Shortages, overages and wrong locations
Not all discrepancies are the same. A comparison between a count and the system shows three types, and separating them is the first step toward the cause:
- Shortage: physical stock is lower than the recorded quantity.
- Overage: physical stock is higher than the recorded quantity.
- Wrong location: the total quantity matches, but the product is in another location.
A shortage in one location and an overage of the same product in another are usually a single put-away or picking error, not two. For that reason, discrepancies should be reviewed by product before any adjustment.
Common causes and how to detect each one
| Cause | How it is detected | Control that prevents it |
|---|---|---|
| Receipt recorded with more or less than arrived | Shortage or overage shortly after the receipt; the stock ledger shows the receipt as the last movement | Receiving against a document, a scan of each line and a tolerance |
| Put-away to another location | Shortage in the suggested location and an overage in a nearby one | Mandatory scan of the destination location |
| Picking from another location or lot | Shortages in reserve locations or lots that do not match | Allocation by the system and scan validation |
| Transfer dispatched and not received | Stock «in transit» that never closes | Receipt at destination by lot and serial number |
| Unrecorded return | Overages of products already sold, often at the dock | Returns created from the original outbound document, with quarantine |
| Confused unit of measure | Discrepancies in exact multiples, for example of 12 | A unit defined per product and entry in that unit |
| Unrecorded shrinkage | Shortages of damaged or expired products | Inventory write-off with a reason |
| Unrecorded movements | Discrepancies with no recent movement to explain them | Every internal transfer recorded with a scan |
How to investigate a discrepancy
- Count again the location and the nearby locations before assuming a system error.
- Review the stock ledger of the product: the last movement in that location, who made it and with which document.
- Look for the product in other locations: an overage of the same product often explains the shortage.
- Review open documents: receipts not yet closed, transfers in transit and pending returns.
- Adjust only afterward, with the reason you found.
Why each adjustment needs a reason
An adjustment corrects the quantity, but the reason makes it possible to correct the cause. If, after a few months, most adjustments carry the reason «put-away error», the problem is in put-away, not in counting. An adjustment without a reason, or with «inventory adjustment» as the reason, corrects the discrepancy and leaves the cause in place.
The person who counts should also be separate from the person who adjusts. A user with authority reviews the discrepancies and applies the adjustments, and the record keeps both names.
How Chainlink WMS helps
In Chainlink, closing a count separates matches, wrong locations, overages, shortages and products not in the system, and adjustments are applied by an Administrative user. Each movement is posted to the stock ledger with its document and user, and every night Chainlink checks that the stock ledger reconciles with on-hand stock. Receiving stops when the tolerance is exceeded, and picking rejects, depending on your configuration, a location or lot other than the one allocated. See counts and picking.