Cycle Counting Strategy & Process

March 09

Agenda
Purpose Features & functionality Business process considerations Setup & configuration Process Special considerations Summary

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Purpose
High level understanding of how Oracle cycle counting works Understand business process considerations How to setup in Oracle apps (11.5.10) Best way to deploy

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Features & Functionality
Part of Inventory module – One of 3 ways to count
Physical Inventory Replenishment Counting Cycle Counting

Automates periodic cycle counting Identifies criteria for automating Provides variance reporting Allows approval control Supports serial & lot control items

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Features & Functionality (Cont’d)
Allows manual adjustments Fully integrated with cost accounting methods Integrated with ABC Analysis
Required to leverage full functionality of Cycle Counting

Provides ability to classify items into ABC ranks Flexibility to update & change “on the fly” Target inventory to count by Subinventory or organization Facilitate recounts & rejects Reporting & Analysis of transactions

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Business Process Considerations
What type of business?
Manufacturing Distribution Other

What inventory accuracy is important to your company?
Business critical Mildly important Not important

What inventory control disciplines are in place?
World class (>95% inventory accuracy) Above 90% accuracy Below 90%

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Business Process Considerations (Cont’d)
Logistics - Method currently in place
RF bar codes enabled Bar code only Written

Logistics - Timing of cut-off
Multiple shifts Resources available Data entry Approval

Management Reporting Requirements
External audit requirements Variance reports Internal audit requirements

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Setup & Configuration
ABC Analysis – First Hurdle
ABC’s of ABC’s ABC Classes ABC Compile ABC Assignment Groups

Cycle Counting – 2nd Hurdle
Cycle Count Attach ABC Group Load ABC Items

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Setup & Configuration (Cont’d)
ABC’s of ABC’s

The ABC classification process is an analysis of a range of items, such as finished products or customers into three categories: A - outstandingly important B - of average importance C - relatively unimportant as a basis for a control scheme. Each category can and sometimes should be handled in a different way, with more attention being devoted to category A, less to B, and less to C.
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Setup & Configuration (Cont’d)
ABC Classes

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Setup & Configuration (Cont’d)
ABC Compile

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Setup & Configuration (Cont’d)
ABC Compile Criterion Current on-hand quantity Current on-hand value Historical usage value Historical usage quantity Historical number of transactions Forecasted usage value Forecasted usage quantity Previous cycle count adjustment quantity Previous cycle count adjustment value MRP demand usage quantity Use the MRP demand usage quantity MRP demand usage value
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Setup & Configuration (Cont’d)
ABC Assignment Groups

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Setup & Configuration (Cont’d)
ABC Assignment Groups (Cont’d)

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Setup & Configuration (Cont’d)
ABC Assignment Groups (Cont’d)

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Setup & Configuration (Cont’d)
Cycle Count

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Setup & Configuration (Cont’d)
Cycle Count (Cont’d)

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Setup & Configuration (Cont’d)
Cycle Count (Cont’d)

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Setup & Configuration (Cont’d)
Attach ABC Group

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Setup & Configuration (Cont’d)
Load ABC Items

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Count Process
Perform Full Cycle Count
Generate Automatic Schedule Requests Generate Cycle Count Requests Cycle Count Listing

Count items
Blind count Record quantity

Approve & Update
Approve cycle counts Request recount Save & Update inventory

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Count Process (Cont’d)
Perform Full Cycle Count

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Count Process (Cont’d)
Perform Full Cycle Count

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Count Process (Cont’d)

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Count Process (Cont’d)
Update Items

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Special Considerations
Establish timely approach Execution is everything! What about locations audit? How to handle reservations and allocations What about “Kits”?

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Summary
Determine what type of industry and counting applies Understand ABC Analysis Analyze data ahead of time for ABC compiles Execute properly Test process thoroughly

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Thanks for attending
Ed McDonough mcdonoughe@tusc.com

March 09

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