Answered What's the difference between defect and audit?

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PogDog

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They both can be used to remove product from the system.

Defect requires a printer, a reason and usually limits you for removing an individual quantity of an item per scan.

Audit requires accepting a large change when it hits a $300 threshold.

Outside of "tagging" a reason for removing that item from the system. Why should I continue to Defect, when Audit is so much easier?
 
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When you use defect you're actually accounting for that product when changing the on-hands. You're saying "this product is gone, and here is the reason for it. It was broken on the floor/messed up as a return/etc. I'm getting rid of 1, please update my inventory so my replenishment system can replace it."

When you audit, you're basically saying that "this product is gone, but I have no idea why. It's out and I need to get more instock to sell."

Defect allows you to keep track of damaged/defective merchandise and maybe even get credited back from the vendor or manufacturer if it gets sent back. Things that get audited may as well have grown a pair of legs and walked right out the door!

PLUS, when you defect, you can defect one each at a time. With an audit, you're affecting the total onhand for the whole DPCI, potentially multiple eaches. There is a huge difference between the two.

The simplified version of a long story is this: Your DC sends you a BOL for every truck. This is like a receipt that tells you what you were billed for. You paid them for merch, and they sent you that merch. Whatever they said they sent you got added to your on-hands. Whenever something is sold or defected, it comes out of your on-hands and is tracked in our system. When something is just put in the trash, stolen, processed out incorrectly, lost, mis-picked, etc it is not actually removed from your on-hands. The system can't keep track of those situations, which means that certain merchandise will not get ordered. This is where we audit to fix the count, which will trigger replenishment. When you do your annual inventory, they count everything that you SHOULD physically have (based on what you were billed for) vs what you ACTUALLY have, determined by the team physically counting everything. Whatever you are missing is called shrink, which tells you how much money you lost in inventory. Any time you do something incorrectly here, you are directly contributing to shrink in your building.

TL;DR: In this situation, the easy way is NOT the correct way.
 
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Jenim12 said:
When you use defect you're actually accounting for that product when changing the on-hands. You're saying "this product is gone, and here is the reason for it. It was broken on the floor/messed up as a return/etc. I'm getting rid of 1, please update my inventory so my replenishment system can replace it."

When you audit, you're basically saying that "this product is gone, but I have no idea why. It's out and I need to get more instock to sell."

Defect allows you to keep track of damaged/defective merchandise and maybe even get credited back from the vendor or manufacturer if it gets sent back. Things that get audited may as well have grown a pair of legs and walked right out the door!

PLUS, when you defect, you can defect one each at a time. With an audit, you're affecting the total onhand for the whole DPCI, potentially multiple eaches. There is a huge difference between the two.

The simplified version of a long story is this: Your DC sends you a BOL for every truck. This is like a receipt that tells you what you were billed for. You paid them for merch, and they sent you that merch. Whatever they said they sent you got added to your on-hands. Whenever something is sold or defected, it comes out of your on-hands and is tracked in our system. When something is just put in the trash, stolen, processed out incorrectly, lost, mis-picked, etc it is not actually removed from your on-hands. The system can't keep track of those situations, which means that certain merchandise will not get ordered. This is where we audit to fix the count, which will trigger replenishment. When you do your annual inventory, they count everything that you SHOULD physically have (based on what you were billed for) vs what you ACTUALLY have, determined by the team physically counting everything. Whatever you are missing is called shrink, which tells you how much money you lost in inventory. Any time you do something incorrectly here, you are directly contributing to shrink in your building.

TL;DR: In this situation, the easy way is NOT the correct way.
Click to expand...

Let me paint a picture where the defect tool is woefully hilarious when it comes to defecting large quantities.

I had recently reset the baby formula pog. I found 24 cans of out-of-date formula. All the same item.

I tried defecting through the app. It required a printer obviously. So I grabbed one. Then I required a reason. It asked if I was going to salvage or donate. Donate. After the first scan, the initial requirements of where and why were locked in. But I had to continue selecting what I wanted to do (donate).

24 times. It was the entire lot of what we had on hand.

If I went with Audit, I could have easily changed the quantity (even if it wasn't to zero everything out). I wouldn't have needed to get a printer or slog through picking the same reason 24 times.

From a user standpoint. Audit is easy. It's not right, but it gets the same end result; a quantity on-hands change and even a request to replenish. And it does it in a fraction of the time.

The defect tool needs revamped. Simplified.
 
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PogDog said:
Let me paint a picture where the defect tool is woefully hilarious when it comes to defecting large quantities.

I had recently reset the baby formula pog. I found 24 cans of out-of-date formula. All the same item.

I tried defecting through the app. It required a printer obviously. So I grabbed one. Then I required a reason. It asked if I was going to salvage or donate. Donate. After the first scan, the initial requirements of where and why were locked in. But I had to continue selecting what I wanted to do (donate).

24 times. It was the entire lot of what we had on hand.

If I went with Audit, I could have easily changed the quantity (even if it wasn't to zero everything out). I wouldn't have needed to get a printer or slog through picking the same reason 24 times.
Click to expand...
Seems shady, and lazy TBH
 
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PogDog said:
Let me paint a picture where the defect tool is woefully hilarious when it comes to defecting large quantities.

I had recently reset the baby formula pog. I found 24 cans of out-of-date formula. All the same item.

I tried defecting through the app. It required a printer obviously. So I grabbed one. Then I required a reason. It asked if I was going to salvage or donate. Donate. After the first scan, the initial requirements of where and why were locked in. But I had to continue selecting what I wanted to do (donate).

24 times. It was the entire lot of what we had on hand.

If I went with Audit, I could have easily changed the quantity (even if it wasn't to zero everything out). I wouldn't have needed to get a printer or slog through picking the same reason 24 times.

From a user standpoint. Audit is easy. It's not right, but it gets the same end result; a quantity on-hands change and even a request to replenish. And it does it in a fraction of the time.

The defect tool needs revamped. Simplified.
Click to expand...

Yea, it does need to be revamped but for now you should still use it. If you audit 24 defective cans of formula to 0 an just throw them into donations it will lead to store shortage.
 
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I'm still not exactly sure what defect does that audit doesn't also do.

Not trying to be flippant. I get that defect removes an item from the inventory. Audit also does that. How is using audit over defect contributing to shrink in that case? If I zero in defect or audit, it's still a zero in the inventory system.
 
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Doing a defect helps spot track on what type of product it is. For example, would you throw away 2 tv's, instead of sending them back to crc? Probably not. I think everything that is defected, are broken down into classes, what can be recycled & sold, spot does it.
 
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PogDog said:
I'm still not exactly sure what defect does that audit doesn't also do.

Not trying to be flippant. I get that defect removes an item from the inventory. Audit also does that. How is using audit over defect contributing to shrink in that case? If I zero in defect or audit, it's still a zero in the inventory system.
Click to expand...

Yeah, so it removes it from the inventory system either way, but defecting merchandise actually accounts for why you don't have it and tells the system where it is going, ie returns center or in the trash can. The product is tracked from start to finish with defect.

Audit does not do this. Audit just says that you don't have this item instock, but doesn't categorize where the product went that you were supposed to have. Audit is only used to trigger replenishment when you have overstated on hands.

Ex. You defect out some formula and donate it. We know that it's going to your food bank. It is going into a box, and will be picked up by your food bank. This formula has been accounted for.

Ex. 2. You audit your formula down to 0. Physically where is the product? Where did it go? How does the computer know that your formula went to the food bank? Would it even matter if we threw the formula in the trash? Or sent it home with a TM to use? We will get new formula to replace it, but as far as we are accounting for this merchandise, what exactly did we do with 24 packages of formula?

Ok, now it is time to inventory. RGIS, or whoever is going to count your infants department.

For Ex1. Based on what your DC sent you, you should have gotten 400 formulas this year. You sold 350 of them at the register. You donated 24 of them using defect. RGIS counts 26 on your salesfloor.
350 sold+24 donated+26 on your floor =400 shipped formulas from your DC. This number matches what you should have, so there was no shrinkage on your formula.

For Ex2, let's keep the numbers the same, but assume you choose to audit instead of defecting/donating.
350 sold + 26 on your floor = 376 formulas accounted for.
You SHOULD have 400 accounted for, but you only accounted for 376. Now you are missing 24 formulas. WHERE DID THE FORMULAS GO? Let's say each formula has a price of $20. $20 x 24 missing formulas = $480. This is SHRINK. Your store shrunk out on $480 of merchandise because it was not accounted for properly.

Does this make more sense?
 
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Jenim12 said:
Yeah, so it removes it from the inventory system either way, but defecting merchandise actually accounts for why you don't have it and tells the system where it is going, ie returns center or in the trash can. The product is tracked from start to finish with defect.

Audit does not do this. Audit just says that you don't have this item instock, but doesn't categorize where the product went that you were supposed to have. Audit is only used to trigger replenishment when you have overstated on hands.

Ex. You defect out some formula and donate it. We know that it's going to your food bank. It is going into a box, and will be picked up by your food bank. This formula has been accounted for.

Ex. 2. You audit your formula down to 0. Physically where is the product? Where did it go? How does the computer know that your formula went to the food bank? Would it even matter if we threw the formula in the trash? Or sent it home with a TM to use? We will get new formula to replace it, but as far as we are accounting for this merchandise, what exactly did we do with 24 packages of formula?

Ok, now it is time to inventory. RGIS, or whoever is going to count your infants department.

For Ex1. Based on what your DC sent you, you should have gotten 400 formulas this year. You sold 350 of them at the register. You donated 24 of them using defect. RGIS counts 26 on your salesfloor.
350 sold+24 donated+26 on your floor =400 shipped formulas from your DC. This number matches what you should have, so there was no shrinkage on your formula.

For Ex2, let's keep the numbers the same, but assume you choose to audit instead of defecting/donating.
350 sold + 26 on your floor = 376 formulas accounted for.
You SHOULD have 400 accounted for, but you only accounted for 376. Now you are missing 24 formulas. WHERE DID THE FORMULAS GO? Let's say each formula has a price of $20. $20 x 24 missing formulas = $480. This is SHRINK. Your store shrunk out on $480 of merchandise because it was not accounted for properly.

Does this make more sense?
Click to expand...

That makes sense. I understood that the defect system "tagged" a reason to the item, but I still didn't understand the process that attributed shrinkage to it if only removing it through audit. This is not a simple concept, but your example does explain it well. I still think the defect process is arduously silly and needs overhauled. But, I'll continue to defect knowing better why I need to defect.

As a presentation lead, this is important to understand so I can better explain why we defect and why we need to go through the process as long as it takes. I asked my receiver (15+ years at Spot) and an ETL (12+ years at Spot), neither actually knew what the difference was or could explain why, just that we should defect and not audit. I like to have full understanding, because if there is an easier way of doing something, I'd prefer doing that. I think most people would.

Thanks for the solid response!
 
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PogDog said:
That makes sense. I understood that the defect system "tagged" a reason to the item, but I still didn't understand the process that attributed shrinkage to it if only removing it through audit. This is not a simple concept, but your example does explain it well. I still think the defect process is arduously silly and needs overhauled. But, I'll continue to defect knowing better why I need to defect.

As a presentation lead, this is important to understand so I can better explain why we defect and why we need to go through the process as long as it takes. I asked my receiver (15+ years at Spot) and an ETL (12+ years at Spot), neither actually knew what the difference was or could explain why, just that we should defect and not audit. I like to have full understanding, because if there is an easier way of doing something, I'd prefer doing that. I think most people would.

Thanks for the solid response!
Click to expand...

Yeah, a lot of this stuff is pretty complicated and we don't really get trained on it as TLs. Definitely good things for you and your team to know, though! The more info the better when trying to run a business. I'm also GMTL/presentation, and this is the same conversation I end up having with TMs/TLs/ETLs and my SD when talking about why inaccurate price changes/salvaging causes shortages. Just a fun tidbit, this is also same reason that AP and S&E teams ban the use of "no barcode" at the POS. Any time product changes hands without being accounted for correctly will create shrink.

I'm also with you about defect being a chore, which is everyone HATES doing it right. Would not mind if they made it a little easier!
 
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Defecting in a way is subtracting not only units but also the financial value of the item we are expected to sale. Same with empty pks, vendor credits, IRs and pc salvage. Not done correctly results in bad results of inventory shrinkage. Team executives loosing job or even store closure in extreme cases. Makes our lives more difficult.
 
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vendordontmesswithme said:
Defecting in a way is subtracting not only units but also the financial value of the item we are expected to sale. Same with empty pks, vendor credits, IRs and pc salvage. Not done correctly results in bad results of inventory shrinkage. Team executives loosing job or even store closure in extreme cases. Makes our lives more difficult.
Click to expand...
Bingo. Defect is like “these two items are going to salvage, they’re accounted for”. Audit “these two items disappeared”. We get some money for sending things to salvage. We get nothing if they disappear
 
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PogDog said:
That's an unwarranted comment.
Click to expand...
I'm sorry, I didn't realize that you truly didn't understand the reasons for defecting vs auditing. As former retail security, I know the causes of shrinkage and the importance of accounting for an item from start to finish, but can see how someone who hasn't dealt with the inventory side of things may not understand. That even your leadership could not provide an answer to you shows that it is often not explained properly.
 
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PogDog said:
Let me paint a picture where the defect tool is woefully hilarious when it comes to defecting large quantities.

I had recently reset the baby formula pog. I found 24 cans of out-of-date formula. All the same item.

I tried defecting through the app. It required a printer obviously. So I grabbed one. Then I required a reason. It asked if I was going to salvage or donate. Donate. After the first scan, the initial requirements of where and why were locked in. But I had to continue selecting what I wanted to do (donate).

24 times. It was the entire lot of what we had on hand.

If I went with Audit, I could have easily changed the quantity (even if it wasn't to zero everything out). I wouldn't have needed to get a printer or slog through picking the same reason 24 times.

From a user standpoint. Audit is easy. It's not right, but it gets the same end result; a quantity on-hands change and even a request to replenish. And it does it in a fraction of the time.

The defect tool needs revamped. Simplified.
Click to expand...
Is Quantity Mark Out of Stock (QMOS) not a thing anymore?
 
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They essentially just rolled the qmos app into defect too. It allows you to put eaches into food items because you are supposed to donate the food and like the other processes it accounts for shrinkage and another form of compensation for the item in the form of tax benefits im assuming. If the item is too old to donate or too badly gone you should make sure to check of the box that says override to toss
 
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