Observation Running head: OBSERVATION

Observation

Observation Interview Protocol Project: Inventory Variances resulting from Shipments Loaded Time of Interview: Date: April 15, 2010 Place: Company Anonymous Interviewer: Shanaika Muldrow Interviewee: Anonymous Position of Interviewee: Branch Manager - Male Questions: 1. What is your role in ensuring shipments are loaded and distributed properly? 2. What is the role of the branch coordinator and warehousemen?

3. Why does the companys physical inventory vary from the companys system inventory? 4. Whom does the company hold accountable for variances? 5. What methods could prevent variances? Question #1: What is your role in ensuring shipments are loaded and distributed properly? Summary: I review orders within our system and create a schedule for the branch coordinators and warehousemen. Once the shipments are packed and loaded, I count the packages against the work order. Next, I sign and date the packing slip.

Question #2: What is the role of the branch coordinator and warehousemen? Summary: The branch coordinator compares the work order schedule to the branchs system inventory to ensure items are in stock. Once the branch coordinator confirms the systems inventory to the work order, she approves and places in a basket for the warehousemen.

Observation The warehousemen take the work orders from the basket and pack items by customer.

Once the warehousemen complete the work orders, they load onto their respective trucks for delivery.

Question #3: Why does the companys physical inventory vary from the companys system inventory? Summary: There are a number of explanations for variances: o Warehousemen load incorrect items o Branch coordinators key in the wrong item number o Intentional overloading (theft) Question #4: Whom does the company hold accountable for variances? Summary: The Branch Manager, branch coordinator, and/or warehousemen Currently, no actions have been taken or put in place for variances

Question #5: What methods could prevent variances? Summary: The branch manager should review work orders after the branch coordinator completes her part. The branch manager and driver should review the customers orders once they are on the truck versus in the staging area of the warehouse.

Conclusion: This branch was experiencing high inventory variances, which the branch manager believed was due to theft. The branchs internal controls for loading customers orders were weak. After interviewing the branch manager and observing their process, we were able to identify some stronger controls. Therefore, these variances should decrease in the future.

Observation

Observation Protocol: Descriptive Notes The branch manager receives customer orders and prepares a work order schedule for the branch coordinator and warehousemen. The branch coordinator confirms that the items needed by the customers are in stock. The branch coordinator places the work order in a basket for the warehousemen.

Inventory Variances from Loading Reflective Notes

The branch manager should have the branch coordinator sign and date the work order. In addition, either the branch manager should have another coordinator review the form for accuracy or he should review for accuracy.

The warehousemen collect the form and starts to prepare the work order. Once the work order is completed by the warehousemen, they store the orders in a staging area prior to loading. The branch manager compares the items packed by customer in the staging area and signs off on the packaging slip.

The branch manager should either have a coordinator review the items in the staging area or another associate other than the warehousemen. The branch manager should sign-off on items loaded as the warehousemen load the trucks.