1. Please use the following two slides as a template for your presentation at NES. Application of Industry Leading Practices & VCS for Inventories with Use of Barcode Scanners Rodney (Rod) Miller, CPPM, CF President of Emerald Coast Chapter

2. Main Topics Inventories are simple, straight forward Right! Ensuring that your inventory does not make more errors than it corrects GAO-02-447G Best Practices in Achieving Consistent, Accurate Physical Counts of Inventory and Related Property http://www.gao.gov/new.items/d02447g.pdf

3. Main Topics

4. Inventories are Simple?

5. Headlines from FOX NEWS June 19, 2008 The U.S. military misplaced hundreds of sensitive nuclear missile components, but they weren't lost -- they just weren't where they were supposed to be, a Navy source told FOX News on Thursday. The Defense Logistics Agency also could not account for a variety of nuclear components, as paperwork was not done from an inventory perspective. However, the Navy source told FOX News the components were not "lost," but were found in other secure classified locations.

6. Inventories are Simple? Industry-Leading Practices GAO-02-447G March 2002 Executive Guide Best Practices in Achieving Consistent, Accurate Physical Counts of Inventory and Related Property “Although conducting a physical inventory, comparing the count results to recorded quantities, researching differences, and determining and posting an accurate adjustment to the on-hand balance seems like a fairly simple, straight forward exercise, in reality it is not. There are many factors that can cause the record of on-hand inventory to differ from the physical quantity counted, including omission of items from the count, incorrect counts, errors in cutoff, and improper recording or reconciliation of count results.” http://www.gao.gov/new.items/d02447g.pdf

7. Best Practices in Achieving Consistent, Accurate Physical Counts of Inventory and Related Property KEY FACTORS Establish Accountability Establish Written Policy Select an Approach Determine Frequency of Counts Maintain Segregation of Duties Enlist Knowledgeable Staff

8. Best Practices in Achieving Consistent, Accurate Physical Counts of Inventory and Related Property KEY FACTORS Provide Adequate Supervision Perform Blind Counts Ensure Completeness of Counts Execute Physical Count Perform Research Evaluate Count Results

9. Best Practices in Achieving Consistent, Accurate Physical Counts of Inventory and Related Property Establish Written Policy For the entire physical count process Include found items

10. Best Practices in Achieving Consistent, Accurate Physical Counts of Inventory and Related Property Perform Blind Counts

11. Best Practices in Achieving Consistent, Accurate Physical Counts of Inventory and Related Property Three Count Process Training

12. Best Practices in Achieving Consistent, Accurate Physical Counts of Inventory and Related Property

13. Location! LOCATION! Location!

14. Best Practices in Achieving Consistent, Accurate Physical Counts of Inventory and Related Property Types of Locator Systems Memory System Memory System Serialized Locator System Serialized Locator System Spot and Bay Locator Spot and Bay Locator Significant Locator System Significant Locator System

15. Best Practices in Achieving Consistent, Accurate Physical Counts of Inventory and Related Property Design of Locator System Plan-o-graph- Drawing of actual layout of a storage area Plan-o-graph- Drawing of actual layout of a storage area Portrays the manner in which the gross space within the storage structure or outside storage area is subdivided.

16. Best Practices in Achieving Consistent, Accurate Physical Counts of Inventory and Related Property Design of Locator System Location Description Patterns Location Description Patterns Building or Area number Building or Area number Section or Floor Number Section or Floor Number Aisles Segments Aisles Segments Segment –Level compartments Segment –Level compartments Ref: Marine Corps Order P4450.7_ http://www.marines.mil/news/publications/Documents/MCO%20P 4450.7E.pdf

17. Handheld Mobile computer (Barcode Scanners) Motorola’s MC9190-G Mobile Computer Scan both 1 & 2d barcodes Take grey scale photos RF Wi Fi Memory

18. Handheld Mobile computer (Barcode Scanners) Inventory process 1 st Counts The inventory taker scans the location and each item on location If the asset is material summary record they record the count quantity If the count does not match the record they are required to rekey the count again. If the rekey quantity matches the record the count is accepted. If the rekey quantity does not match the record it must match the 1 st count before it is accepted (they must key the same count twice to have the count accepted) If an item was not counted at all they must verify a zero count for the item and confirm the zero count All unmatched/missing counts require a 2 nd count

19. Handheld Mobile computer (Barcode Scanners) Inventory process 2 nd Counts If the count does not match the record they are required to rekey the count again. If the rekey quantity matches the record the count is accepted. If the rekey quantity does not match the record it must match the 1 st count before it is accepted (they must key the same count twice to have the count accepted) All unmatched/missing 2 nd counts require a 3rd count 3 rd Counts 3 rd Counts are only conducted by key personnel authorized to adjust the asset record When the third counts are processed any necessary adjustments (losses or Gains) will be made

20. Voluntary Consensus Standards Measuring the results and metrics ASTM International Standards E2132 -11 Standard Practice for Inventory verification: Electronic and Physical Inventory of Assets E2131 – 09 Standard Practice for Addressing and Reporting Loss, Damage or Destruction of Tangible Property

21. Voluntary Consensus Standards E 2132 –11 Standard Practice Physical Inventory of Durable, Moveable Property “8.1 Key results of an inventory verification are measured by located rate, by verified count, or by value and an overage rate by verified count or value. 8.1.1 Located rate by verified count is calculated as follows: Calculated: Number of assets located Number of assets in the total population (1) 8.1.2 Located rate by value is calculated as follows: Value ~as defined in 5.3! of assets located value of assets in the total population (2) Measuring the results and metrics

22. Voluntary Consensus Standards E 2132 –11 Standard Practice Physical Inventory of Durable, Moveable Property “8.1.3 Overage rate by number is calculated as follows: Number of overages Number of assets in the total population (3) 8.1.4 Overage rate by value is calculated as follows: Value ~as defined in 5.3! of overages Value of assets in the total population (4) 8.2 Loss rates can be addressed and reported as in accordance with Practice E2131.” Measuring the results and metrics

23. Voluntary Consensus Standards E 2132 –11 Standard Practice Physical Inventory of Durable, Moveable Property “8.1.3 Overage rate by number is calculated as follows: Number of overages Number of assets in the total population (3) 8.1.4 Overage rate by value is calculated as follows: Value ~as defined in 5.3! of overages Value of assets in the total population (4) 8.2 Loss rates can be addressed and reported as in accordance with Practice E2131.” Measuring the results and metrics

24. Example of Inventory of Material & Equipment in warehouse setting 13,846 line items in storage new & repairable assets from screws to major end items. 3 count inventory process Line Items % total lines 1 st count Matches 10,85878.42% 2 nd counts 3,012 21.75% 2 nd count Matches 1,44210.41% 3 rd count Matches 410 2.96% 12,710 91.79 % Adjustments (loss & Gain) 1,136 8.20% (68.55% losses 778 Line items) 13,846 NOTE: 24 items pending 3d count resolution not included in figures above ** Subcontractor operation warehouse previously

25. The job ain’t finished until the paper work is done!