cycle count and abc analysis(1)

8/10/2019 Cycle Count and ABC Analysis(1)

1/31

ABC analysis

andCycle Count

:Prepared by:Anuj MawadikarUday ShuklaTushar Rajpal


2/31

Objective:

To make a new user aware about the conceptsof ABC analysis & Cycle Count.To layout the process in brief regarding the us

of ABC analysis and Cycle Counting in OracInventory.


3/31

Inventory Record Accuracy:

Inventory Record Accuracy (IRA) is a measure ohow closely official inventory records match thephysical inventory.Why IRA is important?

Inventory is often the largest consumer of capital for anenterprisePoor accuracy requires more inventory and capitalTo overcome late deliveries and missed schedulesStock outs also increase cost


4/31

Methods for Improving Inventory Accuracy

Physical Counting: A physical inventory is a count of what is currently in stock in the warehoucomparing that count to what the computer thinks is in stock, and making anecessary adjustments to get the computer counts to match the warehouscounts.

Cycle Counting:Cycle counting is a popular inventory counting solution that allows businesto count a number of items in a number of areas within the warehouse withohaving to count the entire inventory. Cycle counting is a sampling techniqwhere count of a certain number of items infers the count for the wh

warehouse.


5/31


6/31

Advantages:

Cycle counting enables you to keep inventory recoraccurate by correcting errors between the system onhand (perpetual) and actual on-hand (physicquantities.Cycle counting can also be a valuable tool to h

identify patterns in the errors found. Analysis of these patterns can suggest and help tprioritize improvements in training, tools, processes.Over a period of time these improvements mincrease the average level of IRA.


7/31

ABC analysis:

An Inventory Control Technique. ABC analysis is a type of analysis of materdividing in three groups called A-group

B-Group items and C-group items fpurpose of exercising control over materials.


8/31

ABC analysis:

Criteria A Type B Type C TypeQuantity 10 % 20% 70

Value 70% 20% 10

Control Very Strict Moderate Les

Ordering Daily/ Weekly Monthly YearSafety Stock Less Moderate High

Handled by Senior Officers Middle Mgmt. Fully delega


9/31

ABC analysis in Oracle Inventory:

STEPS:Define ABC classesDefine and run an ABC compileDefine ABC assignment groupsDefine ABC item assignmentsUpdate ABC item assignments


10/31

Define ABC classes:

Navigation: Inventory > ABC Codes > ABC Classes


11/31

ABC compile:


12/31

Run ABC Descending Value Report:


13/31

ABC assignment groups:


14/31

Run ABC Assignment Report:

On the Assign ABC Item form, this report ruautomatically as soon as you press Assign.This report has to be run again if Update Itemis used.


15/31

Cycle Counting:

STEPS:Defining & Maintaining Cycle CountsGenerate Cycle Count listingEnter Actual QuantitiesApprove Adjustment


16/31

Defining Cycle Counts:


17/31

Assign ABC Classes to Cycle Count:


18/31

Observations:

The No. of Counts per Year for a particular classis specified at Cycle Count.12 times per year' does not necessarily mean thathe items will be counted in even increments, suc

as per month, it just means 12 times throughoutthe year.The objective with Cycle Counting is to ensurethat no one knows which items are going to be

counted, this is a near-random process that is


19/31

Cycle Count Items:


20/31

Run Request:

Navigation: Tools > Cycle Count Scheduler


21/31

Navigation: Tools > Perform Full Cycle Count


22/31

Cycle Count Entries:


23/31

Findings:

The maximum number of items per class selected forcycle count are calculated as:Maximum Items to schedule per class = [ (Total Items the class * Counts Per year * No. of working days incount frequency duration) / (No. of working days in thyear) ] +1No. of working days in count frequency duration iscalculated as 1 if the Auto Schedule frequency = Dand 5 if Weekly (assuming the weekends are non-working days as per the calendar attached to the cyclecount)


24/31

Example:

Auto Schedule Frequency = DailyNo. of Items in class B = 300No. of counts per year for class B = 2No. of working days in the year = 260


25/31

Example:

If the next date under the Auto Schedule is 10/26/2012 Perform Full Cycle Count is manually submitted on10/26/2012Result: the cycle count is generated for 3 items in class

as:[(300*2*1)/260] + 1 = 3When the Perform Full Cycle Count completes, itautomatically updates the Next date as next working

calendar date and last date as current date.


26/31

Example:

The Perform Full Cycle Count has to be run o10/27/2012.But if it is not run because of some reasonsand then run directly on 10/31/2012, then thecycle count is generated for 12 items in classB as:[(300*2*5)/260] + 1 = 12 items


27/31

Count Adjustment Approval:


28/31

Next Cycle Count Entries:


29/31

Count History:


30/31

Now what after Cycle Count:We can take note of major discrepancies/ variances, analyreasons for the same and try to aim towards 100% accuracy.

Once the root causes are identified and are being dealt with for tconcerned items, and the Cycle Counting procedures have beereviewed and are in place, the Cycle Counting program should expanded to include all of the inventory items.

We can also aim to eliminate periodic Physical Inventory Couonce we achieve a high level of accuracy, say 95-97% dependinupon entity to entity.


31/31

cycle count and abc analysis(1)

Documents