1 of 7 

ADC 307 

Attachment 

ATTACHMENT TO ADC 307 

Administrative Update to DLMS, Volume 2, Chapter 6, Physical 

Inventory Control and DLMS Supplements (DS) 846P, 846R, and 888I 

(Supply/MILSTRAP) 

1. Originator: 

 a. Service/Agency: Defense Logistics Management Standards Office (DLMSO)

 b. Originator: Ms. Mary Jane Johnson, MILSTRAP Administrator and Joint Physical Inventory 

Working Group (JPIWG) Chair, DLMSO, 703-767-0677, DSN 427-0677, or e-mail: 

Mary.Jane.Johnson@dla.mil

2. FUNCTIONAL AREA: Supply, Physical Inventory Control Program 

3. REFERENCES: 

a. DoD 4000.25-M, DLMS, Volume 2 Supply, available at: http://www.dla.mil/j6/dlmso/elibrary/manuals/dlms/v2.asp

b. DLMSO memorandum, May 1, 2008, subject: DLMS Supply Process Review Committee 

(PRC) Meeting 08-01, April 8-10, 2008, available at: http://www.dla.mil/j6/dlmso/Programs/Committees/Supply/supplyPRC.asp 

c. DLMSO memorandum, July 21, 2008, subject: Joint Physical Inventory Working Group 

(JPIWG) Meeting, June 25, 2008, available at: http://www.dla.mil/j6/dlmso/Programs/Committees/JPIWG/JPIWG.asp 

d. DoD 4000.25-2-M, Military Standard Transaction Reporting and Accounting Procedures 

(MILSTRAP) (http://www.dla.mil/j-6/dlmso/elibrary/Manuals/MILSTRAP/default.asp) 

4. REQUESTED CHANGE: 

a. Title: Administrative Update to DLMS, Volume 2, Chapter 6, Physical Inventory Control 

and DLMS Supplements (DS) 846P, 846R, and 888I (Supply/MILSTRAP) 

b. Description of Change: As discussed at Supply PRC Meeting 08-1 (reference 3.b), and the 

June 25, 2008, JPIWG Meeting (reference 3.c), DLMSO has an ongoing initiative to combine 

the DLSS and DLMS manuals. The current process of maintaining two sets of publications, 

which contain essentially the same information for the different formats, is resource intensive, 

duplicative in nature, and no longer practical. This change makes administrative updates to 

the Physical Inventory Control chapter, which positions the chapter for movement to a 

combined manual, to include: 
2 of 7 

ADC 307 

Attachment 

(1) Identify at the beginning of the DLMS chapter, the correlation between the Accredited 

Standards Committee (ASC) X12 beginning segment Report Type Code for DS 846P 

and 846R, and Transaction Type Code for DS 888I, as well as the functionality of the 

corresponding MILSTRAP transaction document identifier (DI) codes; 

(2) Throughout the chapter uses a generic name for the transactions so that the procedures 

are format neutral and lend themselves to both DLMS and MILSTRAP use;

(3) Updates DS 846P, 846R, and 888I to clearly align the transaction titles with the 

beginning segment Report Type or Transaction Type Code functions, and the 

corresponding MILSTRAP functions;

c. Procedures: 

(1) Revise DLMS, Volume 2 Chapter 6, as shown in the enclosure.

(2) Revise the Table for Correlation of MILSTRAP Document Identifier (DI) Code 

Functionality to DLMS Supplements (DS), to capture the varied transaction names/ 

purpose associated with the beginning segment Report Type Codes (table is available at: 

http://www.dla.mil/j-6/dlmso/eApplications/LogDataAdmin/dlssdlmscrossreftable.asp): 

 

O CORRELATION OF MILSTRAP DOCUMENT IDENTIFIER (DI) CODE FUNCTIONALITY TO DLMS SUPPLEMENTS (DS) 

DS # DLMS Supplement Title DI Code(s) DS Accredited Standards Committee (ASC) X12

Functional Equivalent to MILSTRAP DI Code 

 Beginning Segment Additional Information needed 

1/BIA02/ 020 

Report Type Code 

TC- Physical 

Inventory Request 

None. 

846P 

 

Physical Inventory Request 

When used for a Physical 

Inventory Request Transaction to 

initiate, follow up on, or cancel a 

physical inventory, BIA02 Code 

TC applies. 

When used for a Response to 

Physical Inventory Request 

(without inventory balances), 

BIA02 Code DD applies. Use as a 

response relates to DJA with rp 72 

Management Codes R (No record 

of stock number or no record of 

ownership); S (Physical inventory 

in workload bank or in process; 

and Y (Response to follow-up 

when inventory already complete). 

DJA 

without 

Management

Code R, S, 

or Y. 

DJA with 

Management

Code R, S, 

or Y. 

 

1/BIA02/ 020 

Report Type Code 

DD- Distributor 

Inventory Report 

None. 
3 of 7 

ADC 307 

Attachment 

O CORRELATION OF MILSTRAP DOCUMENT IDENTIFIER (DI) CODE FUNCTIONALITY TO DLMS SUPPLEMENTS (DS) 

DS # DLMS Supplement Title DI Code(s) DS Accredited Standards Committee (ASC) X12

Functional Equivalent to MILSTRAP DI Code 

 Beginning Segment Additional Information needed 

846P Physical Inventory Request 

When used for Transaction 

History Request Transaction 

DZJ 1/BIA02/ 020 

Report Type Code TF 

– Transaction History 

Request 

None. 

846P Physical Inventory Request 

Transaction History Transmittal When 

rp 30-43 of DZK is 8 or 9-filled to 

indicate that no history was available 

for the selected timeframe, submit DS 

846P indicating no history was 

available. BIA02 Code AD applies. 

Rp 30-43 8-fill indicates when rp 7 of 

DZJ history request is W and storage 

activity has no transactions for the 

stock or part number requested for the 

dates specified in DZJ rp 25-31, but 

transactions are available since the 

date of last location reconciliation. 

Rp 30-43 9-fill indicates: 

--When rp 7 of DZJ history request is 

W and storage activity has no 

transactions available for the dates 

specified, or since the date of last 

reconciliation. 

--When rp 7 of DZJ is X and the 

storage activity has no transactions for 

the dates specified. 

DZK 1/BIA02/020 DE 

755 Report Type 

code AD - 

Agent/Distributor 

Inventory Report 

2/LQ01/270 Code ‘FC’ Type of 

Physical Inventory/Transaction 

History Code 8 or 9 

846P Physical Inventory Request 

When used for End of Day 

Transaction Count Transaction 

DZM 1/BIA02/020 Report 

Type code B1 - Batch 

Report 

None. 

846R Location Reconciliation Request 

When used for Location 

Reconciliation Request 

Transaction

DZH 1/BIA02/ 020 

Report Type Code 

LC – Location 

Inventory Report 

None. 

846R Location Reconciliation Request 

When used for Location 

Reconciliation Notification 

Transaction 

DZN 1/BIA02/020 

Report Type Code 

X4 – Summary 

Report 

None. 
4 of 7 

ADC 307 

Attachment 

O CORRELATION OF MILSTRAP DOCUMENT IDENTIFIER (DI) CODE FUNCTIONALITY TO DLMS SUPPLEMENTS (DS) 

DS # DLMS Supplement Title DI Code(s) DS Accredited Standards Committee (ASC) X12

Functional Equivalent to MILSTRAP DI Code 

 Beginning Segment Additional Information needed 

846R Location Reconciliation Request 

When used for Location 

Reconciliation History 

Notification Transaction

DZP 1/BIA02/ 020 

Report Type Code 

ZZ – Mutually 

Defined 

(ASC X12 data 

maintenance request 

submitted for new 

qualifier (T8) for 

future use.) 

None. 

(3) Administrative updates to DS 846P: 

Item 

# 

Location Revision to DS 846P 

Physical Inventory 

Reason Federal IC

Impact 

1. DLMS 

Introductory 

Note 5 

Added PDC to DLMS Introductory note 5: 

- ADC 307, Administrative Update to DLMS, Volume 2, Chapt

6, Physical Inventory Control and DLMS Supplements (DS) 

846P, 846R, and 888I (Supply/MILSTRAP) 

(Supply/MILSTRAP) 

To identify 

changes in the 

DLMS 

Supplements 

No 

impact. 

Revise Beginning Segment BIA02 Report Type Codes as follows (changes are red, bold, highlighted):

2. 1/BIA02/20 Revise DLMS note for code AD:

AD Agent/Distributor Inventory Report 

DLMS Note: Use to identify a Response to a Transaction 

History Request when (No History Available). From 

distribution depot/storage activity to owner/manager. 

(MILSTRAP DI Code DZK functionality when record position 

30-43 is 8-filled or 9-filled.) Use with 2/LQ01/270/FC Type of 

Physical Inventory/Transaction History Code 8 or 9. NOTE: 

When history is available, there is no direct map of 

MILSTRAP DI Code DZK to DLMS. Instead, all transactions 

that were subject to historical submission under DZK, were 

given a beginning segment action code ‘W1” for historical 

submissions. DLMS transactions containing Action Code W1 

for historical submission are: 527R, 867I, 940R, 945A, 947I.) 

Administrative 

update. 

No 

impact. 
5 of 7 

ADC 307 

Attachment 

Item 

# 

Location Revision to DS 846P 

Physical Inventory 

Reason Federal IC

Impact 

3. 1/BIA02/20 Revise DLMS Note 1 for code B1:

B1 Batch Report 

DLMS Note: 

1. Use to identify End of Day Transaction Count. Use to 

provide end of day accountable transaction count information. 

From distribution depot/storage activity to owner/manager to 

advise owner/manager of the number of balance affecting 

transactions that were forwarded during the daily course of 

business. (MILSTRAP DI Code DZM functionality). 

Administrative 

update. 

No 

impact. 

4. 1/BIA02/20 Revise DLMS note for code DD:

DD Distributor Inventory Report 

DLMS Note: Use to identify a Response to Physical 

Inventory Request Transaction (does not include asset 

balances). From distribution depot/storage activity to 

owner/manager. (MILSTRAP DI Code DJA functionality when 

used as a response with Management Code R (no record of 

stock number or no record of ownership), S (physical 

inventory in workload bank or in process), or Y (response to 

follow-up when inventory already complete). 

Administrative 

update. 

No 

impact. 

5. 1/BIA02/20 Revise DLMS note for code TC:

TC Physical Inventory Request 

DLMS Note: Use to identify a Physical Inventory Request 

Transaction. From owner/manager to initiate, follow up on, 

or cancel a physical inventory. From distribution 

depot/storage activity to initiate or cancel a physical 

inventory. (MILSTRAP DI Code DJA functionality) 

Administrative 

update. 

No 

impact. 

6. 1/BIA02/20 Revise DLMS note for code TF:

TF Transaction History Request 

DLMS Note: Use to identify a Transaction History Request 

Transaction. From owner/manager to distribution 

depot/storage activity. (MILSTRAP DI Code DZJ 

functionality). 

Administrative 

update. 

No 

impact. 
6 of 7 

ADC 307 

Attachment 

(4) Administrative updates to DS 846R: 

Item 

# 

Location Revision to DS 846R 

Location Reconciliation 

Reason Federal IC

Impact 

1. DLMS 

Introductory 

Note 5 

Added PDC to DLMS Introductory note 6: 

- ADC 307, Administrative Update to DLMS, Volume 2, 

Chapter 6, Physical Inventory Control and DLMS 

Supplements (DS) 846P, 846R, and 888I (Supply/ 

MILSTRAP) 

To identify 

changes in the 

DLMS 

Supplements 

No 

impact. 

Revise Beginning Segment BIA02 Report Type Codes as follows (changes are red, bold, highlighted):

2. 1/BIA02/20 Revise DLMS note for code LC:

LC Location Inventory Report 

DLMS Note: Use to identify a Location Reconciliation 

Request Transaction. From distribution depot/storage 

activity to the owner/manger to reconcile storage activity and 

owner/manager records. (MILSTRAP DI Code DZH 

functionality.)

Administrative 

update. 

No 

impact. 

3. 1/BIA02/20 Revise DLMS note for code X4:

X4 Summary Report 

DLMS Note: Use to identify a Location Reconciliation 

Notification Transaction. Distribution depot/storage activity 

sends to owner/manager to advise of the number of Location 

Reconciliation Request transactions being forwarded. 

(MILSTRAP DI Code DZN functionality.) 

Administrative 

update. 

No 

impact. 

4. 1/BIA02/20 Revise DLMS note for code ZZ:

ZZ Mutually Defined 

DLMS Note: Use to identify a Location Reconciliation 

History Notification Transaction. Distribution depot/storage 

activity sends to owner/manager to advise of the number of 

transaction history transactions being forwarded. 

(MILSTRAP DI Code DZP functionality.) An ANSI data 

maintenance was approved in version 5030. The approved 

code/name is “LN-Location Reconciliation History 

Notification”. 

Administrative 

update. 

No 

impact. 
7 of 7 

ADC 307 

Attachment 

(5) Administrative updates to DS 888I: 

Item 

# 

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/MILSTRAP) 

To identify 

changes in the 

DLMS 

Supplements 

No 

impact. 

2. 1/BGN07/15 Add DLMS note for code A1:

A1 Storage Item Data Change 

DLMS Note: Use to identify a Storage Item Data 

Correction/Change Transaction. (MILSTRAP DI Code 

DZB functionality.)

Administrative 

update to 

identify 

MILSTRAP DI 

Code 

functionality in 

beginning 

segment 

consistent with 

other DS. 

No 

impact. 

3. 2/G3902/40 Add DLMS enhancement note to qualifier A2

A2 DoDIC 

DLMS Note 2. DLMS enhancement. See introductory 

DLMS note 4.a. 

Administrative 

update. Use of 

DoDIC is a 

DLMS 

enhancement. 

No 

impact. 

5. REASON FOR CHANGE: Administrative update to DLMS Volume 2, Chapter 6 to position the 

chapter 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 DLMS 

chapter and corresponding MILSTRAP DI Code functionality.

6. ADVANTAGES and DISADVANTAGES: 

a. ADVANTAGES: Identifies in the DLMS manual, volume 2, chapter 6, the correlation between 

MILSTRAP DI Codes and associated DLMS transactions. This information is useful in a mixed 

DLSS/DLMS environment. This ADC positions the physical inventory chapter for publication in the 

future combined DLMS/MILSTRAP manual. NOTE: The MILSTRAP Administrator will write all 

future 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 combined 

manual. 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. 

Enclosure 
DoD 4000.25-M Volume 2 

C6 - 1 

ADC 307 Enclosure

C6. CHAPTER 6

PHYSICAL INVENTORY CONTROL

C6.1 GENERAL

C6.1.1. Purpose. This chapter provides procedures, performance objectives, and 

reporting requirements for maintaining accurate records of the physical inventory, 

conducting physical inventory counts, and reconciling record variance for material within 

the supply system of the Department of Defense. 

C6.1.2. Transactions. This chapter addresses the procedures to DS to ASC X12 

Federal IC 846P, 846R, and 888I functions identified by their beginning segment 

report or transaction type code, and their DLSS (MILSTRAP) counterparts identified 

by their document identifier (DI) codes. Both DLMS and DLSS are covered to allow 

for processing in a mixed DLMS/DLSS environment. Other formats, such as XML, 

are also available. See the DLMSO website for available DLMS and DLSS formats: 

http://www.dla.mil/j-6/dlmso/elibrary/TransFormats/140_997.asp. 

 C6.1.2.1. DS to Federal IC 846P, Physical Inventory Request/Transaction 

History Request identified by beginning segment report type code (1/BIA02/20). 

 C6.1.2.1.1. Physical Inventory Request Transaction is DS 846P 

identified by Report Type Code TC – Physical Inventory Request. The 

owner/manager uses this transaction to initiate, follow up on, or cancel a physical 

inventory. The storage activity uses to initiate or cancel a physical inventory. This 

transaction provides MILSTRAP DI Code DJA functionality, except as noted below 

for Report Type Code DD. 

 C6.1.2.1.2. Response to Physical Inventory Request is DS 846P 

identified by Report Type Code DD –Distributor Inventory Report. This is used by 

the storage activity to respond to a Physical Inventory Request Transaction from 

the owner/manager, when response does not include asset balances. Use as a 

response relates to use with physical inventory transaction Management Code R, 

S, or Y. This transaction provides MILSTRAP DI Code DJA functionality when DJA 

is used as a response to indicate no record of stock number or no record of 

ownership; physical inventory in workload bank or in process; or response to 

follow-up when inventory already complete (Management Codes R, S, and Y 

respectively) 

 C6.1.2.1.3. Transaction History Request Transaction is DS 846P 

identified by Report Type Code TF – Transaction History Request. Owner/Manager 

uses to request transaction history from the storage activity. This transaction 

provides MILSTRAP DI Code DZJ functionality. 
DoD 4000.25-M Volume 2 

C6 - 2 

ADC 307 Enclosure

 C6.1.2.1.4. Response to Transaction History Request (No History 

Available) is DS 846P identified by Report Type Code AD – Agent/Distributor 

Inventory Report. Storage Activities use to respond to Transaction History 

Request when no history is available. This transaction provides MILSTRAP DI 

Code 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 846P 

identified by Report Type Code B1 – Batch Report. This transaction is sent by 

storage activity to the owner/manager to advise owner/manager of the number of 

accountable (balance affecting) transactions that were forwarded during the daily 

course of business. This transaction provides MILSTRAP DI Code DZM 

functionality. 

 C6.1.2.2. DS to Federal IC 846R, Location Reconciliation identified by 

beginning segment report type code (1/BIA02/20).

 C6.1.2.2.1. Location Reconciliation Request Transaction is DS 846R 

identified by Report Type Code LC –Location Inventory Report. The storage 

activity 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 to 

846R identified by Report Type Code X4 – Summary Report. The storage activity 

sends to the owner/manager to advise of the number of Location Reconciliation 

Request transactions being forwarded. This transaction provides MILSTRAP DI 

Code DZN functionality. 

 C6.1.2.2.3. Location Reconciliation History Notification Transaction is 

DS to 846R identified by Report Type Code ZZ –Mutually Defined. [An ASC X12 

data maintenance was approved in version 5030 for DS 846R Report Type Code 

LN-Location Reconciliation History Notification.] The storage activity sends to the 

owner/manager to advise of the number of transaction history transactions are 

being forwarded. This transaction provides MILSTRAP DI Code DZP functionality. 

 C6.1.2.3. DS to Federal IC 888I Storage Item Correction. Storage Item 

Data Correction/Change Transaction is DS to 888I identified by beginning segment 

(1/BGN07/15) Transaction Type Code A1 – Storage Item Data Change. The 

IMM/ICP sends this transaction to a storage activity to change elements of data 

pertaining to anitem of supply. This transaction provides MILSTRAP DI Code DZB 

functionality. 

C6.1.3. Applicability. Basic elements of the physical inventory program prescribed 

by this chapter apply to the DoD Components, and establish: 
DoD 4000.25-M Volume 2 

C6 - 3 

ADC 307 Enclosure

 C6.1.3.1. Uniform procedures on existing DoD policy, for maintaining accurate 

records, conducting physical inventories and location surveys/reconciliations, researching 

inventory discrepancies and causes for adjustments, performance assessment, and for 

quality control of work processes prescribed by the DoD Physical Inventory Control 

Program (PICP). 

 C6.1.3.2. Management control of all DoD wholesale supply system material to 

include: 

 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 purchased 

with 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 to 

measure the effectiveness of physical inventory control in the DoD supply system. 

 C6.1.4. Exclusions

 C6.1.4.1. These procedures are not applicable to bulk petroleum; complete 

ships, aircraft, ballistic missiles, nuclear weapons, space vehicles; assets located at 

contractor-owned and/or contractor-operated facilities that are not maintained on the DoD 

wholesale property accountability records; Industrial Plant Equipment reportable to the 

Defense Distribution Depot Richmond Virginia (DDRV); National Security Agency 

(NSA)/Central Security Service assets; and National Defense Stock Pile assets. Loaned 

material and material in-transit shall be accounted for in accordance with Chapter 13 and 

the DoD Component procedures. 

 C6.1.4.2. Physical inventory control procedures for bulk petroleum are 

contained in DoD 4140.25-M. 

 C6.1.4.3. Nuclear weapons for which DoD has custodial responsibility are 

inventoried in accordance with CJCSI 3150.04, Nuclear Weapons Stockpile Logistics 

Management 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: 
DoD 4000.25-M Volume 2 

C6 - 4 

ADC 307 Enclosure

 C6.2.1.1. Ensure material accountability is properly executed within the 

Department of Defense. 

 C6.2.1.2. Ensure accurate property accountability records for the physical 

inventory are maintained in support of customer requirements and readiness by 

performing physical inventories and location surveys/reconciliations; 

 C6.2.1.3. Identify and help resolve problems in supply system work processes 

affecting property accountability records by performing quality control of the work 

processes; and 

 C6.2.1.4. Identify repetitive processing errors and maintain accurate records 

for supply system transactions generated within the supply system by researching and 

reconciling property accountability record imbalances and potential discrepancies. 

 C6.2.2. Philosophy

 C6.2.2.1. The dynamic nature of the physical inventory control function and 

the cost of counting and reconciling records require that the approach be more selective 

than the "100 percent wall-to-wall total item count" concept. Available inventory 

resources must be directed towards those potential and actual discrepancies, controlled 

inventory items, and weapon system critical items for which maximum returns will be 

derived from resources applied. 

 C6.2.2.2. A fundamental requirement of inventory integrity is to implement the 

technical capability that provides for the total item property record that includes a single 

shared asset balance maintained by the storage activity. 

 C6.2.3. Material Security. Security of material is the first line of defense for physical 

inventory control; therefore, the DoD Components shall pay special attention to 

safeguarding of inventory items. This shall include analysis of loss rates through 

inventories, Financial Liability Investigation of Property Loss (DD Form 200) reports, and 

criminal incident reports to establish whether repetitive losses indicate criminal or 

negligent activity. Physical security procedures for supply system material are contained 

in DoD 5200.8-R. 

 C6.2.4. Asset Management. A single total item property record shall be shared to 

provide 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 a 

contractor's custody, on loan, on-hand in distribution centers, reported on-hand at retail 

activities, and for reported assets in the custody of users. The record or record set shall 

identify the quantity, condition, and value of the item asset for each organizational entity 

having physical custody of these assets. 

 C6.2.5. Maintaining Property Accountability/Responsibility. The property 

accountability responsibility for segments of the total item property record may be 

delegated to, but not shared by, one or more organizational entities. However, asset 
DoD 4000.25-M Volume 2 

C6 - 5 

ADC 307 Enclosure

balance information for a particular segment (such as storage activity balance for an 

item) will be shared; duplicative records shall not be maintained. 

 C6.2.5.1. Storage Activity Responsibility. The storage activity maintains the 

property accountability record for all material in storage and is responsible, as a 

minimum, 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 of 

Government 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 either 

assume or assign the accountability for material not in the physical custody of a storage 

activity, including material inducted for organic repair, test assembly/disassembly, 

conversion, modification, or reclamation; material in a contractors hands (in accordance 

with provisions of the Federal Acquisition Regulations), material in-transit; material on 

loan, etc. 

 C6.2.5.3. IMM Responsibility. The IMM is responsible for initiating and 

directing the conduct of physical inventories; discrepancy research and reports; resolving 

discrepancies, investigating, and assessing liability for loss, damage, and destruction of 

Government property; and taking appropriate actions necessary to ensure that the onhand quantity and the total item property record quantity are in agreement for all DoD 

material 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 processing 

procedures pending the establishment of single shared asset balances (see paragraphs 

C6.2.2 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., stock 

numbers that had any transaction affecting record balances) on-hand balances. The 

storage activity shall send the daily closing on-hand balance to each affected 

owner/manager using a Location Reconciliation Request Transaction for End of Day 

Processing. (End of Day Processing is identified in DLMS DS 846R BIA06 Action 

Code Z; in MILSTRAP by Type of Location Reconciliation Request Code 1 in record 

position 7)

 C6.2.6.2. Preparing Location Reconciliation Request and End of Day 

Accountable Transaction Count. Storage activities shall prepare Location Reconciliation 

Request Transactions by line-item (stock number + supply condition code (SCC) = line 

item), type of pack, and date packed/expiration date for subsistence, for each record with

transactions affecting the balance (including zero balance), and for no physical inventory 

adjustment required (DS to Federal IC 947I, Inventory Adjustment (Increase (Physical 

Inventory), with zero quantity, for Quantity or Status Adjustment Reason Code ‘AA’ 
DoD 4000.25-M Volume 2 

C6 - 6 

ADC 307 Enclosure

(MILSTRAP DI Code D8A)). The storage activity shall also send an End of Day 

Accountable Transaction Count Transaction to advise the owner/manager of the number 

of 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 transactions 

received by the owner/manager to identify missing transactions and aid in unreconciled 

balance (URB) research. Under DLMS, a single DS 846P can be used to provide the 

end of day transaction counts for the applicable 5 accountable transactions types. 

The five accountable transaction types for which the storage activity shall provide the 

owner/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/W1916 

Inventory Transaction Type Code AJ; MILSTRAP DI Code D8_). 

 C6.2.6.2.4. Inventory Adjustment-Decreases (DS 947I with 2/W1916 

Inventory Transaction Type Code AD; MILSTRAP DI Code D9_). 

 C6.2.6.2.5. Inventory Adjustment-Dual (DS 947I with 2/W1916 Inventory 

Transaction Type Code DU; MILSTRAP DI Code DA_). 

 C6.2.6.3. Owners shall match the storage activity Location Reconciliation 

Request Transactions to the affected records. Imbalances shall be programmatically 

researched to assure consideration of in-float documents, delayed transactions, and 

duplicate transactions. For unresolved mismatched quantities, the owner/IMM shall 

update the affected record on-hand balance with the storage activity's closing on-hand 

balance. The mismatched quantity (gains and losses) shall be adjusted with Inventory 

Adjustment Increase/Decrease (Accounting Error) (DS 947I with Quantity or Status 

Adjustment Reason Code AB; MILSTRAP DI Code D8B/D9B). 

 C6.2.6.4. Owners/managers shall request assistance from the storage activity 

to isolate causes of record imbalances to maintain transaction level integrity. The 

storage activity assistance should focus on data transmission, e.g., lost transactions, etc. 

 C6.2.7. Reconciling Total Item Property Records with Financial Records. Owning 

DoD Components shall reconcile total item property records and financial records as 

prescribed by DoD 7000.14-R to ensure compatibility of the total inventory value reflected 

by these records and associated reports. 

 C6.2.8. Item Management/Control. DoD material is managed and controlled by 

stock number, SCC, and by type of pack and date packed/ expiration date for 

subsistence. Therefore, physical inventories shall be done and results reported to 
DoD 4000.25-M Volume 2 

C6 - 7 

ADC 307 Enclosure

owners/managers by stock number and SCC, and by type of pack and date 

packed/expiration date for subsistence. 

 C6.2.9. Storage Activity Record Keeping. Storage activities shall keep quantitative 

balance records for all material on hand regardless of ownership. Storage activities shall 

keep transaction histories to support the balance records. Maintenance of these records 

shall give the capability to detect theft or diversion of material and improve the ability to 

determine the cause of inventory variances for corrective action. 

 C6.2.10. Inventory Prioritization. The DoD Components shall select and prioritize 

items for inventory for which they are accountable as follows: 

 C6.2.10.1. Inventory Sampling. A stratified, hierarchal inventory sample shall 

be accomplished at least once annually for the purpose of validating the accuracy of the 

accountable record. Results of the sample will be reported in accordance with the 

stratification and tolerances cited in table C6.T1. 

 C6.2.10.2. Items Designated for Complete Inventories. Complete inventories 

shall be done as follows: 

 C6.2.10.2.1. Controlled Inventory Items. The following controlled 

inventory items (identified in DoD 4100.39-M) require annual complete physical inventory 

and 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 non-nuclear missiles and rockets 

(semiannually in accordance with DoD 5100.7-M). 

 C6.2.10.2.1.4. Precious metals. 

 C6.2.10.2.1.5. Small arms. 

 C6.2.10.2.1.6. Radioactive items. 

 C6.2.10.2.1.7. Inert nuclear ordnance material. 

 C6.2.10.2.1.8. Other items that may be designated by DoD or the 

DoD Components. 

 C6.2.10.2.2. Ammunition or Subsistence. If ammunition or subsistence is 

subjected to complete inventory, physical inventory and location survey may be 

conducted concurrently. 
DoD 4000.25-M Volume 2 

C6 - 8 

ADC 307 Enclosure

 C6.2.10.2.3. Random Statistical Sampling for Controlled Inventory Items 

Not Subject to Annual Complete Physical Inventory. Controlled inventory items not 

subject to annual complete physical inventory must be subjected to annual random 

statistical sampling. Acceptable statistical sampling techniques are widely prescribed 

and may be used so long as every item included in the population has an equal 

probability of being selected in the sample. The statistical sampling technique must give 

reasonable assurance (as a minimum) that the property accountability records are 

accurate with a 95 percent level of confidence, accuracy level of 95 percent, and a 

maximum margin of error of 2 percent. If the sample inventory results do not satisfy the 

above criteria, complete physical inventory of the population from which the sample was 

selected shall be done. 

 C6.2.10.3. Items Not Designated for Complete Inventories. Inventories for 

items not designated for complete inventory under subparagraph C6.2.10.2 shall be done 

as a result of: 

 C6.2.10.3.1. Total or partial material release denials (spot inventory--see 

subparagraph C6.3.4.1 and Type Physical Inventory/Transaction History Code E). 

 C6.2.10.3.2. Location reconciliation variances. 

 C6.2.10.3.3. Location survey errors. 

 C6.2.10.3.4. Owner/IMM request (special inventory); or 

 C6.2.10.3.5. Owners may select items for inventory based on their 

physical inventory prioritization methodology or model, which considers characteristics 

identified by each DoD Component based on the DoD Component priorities, readiness 

drivers; etc. The owner and storage activity shall negotiate projected workload at least 

once annually (prior to each fiscal year). The owner shall send prioritization 

methodology/model results to the storage activity annually using a Physical Inventory 

Request Transaction with Type Physical Inventory or Transaction History Code I1

. 

Items selected for inventory based on owner priority selection systems shall not be given 

priority over items in subparagraphs C6.2.10.1., C6.2.10.2., C6.2.10.3.1., C6.2.10.3.2., 

and C6.2.10.3.3. 

 C6.2.11. Potential Discrepancies. Potential discrepancies between the actual 

physical count of material and the property accountability record on hand balance shall 

be researched and resolved in accordance with Table C6.T3., either by: 

 

1

 The DSS is capable of accepting DS 846P Physical Inventory Request Transactions with Type Physical 

Inventory/Transaction History Code I; however, the DoD Components have not implemented this capability. 

The DoD Component Supply PRC representatives must provide DLMSO with an implementation date, if 

implementing this capability, per Approved DLMS Change (ADC) 33 (available at http://www.dla.mil/j6/dlmso/eLibrary/Changes/approved3.asp). 
DoD 4000.25-M Volume 2 

C6 - 9 

ADC 307 Enclosure

 C6.2.11.1. Correctly posting supply transactions (e.g., receipts, issues, 

adjustments, etc.) discovered during the research process that were previously incorrect 

or un-posted resulting in the record imbalance; and/or 

 C6.2.11.2. Posting an inventory adjustment to correct the record imbalance 

 C6.2.12. Accuracy and Performance Goals. The acceptable DoD accuracy and 

performance goals are as follows: 

 C6.2.12.1. Material Denial Goal: Not greater than one percent. 

 C6.2.12.2. Receipt Processing Performance Goal: 90 percent stored and 

posted within receipt time standards (see Chapter 13). 

 C6.2.12.3. Record Reconciliation Program Goal: 

 C6.2.12.3.1. Location Survey Accuracy: 

 C6.2.12.3.1.1. General Supplies: 97 percent. 

 C6.2.12.3.1.2. Ammunition: 98 percent. 

 C6.2.12.3.2. Location Reconciliation Accuracy: 

 C6.2.12.3.2.1. General Supplies: 97 percent. 

 C6.2.12.3.2.2. Ammunition: 98 percent. 

 C6.2.12.4. Ammunition Property Accountability Record Accuracy Goal: 95 

percent. 

 C6.2.12.5. General Supplies Record Accuracy Goals2

 Table C6.T1. GENERAL SUPPLIES RECORD ACCURACY GOALS

STRATIFICATION SUBPOPULATIONS AND ASSOCIATED GOALS AND TOLERANCE LEVELS

STRATIFICATION SUBPOPULATIONS AND ASSOCIATED GOALS AND TOLERANCE LEVELS

CATEGORY SUB-POPULATION GOAL TOLERANCE 

A UNIT PRICE > $1,000 99% 0%

 

2

 Within 30 calendar days after the end of the 4th quarter each fiscal year, the DoD Components must send 

record accuracy goal information to ADUSD (L&MR/SCI), via electronic mail. Send to: 

debra.bennett@osd.mil. Data may be obtained throughout the year. 
DoD 4000.25-M Volume 2 

C6 - 10 

ADC 307 Enclosure

B UNITS OF ISSUE WHICH MAY BE NON-DEFINITIVE OR 

DIFFICULT TO MEASURE3

 OR 

(ON-HAND BAL > 50 AND EXTENDED VALUE < $50,000) 

 OR 

NSN ACTIVITY (# transactions affecting balance in one 

year) > 50

95% 10%

C DATE OF LAST INVENTORY > 24 MONTHS 

 AND 

ON-HAND BALANCE < 50

95% 5%

D ALL OTHER MATERIAL NOT MEETING ABOVE 

CRITERIA

95% 0%

95% Confidence Level 

+4% Bound applicable to each category.

C6.3. PHYSICAL INVENTORY PROCEDURES

 C6.3.1. Inventory Program Accomplishment. Storage activities shall monitor 

program accomplishment throughout the fiscal year to ensure the requirements of 

paragraph C6.2.10 are met. 

 C6.3.2. Pre-Inventory Planning. The potential for count inaccuracies shall be 

reduced by conducting pre-inventory planning to include: 

 C6.3.2.1. Actions to ensure location integrity by correcting such situations as 

un-binned / loose material; questionable identity of material in location; and single 

locations containing multiple SCCs or stock numbers, inadequately labeled shelf-life 

items (date of manufacture/assembly/pack or date of expiration/inspection/test, as 

appropriate); and/or material lots stored in a single location. 

 C6.3.2.2. Document cleanup to ensure to the extent possible that receipts, 

adjustments, transaction reversals, and other transactions are posted to the property 

accountability record and that in-process receipts are stored in location prior to the 

established physical inventory cutoff date. 

 C6.3.3. Scheduled Inventories

 

3

Applicable Units of Issue: AT, AY, BF, BK, CD, CF, CZ, DZ, FY, FT, FV, GP, GR, HD, KT, LB, MR, OZ, 

OT, PG, PR, SE, SF, SO, SP, SY, TD, TE, TF, TN, TO, TS, MC, MX, YD
DoD 4000.25-M Volume 2 

C6 - 11 

ADC 307 Enclosure

 C6.3.3.1. Item Characteristics. Storage activities shall initiate all scheduled 

inventories based on item characteristics, specifically, the controlled inventory item code 

and any other category codes designated by the DoD Components that require physical 

inventory not less than once each fiscal year, with a Physical Inventory Request 

Transaction using Type Physical Inventory/Transaction History Code G. 

 C6.3.3.2. Selection and Prioritization Model. Storage activities shall initiate all 

scheduled inventories based on selection and prioritization model criteria with a Physical 

Inventory Request Transaction using Type Physical Inventory/Transaction History 

Code I. 

 C6.3.3.3. Random Statistical Sample Inventories

 C6.3.3.3.1. Storage activities shall initiate the scheduled random 

statistical sample inventory to meet the Departments requirements to validate the 

accuracy of the supply records with a Physical Inventory Request Transaction using 

Type Physical Inventory/Transaction History Code N. 

 C6.3.3.3.2. Owners may initiate a scheduled random statistical sample 

inventory of line items owned to determine the overall accuracy of their records with a 

Physical Inventory Request Transaction using Type Physical Inventory/Transaction 

History Code L. 

 C6.3.3.3.3. Storage activities may also initiate a scheduled random 

statistical sample inventory of line items in storage to determine the overall accuracy of 

their records with a Physical Inventory Request Transaction using Type Physical 

Inventory/Transaction History Code P. 

 C6.3.4. Unscheduled Inventories

 C6.3.4.1. Special Inventory. Owners, accountable offices, and storage 

activities shall initiate special inventories using a Physical Inventory Request 

Transaction. If an inventory has not been taken within the past 90 calendar days, cite 

Type Physical Inventory/Transaction History Code C, D, J, or K. If an inventory has been 

taken within the past 90 calendar days, an effort shall be made to construct a transaction 

history and from it determine what the item balance should be or what discrepancy may 

have caused the imbalance. Only when these efforts fail to produce satisfactory results 

will special inventories be done. In this case, cite Type Physical Inventory/Transaction 

History Code H in the Physical Inventory Request Transaction. The procedure for 

restricting special inventories may be waived when the IMM has recorded backorders for 

the item involved. 

 C6.3.4.2. Spot Inventory. 

 C6.3.4.2.1. Storage activities shall initiate spot inventories as a result of 

total or partial material denial on classified and sensitive items regardless of value, 
DoD 4000.25-M Volume 2 

C6 - 12 

ADC 307 Enclosure

pilferable items when the value of the variance is greater than $100, and for noncontrolled items variances greater $5,000. Physical Inventory Request Transactions

shall cite Type Physical Inventory/Transaction History Code E. 

 C6.3.4.2.2. Storage activities shall accomplish all requests for spot 

inventories. 

 C6.3.4.3. On-Hand Balance Mismatch Between Locator and Property 

Accountability Record. Storage activities may initiate unscheduled inventories as a result 

of on-hand balance mismatches between the locator and property accountability records 

with a Physical Inventory Request Transaction using Type Physical 

Inventory/Transaction History Code M. 

 C6.3.5. Canceling Inventories

 C6.3.5.1. General. When conditions exist that prevent accurate completion of 

an inventory that has been established, the inventory shall be canceled by the storage 

activity or the owner/IMM. Conditions that may require cancellation include, but are not 

limited to, catalog changes, rewarehousing of material under inventory, insufficient 

resources, insufficient time to meet established inventory timeframes to notify other 

affected owners/IMMs, and acts of God. 

 C6.3.5.2. Owner/Manager Cancellation. When an owner/IMM cancels an 

inventory, the owner/IMM shall notify all affected storage activities using a Physical 

Inventory Request Transaction with Management Code N. 

 C6.3.5.3. Storage Activity Cancellation. When a storage activity cancels an 

inventory, or when an owner/IMM requests cancellation of an inventory, the storage 

activity shall notify the requesting owner/IMM using a Physical Inventory Request 

Transaction citing Management Code N. When a canceled inventory is required to meet 

annual inventory schedule requirements, the storage activity must reschedule it within the 

current fiscal year. When a spot inventory (Type Physical Inventory/Transaction History 

Code E) is canceled, it must be rescheduled within 15 calendar days. 

 C6.3.6. Conducting, Recording, and Reporting the Inventory

 C6.3.6.1. General. Physical inventory procedures at storage activities shall 

provide the required asset-to-record accuracy with positive control of material and 

documentation that are in-float, including material release orders, receipts, condition 

transfers, catalog and other data changes, etc. 

 C6.3.6.2. In-Float Document Control. The storage activity may reduce the 

volume of in-float accountable documents, during the period required for an item count, 

by suspending the issue of low priority material release transactions from items 

undergoing inventory. However, material shall be released for items undergoing 

inventory when such release is necessary to meet the order/ship timeframes of DoD 
DoD 4000.25-M Volume 2 

C6 - 13 

ADC 307 Enclosure

4140.1-R, to include the recognition of the required delivery date. The storage activity 

may also reduce the volume of in-float accountable documents by deferring routine SCC 

changes, providing Chapter 7 control requirements are complied with. 

 C6.3.6.3. Physical Inventory Timeframe. Storage activities shall complete 

physical inventories and send the appropriate Inventory Adjustment (Physical Inventory) 

Transactions (DS 947I with Quantity or Status Adjustment Reason Code ‘AA’ ; 

MILSTRAP DI Code D8A/D9A) to the owner/IMM within 30 calendar days after the 

physical inventory cutoff date ( PICD) for scheduled inventories and within 15 calendar 

days after the PICD for unscheduled inventories. 

 C6.3.6.4. Post Count Validation and Pre-Adjustment Research. The 

storage activity shall compare the adjusted count with the balance kept by the storage 

activity to determine the potential variance and initiate post count validation and preadjustment research as required under section C6.4. Immediately upon completion of 

post count validation and pre-adjustment research, the storage activity shall record the 

count and date of last inventory on the storage activity quantitative balance record. 

 C6.3.6.5. Zero Quantity Adjustments. When no adjustment is required, the 

storage activity shall update the storage activity record with the date of last inventory and 

send an Inventory Adjustment Increase (Physical Inventory) transaction (DS 947I with

Quantity or Status Adjustment Reason Code AA; MILSTRAP DI Code D8A) with zero 

quantity for each line item to the owner/IMM to indicate completion of the inventory. The 

owner/IMM shall update the date of last inventory using inventory adjustment transaction 

date. 

 C6.3.6.6. Prorating Adjustment for Commingled Assets. When the storage 

activity record shows more than one owner for commingled material, the storage activity 

shall apply all gains and losses to the wholesale IMM. The storage activity shall prorate 

any losses that cannot be applied to the wholesale manager among all owners having 

balances. Storage activities shall not consider foreign owner balances in the prorating 

process. Foreign owner and Special Defense Acquisition Fund balances shall not be 

altered unless they are the only remaining balances for reporting a loss. Resolution of 

these losses shall be in accordance with DoD Security Assistance Program policy. 

 C6.3.6.7. Processing Physical Inventory Adjustments. The storage activity 

shall process Inventory Adjustment (Physical Inventory) transactions (DS 947I with 

Quantity or Status Adjustment Reason Code AA; MILSTRAP DI CodeD8A/ D9A), by 

line-item, and by each date packed/expiration date and type of pack for subsistence, to 

update the storage activity quantitative balance record and each owner/IMM record. 

 C6.3.7. Reconciling Manual Records for Controlled Items. When manual records 

are kept for control of assets in secured storage, the storage activity, as a minimum, shall 

reconcile these records at the time of inventory with the corresponding storage activity 

records and physical counts of material. 
DoD 4000.25-M Volume 2 

C6 - 14 

ADC 307 Enclosure

 C6.3.8. Unscheduled Physical Inventory Follow-Up

 C6.3.8.1. Owner/IMM Follow-up on Physical Inventory Request. When the 

owner/IMM has requested an unscheduled inventory and no adjustment or completion 

transaction has been received within 40 calendar days of the date of the request, the 

owner/IMM shall initiate a follow-up using a Physical Inventory Request Transaction, 

citing Management Code X and duplicate the remaining data from the Physical 

Inventory Request Transaction that established the inventory. 

 C6.3.8.2. Storage Activity Response to Follow-Up on Physical Inventory 

Request. The storage activity shall respond to the owner/IMM follow-up within 5 calendar 

days by providing the appropriate adjustment, completion, or cancellation transaction. If 

an adjustment or completion transaction was previously sent and a follow-up is received, 

the storage activity shall reply sending a Response to Physical Inventory Request 

Transaction with Management Code Y to the owner/IMM. The storage activity shall also 

send DS 947I showing the actual physical inventory adjustment, and identified as 

submission of historical information by 1/W1506/020, code W1. (Storage activities 

operating under MILSTRAP send MILSTRAP DI Code DZK Transaction History 

Transmittal for the physical inventory adjustment). 

 C6.3.8.3. No Record of Physical Inventory Request. If the storage activity 

does not have a record of the owner/IMM original Physical Inventory Request 

Transaction, the storage activity shall process the Physical Inventory Request 

Transaction with Management Code X as an original Physical Inventory Request 

Transaction. 

C6.4. RESEARCH OF POTENTIAL OR ACTUAL PHYSICAL INVENTORY 

ADJUSTMENTS

 C6.4.1. Policy. The DoD Components shall ensure potential or actual adjustments 

are researched in accordance with the value of the adjustment and type of item involved. 

DoD criteria for this research are in Table C6.T3. and will be used as the basis for 

selective research for supply system material. A reduction of the volume of erroneous 

adjustments can only be achieved by conducting specified degrees of research before 

posting the adjustment transaction. More stringent research requirements may be 

imposed by the DoD Components based upon the limits of resources available and upon 

specific asset control problems. However, in no case shall adjustments be processed 

against items without required pre-adjustment research having been performed (see 

Table C6.T3.). 

 C6.4.2. Objectives. Analysis of inventory adjustments is vital in order to: 

 C6.4.2.1. Identify failures in the control systems so improvements can be made. 

 C6.4.2.2. Reduce future discrepancies. 
DoD 4000.25-M Volume 2 

C6 - 15 

ADC 307 Enclosure

 C6.4.2.3. Ensure that proper adjustment was made. 

 C6.4.2.4. Evaluate indicators of trends or system problems for corrective 

action. 

 C6.4.2.5. Detect negligence, abuse, or theft of material. Known or suspected 

negligence, abuse, or theft will be researched in accordance with DoD 7000.14-R and 

TableC6.T3. 

 C6.4.3. Timeliness of Research. Timely completion of the research of potential 

adjustments is essential. Delay only increases the complexities of adequate research 

and reduces the probability of conclusive findings. 

 C6.4.3.1. Pre-adjustment Research. Storage activity pre-adjustment research 

must be completed and the physical inventory adjustment/completion action posted to the 

owner/IMM record within 30 calendar days from PICD for scheduled inventories and 15 

calendar days from PICD for unscheduled inventories. 

 C6.4.3.2. Mandatory Causative Research. The storage activity must complete 

mandatory causative research within 45 calendar days from date the adjustment 

transaction was posted. Sample causative research must be completed within 45 

calendar days from date the sample causative research listing is created. 

 C6.4.4. Transaction History. For intra-DoD Component (or inter-DoD Component, 

based on agreement of the DoD Components involved) reconciliation, the owner/IMM 

may request transaction history for analyzing inventory discrepancies. 

 C6.4.4.1. Transaction History Request. The owner/IMM shall request the 

history using a Transaction History Request Transaction citing the appropriate Type 

Physical Inventory/Transaction History Code. Transaction history shall consist of all 

transactions affecting the balance for the requested timeframe. 

 C6.4.4.2. Transaction History Data. The storage activity shall send transaction 

history data by submitting the affected transactions identified as a historical submission 

with beginning segment Action Code 'W1'. DLMS transactions subject to historical 

submission are: receipt, issue, material release order, material release advice, and 

inventory adjustment (DS 527R, DS 867I, DS 940R, DS 945A, and DS 947I, 

respectively). When no history is available for the selected timeframe, submit a 

Response to Transaction History Request (No History Available) Transaction with 

Type of Physical Inventory/Transaction History Code 8 or 9. (Storage activities still 

operating under MILSTRAP shall send DI Code DZK Transaction History 

Transmittal for all transactions affecting the balance for the requested timeframe). 

 C6.4.5. Error Classification Coding. Causes of potential/actual inventory 

adjustment errors are determined by research. Causes shall be classified, analyzed, and 

evaluated so action may be taken to correct situations causing errors. Error classification 
DoD 4000.25-M Volume 2 

C6 - 16 

ADC 307 Enclosure

codes shall be entered in Inventory Adjustment (Physical Inventory) Transactions (DS 

947I with Quantity or Status Adjustment Reason Code ‘AA’ ; MILSTRAP DI Code 

D8A/D9A)

4

. For analysis and evaluation, error conditions shall be identified to the 

operation in which they occurred (e.g., receiving, issues, etc.) and classified by type 

within each operation. For reporting purposes, each operation and each error type have 

been identified by an alphabetic or numeric code in the error classification code. The 

error classification system is structured to provide the DoD Components latitude to 

amplify the DoD defined error classifications; however, the DoD Components shall 

summarize internally defined error classifications to the appropriate DoD classification for 

all reports provided to higher authorities, auditors, etc. 

 C6.4.6. Error Classification Feedback and Correction

 C6.4.6.1. Causative History Summary. The storage activity shall send a 

quarterly summary of the causative research results for each individual NIIN to the 

commander of the storage activity concerned and to the Inventory Owners (or the 

service International Logistics Control Activity in the case of FMS-owned materiel). The 

summary information shall be provided for all adjustments of extended dollar value 

greater than $16K and any adjustment of an item with a CIIC code that is Classified, 

Sensitive or Pilferable. As a minimum, the summary provided shall include, for each 

NIIN: SCC, Inventory Adjustment Transaction (DS 947I or MILSTRAP DI Code 

D8_/D9_), quantity adjusted, routing identifier (RI) code of the storage activity making 

the adjustment, error classification code, controlled inventory item code, date created, 

date completed, and total adjusted dollar value. 

 C6.4.6.2. Error Correction

 C6.4.6.2.1. Storage Activity Commanders. Commanders at the storage 

activities shall use this information to identify and correct recurring errors in their 

operations (e.g., through established depot training programs, quality control checks, and 

other actions as required). 

 C6.4.6.2.2. Inventory Owners. Inventory owners shall use this 

information as a means to gain insight into the adjustments and subsequent actions 

taken to resolve the error and to evaluate whether changes in procurement practices, 

cataloging data, or other actions may be taken to prevent potential distribution errors. A

single point of contact will be designated at the owner level to request information from 

DLA.

 C6.4.7. Controlled Inventory Item Adjustments. Unresolved physical inventory 

adjustments for all classified and sensitive items regardless of value, and for pilferable 

items when the adjustment is in excess of $2,500, as prescribed by DoD 7000.14-R, shall 

 

4

 The IMM may use error classification codes in Inventory Adjustment (Accounting Error) Transactions

(DS 947I with Quantity or Status Adjustment Reason Code ‘AB’; MILSTRAP DI Code D8B/D9B) 

pending establishment of single shared asset balances (see paragraphs C6.2.2 and C6.2.4). 
DoD 4000.25-M Volume 2 

C6 - 17 

ADC 307 Enclosure

be referred to security officials of the storage activity at which the adjustment occurred to 

determine whether there is culpability or when fraud, waste, or abuse is suspected (see 

Table C6.T3.). 

 C6.4.8. Material Release Denials. Chapter 4 prescribes DoD standard document 

formats, data codes, and criteria for the preparation and processing of material release 

denial at storage activities and by owners/IMMs. 

 C6.4.8.1. Upon initiation of a material release denial citing Management Code 

1, 2, 3 (applies to subsistence only) or 4 (applies to subsistence and ammunition only), 

storage activities shall: 

 C6.4.8.2.1. Reverse the issue, adjust the storage activity record on-hand 

quantitative balance to zero, and send an inventory adjustment decrease transaction (DS 

947I with Quantity or Status Adjustment Reason Code AA; MILSTRAP DI Code D9A) 

for the adjusted quantity to the owner/IMM citing Management Code 1, 2, 3, or 4, and 

send the send an inventory adjustment decrease to any other owners affected by the 

denial loss, citing denial Management Code Q. 

 C6.4.8.2.2. Initiate a spot inventory as required under subparagraph 

C6.3.4.2. 

 C6.4.8.2. If an inventory can be done without delaying processing of the MRO 

beyond the prescribed UMMIPS timeframes (see DoD 4140.1-R), it may be conducted 

before processing the denial transaction. 

C6.5. REVERSAL OF INVENTORY ADJUSTMENTS. Reversal of Inventory 

Adjustment (Physical Inventory) Transactions (DS 947I with Quantity or Status 

Adjustment Reason Code AA; MILSTRAP DI Code D8A/D9A) is a required capability 

that must be implemented with proper controls and supported by proper documentation. 

Procedures for reversing adjustments shall contain, as a minimum, the following control 

features: 

 C6.5.1. Posted/Un-Posted Source Documents. Reversals required to correct 

inventory records when previously un-posted or incorrectly posted supply transactions 

(e.g., receipts, issues, etc.), regardless of age, are limited to those transactions that can 

be properly documented to reference the specific transaction document number(s) that 

will be processed to offset the reversal. 

 C6.5.2. Inventory Adjustment Corrections. Reversals required to correct physical 

inventory adjustments that were based on incorrect/incomplete information are limited to 

2 years from date of the original adjustment unless requirements of paragraph C6.5.1 are 

met. All reversals must be properly documented. 

 C6.5.3. Limitations. Reversals shall not be processed solely on the basis of a 

previous offsetting physical inventory adjustment. 
DoD 4000.25-M Volume 2 

C6 - 18 

ADC 307 Enclosure

 C6.5.4. Performance Assessment. Reversals against transactions processed 

within the adjustment period shall be separated and identified as follows: 

 C6.5.4.1. Gross adjustment during the current period. 

 C6.5.4.2. Reversal of prior quarters' adjustment transactions. 

 C6.5.4.3. Reversals of current quarters' adjustment transactions, and 

 C6.5.4.4. Total value of net adjustments during the current period (i.e., value 

of net gains added to value of net losses). 

C6.6. RECORD RECONCILIATION PROGRAM. Each DoD Component shall implement 

a record reconciliation program that shall consist of both a location survey and a location 

reconciliation.5

 The DoD acceptable accuracy goals are in paragraph C6.2.12.3. The 

DoD Components may impose more stringent standards internally. The record 

reconciliation program is subject to the quality control checks shown in section C6.8. 

Errors shall be subject to validation and research before they are counted as an error. 

The DoD Components shall collect and analyze all Type III errors (see subparagraphs 

C6.6.1.2.3. and C6.6.2.2.3.) by element. 

 C6.6.1. Location Survey. Location survey requires a physical verification, other 

than actual count, between assets and recorded location data to ensure all assets are 

properly recorded. When a discrepancy is identified during the location survey program 

(Type I or Type II error (see subparagraphs C6.6.1.2.1 and C6.6.1.2.2)), the storage 

activity shall conduct prompt research and determine need for a special inventory 

Physical Inventory Request Transaction with Type Physical Inventory/Transaction 

History Code K). In some instances, location survey and physical inventory may be 

conducted concurrently for ammunition and subsistence. 

 C6.6.1.1. Requirements

 C6.6.1.1.1. Timing. Location survey shall be done at each storage 

activity at least once each fiscal year by (1) performing complete location survey of all 

locations; (2) using a statistical sampling methodology that ensures all locations are 

included in the population and each has a probability of selection; or (3) a combination of 

complete and statistical sampling. 

 C6.6.1.1.2. Rewarehousing. A location survey shall be conducted in both 

the gaining and losing storage areas following the accomplishment of re-warehousing 

projects. A location survey conducted as a result of re-warehousing projects satisfies the 

annual survey requirement for the area surveyed. 

 

5

 The location reconciliation process will not be required with the establishment of single shared-asset 

balances (see paragraphs C6.2.2 and C6.2.4). 
DoD 4000.25-M Volume 2 

C6 - 19 

ADC 307 Enclosure

 C6.6.1.1.3. Comparison of Storage Locations with Locator Records. 

Proper sequence of operating a location survey requires comparing of assets in storage 

locations with locator records. This sequence of operation is important to detect assets in 

unrecorded locations. 

 C6.6.1.1.4. Lots/Segments. An objective is to identify items to location 

survey lots or segments. Lots/segments shall be of a manageable size (number of items) 

to permit location survey in minimum time, to ensure maximum uninterrupted service to 

customers, and to obtain the greatest degree of accuracy from the location survey. 

 C6.6.1.1.5. Items within Lot/Segment. Items within a lot/segment, which 

have been subject to a complete item inventory, shall satisfy the annual survey 

requirement when the entire lot/segment is located in a clearly designated, conterminous 

warehouse space. These inventoried lots/segments may be excluded from the complete 

survey for the fiscal year in which they were counted. 

 C6.6.1.1.6. Permanent Item Locations. When permanent locations are 

reserved for items, unoccupied recorded locations shall be identified and/or verified 

during the location survey. 

 C6.6.1.2. Accuracy Measurement. To measure the accuracy of the results of 

the location survey, discrepancies shall be classified in one of the three categories listed 

below. Only one error per stock number per location is charged when locator delete, 

locator establish, or locator record correction is required for the same location. When the 

stock number and actual assets differ, the discrepancy shall be classified as locator 

establish action only. 

 C6.6.1.2.1. Locator Record Deleted. The removal or change of a locator 

record when there is a recorded location but there are no physical assets--unless the 

location is being held open for new receipts. (Type I location survey error.) 

 C6.6.1.2.2. Locator Error Established. The recording of locations when 

assets are physically found in storage and no locator records exist, or when the recorded 

stock number disagrees with the material in the location. (Type II location survey error.) 

 C6.6.1.2.3. Locator Record Corrected. Changes to the locator record 

when physical material characteristics differ from any of the following data elements 

(Type III location survey error): 

 C6.6.1.2.3.1. Unit of issue. 

 C6.6.1.2.3.2. SCC. 

 C6.6.1.2.3.3. Controlled inventory item code (see DoD 4100.39-M, 

Volume 10, table 61). Verification of the code shall consist of ensuring assets are stored 

in areas providing the degree of security commensurate with the assigned code. 
DoD 4000.25-M Volume 2 

C6 - 20 

ADC 307 Enclosure

 C6.6.1.2.3.4. Type of pack code (for subsidence only). (See 

Chapter 4.) 

 C6.6.1.2.3.5. Lot number, serial number or unique item identifier (for 

ammunition only). 

 C6.6.1.2.3.6. Completeness and accuracy of magazine data card 

(for ammunition only). 

 C6.6.1.3. Special Inventory. To ensure accuracy of property accountability 

records, special inventories should be performed when assets are found in an erroneous 

or unrecorded location, or when there are mismatches in the unit of issue that may result 

in a quantity variance. 

 C6.6.2. Location Reconciliation.

6

 

 C6.6.2.1. Requirements. Location reconciliation requires a match between 

storage activity records and owner/IMM records, in order to identify and to correct 

situations when there is: (1) an owner/IMM record with no corresponding storage activity 

record, (2) a storage activity record with no corresponding owner/IMM record, (3) 

common elements of data that do not match, and (4) quantity discrepancies. Mismatches 

shall be researched and special inventories conducted when required to effect corrective 

action. 

 C6.6.2.2. Accuracy Measurement. To measure the accuracy of the results of 

the location reconciliation program, discrepancies shall be classified in one of the four 

categories listed below (report only one error per location reconciliation error). 

 C6.6.2.2.1. Owner/IMM record shows balance for storage activity; no 

Location Reconciliation Request Transaction received. (Type I location reconciliation 

error.) 

 C6.6.2.2.2. Location Reconciliation Request Transaction received from 

storage activity; no corresponding owner/IMM record (Type II location reconciliation 

error.) 

 C6.6.2.2.3. Mismatch of any of the following data elements (Type III 

location reconciliation error): 

 C6.6.2.2.3.1. Unit of issue 

 C6.6.2.2.3.2. Ownership/IMM identifier. 

 

6

 The location reconciliation process will not be required with the establishment of single shared-asset 

balances (see sections C6.2.2 and C6.2.4). 
DoD 4000.25-M Volume 2 

C6 - 21 

ADC 307 Enclosure

 C6.6.2.2.3.3. Controlled inventory item code (see DoD 4100.39-M, 

Volume 10, table 61). 

 C6.6.2.2.3.4. Type of pack code (subsistence only). 

 C6.6.2.2.3.5. Shelf-life code. 

 C6.6.2.2.3.6. Date packed/expiration date (subsistence only). 

 C6.6.2.2.4. Quantity Discrepancy (Type IV Reconciliation Error) 

 C6.6.2.3. Guidance. The DoD Components shall perform location 

reconciliation in accordance with the following guidance: 

 C6.6.2.3.1. Annual Location Reconciliation. Owners/IMMs and storage 

activities shall reconcile all records annually. The annual reconciliation shall be done as 

required by subparagraph C6.6.2.3.3, below. 

 C6.6.2.3.2. Location Reconciliation Request. Storage activities shall 

prepare Location Reconciliation Request Transactions by line-item, and by type of pack 

and date packed/expiration date for subsistence, for each stock number regardless of the 

balance (including zero balances). For annual location reconciliation request, storage 

activities shall cite DS 846P 1/BIA/06 Action Code 24 or, for MILSTRAP DI Code DZH, 

Type of Location Reconciliation Request Code 2. Storage activities shall send the 

request to the owner/IMM. Storage activities preparing MILSTRAP DI Code DZH 

requests shall assure that consecutive transaction numbers by RI Code are 

assigned to the location reconciliation requests for control purposes. 

 C6.6.2.3.3. Location Reconciliation Schedule. All owner/IMM and 

storage activity records (active and inactive records, including zero balances) shall be 

reconciled at least once each fiscal year. Storage activities and Components may 

negotiate agreements for conducting annual location reconciliation any time during the 

fiscal year. When no such agreement exists, location reconciliation requests shall be 

prepared on the second Tuesday of the month indicated in the following schedule: 

 Table C6.T2. Location Reconciliation Preparation Schedule When No Other 

Schedule Agreement Exists

SERVICE OR AGENCY PREPARATION DATE

Army 2nd Tues - January

Navy 2nd Tues - March 

Marine Corps 2nd Tues – May 

Air Force 2nd Tues – July 

Defense Logistics Agency 2nd Tues - September 
DoD 4000.25-M Volume 2 

C6 - 22 

ADC 307 Enclosure

 C6.6.2.3.4. Control of Location Reconciliation. Storage activities and 

owners/IMMs shall establish the following provisions for controlling location reconciliation: 

 C6.6.2.3.4.1. Location Reconciliation Notification. Storage activities 

shall advise intended recipients (owners/IMMs) of the number of transactions being 

forwarded, and cut-off date, using Location Reconciliation Notification Transaction. 

 C6.6.2.3.4.2. Location Reconciliation Transaction History

 C6.6.2.3.4.2.1. Location Reconciliation History Notification 

Transaction. When transaction history is required with Location Reconciliation, the 

storage activity shall advise intended recipients (owners/IMMs) of number of historical 

transactions being sent, and the cutoff date, using Location Reconciliation History 

Notification Transctions. 

 C6.6.2.3.4.2.2. Transaction History to Support Location 

Reconciliation. For transaction history associated with annual reconciliation, the 

owner/manager may cite Type of Physical Inventory/Transaction History Code Y in the 

Transaction History Request Transaction. Transactions subject to transaction history 

submission are receipt (DS 527R with 1/BR02/20/code D4; MILSTRAP DI Code 

D4_/D6), issue (DS 867I; DI Code D7_), materiel release (DS 940R, MILSTRIP DI

Code A5_), materiel release advice (DS 945A, MILSTRIP DI Code AR_), and 

inventory adjustments (DS 947I; MILSTRAP DI Code D8_/D9_). The transaction 

history code may be included in the transaction history submission. DLA 

owner/managers shall use code 'Y' for automatic submission of history requests for the 

Annual (Total) Reconciliation, and code 'W' for automatic submissions of transaction 

history requests for their weekly process. The storage activity perpetuates the type of 

physical inventory/transaction history code in the transaction history submissions. 

 C6.6.2.3.4.3. Owners/IMMs shall use the Location Reconciliation 

Notification and Location Reconciliation History Notification Transactions to determine 

receipt of all Location Reconciliation and historical transactions. Where the number of 

transactions to be sent does not match what was actually received, the owner/IMM may 

reject the Location Reconciliation Notification and/or Location Reconciliation History 

Notification transactions using Reject Advice Transaction (DS 824R; MILSTRAP DI 

Code DZG), with Reject Advice Code AY. 

 C6.6.2.3.5. Processing Location Reconciliation Request. In processing 

Location Reconciliation Request Transactions, owners/IMMs shall match the requests to 

the owner/IMMs records. When a mismatch is programmatically unresolved, Inventory 

Adjustment (Accounting Error) Transaction (DS 947I with Quantity or Status 

Adjustment Reason Code ‘AB’ ; MILSTRAP DI Code D8B/D9B), will be processed to 

adjust the owner/IMM records. All Type I, II, III, and IV mismatches meeting the criteria 

for causative research (see table C6.T3.) shall be resolved as follows: 

 C6.6.2.3.5.1. Research of owner/IMM active and historical records. 
DoD 4000.25-M Volume 2 

C6 - 23 

ADC 307 Enclosure

 C6.6.2.3.5.2. Research of storage activity active/historical record 

using Transaction History Request Transaction with Type Physical 

Inventory/Transaction History Code X. 

 C6.6.2.3.5.3. Request physical inventory using Physical Inventory 

Request Transaction with Type Physical Inventory/Transaction History Code J. 

 C6.6.2.3.5.4. If the above actions fail to resolve the mismatch, the 

Inventory Adjustment (Accounting Error) Transaction (DS 947I with Quantity or 

Status Adjustment Reason Code ‘AB’ ; MILSTRAP DI Code D8B/D9B) shall remain 

on the owner/IMM records. 

 C6.6.2.3.6. Exceptions. A physical inventory is not required under the 

following conditions, except when the mismatch involves classified or sensitive items 

(regardless of dollar value), or pilferable items (when the extended dollar value of the 

variance is greater than $100). 

 C6.6.2.3.6.1. The owner/manager record may be adjusted without 

special inventory when the extended value of the variance is $5,000 or less and 10 

percent or less of the beginning value of the variant owner/manager record for Type IV, 

errors (see subparagraph C6.6.2.2.4.). 

 C6.6.2.3.6.2. The owner/manager record may be adjusted without 

special inventory when the extended value of the variance is $5,000 or less for Type I 

and Type II errors (see subparagraphs C6.6.2.2.1. and C6.6.2.2.2.). 

 C6.6.2.3.7. Discrepancies. When a discrepancy is identified during the 

location reconciliation, send the following transactions, as appropriate, to the submitting 

activity: 

 C6.6.2.3.7.1. DS 824R (MILSTRAP DI Code DZG) – Reject Advice 

Transaction, as prescribed in Volume 1, Chapter 6. 

 C6.6.2.3.7.2. Storage Item Data Correction/Change Transaction

as prescribed in this chapter. Storage activities shall use the Storage Item Data 

Correction/Change Transaction to update stock records, item locator records, and bin 

tags. 

C6.7. RETENTION OF ACCOUNTABLE DOCUMENTATION. Audit capability is 

required for a period of time following the processing of documents and data and 

completion of the research effort. The following retention criteria will apply: 

 C6.7.1. Source Documents. Retain original source documents or facsimiles, i.e., 

microform (microfilm, microfiche), Compact Disk-Read-Only Memory (CD-ROM), etc., for 

at least 2 years. Where source documents are produced, these include only 

accountability change documents such as receipts, issues, shipments, transfers, SCC 
DoD 4000.25-M Volume 2 

C6 - 24 

ADC 307 Enclosure

changes, and inventory and financial adjustments. Keep source documents providing 

evidence of shipment to FMS recipients for 2 years from date of material shipment. 

 C6.7.2. Transaction History. Keep registers, records, files, tapes, and data for at 

least 2 years in a format useful for audit trail purposes. Automated inventory control 

systems shall be designed to facilitate the printout of transaction histories that indicate 

the date the last physical inventory was conducted for each item. 

 C6.7.3. Adjustment Research. Keep backup documentation that directly pertains to 

individual cases of physical inventory adjustment research efforts for at least 2 years. 

 C6.7.4. Annual Statistical Inventory. Keep annual statistical sample inventory lineitem detail data for at least 2 years. 

C6.8. QUALITY CONTROL

 C6.8.1. Goals and Objectives. The DoD Components shall establish a quality 

control program at each owner/IMM and storage activity that encompasses the objectives 

of DoD Directive 5010.38, and the physical inventory objectives contained in DoD 

4140.1-R. Portions of the program can be accomplished during ongoing practices within 

inventory processes. Quality control results will assist management in identifying those 

human, procedural, or system errors that adversely affect record accuracy and in 

achieving better control over physical material warehousing practices. Within the scope 

of this quality control program, those work processes directly related to the control of 

physical material shall be monitored for attained quality levels and performance 

evaluated on improvements, not numerical goals. Accordingly, all quality control 

programs shall include reviews to assess the accuracy/quality of the following work 

processes: 

 C6.8.1.1. Warehousing practices -- to include checks of storage practices, 

stock rotation, shelf-life management, identification of material in store, mixed stock, 

location accuracy and rewarehousing projects. 

 C6.8.1.2. Receiving practices -- to include checks of documentation, material 

identity, quantity, and SCC; checks for processing timeliness; and verification of daily 

input data to the location system. 

 C6.8.1.3. Issuing practices -- to include checks of legibility of issue documents; 

accuracy of stock selection as to identity, quantity, unit of issue, shelf life, SCC, and type 

of pack (subsistence only); marking of outgoing shipments; and release to carriers. 

 C6.8.1.4. Validity of automated date -- to include checks of receipt, issue, and 

adjustment transaction data entries against input documentation. 
DoD 4000.25-M Volume 2 

C6 - 25 

ADC 307 Enclosure

 C6.8.1.5. Inventory practices -- to include checks of inventory counts, location 

surveys, location reconciliation corrective actions, causative research, and adjustments at 

both the owner/IMM and storage activity. 

 C6.8.1.6. Catalog practices -- to include checks of catalog change processing, 

accuracy, and timeliness, using the affected recorded locations as the universe. 

 C6.8.1.7. Locator file updates -- to include checking the accuracy of changes 

to the locator file (e.g., all additions, deletions, and changes of unit of issue, SCC, shelf 

life, etc.). 

 C6.8.1.8. Supply Discrepancy Report (SDR) processing -- to include checks 

for processing timeliness and checking the accuracy of the SDR initiation, follow up and 

reply, investigation research including identification and correction of supply errors, 

adjustment of accountable and financial records, and preparation of Financial Liability 

Investigation of Property Loss report (DD Form 200). 

 C6.8.1.9. Logistics reassignment processing -- checks to determine if the 

logistic reassignment action were completed; e.g., LIM/GIM records were changed to 

reflect decapitalization/transfer, LIM directed the storage activity to change the 

decapitalized/transferred assets to GIM ownership, the storage activity effected and 

advised the LIM of the change, and the LIM initiated action to resolve any quantity 

variances. 

 C6.8.1.10. Suspended asset processing -- to include checks of the timeliness 

in reclassifying suspended (SCCs J, K, L, Q, and R) material. 

 C6.8.2. Assignment of Responsibility. Whenever possible, quality control checks of 

these work processes shall include identification of the individual performing the tasks. 

This will facilitate the placement of responsibility for appraising and improving quality with 

each IMM within the chain of command. 

 C6.8.3. Command Emphasis. Continued command management emphasis and 

review of performance are essential for the success of the quality control program. 

Command IMMs must ensure effective organizational interrelationships among the 

functional element concerned with the PICP such as: comptroller, data systems, 

transportation, warehousing, maintenance, quality control, and supply management. The 

quality control program shall include provisions for initiation of corrective action when 

acceptable quality levels are not met. 

C6.9. PICP PERFORMANCE ASSESSMENT. The DoD Components shall collect and 

maintain performance standards and management data prescribed in paragraphs C6.9.1. 

and C6.9.2, for all material for which the DoD Component maintains the property 

accountability record. This includes all DoD wholesale supply system assets of principal 

and secondary items, including package fuels, less all material exclusions listed in DoD 

4140.1-R; Report Control Symbol: DD-P&L(Q) 935 applies when the DoD Component is 
DoD 4000.25-M Volume 2 

C6 - 26 

ADC 307 Enclosure

required to report this information to higher authorities. DD Form 2338-1 (Inventory 

Control Effectiveness Report Ammunition) and DD Form 2338-2 (Inventory Control 

Effectiveness Report General Supplies) are available for intra-Component use when 

required by the DoD Component. 

 C6.9.1. General Supplies Performance Standards and Data. (The information in 

this section corresponds to information reflected on DD Form 2338-2.) 

 C6.9.1.1. Performance

 C6.9.1.1.1. Material Denials7: 

 C6.9.1.1.1.1. Lines Directed for shipment. The total number of line 

items directed for shipment (MROs, referral orders, redistribution orders (DS 940R 

Material Release)). 

 C6.9.1.1.1.2. Total Material Release Denials. The total material 

denials (sum of total and partial denials, and warehouse refusals (DS 945A, Material 

Release Advice). Include denial transactions classified by denial Management Codes 1, 

2, 3 (subsistence only), 4, 5, 6, and 7 in the total. 

 C6.9.1.1.1.3. Material Denial Rate. Compute this figure by dividing 

total denials by the line items directed for shipment and multiplying by 100. The DoD 

performance goal for the material release denial rate is not greater than 1 percent. 

 C6.9.1.1.2. Receipt Processing Performance8: 

 C6.9.1.1.2.1. Receipts Posted and Stored. The total number of line 

item receipts posted and stored to the total item property record. 

 C6.9.1.1.2.2. Receipts Posted and Stored on Time. The total 

number of line-item receipts which where effectively posted and stored within the 

timeframes. Both storing and posting actions are considered complete when the item is 

in the storage location or available for issue, and the quantity is posted to the total item 

property record. 

 C6.9.1.1.2.3. On-Time Receipt Rate. Compute this figure by 

dividing the total number of receipts posted and stored on time by the total number of 

receipts and multiplying by 100. The DoD performance goal for posting and storing 

receipts on time is 90 percent. 

 

7 Performance data maintained by DLA for material stored at DSS locations regardless of ownership. 

Maintained by Service for material stored at Service depots. 

8 Performance data maintained by DLA for material stored at DSS locations regardless of ownership. 

Maintained by Service for material stored at Service depots. 
DoD 4000.25-M Volume 2 

C6 - 27 

ADC 307 Enclosure

 C6.9.1.1.3. Record Reconciliation Program. Shows the results of the 

location survey (ratio of accurate storage activity locator records to storage activity 

locations surveyed) and the location reconciliation9 (ratio of valid storage activity records 

to IMM records): 

 C6.9.1.1.3.1. Locations Surveyed10. The number of storage activity 

locations surveyed. 

 C6.9.1.1.3.2. Survey Errors. The total number of location 

discrepancies as defined in subparagraph C6.6.1.2. Report only one error per stock 

number per location. 

 C6.9.1.1.3.3. Survey Accuracy. Compute this figure by dividing the 

locations with discrepancies by the total locations surveyed multiplying by 100, and 

subtracting the result from 100 percent. DoD goal for location survey accuracy is 97 

percent. 

 C6.9.1.1.3.4. Locations Reconciled11. The total number of location 

records reconciled (i.e., the sum of line items on the owner's/IMM's record and line items 

not on the IMM's record but were on the storage activities' records). 

 C6.9.1.1.3.5. Reconciliation Errors. The total number of discrepant 

location records as defined in subparagraph C6.6.2.2. Count one error per location 

reconciliation request (line item) or unmatched IMM's record. 

 C6.9.1.1.3.6. Reconciliation Accuracy. Compute this figure by 

dividing the number of discrepancies by the number of records reconciled, multiplying by 

100, and subtracting the result from 100 percent. DoD goal for location reconciliation is 

97 percent. 

 C6.9.1.2. Physical Inventory Adjustments

 C6.9.1.2.1. Physical Inventories: 

 C6.9.1.2.1.1. Number of Scheduled and Unscheduled Inventories 

Completed. The total number of line items inventoried (scheduled and unscheduled). 

Each SCC for a stock number at each storage activity is a line item. 

 C6.9.1.2.1.2. Number of Inventories with Variances. The total 

number of line items inventoried (scheduled and unscheduled) that had an inventory 

variance. 

 

9

 The location reconciliation process will not be required with the establishment of single shared asset 

balances (see paragraphs C6.2.2 and C6.2.4). 

10 Performance data maintained by DLA for locations surveyed at DSS locations regardless of ownership. 

Maintained by Service for locations surveyed at Service depots. 11 Performance data maintained by owner/IMM regardless where material is stored. 
DoD 4000.25-M Volume 2 

C6 - 28 

ADC 307 Enclosure

 C6.9.1.2.1.3. Inventory Variance Rate. Shows the percent of lineitems inventoried that had an inventory variance. Compute this figure by dividing the 

lines with inventory variances by the total line items inventoried and multiply by 100. 

 C6.9.1.2.1.4. Number of Inventories with Major Variances. The total 

number of line items inventoried (scheduled and unscheduled) that had a major inventory 

variance (overages or shortages exceeding $5,000) and all variances on controlled items. 

 C6.9.1.2.1.5. Major Variance Rate. Shows the percent of line-items 

inventoried that had major inventory variances. Compute this figure by dividing the lines 

with a major inventory variance by the total line items inventoried and multiply by 100. 

 C6.9.1.2.2. Number of Adjustments from other than Physical 

Inventories12

 C6.9.1.2.2.1. Number of Location Reconciliation Adjustments. The 

number of location reconciliation adjustments (DS 947I with Quantity or Status 

Adjustment Reason Code ‘AB’ ; MILSTRAP DI Code D8B/D9B). 

 C6.9.1.2.2.2. Number of End of the Day Processing Adjustments. 

The number of end of the day processing adjustments (DS 947I with Quantity or Status 

Adjustment Reason Code ‘AB’ ; MILSTRAP DI Code D8B/D9B). 

 C6.9.1.2.2.3. Total. Absolute total of adjustments from other than 

physical inventories. 

 C6.9.1.2.3. Total Adjustments. The sum of number of inventories with 

variances and the number of adjustments from other than physical inventories. 

 C6.9.1.2.4. Number of Reversals of Inventory Adjustments

 C6.9.1.2.4.1. Number of Gain Reversals. The number of gain 

reversals of inventory adjustments. 

 C6.9.1.2.4.2. Number of Loss Reversals. The number of loss 

reversals of inventory adjustments. 

 C6.9.1.2.4.3. Total. Absolute total of inventory reversals (gains and 

losses). 

 C6.9.1.2.5. Monetary Value

 

12 The end of day process and location reconciliation process will not be required with the establishment 

of single shared asset balances (see paragraphs C6.2.2 and C6.2.4). 
DoD 4000.25-M Volume 2 

C6 - 29 

ADC 307 Enclosure

 C6.9.1.2.5.1. Average Value of Inventory. The average value of onhand assets as shown on financial records for the 12 months prior to the report cutoff 

date (i.e., current quarter plus last three quarters). 

 C6.9.1.2.5.2. Record Value of Items Inventoried. The extended 

value prior to actual inventory of line-items inventoried (scheduled and unscheduled) 

during the reporting period. 

 C6.9.1.2.5.3. Value of Inventory Adjustments

 C6.9.1.2.5.3.1. Physical Inventory Adjustments: 

 C6.9.1.2.5.3.1.1. Gains. Monetary value of gains resulting 

from inventory less the monetary value of gain reversals (from current and prior quarters) 

processed during the report period. 

 C6.9.1.2.5.3.1.2. Losses. Monetary value of losses 

resulting from inventory less the monetary value of loss reversals (from current and prior 

quarters) processed during the report period. 

 C6.9.1.2.5.3.1.3. Gross Adjustments

 C6.9.1.2.5.3.2. Reversals--Current Quarter

 C6.9.1.2.5.3.2.1. Gains. The total monetary value of 

decreases to the record balances as a result of reversing gain adjustments processed 

during the reporting period. Compute the FY to Date value for reversals of current 

quarter gains by adding the Quarter Ending value for reversal of current quarter gains to 

the prior quarter FY to Date value of reversal of current quarter gains. 

 C6.9.1.2.5.3.2.2. Losses. The total monetary value of 

increases to the record balances as a result of reversing loss adjustments processed 

during the reporting period. Compute the FY to Date value for reversal of current quarter 

losses by adding the Quarter Ending value for reversal of current quarter losses to the 

prior quarter FY to Date value for reversal of current quarter losses. 

 C6.9.1.2.5.3.2.3. Total. The absolute total of reversals of 

current quarter gains and losses. 

 C6.9.1.2.5.3.3. Reversal--Prior Quarters

 C6.9.1.2.5.3.3.1. Gains. The total monetary value of 

decreases to record balances as a result of reversing gain adjustments reported in prior 

quarters. Compute the FY to Date value for reversal of prior quarters gains by adding the 

quarter ending value of reversal of current quarter gains to the prior quarter gains. 
DoD 4000.25-M Volume 2 

C6 - 30 

ADC 307 Enclosure

 C6.9.1.2.5.3.3.2. Losses. The total monetary value of 

increases to record balances as a result of reversing loss adjustments reported in prior 

quarters. Compute the FY to Date value for reversal of prior quarter losses to the prior 

quarter FY to Date value for reversal of prior quarter losses. 

 C6.9.1.2.5.3.3.3. Total. The absolute total of reversals of 

prior quarter gains and losses. 

 C6.9.1.2.5.3.4. Total Reversals. The total of reversals of 

current quarter and prior quarter gains and losses. 

 C6.9.1.2.5.3.5. Total Record Imbalances. The total of gross 

adjustments and total reversals. 

 C6.9.1.2.6. Gross Adjustments as a Percent of

 C6.9.1.2.6.1. Average Value of Inventory. Divide the total value of 

gross adjustments by the average value of inventory and multiply by 100. 

 C6.9.1.2.6.2. Value of Items Inventoried. Divide the total value of 

gross adjustments by the record value of items inventoried and multiply by 100. 

 C6.9.1.2.7. Total Record Imbalances as a Percent of: 

 C6.9.1.2.7.1. Average Value of Inventory. Divide the value of the 

total record imbalances by the average value of inventory. 

 C6.9.1.2.7.2. Value of Items Inventoried. Divide the total value of 

gross adjustments by the record value of items inventoried and multiply by 100. 

 C6.9.1.2.8. Monetary Value of Location Reconciliation: 

 C6.9.1.2.8.1. Value of Line Items Reconciled. The extended value 

of line-items reconciled during the reporting period. 

 C6.9.1.2.8.2. Gains. The monetary value of gains resulting from 

reconciliation during the period. 

 C6.9.1.2.8.3. Losses. The monetary value of losses resulting from 

reconciliation during the period. 

 C6.9.1.2.8.4. Total. The absolute total of location reconciliation 

gains and losses. 

 C6.9.1.2.9. Monetary Value of End of the Day Processing
DoD 4000.25-M Volume 2 

C6 - 31 

ADC 307 Enclosure

 C6.9.1.2.9.1. Gains. Enter the value of gains resulting from end of 

the day processing. 

 C6.9.1.2.9.2. Losses. Enter the value of losses resulting from end 

of the day processing. 

 C6.9.1.2.9.3. Total. The absolute total of end of the day processing 

gains and losses. 

 C6.9.2. Ammunition Performance Standards and Data. (The information in this 

section corresponds to information shown on DD Form 2338-1.) 

 C6.9.2.1. Performance

 C6.9.2.1.1. Material Denials. Complete as described in subparagraph 

C6.9.1.1.1. For ammunition, include denial transactions classified by denial Management 

Codes 1, 2, 5, 6, and 7 in the total. DoD Components shall identify denials separately for 

high-risk and low-risk items. 

 C6.9.2.1.2. Receipt Processing Performance. Complete as described in 

subparagraph C6.9.1.1.2. DoD goal for posting and storing ammunition receipt on-time is 

90 percent. 

 C6.9.2.1.3. Record Reconciliation Program. Complete as described in 

subparagraph C6.9.1.1.3. DoD goals for location survey and location reconciliation for 

ammunition are 98 percent13. 

 C6.9.2.2. Physical Inventory Adjustments

 C6.9.2.2.1. Physical Inventories

 C6.9.2.2.1.1. Number of Scheduled and Unscheduled Inventories 

Completed. The total number of line-items inventoried (scheduled and unscheduled). 

Each SCC for a stock number at each storage activity is a line item. 

 C6.9.2.2.1.2. Number of Inventories with Variances. The total 

number of line items inventoried (scheduled and unscheduled) that had an inventory 

variance. 

 C6.9.2.2.1.3. Inventory Record Accuracy. Shows the percent of 

lines inventoried without an inventory variance. Compute this figure by dividing the lines 

with an inventory variance by the total lines inventoried and multiply by 100, and 

subtracting the result from 100 percent. The DoD inventory record accuracy goal for 

ammunition is 95 percent. 

 

13 The location reconciliation process will not be required with the establishment of a single shared asset 

balances (see paragraphs C6.2.2 and C6.2.4) 
DoD 4000.25-M Volume 2 

C6 - 32 

ADC 307 Enclosure

 C6.9.2.2.2. Number of Inventory Adjustments from other than Physical 

Inventories. Complete same as subparagraph C6.9.1.2.2. 

 C6.9.2.2.3. Total Inventory Adjustments. Complete same as 

subparagraph C6.9.1.2.3. 

 C6.9.2.2.4. Number of Reversals of Inventory Adjustments. Complete 

same as subparagraph C6.9.1.2.4. 

 C6.9.2.2.5. Monetary Value. Complete same as subparagraph 

C6.9.1.2.5. 

 C6.9.2.2.6. Gross Adjustments as a Percent of. Complete same as 

subparagraph C6.9.1.2.6. 

 C6.9.2.2.7. Total Record Imbalances as a Percent of. Complete same as 

subparagraph C6.9.1.2.7. 

 C6.9.2.2.8. Monetary Value of Location Reconciliation. Complete same 

as subparagraph C6.9.1.2.8.1. 

 C6.9.2.2.9. Monetary Value of End of the Day Processing. Complete 

same as subparagraph C6.9.1.2.8.2. 

Table C6.T3. Minimum Research Requirements for Potential or Actual Physical 

Inventory Adjustments

CONDITION OF 

DISCREPANCY 

REQUIRED RESEARCH 

 Post Count 

Validation 

Pre-adjustment 

Research 

Causative 

Research 

1. < $1,000 NO NO NO 

2 > $1,000 but < $5,000 and 

< 10 percent unit variance 

YES NO NO 

3. > $1,000 but < $5,000 and 

> 10 percent unit variance 

YES YES NO 

4. > $5,000 but < $16,000 

and < 25 percent unit 

variance 

YES YES SAMPLE 

5. > $5,000 but < $16,000 

and > 25 percent unit 

variance 

YES YES YES 

6. > $16,000 YES YES YES 
DoD 4000.25-M Volume 2 

C6 - 33 

ADC 307 Enclosure

CONDITION OF 

DISCREPANCY 

REQUIRED RESEARCH 

 Post Count 

Validation 

Pre-adjustment 

Research 

Causative 

Research 

7. Controlled Inventory Item YES YES YES14

8. Suspected Fraud, Waste, 

or Abuse

YES YES YES 

C6.10. STORAGE ITEM DATA CORRECTION/CHANGE NOTIFICATION.

 C6.10.1. This section provides standard procedures required by ICPs to provide for 

the correction and/or updating of storage activity records when: 

 C6.10.1.1. Reported transactions indicate that the ICP and storage activity 

records are inconsistent. 

 C6.10.1.2. A catalog/stock list change is processed against an ICP record that 

will affect stock control data maintained at the storage activities. 

 C6.10.2. ICP Action. ICPs use the Storage Item Data Correction/Change 

Transaction to provide storage activities with data record changes on items of supply. The 

ICP enters the “correction/change code for storage item records” in the transaction to 

provide information on the nature of the change, actions to be taken, and data affected by 

the change. 

 C6.10.3. Storage Activity Action. Storage activities shall use the Storage Item 

Data Correction/Change Transaction to update stock records, item locator records, 

and bin tags. 

 

14 Sample causative research in lieu of complete causative research for pilferable, and CIIC 7, item 

discrepancies with a value from $.01 to $2,500 may be accomplished to serve as a deterrent to fraud, 

waste, or abuse and to identify systemic inventory and security problems. Causative research will be 

conducted on all adjustments (gains and losses) of classified and sensitive items regardless of dollar value 

of item or extended dollar value of adjustment. Causative research will be conducted on all adjustments 

(gains and losses) of pilferable items, and CIIC 7 items, with an extended value greater than $2,500, and 

all adjustments with an extended value of greater than $16,000 or greater than 25 percent unit variance 

and greater than $5,000.