Units and currencies that differ between head office and local books

Head office counts a cable in metres. The local entity buys the same cable on drums and keeps its book in drums. Head office values stock in US dollars, the local ledger is in soums, and the report to Seoul may have to be in won. None of these is wrong, but a count that does not settle units and currency first produces two totals that cannot be compared. The same stock then shows up as a surplus in one file and a shortage in another.

Three kinds of mismatch

1. Pack size: pieces, boxes and pallets. A box may hold 12 pieces here and 10 there.
2. Unit of measure: kilograms against pieces, metres against rolls, litres against kilograms (which needs a density). The kind of unit itself differs.
3. Currency and date: whether value is stated in won, dollars or soums, and the exchange rate of which day is used.

Quantity: one base unit per item

• For each item, choose as the base unit the smallest unit that is actually counted: pieces, metres, kilograms.
• Put the conversion factor from every other unit into the base unit next to the codes in the mapping table. For example 1 drum = 500 m, 1 box = 24 pieces.
• Counters may count in the unit they see on the shelf (a full box) but should record the base-unit value as well. Do the conversion in the file, not in anybody's head.
• Check whether the factor varies by supplier. If drums of the same item hold 305 m at one time and 500 m at another, keep a dated factor or split them into separate items.

For illustration, head office manages a cable in metres and the local book in drums, with 12 drums on record. On the floor there are 11 full drums and one drum with 180 m left. If one drum is 500 m, the book says 12 × 500 = 6,000 m and the count says 11 × 500 + 180 = 5,680 m, a difference of -320 m. Had the count been written down only as "11.36 against 12 drums", nobody could read the difference at a glance.

Value: one cost basis, one rate, one date

Agree these points before the count starts:

• Which cost is used: purchase cost, the average cost in the book, or the standard cost at head office.
• The currency of the source data and the currency of the result file.
• Which exchange rate: the official rate on the cut-off date, a monthly average, or a rate set by head-office policy, and who supplies it.
• Whether rounding is done on each line or on the total.

For illustration, assume 1 USD = 12,000 UZS (an invented rate for the example). A unit cost of 24,000 UZS is 2.00 USD. A shortage of 500 pieces is 500 × 24,000 = 12,000,000 UZS, or 1,000 USD. Convert the same line with the rate of another day, 12,300, and it becomes about 975.6 USD: the stock has not changed, yet the value differs by 24 USD. If 300 lines move like this, the exchange rate alone creates a large argument.

Where the mistakes hide

• Decimal separator: Excel set to Russian or Uzbek uses a comma, while Korean or English settings use a point. Whether "1,5" means 1.5 or 1,500 depends on the setting. Always check the totals before merging files.
• Unit names: pcs, ea, шт and 개 are the same unit written differently. Normalise them to one.
• Fractional units such as 0.5 box: convert to pieces and record whole numbers.
• Files converted earlier: make sure value columns converted at different times are not mixed.

Write the basis on one page

Put a single basis sheet at the front of the result file: the base-unit rule, the version of the conversion table, the cost basis, the currency, the exchange rate and its date, and the rounding method. Anyone who recalculates later can reproduce the result.

Summary

Units and currency are too late to settle once the count is over. Fix the base unit, the conversion table, the cost basis and the rate first, and the two books will say the same thing. When head office uses its own units or currency basis, Smart Inventory agrees the layout of the results with you before work starts and leaves the conversion basis visible in the result file.