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Cycle Count Variances.

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Daniel E
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7/23/2014 5:04 PM
    I have an Inventory related question about Cycle Counts. This isn't 100% Lawson themed, but more Inventory Management as a whole themed. Alright here it goes:

    I work for a major Corporation and manage POS Inventory. We use a third party to actually house and manage the inventory. Every week we do a cycle count which has a 9 week rotation, then any variances are researched.

    When a variance comes up, we both spend a good amount of time researching his records with my records and most of the time are able to find out what causes the variance. There are times though were the variance cannot be found. What my question is, is when do you say enough is enough and close out that variance by adjusting (IC24) the item in or out? Currently I have about 3 variances that have been open for 3 months, and are hurting our weekly cycle count score because the same variance keeps appearing.

    Does anybody else have this problem?

    Any and all help would be greatly appreciated.
    Thank You,
    -Daniel
    JonA
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    7/24/2014 5:51 PM
      We don't have a POS system but we do a couple cycle counts a week at each inventory location. We don't spend a lot of time on variances in general. If the variance is small, say under $50, we might not research it and just accept it. Basically, we look more closely at high dollar and large quantity variances. If an item is issued to a single department we might issue/credit that department instead of accepting the variance.
      Jon Athey - Sr. Supply Chain Analyst - Materials Management - MyMichigan Health
      Daniel E
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      Posts: 2
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      7/25/2014 1:12 PM
        JonA, thank you for your response.

        That does make sense. Basically its cheaper to accept a variance under $50, then to actually spend an hour or two researching the varaince.
        For your large variances, how long do you leave it open? Do you leave it open until you have a chance to review the history and then adjust accordingly, or leave it open until the issue is resolved with an adjustment?
        JonA
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        7/25/2014 1:38 PM
          We'll do some research prior to but we run IC175 to post the variances fairly soon. We don't leave them open. If a variance warrants further research and we discover a cause we'll adjust quantities as needed and use the Physical Inventory Adjustments account as the offset.
          Jon Athey - Sr. Supply Chain Analyst - Materials Management - MyMichigan Health
          Kat V
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          7/28/2014 11:57 AM
            Hospitals tend to have a larger tolerance of variance than other businesses - but we are similar to Jon's setup. Certain items are cycle counted daily because there are UOM issues - the variances are split between the departments that received product that day. Otherwise, the larger variances are hunted down and the lower ones are written off.