Achieving Inventory Optimization and Distribution Controls with Cycle Count

Raza Haider

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About…

Who is DataRoad?
• DataRoad is… •
an Oracle Certified Partner providing consulting services using the Oracle 11i E-Business Suite. DataRoad has nationally-recognized expertise in providing Oracle-based E-Business solutions for clients in a wide range of industries.
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About…

DataRoad provides…
• • • • • • • • • 11i E-Business Suite Implementations 11i E-Business Suite Upgrades Managed Services of Applications and Technologies Oracle Database and Applications Server Services Oracle Professional Staffing Customized Oracle Training Oracle Software Development Hardware and Software for Oracle Infrastructure Headquarter located in Jacksonville, FL
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Presenter’s Qualifications

Raza Haider
• • Sr. Independent Consultant, specializing in Oracle 11i E-Business Suite 7+ years of experience in Financials 11i, Supply Chain, and SelfService including iProcurement, iExpense, and development of APPS web inquiry systems Successfully completed many multi-org / multi-currency implementations and upgrades under tight schedules and deadlines rhaider_oracle@yahoo.com

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Presentation Agenda • • • • Objective Inventory Optimization – Why? Oracle Solutions Concepts and Procedures – Identify Phases • ABC Analysis • Workday Calendar • Cycle Count – Supporting Reports • When to perform Cycle Counting? • Conclusion • Q&A
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Objective

• The purpose of this presentation is to demonstrate the steps involved in building a Cycle Counting system using Oracle 11.5.10 • Use the paper and this presentation together
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Inventory Optimization – Why? • Inventory accuracy in manufacturing, distribution, and fulfillment operations is critical • Without accurate stock level information in your system, effective inventory management is impossible • Accurate inventory contributes to improved customer service • Procuring the right quantities to replenish your inventory is crucial • Up-to-date stock levels will positively impact business performance and mission results (ROI) • Organizations must ensure inventory accuracy for procurement controls, auditing and financial reporting

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Oracle Solutions
• Oracle meets all challenges and demands to achieve accurate stock levels with methods like Physical Inventory and Cycle Counting – Physical Inventory • Takes a snapshot of inventory quantities • Material transactions are frozen until after you have performed your adjustments • May not be suitable for those operations that verify stock balances more than once a year – Cycle Counting • Cycle counting can be utilized to achieve accuracy with a great degree of flexibility • Available in a number of Oracle modules

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Cycle Count Concepts and Procedures

• Cycle counting is the periodic counting of individual items throughout the year • Items of higher value are counted more frequently than items of lower value • Cycle count initiates counts to be scheduled as often as desired (daily, weekly, monthly, etc) • Ensures that no items will be skipped, or counted more often than necessary • It can replace the traditional year-end physical inventory

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Concepts and Procedures • The presentation will identify the main components of building a practical cycle counting system • Screen prints are presented to illustrate the steps • Cycle Count can be divided into 3 primary phases:
– ABC Analysis – Inventory Calendar – Cycle Count

• Each can be configured and tailored to fit any business requirements • Oracle Inventory responsibility

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Concepts and Procedures
Oracle Inventory Responsibility

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Concepts and Procedures
ABC Analysis – Phase 1

• ABC Analysis – Determines the values of items by ranking them in a criterion and then grouping them into classes – ABC Analysis is divided into four main sub-tasks
• • • • ABC Compile ABC Classes ABC Assignment Groups Assign Items

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Concepts and Procedures
ABC Compile

• Navigate to Inventory ABC Codes ABC Complies New • Choose one of 15 compilation criteria for performing an ABC analysis • Can be defined and complied for the entire organization or a specific subinventory
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Concepts and Procedures
ABC Compile

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Concepts and Procedures
ABC Compile - Criterion

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Concepts and Procedures
ABC Compile

• Analyze your results with “ABC Descending Value Report” • Use it as a guide in assigning your items to ABC classes • Tools menu will allow you to:
View, Purge and Print compile

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Concepts and Procedures
ABC Compile

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Concepts and Procedures
ABC Classes

• ABC classes are used to identify the value groupings to which your items belong • Use your own terminology for ABC classes • For example, if you select criterion “Historical number of transactions” in your compile, you can define classes A, B, C and D where:
– – – – Class A for High Moving Items Class B for Medium Moving Items Class C for Slow Moving Items Class D for Obsolete Items

• Navigate to Inventory

ABC Codes

ABC Classes

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Concepts and Procedures
ABC Classes

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Concepts and Procedures
ABC Assignment Groups

• Before you assign items to ABC classes, you must define an ABC group • Groups link a particular ABC compile with a valid set of ABC classes • Inventory ABC Codes ABC Assignment Groups

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Concepts and Procedures
ABC Assignment Groups

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Concepts and Procedures
ABC Assignment Groups

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Concepts and Procedures
Assign Items

• • • •

Choose the sequence number that corresponds to the last item in each class You can base your assignment on the percentage of items or the cumulative inventory value that corresponds to the last item in each class For example, if you assign 55% of your items to class A, then you must choose a value between 0% and 45% for the next class To define assignments, click ‘Assign Items’ button in the group window. Alternatively you can navigate to Inventory ABC Codes ABC Assign

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Concepts and Procedures
Assign Items

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Concepts and Procedures
ABC Analysis

ABC Analysis: Use the following reports to verify ABC analysis information – ABC Descending Value Report can be used to analyze your result. Oracle Inventory ranks all the items in your ABC compile in descending order to produce the ABC Descending Value Report. This report can be utilized as a guide in assigning your items to ABC classes. – ABC Assignments Report lists items and the ABC classes of the items Forms Inquiry – Update ABC Assignments window checks class assignment of items within an ABC group

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Concepts and Procedures
Workday Calendar – Phase 2

• Workday Calendar is required in cycle counting • Can have exceptions • On/Off day follows workday patterns • Build the Calendar from Tools menu • Navigate to Inventory Setup Organizations Calendar
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Concepts and Procedures
Workday Calendar – Phase 2

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Concepts and Procedures
Cycle Counting – Phase 3

• Cycle counting has multiple components
– – – – Cycle Count (Definition) Perform full cycle count Cycle Count Entries Approve Counts

• Cycle count can be manual or automatic
– Manual process requests counts for any item at any time – Automatic scheduling chooses the specific item to count in a time interval

• Both are very similar to set up; however the following sections discuss the automatic scheduling scenario

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Concepts and Procedures
Cycle Count (Definition)

• Divided into multiple tasks and each task can have additional subtasks • Header
– Cycle count name Description – Calendar – GL adjustment account
• Adjustments/discrepancies are posted to this default account but it can be overridden when entering the actual counts

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Concepts and Procedures
Cycle Count (Definition)

• Detail Regions
– ‘Scope and Control’ – ‘Serial and Schedule’ – ‘Adjustment and ABC’

• Cycle Count Classes

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Concepts and Procedures
Cycle Count (Definition)

Detail Block

– ‘Scope and Control’ region has:
• Count Controls parameters • Count Subinventories
– To include organization or sub-inventory level cycle counting information

• Automatic Recounts • Navigate to Inventory Cycle Count New Counting Cycle Counting

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Concepts and Procedures
Scope and Control

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Concepts and Procedures
Cycle Count (Definition)

Detail Block

– ‘Serial and Schedule’ region has:
• Serial control options
– Optional

• Auto scheduler parameters
– Must select ‘Auto Schedule’ to initiate counts to be scheduled as often as desired (daily, weekly, monthly, etc)

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Concepts and Procedures
Serial and Schedule

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Concepts and Procedures
Cycle Count (Definition)

Detail Block

– ‘Adjustment and ABC’ region has:
• Approval - tolerances parameter for
– Qty variances – Adjustment value – Hit/Miss analysis

• ABC Initialization
– Compile Group – (Re)initialize option

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Concepts and Procedures
Adjustment and ABC

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Concepts and Procedures
Cycle Count Classes

• Click on ‘Classes’ button
– Select the name of the ABC class for your cycle count – The number of times per year you want to count each item in this class

• Close Classes window and Save • Oracle will submit a concurrent request
– Classes will be assigned to items

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Concepts and Procedures
Cycle Count Classes

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Concepts and Procedures
Perform full cycle count

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Concepts and Procedures
Perform full cycle count

• Enter all parameters for each program • Make sure to check ‘Save output’ before submitting the job • Cycle count listing has the detailed information on items • The report provides blank space to write down actual counts
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Concepts and Procedures
Perform full cycle count

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Concepts and Procedures
Cycle count listing

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Concepts and Procedures
Cycle Count Entries

• Navigate to Inventory Counting Cycle Counting Cycle Count Entries • Header level you can find your cycle count, adjustment account, and other defaults • Details level will show all open count requests • Enter all required and optional information for each line • Use listing report to make adjustments

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Concepts and Procedures
Cycle Count Entries

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Concepts and Procedures
Cycle Count Entries

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Concepts and Procedures
Cycle Count Entries

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Concepts and Procedures
Cycle Count Entries

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Concepts and Procedures
Approve Count

• Navigate to Inventory Counting Cycle Counting Approve Count • At the header level you can find your cycle count, adjustment account and other defaults • The detail level will query pending counts • Approve cycle count adjustments held for:
– approval, to recount an item, or to reject the adjustment

• Inventory determines which counts need approval by using the approval tolerances you enter while defining your cycle count. • Once an item is approved, qty-on-hand is adjusted and the material adjustment value is posted to GL - once transferred

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Concepts and Procedures
Approve Count

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Concepts and Procedures
Supporting Reports

• • • • • • • • •

ABC Assignments Report ABC Descending Value Report Cycle Count Entries and Adjustments Report Cycle Count Hit/Miss Analysis Cycle Count Listing Cycle Count Open Requests Listing Cycle Count Unscheduled Items Report Cycle Counts Pending Approval Report Cycle Count Schedule Requests Report
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Concepts and Procedures

• •

This completes the cycle counting initial process Based on the frequency and the scheduled date, you would ‘Perform full cycle count’ as described above

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Concepts and Procedures

• When to perform Cycle Counting?
– During the time when material transactions are not moving – Typically this is just before or after normal peak working hours – Consider counting for one hour each morning before your warehouse opens for business or – Each afternoon, after the last order has been filled

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Concepts and Procedures
Conclusion

• Time is money; Oracle Cycle Counting will save a tremendous amount of time • Significantly reduces overtime costs associated with performing the counts while reducing the plant shutdowns • Ultimately, cycle count adjustments are posted to General Ledger facilitating accurate financial system and reports
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Q&A Thank You! Raza Haider
rhaider_oracle@yahoo.com
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