Cycle Counting Whitepaper

8/10/2019 Cycle Counting Whitepaper

1/14

1/4/2015 Document 66634.1

https://support.oracle.com/epmos/faces/DocumentDisplay?_adf.ctrl-state=iwmsrms4s_368&id=66634.1 1/14

How To Setup and Define a Cycle Count (Doc ID 66634.1)

APPLIES TO:

Oracle Inventory Management - Version 11.5.10 and later

Information in this document applies to any platform.Checked for relevance on 22-APR-2010

GOAL

Describe the minimum requirements to define a Cycle Count

SCOPE & APPLICATION

This is intended for those who have never setup/define a cycle count.

SOLUTION

Cycle Count is divided into two primary functions: ABC Analysis and

Defining a Cycle Count. We will first discuss how to perform an ABC Analysisand then how to define and run a Cycle Count. The functions described

here pertains to all versions of the Inventory application(Character, GUI, and NCA).

ABC ANALYSIS OVERVIEW

ABC Analysis:

ABC analysis is a method of determining the value of items in your inventory,

ranking your items according to a criterion and then grouping items into classes."ABC" refers to the rankings you assign your items as a result of this analysis,

where "A" items are more valuable than "B" items and so on.


2/14

1/4/2015 Document 66634.1


ABC Classification:

Classification is the process of assigning items to groups called ABC classes.Oracle inventory allows you to use your own terminology to define ABC classes.

ABC Ranking:

Oracle Inventory allows you to choose one of 15 compilation criteria forperforming an ABC analysis, and allows you to maintain multiple rankings of the

same set of items.

STEPS TO DEFINE AN ABC COMPILATION

1. Define an ABC Compile

Enter your compilation

Name,Description,

Criterion (choose from 15 choices)Subinventory,

Cost type,Content and Valuation Scope (restricted to subinventory),

Compile Specification (Current on hand quantity)Save

Click on Compile

When the compilation has completed re-query the ABC compile. Whenthe query return it should have values in these additional fields:

Compile Status = Completed

Total Inventory Items =Total Inventory Value =If the above 3 fields do no have a value in them the compile did not

complete satisfactory. Determine problem, correct and resubmitcompile.

2. Define ABC Classes

Enter the Classes


3/14

1/4/2015 Document 66634.1


Name =

Define class names that suit your business environmentUse these classes to group items in your ABC compilation

Description =

Before you assign items to ABC classes, you must define an ABC group.

3. Define ABC Groups

Enter ABC Group

Name = ABC Compile =

ABC ClassesSequence =

Name =

An AB C group may have an unlimited number of ABC classes.A rank of 1 is higher than a rank of 2 and so on.

Assign items of higher relative value to classes of higher rank.

4. Define ABC Assignments

Assign Sequence NumberBase your assignment on the number of items in you compilation.

Choose the sequence number that corresponds to the last item in

each class.

Assign Item PercentBase your assignment on the percentage of items in you compilation

Choose a value from the remaining unassigned percentage of the total

Number of items. For example, if you assign 60% of your itemsto class A, then you must choose a value between 0% and 40% for

the next class.

Assign Inventory ValueBase your assignment on the inventory value of the items in you

compilation.


4/14

1/4/2015 Document 66634.1


Choose the cumulative inventory value that corresponds to the last

item in each class.

Assign Value PercentBase your assignment on the percentage of inventory value of theitems in your compilation.

Choose a value from the remaining unassigned percentage of the total

Inventory value of your items. For example, if you assigned 60% of

the total inventory value to class A, then you must choose a valuebetween 0% and 40% for the next class.

Unmatched Items and NumbersIf the value that you enter does not exactly match an item, then Oracle

Inventory chooses the first item with a value greater than the numberThat you entered.

UPDATE 'ABC' ASSIGNMENTS

Update ABC Assignment

Change the ABC classes of items in an ABC group.For example, you may want to assign an item to a class of higher

value because of its significance to your operations.

Add New ItemsAdd new items to your ABC group without having to recompile and

then reassign the items to classes.

For example, you made your assignment based on historical usageValue. You have an item in your inventory that will have a high

usage value and should be an "A" item, but was classified as a "C "item due to the item's position in the Descending Value Report for the

compilation. You can reclassify this item to be an A item.

Assign Items to ClassesYou may use the Update ABC Assignments form to assign items to

Classes without using the Define ABC Assignments form.

Use the Update ABC Assignments form to assign items to classes ifyou choose not to use an ABC compilation as a basis for class

Assignments.


5/14

1/4/2015 Document 66634.1


ABC ANALYSIS REPORTS AND INQUIRIES

Use reports and inquiry forms to verify ABC analysis information.

Reports

ABC Assignments Report--list items and the AB C classes of theitems.

ABC Descending Value Report--list items in your ABC compilation

in descending order of compilation criterion.

Inquiry Forms

Update ABC Assignments--check class assignment of items withinAnd ABC group.

The following are the steps to define, generate, enter counts, makeadjustments, and approve the count entries.

PERFORM CYCLE COUNT: OVERVIEW

Cycle CountingCycle counting is the periodic counting of individual items throughout

the year.

Count items of higher value more frequently than items of lowervalue.

You can perform cycle counting instead of performing physical

inventory, or your can use both techniques to verify the accuracy ofon-hand quantities and values.

InitializationInitialization is the process identifying the items that you want tocycle count.

Initialize you cycle count by choosing an ABC group that you

defined.

Automatic Scheduling


6/14

1/4/2015 Document 66634.1


Automatic scheduling is the process of choosing the s pecific item toCount in a time interval.

Oracle Inventory allows you to choose how frequently you want run

the automatic scheduler.

The frequency of running the automatic scheduler determines the timeInterval for which Oracle Inventory schedules items to cycle count.

Manual SchedulingManual scheduling is the process of requesting counts for any item at

Any time.

Request counts for specific subinventories, locators, and items, andSet the count for any date.

Define Cycle Count Header

Define cycle count parameters that apply to general processing.

Assign a unique name to your cycle count and use this name toidentify any further activity for this cycle count.

Define and maintain an unlimited number of cycle counts for

your organization.

For example, you can have two separate cycle count headers for twosets of subinventories.

Specify whether you want to cycle count items in the entire

organization, or only those items in specific subinventories.

Organization Level Cycle Counting

Enter periodic counts for items that exist in all locations ofyour organization.

For example, the cycle count "ORG98 includes all items inorganization AUS.

Subinventory Level Cycle Counting

Enter periodic counts items that exist in specific subinventoriesof your organization.


7/14

1/4/2015 Document 66634.1


For example, the cycle count FLOOR98 includes all items insubinventory Floor Stock with organization SAC.

If you choose to only count a subset of your organization, use

The next page of the form to specify the subinventories tocycle count.

Specify the Item to Cycle Count

Choose ABC Group

Choose the items that you want to cycle count.

You must perform an ABC analysis if you want to associatean ABC group with you cycle count header.

Oracle Inventory uses the ABC group to determine the items

in your cycle count header.

Initialize Cycle CountOracle Inventory updates the existing cycle count classes and

associates items with the ABC group that you specify.

The initialization process determines the items to cycle countwithin your organization or subinventories.

You may add an AB C class to your cycle count without running

The initialization program. In this case, you must manually additems to the ABC class within your cycle count header.

Enter Count Frequencies

Enter the frequency with which you want to count items in eachclass.

Typically, you would count ABC classes of high relative valuemore frequently than you would count ABC classes of lowrelative value.

Enter Scheduling ParametersEnter Cycle Count Calendar

Specify a manufacturing calendar and exception set combinationso that Oracle Inventory can automatically schedule counts for

valid workdays.


8/14

1/4/2015 Document 66634.1


The cycle count calendar can be different from your

organization's workday calendar. For example, you can chooseto perform cycle counting on days that do not correspond to

regular workdays in you organization.

Enable Automatic Scheduling

The automatic scheduler chooses the items to count in each

scheduling interval.

Oracle Inventory chooses the items to count based on thefrequency with which you run the scheduler and the frequency

with which you count each class of items.

Schedule DailyRun the automatic scheduler every day.

The scheduler picks the items to count on each day.

Schedule WeeklyRun the automatic scheduler once week.

The scheduler picks the items to count in each week.

Schedule Every PeriodRun the automatic scheduler once a period. The cycle count

calendar that you choose determines the length of the period.

The scheduler picks the items to count in each period.

Change Header Next Scheduled DateOracle Inventory allows you to override automatic scheduling

for period when you do not want to perform cycle counting.

For example, you may want to suspend cycle counting activitywhen you perform a physical inventory.

If you do not run the scheduler on a particular day, then it

schedules twice as many items the next time you run thescheduler on the system-specified Header Next Schedule Date.

You can change the Header Next Schedule Date to the currentdate and then run the scheduler. In this case the automatic

scheduling program schedules those items that it would have


9/14

1/4/2015 Document 66634.1


scheduled on the day on which you should have originally runthe program.

Schedule Zero On-hand Quantity Items

Specify whether or not Oracle Inventory should schedule itemsthat have system on-hand quantities of zero.

If you have items with restricted subinventories and /or locators

then you can enable Oracle Inventory to generate a count

request for each such predefined relationship even if that stockkeeping unit has a system on-hand quantity of zero.

Enter Count Entry ControlsEnter Default Adjustment Account

Oracle Inventory posts cycle count adjustments to anadjustment account

The adjustment account that you enter defaults into the Enter

Cycle Counts form, but you can override and enter any accountwhen entering count results.

Choose one of three approval options for your cycle count.

Required for all AdjustmentsUse the Approve Cycle Count Adjustments form to approve

all adjustments.

Oracle Inventory requires you to approve all adjustmentsregardless of whether or not they are within tolerances.

Oracle Inventory update system on-hand quantities as soon as

approve your adjustments and save your changes.

Required for Adjustments Out of ToleranceEnter quantity and cost tolerance levels for your cycle count.

Use the Approve Cycle Count Adjustments form to approve

all adjustments that exceed any of the tolerance levels.

Oracle Inventory updates system on-hand quantities as soonas you approve your adjustments and save your changes.


10/14

1/4/2015 Document 66634.1


Not Required for AdjustmentsYou do not have to use the Approve Cycle Count Adjustments

form to approve any adjustments.

Oracle Inventory updates system on-hand quantities as soon asyou save your changes.

Enter Approval Tolerances For Your Cycle Count

Quantity Variance tolerances

A quantity variance tolerance is a user-defined limit for thedifference between the system tracked on-hand quantity andthe actual count quantity

In oracle Inventory, you express positive and negative quantitytolerances as percentages of the system on-hand quantity.

Adjustment Value Tolerances

An adjustment value tolerance is a user-defined limit for totalvalue of a cycle count adjustment.

Adjustment value = (system on-hand quantity - actual count

quantity) x current item cost.

In Oracle Inventory, you express positive and negativeadjustments value tolerances as amounts in you functional

currency.

Three Levels of Approval TolerancesSpecify approval tolerances at three levels of your cycle count--

header level, class level and item level.

Tolerances that you set at the item level (in the Define cycle

Count Items form) override tolerances that you set at the classlevel. Tolerance that you set at the class level overridetolerances that you set at the header level.

Define Measurement Errors

You may specify a positive and a negative cycle countmeasurement error when you define each item.

Oracle Inventory does not make an adjustment at all if your

count differs from the system on-hand quantity by less than


11/14

1/4/2015 Document 66634.1


the specified measurement error.

Since these measurement errors actually prevent adjustmentsfrom taking place, you would use them on an exception basis

for items you cannot accurately count. For example, if youcount your nuts and bolts as an eyeball or weight estimate you

might introduce a measurement error.

Specify Hit Miss Tolerance

Specify tolerances to use for cycle count hit/miss analysisreporting.

A count is considered a "hit" if it is within these tolerances

and a "miss" if it is outside the hit miss tolerances.

Use hit/miss analysis to evaluate accuracy of cycle countingprocedures.

Enable Unscheduled Counts

Enter counts for items that you do not schedule by eitherautomatic scheduling or manual scheduling.

Specify Late Count Days

Specify the number of days after which a scheduled countis considered late.

Oracle Inventory uses the late count days to calculate the

due date for each count.

Choose Automatic RecountsSpecify whether or not Oracle Inventory should generate

for adjustments that exceed tolerances.

You must enter another count for an item to which OracleInventory assigns a status of "account."

Recount items automatically appear on the next cycle count

listing.

You must specify the maximum number of r ecount r equeststhat Oracle Inventory can generate.


12/14

1/4/2015 Document 66634.1


After the last r ecount, Oracle inventory requires you toApprove or reject the count.

Generate Automatic Schedule

Generate Schedule RequestsThe scheduling program picks the items to cycle count in the

period until the end of the scheduling interval.

For example, a schedule that you run weekly picks more items

to cycle count than does a schedule that you run daily, becausethe weekly schedule picks items for more workdays at a time.

Oracle Inventory uses the scheduling frequency and the class

frequencies to determine the items to cycle count in eachscheduling interval.

Schedule Control Group

Specify whether or not you want Oracle Inventory to generateschedule requests for control group items.

Schedule Zero On-hand Quantity Items

If you have items with restricted subinventories and/or locators,Then you can enable Oracle Inventory to generate a count

request for each such predefined relationship even if that stockkeeping unit has a system on-hand quantity of zero.

Generate Cycle Count List

Generate Cycle Count ListThe cycle count list has detailed information on the stock

keeping units to cycle count and blank fields in which one canRecord actual counts.

Oracle Inventory uses the output of the count generationProgram to produce the count list.

Enter Cycle CountsEnter Cycle Counts

Enter quantities for each stock keeping unit.

You must generate count requests before you can enter counts.

You can query the output of the count generation program.

1/4/2015 D t 66634 1


13/14

1/4/2015 Document 66634.1


You can query your counts by any level of detail.

Enter Unscheduled Counts

If you enabled unscheduled count entry in your cycle countheader, then you can enter counts for items that you have not

generated automatic or manual schedule requests.

For unscheduled counts, you do not have to run the count

generation program.

Enter RecountsEnter quantities for those adjustments that Oracle Inventory

request recounts.

If a recount adjustment exceeds an approval tolerance, thenOracle Inventory requests recounts until you reach the

maximum number of recounts.

If a recount adjustment exceeds an approval tolerance after themaximum number of recounts, then Oracle Inventory requires

you to either approve or reject the adjustment.

Cycle Count AdjustmentsOracle Inventory processes cycle count adjustment for those

counts that do not need approval.

Oracle Inventory performs a cycle count adjustment by creatinga material transaction for the quantity and sign (plus or minus)

of the adjustment.

Approve Cycle Count Adjustments

Approve AdjustmentsOracle Inventory requires you either approve all counts that youentered or only those counts that exceed approval tolerances.

You may request a recount if you do not w ant to approve or

reject an adjustment.

A recount request appears on the next cycle count listing thatyou generate.

1/4/2015 Document 66634 1


14/14

1/4/2015 Document 66634.1


Oracle Inventory automatically adjusts all cycle counts thatyou approve on this form.

Enter Approved Counts

Enter counts that Oracle Inventory automatically adjustswithout requiring further approval.

You have now completed the process required to do a complete cycle count.

Example

Here is an example related to the setup of ABC Cycle Count Schedule. For example: a customer has 300 A items, they want to count the A items 12 times per year. They

would like to set up the system so that each month the system automatically selects A items (in our example it would be 10 items/day) and prints a daily cycle countrequest the first day of the month. They then want the system to generate another list of A items for Day 2 etc. The process would be repeated daily until all A items are

cycle counted each month.Reference: Thread: Question about ABC Cycle Count Schedule (http://myforums.oracle.com/jive3/thread.jspa?threadID=1245620&tstart=0)

Do the set up as follows :

1. Add all 300 items to class A2. Make Counts per year for class A - 12

3. Automatic schedule for 'Daily'The above set up would ensure all the 300 items to be counted once over a period of one month.

Cycle Counting Whitepaper

Documents

Transcript of Cycle Counting Whitepaper