Stock Checks

Stock checks (or cycle counts) involve the physical checking of inventory to verify that system records (also called the record on hand, or ROH) match actual on-hand inventory levels—also called the physical on hand (POH) levels. If the physical inventory for an item is below the system quantity, an adjustment to that part’s record can trigger a reorder request for additional inventory. Why might physical inventory be less than what the computerized system indicates should be on hand? Placing material in an incorrect location, damage that is not properly recorded, theft, and short shipments from the supplier that receiving did not notice all can contribute to the POH being less than the ROH. For example, at one major hardware retailer, missing inventory on the shelf may be located in another area of the store, or may simply be missing because of a problem with the incorrect item being entered into the system.

Smaller firms that rely on standard, easy-to-obtain items often use stock checks to determine material ordering requirements. In this environment, the stock check consists of physically visiting a part location to determine if there is enough inventory to satisfy user requirements. No purchase reorder is necessary if there is enough inventory to cover expected requirements.