conformance
The OP said, "This is a small company ~ about 70 people" so the assumption that accurate stock quantities can't be verified by physical count prior to accepting an order is not necessarily correct. Even if it were a larger company, if inaccurate system information is a known issue, quantities may be verified. Of course, this doesn't address how, if system quantities are not trustworthy, stock allocations are handled. It might be a nonconformance, but the burden of proof would be on the auditor to show that it was a problem, especially if there is no evidence to the contrary.
 

Helmut Jilling

Auditor / Consultant
#18
If it were up to me, I'd probably do some research into what issues arise from having such poor inventory control. I could be wrong, but surely the company or their customers have seen some negative results from not having accurate inventory. It happens at home in the fridge/pantry, doesn't it?:lmao: Someone has to run out to get some milk, bread or similar, last minute..........:yes:

I would have found out from the management team what effects this situation has had, e.g premium costs to replace missing items etc.

Also, I would want to know what managements business objectives might be affected too. Do they really have customers who don't want the product quicker - i.e at a shorter lead time that it takes to get to replace the missing stock? If they don't have an objective of reducing lead time on their product, then this company is going to have a lot more to worry about than missing inventory.............:mg:

I might be missing the point, but what you grade this finding is relatively un-important, how management view this as a risk, it's impact on business performance to customers or business objectives and what they think should be done it is all that matters.:yes:
:2cents:
Andy

All in all, I think Andy has summed up a tricky grey area pretty well.
 

Jen Kirley

Quality and Auditing Expert
Staff member
Admin
#19
As an auditor I'd be more interested in how they responded to the stock counts not matching.

Did it get any attention?

If so, what sort and was it effective?

If not, is the message that the counts don't matter--and in that case, why count in the first place?

My take is that this is in finding and dealing with an internally noted nonconformance, or at least the group finding an opportunity for improvement--or not.
 

Sidney Vianna

Post Responsibly
Staff member
Admin
#20
ISO requirement "The ability of organization to meet the customer requirement before accepting the order" cannot be ascertained by order takers (e.g. cutomer service) if the inventory system is not effective to provide accurate counts. This is a non-conformance
A good auditor is always attentive to what is said. The OP stated:

The fact that counts are off doesn't effect the product quality or deliveries
So....
 
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