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TLIA2207C

Participate  in  stocktakes    

MC  
Armstrong’s  Driver  Education  
 
Learner  Guide  
TLIA2207C Participate in stocktakes

Page 2 © Australian National Training Authority 2003


ADELG1074 Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009
TLIA2207C Participate in stocktakes

Contents
What this Learner’s Guide is about ........................................ 5  
Planning your learning ........................................................... 6  
How you will be assessed ...................................................... 8  

Section 1............................................................................................. 9  
How do you maintain stock levels? ........................................ 9  

Section 2........................................................................................... 29  
How do you plan and do a stocktake? ................................. 29  

Section 3........................................................................................... 39  
Identify stock discrepancies ................................................. 39  

Additional resources ....................................................................... 56  

Feedback on activities .................................................................... 58  

© Australian National Training Authority 2003 Page 3


Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009 ADELG1074
TLIA2207C Participate in stocktakes

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ADELG1074 Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009
TLIA2207C Participate in stocktakes

What this Learner’s Guide is about

This  Learner’s  Guide  is  about  the  skills  and  knowledge  required  to  
participate  in  stocktakes  in  accordance  with  workplace  requirements  
including:  preparing  for  stocktakes,  identifying  sock  discrepancies  and  
completing  all  required  documentation.    

The  Elements  of  Competency  from  the  unit  TLIA2207C  Participate  in  
stocktakes  covered  in  this  Learner’s  Guide  are  listed  below.  
Prepare  for  stocktake  
Stocktake  and  count  stock  
Identify  stock  discrepancies  
Complete  documentation  
This  unit  of  competency  is  from  the  Transport  and  Logistics  
Training  Package  (TLI07).  
 

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TLIA2207C Participate in stocktakes

Planning your learning

It  is  important  to  plan  your  learning  before  you  start  because  you  may  
already  have  some  of  the  knowledge  and  skills  that  are  covered  in  this  
Learner’s  Guide.  This  might  be  because:  
• you  have  been  working  in  the  industry  for  some  time,  
and/or  
• you  have  already  completed  training  in  this  area.  

Together  with  your  supervisor  or  trainer  use  the  checklists  on  the  
following  pages  to  help  you  plan  your  study  program.  Your  answers  to  
the  questions  in  the  checklist  will  help  you  work  out  which  sections  of  
this  Learner’s  Guide  you  need  to  complete.  

This  Learner’s  Guide  is  written  with  the  idea  that  learning  is  made  more  
relevant  when  you,  the  learner,  are  actually  working  in  the  industry.  
This  means  that  you  will  have  people  within  the  enterprise  who  can  
show  you  things,  discuss  how  things  are  done  and  answer  any  
questions  you  have.  Also  you  can  practise  what  you  learn  and  see  how  
what  you  learn  is  applied  in  the  enterprise.  

If  you  are  working  through  this  Learner’s  Guide  and  have  not  yet  found  
a  job  in  the  industry,  you  will  need  to  talk  to  your  trainer  about  doing  
work  experience  or  working  and  learning  in  some  sort  of  simulated  
workplace.    

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ADELG1074 Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009
TLIA2207C Participate in stocktakes

Section 1: Maintaining stock levels

Are  you  able  to:   Yes   No  


1. identify  minimum  stock  levels  and  when  
to  re-­‐order  stock?          
2. ensure  that  staff  comply  with  appropriate  
stock  re-­‐ordering  methods  and  follow  
correct  stock  level  maintenance  
procedures?          
3. use  various  methods  to  re-­‐order  stock  and  
maintain  stock  levels  in  the  warehouse?          

Section 2: Plan a stocktake

Are  you  able  to:   Yes   No  


1. assemble  and  interpret  relevant  inventory  
data?          
2. apply  your  company’s  procedures  for  a  
stocktake  or  cyclical  count?          
3. organise  and  allocate  staffing,  tasks  and  
equipment  for  a  stocktake  or  cyclical  
count?          
4. give  team  members  clear  directions  on  the  
stocktake  tasks  they  must  perform?          
5. demonstrate  appropriate  methods  for  
recording  information  from  a  warehouse  
stocktake  or  cyclical  count?            

Section 3: Stock discrepancies

Are  you  able  to:   Yes   No  


1. interpret  data  received  or  recorded?          
2. compare  results  with  documentation  or  
inventory  records,  and  reconcile  and  adjust  
stock  records  and  levels?          
3. input  and  report  results  and  discrepancies  
in  the  appropriate  format  and  send  them  to  
the  relevant  person  or  department?          

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TLIA2207C Participate in stocktakes

4. identify  reasons  for  discrepancies  in  stock?          

How you will be assessed

Assessment  of  this  Unit  of  Competency  will  include  observation  of  real  
or  simulated  work  processes  using  workplace  procedures  and  
questioning  on  underpinning  knowledge  and  skills.  It  must  be  
demonstrated  in  an  actual  or  simulated  work  situation  under  
supervision.  

You  will  be  required  to:  


• identify  and  describe  stocktaking  methods  
• explain  stock  re-­‐ordering  processes  in  your  workplace  
• complete  required  documentation.  

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ADELG1074 Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009
TLIA2207C Participate in stocktakes

Section 1

How do you maintain stock


levels?

© Australian National Training Authority 2003 Page 9


Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009 ADELG1074
TLIA2207C Participate in stocktakes

Section outline

Areas  covered  in  this  section  


How  do  you  maintain  stock  levels?  
Why  do  you  need  to  communicate  with  purchasing  or  
management  about  re-­‐ordering?  
What  are  your  company’s  re-­‐ordering  policy  and  procedures?  
What  documentation  is  required  for  re-­‐ordering?  

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ADELG1074 Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009
TLIA2207C Participate in stocktakes

How do you maintain stock levels?

Stock  levels  need  to  be  maintained  so  that  you  can  fill  orders  with  a  
turn  around  time  that  satisfies  customers.  

On  the  other  hand,  you  do  not  want  to  hold  excess  stock  
unnecessarily.    Some  of  the  disadvantages  of  holding  excess  stock  are:  
• having  money  tied  up  in  inventory  
• higher  operating  expenses,  rent,  rates,  repairs,  heating,  
cooling,  lighting,  etc  
• valuable  space  taken  up  by  extra  storage  
• chance  of  stock  becoming  obsolete  or  expiring  
• deterioration  of  stock  
• higher  insurance  cost  of  stock  
• more  time  taken  for  stock  checking  and  recording  of  stock.  

However,  there  are  also  some  advantages  to  holding  large  quantities  
of  stock  in  that:  
• you  may  receive  discounts  from  suppliers  for  ordering  
large  quantities  
• you  have  a  buffer  for  when  delivery  cannot  be  exactly  
matched  with  daily  usage  
• you  reduce  the  risk  of  being  unable  to  fill  orders  if  there  is  
a  breakdown  or  interruption  to  supply  
• you  can  cash  in  on  fluctuations  in  the  price  of  the  
commodity  –  it  can  be  an  advantage  to  have  a  large  
quantity  of  stock  if  the  price  is  about  to  rise  
• some  items  appreciate  in  value  during  their  time  in  
storage,  (for  example,  wines  and  spirits).  

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Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009 ADELG1074
TLIA2207C Participate in stocktakes

As  you  can  see,  it  is  difficult  to  run  a  warehouse  on  a  very  tight  basis  
and  still  take  into  account  all  of  these  needs.    As  the  warehouse  
supervisor  you  will  sometimes  have  to  make  decisions  about  required  
stock  levels.  

When  deciding  what  level  of  which  stock  lines  should  be  kept,  you  will  
need  to  balance  the  advantages  of  holding  large  quantities  of  stock  
against  the  disadvantages.    The  level  at  which  you  decide  stock  needs  
to  be  replenished  will  depend  on  a  number  of  factors.    Besides  the  
advantages  and  disadvantages  discussed  previously,  you  will  also  need  
to  consider:  
• minimum  re-­‐order  quantities  or  standard  units  of  issue  
(pallet  load,  items  per  box,  etc)  
• history  of  demand  for  a  product  
• legislative  demand  to  hold  stock  (e.g.  spare  parts)  even  if  
there  is  little  or  no  customer  demand  for  the  product  
• seasonal  demand  for  a  product  
• frequency  of  delivery  or  availability  of  supplies,  especially  
from  overseas  (fluctuations  in  the  money  market)  
• taking  care  not  to  carry  too  much  stock  in  high  value  items  
• taking  care  not  to  carry  too  much  stock  in  items  that  might  
become  obsolete  (computer  chips  or  some  machine  parts)  
or  if  the  item  has  an  expiry  date.  

Many  companies  have  a  computer  system  built  into  their  stock  control  
that  is  activated  when  stock  needs  to  be  purchased.    This  can  be  done  
on  a  weekly  or  monthly  basis,  or  at  any  time  that  suits  the  
organisation.  

Other  companies  have  a  system  that  will  requisition  stock  on  a  day  to  
day  basis  and  again  this  will  automatically  raise  the  orders  for  the  
purchases.  

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ADELG1074 Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009
TLIA2207C Participate in stocktakes

Activity 1: How do you maintain your stock levels?

Consider the stock held in your warehouse. From the advantages,


disadvantages and points to consider on the previous pages,
choose the points that apply to your stock situation and list them
below.

If any point only applies to some of your stock, write the type of
stock in brackets after the point e.g. seasonal variations in demand
(beach towels).

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There is feedback on this activity at the back of this Learner’s


Guide.

© Australian National Training Authority 2003 Page 13


Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009 ADELG1074
TLIA2207C Participate in stocktakes

How do you re-order stock?

To  run  an  efficient  and  profitable  warehouse,  you  should  be  aware  of  
all  the  re-­‐ordering  systems  used  by  your  company.    There  are  two  main  
types  of  re-­‐ordering  systems:  
• push  systems  
• pull  systems.  

Push  systems  include  fixed  quantity  and  fixed  period  re-­‐ordering.  They  
have  been  in  use  for  a  very  long  time.  

Pull  systems  include  Just  in  Time  (JIT)  and  KANBAN  or  ticket  triggering.  

JIT  and  KANBAN  systems  are  more  recent  and  come  from  quality  
philosophies.    They  have  been  introduced  in  many  places  to  try  to  
increase  efficiency  by  reducing  the  amount  of  warehouse  stock.  

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ADELG1074 Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009
TLIA2207C Participate in stocktakes

Activity 2: Re-ordering stock

What re-ordering mechanism is used in your warehouse?

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There is feedback on this activity at the back of this Learner’s


Guide.

© Australian National Training Authority 2003 Page 15


Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009 ADELG1074
TLIA2207C Participate in stocktakes

Just in time

Just  in  Time  (JIT)  comes  out  of  a  quality  philosophy.    Its  aim  is  to  have  
the  right  goods  in  the  right  place  at  the  right  time.    This  system  
increases  efficiency  and  reduces  waste  by  saving  on  unnecessary  
storage.    It  takes  the  view  that  held  stores  act  as  a  buffer  in  times  of  
variation,  so  that  if  you  cut  out  this  variation  you  will  not  need  the  
buffer  of  extra  goods  in  storage.    This  system  will  not  work  if  you  have  
a  high  level  of  defective  or  reject  products.  

The  aim  of  JIT  is  to  keep  inventory  small.    This  should  save  the  
company  money  through  not  having  money  tied  up  in  stock,  the  
associated  costs  of  insurance,  and  the  risk  of  stock  going  out  of  date.    
It  also  reduces  the  need  for  large  storage  areas  in  warehouses.    
However,  JIT  is  not  very  practical  if  the  stock  is  coming  from  overseas  
and  time  frames  cannot  be  guaranteed.  

In  a  JIT  system  the  warehouse  aims  to  have  stock  come  in  one  door  
and  out  the  other,  with  very  little  being  held  in  storage.  

Some  features  of  a  JIT  system  include:  


• it  takes  about  5  to  7  years  to  implement  
• it  minimises  paperwork  because  you  usually  order  
standard  quantities  in  standard  containers  
• it  requires  more  frequent,  smaller  deliveries  than  
traditional  systems  
• it  is  helpful  if  the  suppliers  are  located  close  to  the  
distribution  centre,  because  of  the  frequent  small  
deliveries  –  however,  this  is  not  essential.  

Co-­‐operation  from  suppliers  is  a  key  step  to  implementing  a  JIT  


system.  Reliable  supplies  are  the  key  to  the  whole  system.    JIT  usually  
requires  you  to  develop  long-­‐term  relationships  with  fewer  suppliers  
rather  than  short-­‐term  relationships  with  many  suppliers.  

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ADELG1074 Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009
TLIA2207C Participate in stocktakes

Even  if  your  company  does  not  operate  a  JIT  system,  customers  may  
still  want  you  to  deliver  to  them  on  a  JIT  basis.    For  example,  in  retail  
situations  high  rental  costs  and  strong  competition  means  that  shops  
have  smaller  store  rooms,  and  use  more  space  for  customer  service.    
The  days  of  supermarkets  with  large  storerooms  out  the  back  are  
gone.    This  means  that  retailers  need  to  receive  goods  on  a  JIT  basis,  
and  put  them  straight  onto  the  shelves  instead  of  storing  them  as  they  
once  would  have.    These  demands  from  retailers  put  more  pressure  on  
warehouses  to  understand  JIT  and  act  as  JIT  suppliers,  whether  they  
intend  to  adopt  it  for  their  operations  or  not.  

Kanban

KANBAN  is  a  pull  system  which  uses  cards  or  tickets  to  let  the  supplier  
know  that  more  stock  is  needed.      KANBAN  is  a  technique  that  is  used  
together  with  JIT.    You  can  have  JIT  without  KANBAN,  but  you  cannot  
have  KANBAN  without  JIT.  

With  the  KANBAN  system,  the  date  of  delivery  is  set  by  the  customer.    
The  workplan  works  backwards  from  this  date  to  set  the  dates  for  
shipping,  final  inspections,  completion,  assembly  and  start  of  the  
project.    Each  part  of  the  project  is  pulled  by  the  customer’s  delivery  
date.  

This  means  that  it  is  not  until  the  customer  requests  a  product  that  it  
starts  moving  through  the  warehouse.  

© Australian National Training Authority 2003 Page 17


Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009 ADELG1074
TLIA2207C Participate in stocktakes

Activity 3: Just in Time and KANBAN

If you can, arrange to visit a warehouse or distribution centre which


operates on JIT principles with a KANBAN system.

Ask the person showing you around, the following questions:

How does the JIT system work?

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How long did it take to implement?

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What were some of the difficulties in getting the system going?

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Are there items where JIT would not work?

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Do you use the KANBAN system? If yes, how does it work?

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What would you do if you had to implement both systems again?

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© Australian National Training Authority 2003 Page 19


Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009 ADELG1074
TLIA2207C Participate in stocktakes

Fixed quantity re-ordering

This  is  the  most  conventional  way  of  identifying  when  stock  needs  to  
be  re-­‐ordered.    It  relies  on  defining  the  following  stock  levels  for  every  
product  kept  by  the  warehouse:  
• minimum  stock  level  –  the  smallest  amount  in  the  
warehouse  to  serve  the  needs  of  the  customer  
• ordering  stock  level  –  the  level  at  which  an  order  is  placed;    
this  level  is  held  to  supply  customers  while  waiting  for  the  
delivery  of  new  stock  
• hastening  stock  level  –  the  level  at  which  you  need  to  
hurry  along  your  supplier  
• maximum  stock  level  –  this  is  the  maximum  amount  of  
stock  held  to  meet  your  customer’s  needs;  you  should  not  
hold  more  than  maximum  stock  level  because  if  it  is  not  
ordered  by  your  customers,  it  can:  
− go  out  of  date  
− deteriorate  
− become  obsolete  
− tie  up  company  money  with  stock  which  is  just  sitting  on  the  
shelves.  

Quantities  set  for  each  of  the  levels  need  to  be  reviewed  regularly.  
Otherwise  the  levels  go  out  of  date  and  the  system  becomes  
ineffective.  

Different  items  will  reach  ordering  levels  at  different  times.    This  
means  that  orders  are  placed  for  one  or  a  few  items  at  a  time  and  the  
period  between  orders  can  be  quite  irregular.  

Page 20 © Australian National Training Authority 2003


ADELG1074 Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009
TLIA2207C Participate in stocktakes

Fixed period re-ordering

The  fixed  period  re-­‐ordering  method  is  a  less  conventional  way  of  
identifying  when  stock  needs  to  be  re-­‐ordered.    This  system  involves  
ordering  set  amounts  of  goods  to  be  delivered  at  set  periods  of  time.    
For  example,  you  might  order  10  cartons  of  product  X  to  be  delivered  
on  the  first  of  every  month.    For  this  system  to  work  you  must  be  able  
to  estimate  how  much  product  you  need  over  a  pre-­‐determined  period  
of  time.    This  estimate  is  usually  based  on  past  patterns  of  use.    The  
advantages  of  this  system  of  re-­‐ordering  are:  
• stock  is  delivered  automatically  without  you  having  to  
verify  what  the  current  or  proposed  stock  levels  are  
• you  can  pay  as  you  go  
• you  don’t  have  to  store  excess  stock  
• you  can  often  get  a  good  price  for  the  product.  

The  main  disadvantages  of  this  system  are:  


• you  may  run  into  stock  shortage  or  overstocking  
• that  stock  may  become  out  of  date,  obsolete  or  
deteriorated.    

The  fixed  period  re-­‐ordering  system  is  dependent  on  the  type  of  
industry  and  product.    It  is  commonly  used  in  ‘blanket  orders’  placed  
on  suppliers  and  is  regularly  used  for  incidental  supplies  such  as  
stationary,  that  do  not  effect  your  customer.  

All  ordering  systems  are  subject  to  factors  such  as:  


• perishable  or  non  perishable  items  
• seasonal  fluctuations  
• industrial  stability  
• technological  advances  
• changing  customer  attitudes  
• rate  of  inflation  and  likely  price  increases  
• availability  of  discounts  for  large  orders  
• restrictions  on  supply  
• lead  times.  

© Australian National Training Authority 2003 Page 21


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Activity 4: Fixed period re-ordering

List the advantages you might expect from fixed period re-ordering.

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

List the disadvantages.

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

There is feedback on this activity at the back of this Learner’s


Guide.

Page 22 © Australian National Training Authority 2003


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Communicating with purchasing and


management about re-ordering

The  amount  of  capital  tied  up  in  inventory  will  always  have  to  be  
carefully  balanced.    As  the  warehouse  supervisor  you  should  work  very  
closely  with  the  purchasing  department  at  all  times.  

Company  policy  will  dictate  the  amount  of  inventory  that  should  be  
held  to  maintain  supply  to  the  customer  while  not  overstocking.  

Purchasing  will  be  working  with  senior  management  to  decide  on  the  
amount  of  stock  needed  to  keep  the  customers  supplied.    During  
abnormal  times  you  will  have  to  provide  purchasing  with  up  to  date  
figures  on  the  quantity  of  stock  held  and  whether  more  stock  needs  to  
be  brought  in.    The  importance  of  your  accuracy  in  running  the  
warehouse  is  crucial.  

© Australian National Training Authority 2003 Page 23


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Activity 5: Re-ordering policies and procedures

Obtain and read a copy of your company’s policies and procedures


(if there are any) for re-ordering stock.

Answer the questions below.

Who identifies when stock needs to be re-ordered?

___________________________________________________

___________________________________________________

How can they tell that certain stock needs to be re-ordered?

___________________________________________________

___________________________________________________

If there are minimum stock levels, who sets them?

___________________________________________________

How often are minimum stock levels reviewed?

___________________________________________________

Who actually re-orders stock?

___________________________________________________

___________________________________________________

How is stock re-ordered?

___________________________________________________

___________________________________________________

___________________________________________________

___________________________________________________

What documentation is required for re-ordering?

___________________________________________________

___________________________________________________

___________________________________________________

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What is the procedure the purchasing department must take when


re-ordering?

___________________________________________________

___________________________________________________

___________________________________________________

Are your re-ordering systems supply driven or customer driven?

___________________________________________________

© Australian National Training Authority 2003 Page 25


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TLIA2207C Participate in stocktakes

What documentation is required for


re-ordering?

It  is  the  warehouse  supervisor’s  job  to  regularly  check  the  quantity  of  
stock  held  and  to  assist  the  purchasing  department  with  re-­‐ordering.    
The  warehouse  supervisor  will  have  to  raise  a  requisition  which  will  
show  what  stock  is  required,  and  its  colour,  size,  quantity  and  so  on.  

The  requisition  will  then  go  to  the  warehouse  manager  who  will  check  
that  everything  is  correct,  and  forward  it  on  to  the  purchasing  
department.  

The  purchasing  department  will  ask  the  supplier  if  the  stock  is  available  
and  when  it  can  be  delivered.    When  all  of  these  issues  are  settled,  they  
will  then  raise  a  purchase  order  and  number  before  sending  it  off  to  
the  supplier.  

Other  companies  may  have  a  different  re-­‐ordering  system  from  the  


one  mentioned  above.  

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Activity 6: Documentation for re-ordering

Get a copy of any documentation required for re-ordering in your


warehouse. Fill it in as a sample. Ask someone to explain to you
any parts that you do not know how to fill in.

There is feedback on this activity at the back of this Learner’s


Guide.

© Australian National Training Authority 2003 Page 27


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Page 28 © Australian National Training Authority 2003


ADELG1074 Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009
TLIA2207C Participate in stocktakes

Section 2

How do you plan and do a


stocktake?

© Australian National Training Authority 2003 Page 29


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Section outline

Areas  covered  in  this  section  

What  you  need  to  consider  when  planning  a  stocktake  

Types  of  stocktakes  and  stocktaking  methods  

Organising  a  stocktake  

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Stocktaking

Stocktaking  is  the  process  of  physically  checking  the  quantities  and  
condition  of  goods  held  in  the  warehouse.  

There  are  two  main  types  of  stocktakes:  


• ongoing  
• periodic  (monthly,  quarterly,  annual).  

Periodic

Periodic  stocktaking  involves  counting  all  of  your  stock  at  the  end  of  a  
given  period,  usually  the  end  of  the  financial  year.  

When  doing  an  annual  stocktake,  the  warehouse  might  need  to  be  
closed  for  a  certain  period  of  time  so  that  all  stock  can  be  checked.    If  
this  happens,  the  production  department  will  have  to  be  informed  well  
in  advance  so  that  they  can  stock  up  on  supplies  before  the  stocktake.  

Ongoing

Nowadays,  with  all  the  computer  systems  operating  in  warehouses,  a  


stocktake  can  be  carried  out  at  any  time  with  little  interruption  to  
productivity.  

Some  companies  do  a  monthly  stocktake,  using  their  computer  to  


show  the  amount  of  stock  that  should  be  held  while  the  warehouse  
staff  physically  check  the  stock  against  the  computer’s  figures.  They  
may  even  decide  to  do  a  weekly  stocktake  on  high  turnover  items.    
Other  companies  do  twice  yearly  stocktakes  which  are  done  manually,  
using  the  computer  to  assist  the  count  while  warehouse  personnel  
physically  count  each  item  on  the  stocktake.    The  physical  count  can  be  
checked  against  the  figures  on  the  computer  system.  

© Australian National Training Authority 2003 Page 31


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Physical stocktakes

Periodically,  it  is  important  to  physically  check  inventory  for  three  
reasons:  
• to  determine  whether  inventory  records  are  accurate  
• to  confirm  physical  quantities  so  they  can  be  valued  for  
financial  accounting  purposes  
• to  determine  if  effective  control  is  being  maintained.  

Stocktaking  can  be  a  laborious  and  time  consuming  activity,  but  it  can  
be  made  more  efficient.  
• Count  items  of  highest  value  and  importance  
approximately  every  three  months,  and  items  of  low  value  
and  importance  about  every  six  months.  
• Count  high  value  and  important  inventory  items  by  units,  
and  low  value  inventory  in  bulk  by  containers  or  weight.  
• Count  inventory  when  it  has  reached  re-­‐order  levels  as  
quantities  will  be  low  and  less  counting  will  be  required.  
• Use  experienced  and  responsible  staff  on  high  value  and  
important  items  and  less  experienced  staff  on  other  items.  

When  doing  a  physical  stocktake,  your  method  of  counting  will  depend  
on  the  number  of  workers  you  have  available.  

One person stocktakes

In  this  type  of  stocktake,  one  person  counts  the  goods  by  description  
and  quantity  from  start  to  finish  by:  
• using  a  blank  piece  of  paper  to  record  all  details  
• double  checking  the  figures  by  repeating  the  stocktake  in  
reverse  order  –  without  using  the  first  stocktake  figures  as  
a  guide  
• comparing  the  figures  on  both  sheets  and  double  checking  
any  differences  
• comparing  findings  with  the  computer  or  paper  based  
records  
• recording  any  adjustments  or  transfers.  

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Two person

This  method  is  the  same  as  above  except  one  person  counts  while  the  
other  writes.    When  counting  the  second  time,  you  should  swap  roles  
so  that  the  writer  is  now  counting  and  the  counter  is  now  writing.    
Compare  this  count  with  the  previous  count  and  double  check  any  
differences.  

Counting system

The  computer  system  will  be  used  to  show  the  quantity  of  stock  that  
should  be  held.    However,  this  should  only  be  used  as  a  guide  because  
all  stock  will  have  to  be  checked  physically  with  stock  cards  for  all  
items.  

In  some  warehouses  the  stock  is  stored  so  that  it  can  be  counted  with  
ease  –  in  packs  of  a  set  quantity,  in  boxes  with  set  numbers  in  it,  or  on  
pallets  of  set  amounts.  

‘Real  time’  information  from  computers  is  critical  for  accurate  


stocktaking  and  reporting.    

© Australian National Training Authority 2003 Page 33


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TLIA2207C Participate in stocktakes

Activity 7: Stocktaking methods

What stocktake methods are used in your warehouse? (You may


need to get this information from your trainer.)

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

What benefits do these have over other methods?

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

What are the disadvantages of these methods?

____________________________________________________

____________________________________________________

____________________________________________________

There is feedback on this activity at the back of this Learner’s


Guide.

Page 34 © Australian National Training Authority 2003


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TLIA2207C Participate in stocktakes

How do you organise a stocktake?

Organising  a  stocktake  is  important  not  only  to  your  warehouse  and  its  
staff,  but  also  to  your  customers.    Customers  need  to  be  notified  well  
in  advance  if  there  is  going  to  be  a  disruption  to  supply.      

As  discussed  earlier,  the  type  of  stocktake  you  do  depends  on  the  
policy  of  your  company  and  the  resources  available.    Company  policy  
will  dictate  whether  you  have  an  annual  stocktake  where  the  
warehouse  shuts  down  for  a  period  of  time,  or  ongoing  cyclic  
stocktakes  with  less  interruptions  but  a  little  less  accuracy.  

Things to consider when planning or organising a


stocktake

When  planning  a  stocktake  you  need  to:  


• have  sufficient  resources  to  conduct  the  stocktake    
• draw  up  a  stocktake  program  and  get  everyone,  including  
the  finance  department  and  auditors,  to  agree  to  it  
• prepare  stocktaking  sheets,  cards  or  other  documents  in  
advance  
• instruct  everyone  involved  about  their  duties  
• inform  customers  so  that  they  can  stock  up  during  the  
stocktake  time.  

© Australian National Training Authority 2003 Page 35


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TLIA2207C Participate in stocktakes

Activity 8: Organising a stocktake

Talk to someone who has recently organised a stocktake in your


warehouse and find out the following:

What areas were involved?

____________________________________________________

How many staff were required, what did they do, and how were the
duties allocated?

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

How long did it take?

____________________________________________________

What information did they need to get together before the


stocktake?

____________________________________________________

____________________________________________________

____________________________________________________

What documentation did they have to complete? (Have a look at


the documents and make sure you understand how to fill them in).

____________________________________________________

____________________________________________________

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What was done to ensure that all staff knew the procedures and
their own tasks?

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

What effect did the stocktake have on normal operations?

____________________________________________________

____________________________________________________

____________________________________________________

What was done to reduce the impact on normal operations?

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

© Australian National Training Authority 2003 Page 37


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TLIA2207C Participate in stocktakes

Page 38 © Australian National Training Authority 2003


ADELG1074 Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009
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Section 3

Identify stock discrepancies

© Australian National Training Authority 2003 Page 39


Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009 ADELG1074
TLIA2207C Participate in stocktakes

Section outline

Areas  covered  in  this  section  

Identifying  stock  discrepancies  

Dealing  with  discrepancies  

Adjusting  inventory  figures  

Page 40 © Australian National Training Authority 2003


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What are stock discrepancies?

A  discrepancy  occurs  when  there  is  either  more  or  less  stock  than  the  
amount  recorded.    This  might  be  because  there  is  an  incorrect  quantity  
of  stock  or  because  the  records  are  incorrect.  

When  there  is  more  stock  than  recorded  there  is  a  stock  surplus.  When  
there  is  less  stock  than  recorded,  there  is  a  stock  deficiency.    
Deficiencies  are  often  referred  to  as  shrinkage.  

Discrepancies  can  be  caused  by:  


• data  entry  errors  
• under  or  over  supply  
• pick  errors  
• theft  
• waste  by:  
− damage  
− incorrect  storage  
− contamination  
− expired  use-­‐by  dates  
• buyer’s  errors  
• coding  errors  
• changes  in  the  number  of  items  in  a  pack.    (for  example,  
from  packs  of  12  to  packs  of  10)  
• stock  returned  from  customers  for  replacement  
• incorrect  checking    
• work  in  progress  
• incorrect  allocations.  

© Australian National Training Authority 2003 Page 41


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TLIA2207C Participate in stocktakes

How do you know there is a stock discrepancy?

One  way  to  identify  stock  discrepancies  is  to  compare  stocktake  
results  with  inventory.    Sometimes  you  do  not  need  to  wait  for  a  
stocktake  to  identify  discrepancies.    For  example,  shrinkage  due  to  
damage  can  be  recorded  as  soon  as  the  damage  occurs  by  filling  out  a  
form  or  immediately  updating  the  inventory.  

Companies  involved  in  quality  assurance  systems  must  record  all  


damage  and  disposal  details  on  a  nonconformance  report.  

No  inventory  control  system  is  perfect  and  some  discrepancies  


between  physical  quantities  and  inventory  records  can  be  expected.    
Where  this  happens,  the  inventory  records  should  be  altered  to  show  
actual  physical  quantities.    However,  it  is  a  good  idea  to  re-­‐check  the  
count  first  before  altering  records.    Major  discrepancies  or  a  high  
incidence  of  minor  discrepancies  could  be  an  indication  of  breakdown  
in  control  and  should  be  investigated.  

Many  businesses  take  careful  steps  to  guard  against  theft,  but  
inventory  shortages  can  arise  for  a  variety  of  other  reasons.    
Frequently,  shortages  are  because  of  inadequate  receiving,  dispatch-­‐
in,  and  issuing  procedures  and  controls.  

Types of record keeping discrepancies

Record  keeping  discrepancies  might  include:  


• inaccurate  data  entries  
• keyboard  mistakes  
• human  error  
• inaccurate  documentation:    
− receiving  or  packaging  slips  
− dispatch  documents.  

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The impact of discrepancies or variances on


warehouse operations

Discrepancies  or  variances  can  cause:  


• a  need  for  more  stocktakes  or  cyclical  counts  
• inaccurate  records  for:  
− pick  slips  
− inventory  lists  
− customer  inquiries  about  stock  availability  
− re-­‐ordering  procedures.  

How do you deal with discrepancies?

If  the  discrepancy  is  large,  it  is  worth  investigating  by  following  these  
steps:  
• Examine  stock  cards,  computer  records  and  figures  to  
check  for  calculation  errors.  
• Verify  the  correct  quantity  of  the  discrepancy.  
• Check  basic  documents  such  as  receipts,  issues,  transfers,  
delivery  documents,  return  to  store  notes,  etc.  
• Examine  previous  stocktake  results  to  see  if  there  were  
any  discrepancies.  
• Make  inquiries  into  other  departments  in  case  there  has  
been  an  issue  or  return  to  the  warehouse  without  
documentation  outside  of  normal  working  hours.  

Workplace procedures for reporting major discrepancies

Your  workplace  will  have  its  own  procedures  for  reporting  major  
discrepancies.    Some  of  the  things  you  will  need  to  ask  yourself  when  
reporting  major  discrepancies  are  listed  below:  
• Should  the  report  be  made  verbally  or  in  writing?  
• What  documentation  should  be  used  (for  example,  
damage  reports,  stock  adjustments,  stock  transfer,  
quarantine  reports  etc.)?  
• What  personnel  or  departments  should  receive  the  report?    

© Australian National Training Authority 2003 Page 43


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TLIA2207C Participate in stocktakes

Why does shrinkage matter?

Shrinkage  can  have  an  effect  on  profit.    For  example,  if  a  pallet  load  of  
goods  is  damaged  because  of  bad  housekeeping,  the  cost  of  that  
pallet  of  goods  will  come  straight  out  of  the  company  profit  and  will  
also  have  an  impact  on  insurance  premiums.  

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Activity 9: Identifying causes of shrinkage

Fill in the table below. You may need to talk to other workers, your
trainer or your loss prevention manager, to find the answers.

Shrinkage Identified from Inventory updated

e.g. pick errors stocktake by manager after


stocktake

e.g. damage damage report form by trainer when


damage is reported

data entry

pick error

theft

damage

spoiled or out of date

© Australian National Training Authority 2003 Page 45


Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009 ADELG1074
TLIA2207C Participate in stocktakes

How do you adjust inventory records?

You  may  find  that  after  the  stocktake  your  inventory  records  do  not  
match  the  amount  of  stock  that  is  held.    If  so,  you  will  have  to  adjust  
your  records.  

You  can  do  this  by:  


• manually  adjusting  it  on  the  cards  
• producing  an  audit  report  
• reviewing  all  journal  adjustments  
• adjusting  the  amounts  on  the  computer.  

Stock  can  also  be  reviewed  on  a  monthly  basis  and  the  marketing  
department  will  ‘write  down’  the  value  of  the  stock.  For  example,  
clothing  garments  that  might  have  gone  out  of  fashion.    The  stock  will  
then  be  sold  at  a  sale  price.    Other  stock  can  be  looked  at  during  the  
year,  and  written  down  and  off-­‐loaded  at  sales.    These  will  all  cause  the  
inventory  report  to  be  adjusted.  

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Activity 10: Updating inventory records

Ask your trainer or refer to company procedures to answer the


following questions.

Who has the authority or responsibility for adjusting inventory


records?

____________________________________________________

When can inventory records be adjusted (anytime, on-going, only


after a stocktake or other)?

____________________________________________________

How are inventory records adjusted? (Write down a step-by-step


guide that has to be followed in your organisation.)

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

© Australian National Training Authority 2003 Page 47


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TLIA2207C Participate in stocktakes

What is an inventory report?

An  inventory  report  tells  you  what  stock  is  available  and  what  stock  is  
required.    This  can  be  achieved  in  different  ways:  
• with  an  on-­‐line  computer  display  
• by  numbers  on  bin  cards  
• by  running  a  range  of  reports  on  the  computer.  

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ADELG1074 Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009
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Activity 11: Inventory reports

Ask your workplace trainer or refer to enterprise procedures to


answer the following questions.

How are inventory reports presented (on paper, on computer, or


verbally)?

___________________________________________________

Who prepares an inventory report?

___________________________________________________

Who is an inventory report sent to?

___________________________________________________

What information has to be written in an inventory report?

___________________________________________________

___________________________________________________

___________________________________________________

___________________________________________________

Is there a set format for inventory reports? (If the answer is yes, get
a copy and make sure you are clear about what goes in each
section of the report.)

___________________________________________________

© Australian National Training Authority 2003 Page 49


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TLIA2207C Participate in stocktakes

How do you locate stock?

Good  location  of  stock  is  essential  for  speed  and  efficiency  in  the  
warehouse.    All  staff  must  be  able  to  locate  stock  quickly.    Some  of  the  
ways  of  assisting  this  include:  
• documentation  
• labelling  
• computer  based  systems  
• manual  systems  
• master  plan  
• aisle  identification  
• numbering  of  racks  or  bins  
• colour  coding  of  racks  or  bins  
• floor  markings.  

Stock  must  be  put  away  in  marked  warehouse  locations  so  that  it  can  
be  found  quickly  and  easily.    Products  with  the  same  product  code  
must  be  separated  into  batch  numbers  so  that  specific  batches  of  
stock  can  be  easily  identified  in  the  case  of  damages,  goods  under  
quarantine,  promotional  stock,  and  contamination.  

Automatic  allocation  systems  are  available  on  many  computerised  


systems.    They  take  into  account  the  cubic  capacity  of  the  warehouse,  
and  whether  block  stacking  or  racked  storage  is  used.    These  systems  
are  suitable  for  random  storage  slots.  

Locations  are  normally  branded  using  a  combination  of  alpha  and  


numeric  digits.    For  example,  one  bay  of  racking  location  may  be  
branded  A44A  with  the  bay  above  being  A44B  and  so  on.    You  must  be  
careful  that  the  letters  I  and  O  are  not  confused  with  the  numbers  1  
and  0.    Other  installations  are  simply  marked  1,  2,  3  and  so  on  up  to  the  
largest  number,  and  sometimes  colour  codes  are  used  for  different  
levels  in  the  racking  system.    For  example,  W34  could  stand  for  level  
White  bay  34.  

There  are  many  forms  of  allocating,  but  the  most  important  thing  to  
remember  is  to  keep  your  system  as  simple  as  possible.    You  should  
also  keep  in  mind  that  the  more  digits  you  use,  the  more  key  strokes  
there  are  to  be  keyed  in  by  the  computer  operator.  

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Activity 12: How do you locate stock?

Make a list of all the ways you locate stock in your warehouse.

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

© Australian National Training Authority 2003 Page 51


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TLIA2207C Participate in stocktakes

How do you organise stock?

All  stock  should  be  organised  in  a  way  that  maximises  productivity  and  
prevents  double  handling.    This  will  increase  profits  for  the  company  
and  have  ‘flow  on’  effects  for  all  employees.    Stock  should  also  be  
organised  to  avoid  damage  and  spoilage  due  to  sunlight,  heat,  
radiation,  etc.  

To  store  stock  in  the  most  convenient  and  efficient  way,  you  should:  
• use  movable  racks  for  clothing  garments  
− by  colour  
− style  
− size.  
• store  high  turnover  stock  near  the  dispatch  area  
• have  markings  on  the  floor  to  indicate  where  stock  should  
go  
• place  stock  in  bins  
• have  vertical  stacking  on  racks  and  use  Forklifts  for  access  
• have  a  secure  area  for  high  cost  items.  

Depending  on  your  racking  and  block  stacking  capacity,  you  should  
always  look  at  your  movement,  ‘turnover’  or  order  picking  
requirements  to  help  you  decide  how  to  place  stock  in  your  
warehouse.    Just  because  a  product  can  stack  three  high  does  not  
mean  it  cannot  be  racked  and  vice  versa.  

Stock  should  also  be  organised  in  a  way  that  prevents  contamination  
by  other  stock.    For  example,  you  should  not  have  chemicals  placed  on  
racks  above  foodstuffs.  

Other  ways  to  organise  stock  include:  


• multiple  locations  (picking  or  reserve  2  bins)  
• picking  direct  from  bulk  (1  bin)  
• binning  
• racking  
• bulk  stacking  
• separate  special  purpose  areas  (e.g.  coldrooms,  freezers,  
dangerous  goods,  storage  areas)  
• theft-­‐sensitive  cages.  

Page 52 © Australian National Training Authority 2003


ADELG1074 Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009
TLIA2207C Participate in stocktakes

Activity 13: How do you organise stock?

Explain how stock is placed in your warehouse. Give special


consideration to any stock which has special storage requirements.

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

© Australian National Training Authority 2003 Page 53


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TLIA2207C Participate in stocktakes

Why does stock location matter for stock


control?

It  is  very  important  that  your  customer’s  orders  are  received  correctly,  
in  the  best  possible  condition,  and  without  delay.    As  the  supervisor  or  
team  leader  of  the  warehouse  you  must  have  stock  located  to  assist:  
• identification  of  special  stock  
• accurate  and  simple  order  picking    
• stocktaking  
• workflow  
• segregating  goods  (dangerous  goods,  odours,  etc.)  
• isolating  goods  (quarantine,  damages,  re-­‐pack,  insurance  
claims  promotional  items,  etc.).  

Stock  must  also  be  located  so  that  it  is  easily  rotated,  i.e.  ‘first  in  –  first  
out.’    This  applies  to  all  stock  that  does  not  have  a  ‘use  by  date.’  

All  stock  with  a  ‘use  by  date’  should  be  automatically  flagged  on  a  
computer  system  so  that  you  know  when  it  is  nearing  expiry.    This  
avoids  having  to  dump  stock  which  passes  its  use  by  date.  

Systems  must  be  in  place  to  prevent  the  same  order  from  being  picked  
and  or  dispatched  twice,  and  to  prevent  theft.  

Appropriate  organisation  and  labelling  will  reduce  wrong  picks.  Most  


warehouses  have  sophisticated  computer  systems  that  can  cater  for  all  
of  the  above  requirements.  

Page 54 © Australian National Training Authority 2003


ADELG1074 Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009
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Activity 14: Why does stock location matter for stock control?

What precautions can you take to prevent the same order from
being dispatched twice to the same customers?

____________________________________________________

____________________________________________________

____________________________________________________

____________________________________________________

In Activity 2, you listed the ways in which stock is organised in your


warehouse. How do the different ways of organising and placing
stock help with stock control in your organisation?

Fill in the table below.

System for organising stock How this helps with stock


control

© Australian National Training Authority 2003 Page 55


Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009 ADELG1074
TLIA2207C Participate in stocktakes

Additional
resources

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References:  
• Workplace  Health  &  Safety  Handbook,  Occupational  Health  &  
Safety  Commission,  1992  

Video:  

Manual  Handling  -­‐  Safetycare  Series  

Web  sites:  
• NOHSC  (National  OHS  Committee  –  Publications)  
http://www.nohsc.gov.au/OHSInformation/NOHSCPublications/  
• Workcover  Authority  of  NSW  
http://www.workcover.nsw.gov.au/  
• Victorian  WorkCover  Authority  
http://www.workcover.vic.gov.au/  
• WorkCover  Queensland    
http://www.workcover.qld.gov.au/  
• WorkCover  WA      
http://www.workcover.wa.gov.au/  
• WorkCover  Corporation  of  SA  
http://www.workcover.wa.gov.au/  
• ACT  WorkCover      
http://www.workcover.act.gov.au/  
• Workplace  Standards  Tasmania  
http://www.wst.tas.gov.au/node/WST.htm  
• Work  Health  Authority  NT  
http://www.deet.nt.gov.au/wha/index.html  

Other  relevant  resources  might  include:  


• workplace  procedures  related  to  stock  
• workplace  documents  related  to  stock  
• company  Intranet  related  to  stock  
• company  stock  record  system  (paper  based  or  electronic).  

© Australian National Training Authority 2003 Page 57


Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009 ADELG1074
TLIA2207C Participate in stocktakes

Feedback on
activities
The responses provided in this section are suggested responses.
Because every workplace is different, your responses may vary
according to your specific workplace procedures, the equipment
available and the nature of the business.

Page 58 © Australian National Training Authority 2003


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Activity 1: How do you maintain stock levels?

All warehouses are different, however, the following list may be


useful:
• manual
• computerised
• automated
• picking and reserve bins
• card making system.

Activity 2: Re-ordering stock

All warehouses are different, however, the following list may be


useful:
• manual
• computerised
• automated
• picking and reserve bins
• card making systems.

Activity 4: Fixed period re-ordering

Advantages:
• stock is delivered automatically without you having to verify what
the current or proposed stock levels are
• you can pay as you go
• you don’t have to store excess stock
• you can often get a good price for the product.

Disadvantages:
• you may run out of stock or overstock
• stock may become out of date, obsolete or deteriorated.

© Australian National Training Authority 2003 Page 59


Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009 ADELG1074
TLIA2207C Participate in stocktakes

Activity 6: Documentation for re-ordering

All warehouses are different, however, documentation might


include:
• requisition slips
• purchasing orders.

This documentation might be automatically produced and sent by a


computer, in which case you will not need to fill in anything, but
make sure you understand everything on the forms. Otherwise, fill
in the sample forms you have collected according to company
procedure.

Activity 7: Stocktaking methods

Manual system
• Advantages:

it does not rely on expensive equipment.


• Disadvantages:

care must be taken to ensure accuracy – more manual


information processing is required to compare stocktake
results with inventory records

it takes a lot more time and labour.

Numeric keypad
• Advantages:

quicker than the manual system

can be linked directly to the inventory database of the


computer, making reporting easier than for formal counting.
• Disadvantages:

accuracy depends on the skill of the operator

cost of equipment.

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Scanner
• Advantages:

quicker than the manual system

more accurate than manual or numeric systems

can be linked directly to the inventory database of the


computer, making reporting easier than for manual counting.
• Disadvantages:

cost of equipment.

Systematic or continuous stocktakes


• Advantages:

high value or turnover items can be checked more regularly


than less important items

you do not have to close down the whole warehouse to do this


sort of stocktake

discrepancies are continuously being investigated to resolve


major causes.
• Disadvantages:

some items may not be checked in a given year.

Annual or cyclic stocktakes


• Advantages:

gives an accurate picture of total stock at a set point in time


• Disadvantages:

huge disruption to normal work, particularly in a large


warehouse which may have to cease operation for a
number of days

all discrepancies between actual stock and records are


identified at once and there may be limited time to deal with
discrepancies and their causes.

© Australian National Training Authority 2003 Page 61


Customised and developed by Armstrong’s Driver Education Pty Ltd July 2009 ADELG1074