Customer-Supplied Material: A Custody Reconciliation Sheet

Reconcile customer-supplied material by owner and lot, keeping unused stock, work in progress, finished output, scrap and returns in separate states. Convert them to one agreed material basis before comparing the total with opening stock plus receipts.

A job can be commercially complete while customer-owned metal remains in your stores, at a subcontractor or beside the machine. The stores lead and job owner need a custody statement whenever a customer requests a balance, a job closes or unexplained stock appears. A zero purchase price does not remove responsibility for the material.

Agree the basis before counting

Bring the customer receipt, lot identity, quantity and unit, opening balance, job issues, production returns, scrap records and dispatch acknowledgements. Record who owns each lot separately from who currently holds it. Two customers may supply the same grade and size; an item description alone cannot distinguish their property.

Use one unit for the reconciliation. If incoming bars are measured in kilograms and output in pieces, record the agreed conversion or measured material content. Do not add 40 pieces to 200 kilograms. Keep the basis and its uncertainty visible when the conversion is approximate. The customer and your responsible commercial owner should agree how process loss, recoverable scrap and damaged material will be treated.

Build one conservation equation

For a defined period, opening customer material plus new receipts must equal material still held in all states plus material returned or otherwise disposed of with authority. A transfer from stores to WIP changes location or state; it is not a second receipt or final consumption.

The accounted total is 300 + 180 + 420 + 70 + 20 + 10 = 1,000 kg, so the unexplained difference is zero. These are illustrative quantities, not a factory result. If finished output has already left your custody, show it as dispatched output instead of counting it again under material held.

Resolve differences without balancing plugs

An unexplained 8 kg is a discrepancy to investigate. Check the cutoff time, unit conversion, duplicate issue, unposted return and subcontractor balance before considering an adjustment. Never rename the difference “process loss” merely to make the statement balance. Quality owns damage disposition; the commercial owner obtains customer authority where needed; stores posts the approved physical movement.

Separate a disputed quantity from a confirmed one. Record the disputed amount, supporting documents, named resolver and next review date. A customer acknowledgement should identify the statement version and cutoff, so a later receipt cannot silently alter an already agreed balance.

Keep the statement linked to movement records

The GS1 traceability framework defines common requirements for interoperable traceability systems. Our original custody worksheet connects owner, lot and movement records; this is not a tax-document template or a claim of GS1 certification.

In Optiwise, our inventory ledger records stock changes and lot references. Our no-code forms and modules let you configure the ownership statement, attach acknowledgements and retain the review record. Define the customer ownership fields and reconciliation rules during setup; a custom custody statement is a configured workflow.

Accept the first statement only when every balance has a supporting location or movement, units agree, unexplained differences have an owner and both parties can identify the same version. Repeat the check for one open job before extending it to all customers.

Questions about customer material

Should scrap be removed from the customer balance immediately?

Only after its physical destination and authorised ownership treatment are recorded. Scrap still held on the customer’s behalf remains part of the custody statement.

Does a finished job mean the material statement can close?

No. Close the statement when residual stock, outside stock, scrap, returns and discrepancies are resolved or explicitly carried forward with responsibility.

Bring one customer-owned lot to a custody-workflow demo.