6 replies to this topic

[matthewcc]

Hello all, here's a question that I didn't see addressed on the forums anywhere. We do periodic physical inventories such as cycle counts (usually we do cycle counts weekly). This includes finished goods as well as components and in-process goods, cycling through different items so ideally we cycle through everything eventually--hence the term "cycle"--I don't know if this is typical, but it is how we do it. We also do year-end inventory of everything we have in inventory; we do this at our fiscal year-end.

 

My question is this: What are your thoughts on whether it is necessary to establish written procedures describing methods and responsibilities for performing cycle counts and other counts and how to handle (and whether to investigate) inventory discrepancies? Without written procedures, I think a regulator or auditor can reasonably question why we don’t investigate discrepancies, how we know theft/food fraud are not occurring, and whether our traceability/inventory controls are adequate. It’s troubling to me that seemingly random quantities of finished goods appear and disappear with associated uncertainty regarding whether they are acceptable in food safety, authenticity, and quality.

 

I don't expect inventory to be perfect, and I don't think you can ever achieve perfection. I am also unaware of regulations requiring such written procedures. However, it just seems to me that without such written procedures, there are too many questions relating to food safety and quality without some written method of whether/how to investigate that something has occurred to adversely affect food safety, authenticity, or quality. Currently, we seem to view inventory discrepancies as merely minor financial losses or gains, and this does not seem right to me, for the reasons explained.

 

We are regulated in the United States under 21 CFR Part 111 and 117 and we have SQF and NSF GMP certifications. 

 

Thank you,

Matthew

 

[GMO]

I think it's worth a procedure but I'd get the people who do it to write it.  Certainly large discrepancies should be investigated and CAPA done.  But that requires a process and a definition of what "large" is.  I don't think it needs to be complex though.

[matthewcc]

Thanks GMO - 

 

I should also explain that the most common reason given by coworkers for finished goods being more or less than expected are that we accidentally pulled from the wrong lot--thus, the lot accidentally pulled from will have too few bottles, and the lot we intended to pull from will have too many bottles, by the same quantity. We even have a term for this discrepancy, calling it an 'over under' error, because one lot is over on inventory, and the other lot is under, by the same quantity. This has been a topic of conversation for a long time, and we have shadowed workers who pick/ship and written at least one CAPA to try to uncover the root cause for such discrepancies and have not been able to stop them from happening.

[GMO]

You could decide though that for some you might just record them and then do some more RCA on a trend.  It's absolutely possible to get rid of the kind of error you describe given time and money.  But if you know how many times you're having to adjust your inventory because of this and the risk to product trace, time people spend on it etc, it might make the benefit / effort swing your way.  

[jfrey123]

Call me jaded or a perfectionist, but....... If you're indicating that you've got inventory discrepancies at annual cycle counts between incorrectly handled lots, then I dare say you've got traceability issues that absolutely open the door to all of the fraud, adulterated product, and other associated recall issues that could easily be brought up by an auditor or worse a regulatory body.

 

Say you do have a recall, but with this internal error that happens so much you've given it a common name in your site, you thought you recalled all of the affected bottles just to find out you swapped the recalled bottles on a wrong order to whom you didn't notify of a recall.  That feels problematic.

[Killian]

Call me jaded or a perfectionist, but....... If you're indicating that you've got inventory discrepancies at annual cycle counts between incorrectly handled lots, then I dare say you've got traceability issues that absolutely open the door to all of the fraud, adulterated product, and other associated recall issues that could easily be brought up by an auditor or worse a regulatory body.

 

Say you do have a recall, but with this internal error that happens so much you've given it a common name in your site, you thought you recalled all of the affected bottles just to find out you swapped the recalled bottles on a wrong order to whom you didn't notify of a recall.  That feels problematic.

 

I saw a similar thing happen with a mock recall, fully a third of what was affected by the mock recall had been cycle counted out, which feels pretty unacceptable from a traceability standpoint. The person doing the mock was a numbers person, so to them as long as the numbers netted 0 they didn't feel the need to look further into the fact that a large portion had simply disappeared.

[GMO]

During my career, I dabbled in operations (a while ago).  At the time the company I was working for had some decent ERP for how long ago it was but error was common.  The person I took over from in role used to stocktake every week and correct every error reversing excessive goods issue and issuing more where there was the alternate error.  That seems dodgy but it wasn't as we ran week long batches so in fact it really was correcting to what must have happened.  

 

This guy gave up every Saturday morning, without pay.  I did it twice and thought "F this!"  I then delegated the stocktake to my team and also delegated correcting their errors to them.  Guess what?  They got better at issuing correctly...

 

What would have been REALLY dodgy would have been if the person who preceded me wrote on or wrote off stock.  That then breaks the link of what has been delivered to where it's been used or creates stock from thin air.  Very bad practice but often completed by members of staff who don't know better or don't care as it's always quicker than doing the right issuing to orders or reflecting a real under or over use.

 

Some people (with more advanced systems than we had) now run a report on variances before closing off any order.  Yes it's an admin task but it gives you the opportunity to challenge in the moment.  This takes the expected consumption from a BOM and then compares it with what has been issued.  But please don't think "Ah!  I have the answer, let's backflush everything!" as that just makes you look compliant even if you're not.  It's only valid IMO when you have a single silo and even then there are some nuances which need building in around batch blending.

 

Anyway, that rather wordy explanation is to reflect on what I said above and others' comments.  If you have consistent batch errors with issuing of materials, and you're doing nothing about it, your team have a name for it (which reminds me about when we had a bird in one factory and it had been named  .)

 

The implications could be:

Trace inaccuracy - potential for incorrect or incomplete recall.

Stock inaccuracy - potential for lines to stop as expected stock is not on hand.

Value of stock inaccuracy - could mean your finances are not as expected.

Wasted time - correcting stock even doing it badly is time hungry and a non value add task.

Lack of data - incorrect issuing means you won't be seeing those small over and under usages which could point you towards BOM errors or CI opportunities.

Compliance risk - likely to be picked up on an audit at some point...

 

So while you've tried to fix it, maybe you've just not had the right people on it with the right desire to act and the right budget / will?  Do you have anyone trained in practical problem solving?  It would be a good project for them with some quick wins I'd argue.