Pick Goods. The receive order activity forwards the stock release document (also
called the picking ticket) to the pick goods function, in the warehouse. This document
identifies the items of inventory that must be located and picked from the warehouse
shelves. It also provides formal authorization for warehouse personnel to release the specified
items. After picking the stock, the order is verified for accuracy and the goods and
verified stock release document are sent to the ship goods task. If inventory levels
are insufficient to fill the order, a warehouse employee adjusts the verified stock release
to reflect the amount actually going to the customer. The employee then prepares a
back-order record, which stays on file until the inventories arrive from the supplier
(not shown in Figure 9.14). Back-ordered items are shipped before new sales are
processed.
Finally, the warehouse employee adjusts the stock records to reflect the reduction
in inventory. These stock records are not the formal accounting records for controlling
inventory assets. They are used for warehouse management purposes only. Assigning
asset custody and accounting record-keeping responsibility to the warehouse clerk would
violate a key principle of internal control. The inventory control function, discussed later,
maintains the formal accounting inventory records.