ATTACHMENT TO ADC 307 - Dla.mil

(5) Administrative updates to DS 888I:ItemLocationRevision to DS 888IStorage Item Correction#1.2.DLMSIntroductoryNote 51/BGN07/15Added PDC to DLMS Introductory note 6:- ADC 307, Administrative Update to DLMS, Vol 2, Chapter 6,Physical Inventory Control and DLMS Supplements (DS) 846P,846R, and 888I (Supply/MILSTRAP)Add DLMS note for code A1:A1 Storage Item Data ChangeDLMS Note: Use to identify a Storage Item DataCorrection/Change Transaction. (MILSTRAP DI CodeDZB functionality.)ReasonFederal ICImpactTo identifychanges in theDLMSSupplementsNoimpact.Administrativeupdate toidentifyMILSTRAP DICodefunctionality inbeginningsegmentconsistent withNoimpact.other DS.3.2/G3902/40Add DLMS enhancement note to qualifier A2A2 DoDICDLMS Note 2. DLMS enhancement. See introductoryDLMS note 4.a.Administrativeupdate. Use ofDoDIC is aDLMSenhancement.Noimpact.5. REASON FOR CHANGE: Administrative update to DLMS Volume 2, Chapter 6 to position thechapter for a future combined MILSTRAP/DLMS manual. Administrative updates to DS 846P, 846R,and 888I to clearly identify beginning segment transaction in the context of the applicable DLMSchapter and corresponding MILSTRAP DI Code functionality.6. ADVANTAGES and DISADVANTAGES:a. ADVANTAGES: Identifies in the DLMS manual, volume 2, chapter 6, the correlation betweenMILSTRAP DI Codes and associated DLMS transactions. This information is useful in a mixedDLSS/DLMS environment. This ADC positions the physical inventory chapter for publication in thefuture combined DLMS/MILSTRAP manual. NOTE: The MILSTRAP Administrator will write allfuture proposed changes to the Physical Inventory Control chapter against the ADC 307 chapter version,for configuration control so that changes can be accurately captured for the next DLMS publication,whether it is in a formal change to the current DLMS manual, a reissuance, or the target combinedmanual. There are several proposed Physical Inventory changes pending.b. DISADVANTAGES: None.7. IMPACT: Publication revision to DoD 4000.25-M, vol 2, chapter 6; and DS 846P, 846R, and 888I.Enclosure7 of 7ADC 307Attachment

DoD 4000.25-M Volume 2C6. CHAPTER 6PHYSICAL INVENTORY CONTROLC6.1 GENERALC6.1.1. Purpose. This chapter provides procedures, performance objectives, andreporting requirements for maintaining accurate records of the physical inventory,conducting physical inventory counts, and reconciling record variance for material withinthe supply system of the Department of Defense.C6.1.2. Transactions. This chapter addresses the procedures to DS to ASC X12Federal IC 846P, 846R, and 888I functions identified by their beginning segmentreport or transaction type code, and their DLSS (MILSTRAP) counterparts identifiedby their document identifier (DI) codes. Both DLMS and DLSS are covered to allowfor processing in a mixed DLMS/DLSS environment. Other formats, such as XML,are also available. See the DLMSO website for available DLMS and DLSS sFormats/140 997.asp.C6.1.2.1. DS to Federal IC 846P, Physical Inventory Request/TransactionHistory Request identified by beginning segment report type code (1/BIA02/20).C6.1.2.1.1. Physical Inventory Request Transaction is DS 846Pidentified by Report Type Code TC – Physical Inventory Request. Theowner/manager uses this transaction to initiate, follow up on, or cancel a physicalinventory. The storage activity uses to initiate or cancel a physical inventory. Thistransaction provides MILSTRAP DI Code DJA functionality, except as noted belowfor Report Type Code DD.C6.1.2.1.2. Response to Physical Inventory Request is DS 846Pidentified by Report Type Code DD –Distributor Inventory Report. This is used bythe storage activity to respond to a Physical Inventory Request Transaction fromthe owner/manager, when response does not include asset balances. Use as aresponse relates to use with physical inventory transaction Management Code R,S, or Y. This transaction provides MILSTRAP DI Code DJA functionality when DJAis used as a response to indicate no record of stock number or no record ofownership; physical inventory in workload bank or in process; or response tofollow-up when inventory already complete (Management Codes R, S, and Yrespectively)C6.1.2.1.3. Transaction History Request Transaction is DS 846Pidentified by Report Type Code TF – Transaction History Request. Owner/Manageruses to request transaction history from the storage activity. This transactionprovides MILSTRAP DI Code DZJ functionality.C6 - 1ADC 307 Enclosure

DoD 4000.25-M Volume 2C6.1.2.1.4. Response to Transaction History Request (No HistoryAvailable) is DS 846P identified by Report Type Code AD – Agent/DistributorInventory Report. Storage Activities use to respond to Transaction HistoryRequest when no history is available. This transaction provides MILSTRAP DICode DZK functionality when DZK record position 30-43 is 8-filled or 9-filled.)C6.1.2.1.5. End of Day Transaction Count Transaction is DS 846Pidentified by Report Type Code B1 – Batch Report. This transaction is sent bystorage activity to the owner/manager to advise owner/manager of the number ofaccountable (balance affecting) transactions that were forwarded during the dailycourse of business. This transaction provides MILSTRAP DI Code DZMfunctionality.C6.1.2.2. DS to Federal IC 846R, Location Reconciliation identified bybeginning segment report type code (1/BIA02/20).C6.1.2.2.1. Location Reconciliation Request Transaction is DS 846Ridentified by Report Type Code LC –Location Inventory Report. The storageactivity sends to the owner/manager to reconcile storage activity and owner/manger records. This transaction provides MILSTRAP DI Code DZH functionality.C6.1.2.2.2. Location Reconciliation Notification Transaction is DS to846R identified by Report Type Code X4 – Summary Report. The storage activitysends to the owner/manager to advise of the number of Location ReconciliationRequest transactions being forwarded. This transaction provides MILSTRAP DICode DZN functionality.C6.1.2.2.3. Location Reconciliation History Notification Transaction isDS to 846R identified by Report Type Code ZZ –Mutually Defined. [An ASC X12data maintenance was approved in version 5030 for DS 846R Report Type CodeLN-Location Reconciliation History Notification.] The storage activity sends to theowner/manager to advise of the number of transaction history transactions arebeing forwarded. This transaction provides MILSTRAP DI Code DZP functionality.C6.1.2.3. DS to Federal IC 888I Storage Item Correction. Storage ItemData Correction/Change Transaction is DS to 888I identified by beginning segment(1/BGN07/15) Transaction Type Code A1 – Storage Item Data Change. TheIMM/ICP sends this transaction to a storage activity to change elements of datapertaining to anitem of supply. This transaction provides MILSTRAP DI Code DZBfunctionality.C6.1.3. Applicability. Basic elements of the physical inventory program prescribedby this chapter apply to the DoD Components, and establish:C6 - 2ADC 307 Enclosure

DoD 4000.25-M Volume 2C6.1.3.1. Uniform procedures on existing DoD policy, for maintaining accuraterecords, conducting physical inventories and location surveys/reconciliations, researchinginventory discrepancies and causes for adjustments, performance assessment, and forquality control of work processes prescribed by the DoD Physical Inventory ControlProgram (PICP).C6.1.3.2. Management control of all DoD wholesale supply system material toinclude:C6.1.3.2.1. Principal items.C6.1.3.2.2. Packaged petroleum, oil, and lubricants.C6.1.3.2.3. Secondary items regardless of whether assets are purchasedwith stock fund or procurement appropriations.C6.1.3.2.4. Ammunition.C6.1.3.2.5. Forms and publications.C6.1.3.2.6. Subsistence.C6.1.3.3. Management data and performance standards necessary tomeasure the effectiveness of physical inventory control in the DoD supply system.C6.1.4. ExclusionsC6.1.4.1. These procedures are not applicable to bulk petroleum; completeships, aircraft, ballistic missiles, nuclear weapons, space vehicles; assets located atcontractor-owned and/or contractor-operated facilities that are not maintained on the DoDwholesale property accountability records; Industrial Plant Equipment reportable to theDefense Distribution Depot Richmond Virginia (DDRV); National Security Agency(NSA)/Central Security Service assets; and National Defense Stock Pile assets. Loanedmaterial and material in-transit shall be accounted for in accordance with Chapter 13 andthe DoD Component procedures.C6.1.4.2. Physical inventory control procedures for bulk petroleum arecontained in DoD 4140.25-M.C6.1.4.3. Nuclear weapons for which DoD has custodial responsibility areinventoried in accordance with CJCSI 3150.04, Nuclear Weapons Stockpile LogisticsManagement and Nuclear Weapons Report Under the Joint Reporting Structure.C6.2. POLICY. DoD policy is contained in DoD 4140.1-R.C6.2.1. Purpose. The purpose of the DoD physical inventory control process is to:C6 - 3ADC 307 Enclosure

DoD 4000.25-M Volume 2C6.2.1.1. Ensure material accountability is properly executed within theDepartment of Defense.C6.2.1.2. Ensure accurate property accountability records for the physicalinventory are maintained in support of customer requirements and readiness byperforming physical inventories and location surveys/reconciliations;C6.2.1.3. Identify and help resolve problems in supply system work processesaffecting property accountability records by performing quality control of the workprocesses; andC6.2.1.4. Identify repetitive processing errors and maintain accurate recordsfor supply system transactions generated within the supply system by researching andreconciling property accountability record imbalances and potential discrepancies.C6.2.2. PhilosophyC6.2.2.1. The dynamic nature of the physical inventory control function andthe cost of counting and reconciling records require that the approach be more selectivethan the "100 percent wall-to-wall total item count" concept. Available inventoryresources must be directed towards those potential and actual discrepancies, controlledinventory items, and weapon system critical items for which maximum returns will bederived from resources applied.C6.2.2.2. A fundamental requirement of inventory integrity is to implement thetechnical capability that provides for the total item property record that includes a singleshared asset balance maintained by the storage activity.C6.2.3. Material Security. Security of material is the first line of defense for physicalinventory control; therefore, the DoD Components shall pay special attention tosafeguarding of inventory items. This shall include analysis of loss rates throughinventories, Financial Liability Investigation of Property Loss (DD Form 200) reports, andcriminal incident reports to establish whether repetitive losses indicate criminal ornegligent activity. Physical security procedures for supply system material are containedin DoD 5200.8-R.C6.2.4. Asset Management. A single total item property record shall be shared toprovide material asset information. The total item property record shall, as a minimum,include material that is due-in, in-transit, in organic maintenance facilities, in acontractor's custody, on loan, on-hand in distribution centers, reported on-hand at retailactivities, and for reported assets in the custody of users. The record or record set shallidentify the quantity, condition, and value of the item asset for each organizational entityhaving physical custody of these assets.C6.2.5. Maintaining Property Accountability/Responsibility. The propertyaccountability responsibility for segments of the total item property record may bedelegated to, but not shared by, one or more organizational entities. However, assetC6 - 4ADC 307 Enclosure

DoD 4000.25-M Volume 2balance information for a particular segment (such as storage activity balance for anitem) will be shared; duplicative records shall not be maintained.C6.2.5.1. Storage Activity Responsibility. The storage activity maintains theproperty accountability record for all material in storage and is responsible, as aminimum, for material custody, care, receipt, storage, and issue; safeguarding and rewarehousing materials; physical inventory and research; location survey/reconciliation;quality control checks; supply discrepancy report initiation, research and resolution;investigating and assessing financial liability for loss, damage, and destruction ofGovernment property; and appropriate actions necessary to ensure that the physical onhand quantity and the total item property record quantity are in agreement.C6.2.5.2. Owning DoD Component. The owning DoD Component shall eitherassume or assign the accountability for material not in the physical custody of a storageactivity, including material inducted for organic repair, test assembly/disassembly,conversion, modification, or reclamation; material in a contractors hands (in accordancewith provisions of the Federal Acquisition Regulations), material in-transit; material onloan, etc.C6.2.5.3. IMM Responsibility. The IMM is responsible for initiating anddirecting the conduct of physical inventories; discrepancy research and reports; resolvingdiscrepancies, investigating, and assessing liability for loss, damage, and destruction ofGovernment property; and taking appropriate actions necessary to ensure that the onhand quantity and the total item property record quantity are in agreement for all DoDmaterial that is not in the physical custody of the DoD Components.C6.2.6. End of the Day Processing. Use the following end of the day processingprocedures pending the establishment of single shared asset balances (see paragraphsC6.2.2 and C6.2.4). End-of-the day-processing shall be accomplished as follows:C6.2.6.1. Owner/Manager and Storage Activity Responsibility.Owners/Managers and storage activities shall daily match all active records (i.e., stocknumbers that had any transaction affecting record balances) on-hand balances. Thestorage activity shall send the daily closing on-hand balance to each affectedowner/manager using a Location Reconciliation Request Transaction for End of DayProcessing. (End of Day Processing is identified in DLMS DS 846R BIA06 ActionCode Z; in MILSTRAP by Type of Location Reconciliation Request Code 1 in recordposition 7)C6.2.6.2. Preparing Location Reconciliation Request and End of DayAccountable Transaction Count. Storage activities shall prepare Location ReconciliationRequest Transactions by line-item (stock number supply condition code (SCC) lineitem), type of pack, and date packed/expiration date for subsistence, for each record withtransactions affecting the balance (including zero balance), and for no physical inventoryadjustment required (DS to Federal IC 947I, Inventory Adjustment (Increase (PhysicalInventory), with zero quantity, for Quantity or Status Adjustment Reason Code ‘AA’C6 - 5ADC 307 Enclosure

DoD 4000.25-M Volume 2(MILSTRAP DI Code D8A)). The storage activity shall also send an End of DayAccountable Transaction Count Transaction to advise the owner/manager of the numberof balance affecting transactions that were forwarded during the daily course of business.This end of day count transaction is compared to the actual number of transactionsreceived by the owner/manager to identify missing transactions and aid in unreconciledbalance (URB) research. Under DLMS, a single DS 846P can be used to provide theend of day transaction counts for the applicable 5 accountable transactions types.The five accountable transaction types for which the storage activity shall provide theowner/IMM end of day transaction counts are as follows:C6.2.6.2.1. Receipts (DS 527R with 1/BR02 Transaction Type Code D4;MILSTRAP DI Code D4 /D6 )C6.2.6.2.2. Issues (DS 867I; MILSTRAP DI Code D7 ).C6.2.6.2.3. Inventory Adjustment-Increases (DS 947I with 2/W1916Inventory Transaction Type Code AJ; MILSTRAP DI Code D8 ).C6.2.6.2.4. Inventory Adjustment-Decreases (DS 947I with 2/W1916Inventory Transaction Type Code AD; MILSTRAP DI Code D9 ).C6.2.6.2.5. Inventory Adjustment-Dual (DS 947I with 2/W1916 InventoryTransaction Type Code DU; MILSTRAP DI Code DA ).C6.2.6.3. Owners shall match the storage activity Location ReconciliationRequest Transactions to the affected records. Imbalances shall be programmaticallyresearched to assure consideration of in-float documents, delayed transactions, andduplicate transactions. For unresolved mismatched quantities, the owner/IMM shallupdate the affected record on-hand balance with the storage activity's closing on-handbalance. The mismatched quantity (gains and losses) shall be adjusted with InventoryAdjustment Increase/Decrease (Accounting Error) (DS 947I with Quantity or StatusAdjustment Reason Code AB; MILSTRAP DI Code D8B/D9B).C6.2.6.4. Owners/managers shall request assistance from the storage activityto isolate causes of record imbalances to maintain transaction level integrity. Thestorage activity assistance should focus on data transmission, e.g., lost transactions, etc.C6.2.7. Reconciling Total Item Property Records with Financial Records. OwningDoD Components shall reconcile total item property records and financial records asprescribed by DoD 7000.14-R to ensure compatibility of the total inventory value reflectedby these records and associated reports.C6.2.8. Item Management/Control. DoD material is managed and controlled bystock number, SCC, and by type of pack and date packed/ expiration date forsubsistence. Therefore, physical inventories shall be done and results reported toC6 - 6ADC 307 Enclosure

DoD 4000.25-M Volume 2owners/managers by stock number and SCC, and by type of pack and datepacked/expiration date for subsistence.C6.2.9. Storage Activity Record Keeping. Storage activities shall keep quantitativebalance records for all material on hand regardless of ownership. Storage activities shallkeep transaction histories to support the balance records. Maintenance of these recordsshall give the capability to detect theft or diversion of material and improve the ability todetermine the cause of inventory variances for corrective action.C6.2.10. Inventory Prioritization. The DoD Components shall select and prioritizeitems for inventory for which they are accountable as follows:C6.2.10.1. Inventory Sampling. A stratified, hierarchal inventory sample shallbe accomplished at least once annually for the purpose of validating the accuracy of theaccountable record. Results of the sample will be reported in accordance with thestratification and tolerances cited in table C6.T1.C6.2.10.2. Items Designated for Complete Inventories. Complete inventoriesshall be done as follows:C6.2.10.2.1. Controlled Inventory Items. The following controlledinventory items (identified in DoD 4100.39-M) require annual complete physical inventoryand do not qualify for use of a random statistical sampling approach:C6.2.10.2.1.1. Top Secret.C6.2.10.2.1.2. Narcotics, drug abuse items, and alcohol.C6.2.10.2.1.3. Category I

Location Revision to DS 888I Storage Item Correction Reason Federal IC Impact 1. DLMS Introductory Note 5 Added PDC to DLMS Introductory note 6: - ADC 307, Administrative Update to DLMS, Vol 2, Chapter 6, Physical Inventory Control and DLMS Supplements (DS) 846P, 846R, and 888I (Supply/MIL