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on inventory counts

At work we have just had one of our periodic stock counts and this triggered a memory from just over thirty years ago. It was the beginning of April and I had just taken over my first significant operational command; three warehouses on one site plus part of the office block alongside. I had just over 350 people working for me and, just to add some spice, the computerisation of the operation went live on the morning that I took over.

It was not a great start because the computer system had been poorly specified and it ground to a halt halfway through the first morning, partly because the results of the stock count over the weekend were still being input. By the afternoon we had the first results back from the data input and whilst two of the three product categories we about right the third was showing us a little more than £30M over the expected figure.

One of the problems when you count stock is that the unit that you are counting may not be obvious. For example take a item that comes in boxes of 200 and where 56 such boxes constitute a full pallet. What does that full pallet get recoded as? 1, 56 or 11,200? My own team would have known the answer, but the annual stock count was always done by a professional team of valuers to ensure probity and so errors were always possible. The discrepancy of £30M was going to be down to either an error in the count unit, how that had been interpreted for data input or just an input error.

We set up a report to run on overnight processing (that’s how it worked in those days) and called it a day. The next morning we found that our friends in IT had not checked the paper level on the computer room printer and it had run out about 20% of the way through the report (these were the days of the piano lined paper reports). My colleague the Finance Director had assigned his Chief Accountant to assist and my head of the product category was leading from our side as we searched for the discrepancy, but with so little of the stock report available they were a little hampered.

After lunch thinks improved when we found one error and got the discrepancy down to £22M. The IT team told us that processing the report that we had asked for and printing it would take 10 hours and so we shut the computer system down again and set it running the report in mid-afternoon, this time with a new box of paper. Then I got the call to go and see the MD…

My colleague the Finance Director, I’ll call him Dick, had decided to duck any blame and dump it on my team, so when I walked into the office there he was looking smug and there were a few of the other senior managers around the table to watch the new boy get shafted. The MD was apoplectic and wanted someone fired. He was a bully, but iike many such people he was also a coward and he was frightened that, if this was a genuine overstock, his neck was on the block. I was the new kid in town, but I needed to fight my team’s corner and to show that whilst I was a new arrival, I hadn’t just come in on the turnip cart.

Looking around the assembled faces I could have suggested that the Purchasing Director might like to see which of his team had bought all of the excess stock, if it did exist, but there was no point in starting a new fight as they all knew who had convened the meeting and why and so I decided that as “Dick” had tried to drop my team in the smelly stuff I would have to take him on.

Smiling, I asked if Dick was happy that the previous year’s count had been accurate. He was so I proposed that, if we did have all of the extra stock, the additional purchases must have been made since then. He agreed again, but slightly hesitantly. I asked if had he not noticed any unusually large invoices, for his team would have been invoice matching against deliveries before paying the bills and the sort of value we were talking about must have stood out, surely? After all, such invoices would have been at his level of authority to sign off. Was it not also the case that we would have gone over budget and would he not have picked up on that at the time? Perhaps if he could remember any such event it would help us to narrow down where the problem was. Blood drained from Dick’s face as the MD switched his ire from me to him.

All of a sudden Dick was backing away from blaming my people and agreeing that the problem was either a stock unit error or one of data input after all. I could have gone on to suggest that, in the latter case, that was his fault too as the data input had been done by his team, but the initial crisis was over and it was agreed that we would review the situation the next afternoon. I had made my point.

The next morning we had the full report that we needed and found the main error in minutes. By the end of the day we had found a few more and were within 0.02% of where we expected to be, and all of the errors were due to data input bar one where the wrong stock unit had been used. No-one got fired and I went on to enjoy three good years in that job.

We got the computer system working too, I later married the lady that the MD was threatening to fire and, all these years later, we are still together.

I like happy endings.

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