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Part 5 of 7 · Stock transfer planner series ~5 min read

What in-transit stock does to your numbers

A transfer takes a day or a week, and during that time the stock is somewhere that most inventory systems have no way of describing, which produces two opposite and equally annoying errors.

Key takeaways

  • In-transit is a real location with a real balance, not a gap between two sites.
  • Deduct at despatch, add at receipt, and never both at once or neither.
  • A transfer open longer than expected is an exception worth chasing.
  • Confirm the quantity at the receiving end; discrepancies happen.
  • Reconcile in-transit monthly. It should be nearly empty.

Two failure modes

Three ways of accounting for stock in transit between sitesThree boxes stacked on the left. Deduct at receipt only, where A still shows it, labelled double count. Deduct at despatch only, where B does not have it yet, labelled disappeared. And In-transit location, holding a real balance, labelled correct. All three converge on The stock exists somewhere, always, and that leads down to And can be counted at any moment. A note says the first two are the common implementations and both produce phantom stock.Deduct at receipt onlyA still shows itdouble countDeduct at despatch onlyB does not have it yetdisappearedIn-transit locationa real balancecorrectThe stock existssomewhere, alwaysAnd can be countedat any momentThe first two are the common implementations and both produce phantom stock.
Fig 1. Three ways of handling stock that has left one site and not reached another. Only the third keeps the total correct at every instant.
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The double count

Deducting only at receipt means the source shows stock it no longer physically has. Somebody at the source promises it to a customer, goes to pick it, and it is in a van eighty miles away. That is a customer-facing failure caused entirely by an accounting choice.

The disappearance

Deducting at despatch with nowhere to put it means the stock does not exist anywhere for the duration. The company-wide total is wrong, and a stock valuation run during that window under-reports. Over a month with regular transfers, some quantity is permanently in flight and permanently missing from the total.

Open and close

How a stock transfer moves through in-transit and closesA vertical chain of five steps entered by a box labelled A transfer is picked at the source. Step one deducts from the source and adds to in-transit. Step two sets an expected arrival from the movement. Step three asks whether it has been received, confirmed with a count; if not it exits to Chase it, after the expected date. Step four asks whether the count matches despatched against received; if not it exits to Discrepancy, recorded with both ends notified. Step five closes the transfer and in-transit returns to zero. A note says the fourth gate is the same three-way match as goods receipt, at a smaller scale.AWS ACCOUNTA transfer is pickedat the sourceDeduct from sourceand add to in-transitExpected arrivalfrom the movementReceived?confirmed, with a countChase itafter the expected datenoCount matches?despatched against receivedDiscrepancyrecorded, both ends notifiednoClose the transferin-transit returns to zeroThe fourth gate is the same three-way match as goods receipt, at a smaller scale.
Fig 2. The lifecycle of one transfer. Confirming a count at the receiving end catches the same class of error as receiving from a supplier.
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  • Machine learning
  • Management
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Counting at the receiving end

It is tempting to skip, because it is internal stock moving between your own sites and nobody is trying to short you. The reason to do it anyway is that picking errors happen at the same rate internally as anywhere else, and an unconfirmed transfer means a discrepancy surfaces months later in a stock count with no way to trace it.

A count at receipt turns that into a same-week question with two named people who can both remember the box.

The monthly reconciliation

How the in-transit balance is reconciled monthlyA horizontal row of five boxes. In-transit balance at month end. Should be small, a day or two of flow. Anything old, over fourteen days? Chase or write off, with a decision. Back to near zero, every month. A note says a growing in-transit balance is transfers that were never confirmed, rather than stock.IN-TRANSIT SHOULD BE NEARLY EMPTYIn-transit balancemonth endShould be smalla day or two of flowAnything old?over 14 daysChase or write offwith a decisionBack to near zeroevery monthA growing in-transit balance is transfers that were never confirmed, not stock.
Fig 3. The monthly check. A rising in-transit balance is a process failure rather than an inventory position, and it is easy to miss because nobody owns that location.
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In practice the ageing in-transit balance is almost always paperwork: the stock arrived and nobody confirmed it. Which is worth knowing, because it means the receiving site has physical stock its system does not know about, and that surfaces as a positive variance at the next count.

The stock that genuinely did not arrive

Rare and it happens: a box left on a van, delivered to the wrong site, or picked and never loaded. The trace is short because both ends are yours, and the resolution is usually finding it somewhere.

What matters is that it is a recorded event with a decision at the end, rather than a line that ages quietly until somebody writes off the whole in-transit balance at year end without looking at what was in it.

Next: what all of this costs to run.

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