☛ Can I have a copy of your policies and procedures?

☛ Which inventory cost-flow method do you use for operational and financial purposes?

☛ How is inventory classified? Do you utilize bar coding or scanning equipment?

☛ How are raw material, work-in-progress (WIP) and finished goods stored and monitored?

☛ How are location numbers assigned? Outline of location number definitions?

☛ What systems are used for monitoring the distribution of inventory? Does the system interface with all of the plants – or do the plants manually submit inventory updates to accounting?

☛ What are the procedures followed to verify current inventory levels and managing inventory needed for upcoming work orders?

☛ How do you identify, value, and dispose of obsolete, damaged, and/or slow-moving inventory?

☛ How do you determine appropriate reserves and safety stock levels?

☛ Cycle counts

☛ How often are cycle counts performed?

☛ What products are given priority or a low variance threshold?

☛ Are cycle counts performed for raw materials, WIP and finished goods?

☛ Are random cycle counts periodically conducted?

☛ What is the process followed to perform inventory counts?

☛ Who is responsible for conducting the cycle counts (independent of accounting function)?

☛ How are the employees trained to perform this function?

☛ Have policies/procedures/instructions for cycle counts been established and documented?

☛ Who performs the validation of the counts (should be independent of receiving/production functions)? Any approvals required?

☛ What are the documentation requirements for the cycle counts?

☛ Are the cycle count documents pre-numbered to keep track of all outstanding documents?

☛ How are cycle counted items marked?

☛ What is the process followed to research and resolve discrepancies if any are noted during the cycle count process?

☛ What is the variance threshold above which items must be researched?

☛ Are the causes of the discrepancies tracked and evaluated?

☛ What is the single greatest cause of inventory errors? (Clerical error, equipment failure?)

☛ Who is responsible for making adjustments to the system for discrepancies noted during the cycle count process?

☛ Is an annual physical inventory performed?