prms cycle counting and physical inventory count_phys inv sample.pdf · · 2009-04-20prms cycle...

PRMS Cycle Counting andPhysical Inventory

Master Production Schedule

Material Requirements Plan

Scheduling

Workbench

by

Production

Line

Work Order/

FPOMaintenance

Pick SlipPrint

Stage Request

Consolidated

Pick

SHOP

FLOOR

CONTROL

Soft BillMaintenance

Auto Allocation to

Lots

RMS/PresentVersion 2.3

A Product ofMXB - Managing the Business

100 N. Freeman RoadTucson, AZ 85748

(520) 886-5914www.ElectricEd.com

RMS/Teachkit PRMS Cycle Count and Physical Inventory

Teacher's GuideTable of Contents

Sample Agenda iAttendance Sheet iiWhy Count? 1

Why Do We Do Physicals? 2Impact of Inaccurate Inventories 4Complications of MRP II 6What is Wrong with doing Physicals 8Operational Requirements 10Cycle Counts vs. WIP Counts 12Cycle Counting 14

Getting There 17Defining the Program 20Defining "Accuracy" 22Defining the Organizational Requirements 24

Setting Up 29A Counting Commitment 32System Control 34Warehouse Master 38Reason Code Maintenance 40Counting by Master Count Schedule 42

System Control 42Functional Programs 46ABC Analysis and Update 48Manual ABC Classification 50Count Day Calendar 52Count Schedule Generation 54

Counting by Master Count Schedule, Location, or Physical 56Functional Programs for Both Methods 56Count Day Setup 58Count Day Maintenance 60Count Day Initiation 62

The PRMS Counting Process 65Print Counting Tags 68Count Entry Maintenance 70Count Adjustment Entry 74Count Adjustment Posting 78Accounting Warehouse Write-Off 80Tracking File Purge 82

C MXB, 1996, 2000 Printed in the United States

All Rights ReservedPRMS is a registered trademark of interBiz Solutions, a division of Computer Associates Inc.

RMS/Teachkit PRMS Cycle Count and Physical Inventory

Teacher's GuideTable of Contents (cont.)

Reports 85WIP Reporting Forms 88ABC Analysis Report 90Scheduled Count Items Report 92Unscheduled Items Audit Report 94Missing Tags Report 96Item Count Variance Report 98Item Inventory Accuracy Report 100Consignment/VMI Whse Discrepancy Valuation 9.0 102

Hands On Workshop 105

C MXB, 1996, 2000 Printed in the United States

All Rights ReservedPRMS is a registered trademark of interBiz Solutions, a division of Computer Associates Inc.

Sample Agenda

Day 1

MorningWhy CountGetting ThereSetting Up

AfternoonSetting Up WorkshopThe PRMS Counting ProcessReportsPerforming the Count Workshop

Page i

Name (printed) Job Function Day 1 Day 4Day 3Day 2check (x)

Course Title

Course Dates

RMS/TeachkitCycle Count/Phys Inv.

Why Count?



Scheduling

Workbench

by

Production

Line

Work Order/

FPOMaintenance

Pick SlipPrint

Stage Request

Consolidated

Pick

SHOP

FLOOR

CONTROL


Auto Allocation to

Lots

RMS/TeachkitPage 1

Why Count?

Why Do We Do Physicals?

Financial Reporting Requirements

Assure that assets stated of a publiccompany are a reasonableassessment

Physicals are a method of assuring the statement of the balancesheet. They are not meant to support the operational needs ofaccurate inventories for day to day business. In fact, most studieshave concluded that physical inventories actually deteriorate theaccuracy of specific part counts.

Page 2

Physicals

Physicals are a method of assuring the statement of the balance sheet. They are not meant to support the operational needs of accurate inventories for day to day business.

Why Count?

Impact of Inaccurate Inventories

Poor Customer Service Levels

Unnecessary Inventory Investment

Reduced Operational Efficiency

When the quantity of the POR from MRP is not the correct value,then all planning and execution of that part is manual

Page 4

Inaccurate Inventories

Not having accurate inventories means that all the systems and automation designed to use inventories as a factor must be manually revised.

Why Count?

Complications of MRP II

Accurate Forecasts

Accurate Master ProductionSchedule

Accurate Product Structures

Accurate Inventories

Accuracy in Purchasing

When the quantity of the POR from MRP is correct, all planning andexecution is simple, consisting of reviewing, selecting and submittingdata for batch processing.

Page 6

MRP

Effective MRP II utilization necessitates that the quantity of the POR's being generated is the action that will be taken. Only then can the electronic launching of Purchase Orders and Manufacturing Orders be practical. A well disciplined system means that there is little administration effort in executing the functions of the system.

Why Count?

What is Wrong with doing Physicals

Financial versus OperationalRequirements

Timeliness

Accuracy of Count

Page 8

Physicals

Physicals may often deteriorate the accuracy of part, quantity and location while at the same time satisfying the financial requirements. The financial requirements are that if the balance sheet says there is $100.00 of inventory, then the perpetual says there is $100.00. Operational requirements state that if the system says there is 100 of product A in location A-A-A to pick for a customer order, then that specific product is in that specific location.

Why Count?

Operational Requirements

Product and Quantity Accuracy forMaterial Support

Product Master accuracy indicates validity of the purchase plan

Location and Lot Accuracy forPick/Pull Support

Warehouse, location and lot accuracy effect the direct laborefficiency of storing and moving material

Page 10

Op Requirements

Operational requirements are for accurate part counts in the proper location at any given time, not just once or twice per year.

Why Count?

Cycle Counts vs. WIP (Floor stock) Counts

Cycle CountsREGULARLY SCHEDULED FOR PRE-DETERMINEDPOPULATION

RECONCILIATION TO TRANSACTION CUTOFFS

APPLIED TO CONTROLLED STORES ENVIRONMENTS

WIP CountsSPECIFICALLY FOR BACKFLUSH ENVIRONMENTS

VALIDATES THE BILL OF MATERIALS

DETERMINES 'MATERIAL USAGE VARIANCE'

PERFORMED IN MINUTES, DAILY AND/OR WEEKLYComponent parts stocked in fixed locations/fixedquantitiesGo/No Go Counting Method

WIP Counts

There is a significant difference between the two. Cycle count is intended for controlled stores where material is stocked. WIP counts are used to validate the backflush and used where material movement is fluid.

Why Count?

Cycle Counting; an Operational Solution-ControlledStores

Assurance of Inventory Accuracybased on Regularly ScheduledSampling Techniques

Establishment of Responsibilitiesfor the Accuracy of Inventory by theOperational Management of anOrganization

Page 14

Solution

Cycle Count programs make the accuracy of inventory an everyday routine owned by the operational departments, not just a one time event.

Getting There



Scheduling

Workbench

by

Production

Line

Work Order/

FPOMaintenance

Pick SlipPrint

Stage Request

Consolidated

Pick

SHOP

FLOOR

CONTROL


Auto Allocation to

Lots

RMS/TeachkitPage 17

Getting There

Getting There

Define the Program

Assess the Current Position

Begin the Counting Process

Page 18

Getting there

Before you take off and begin counting immediately, some thought is required.

Getting There

Defining the Program

Statement of Purpose

Definition of "Accuracy"

Definition of OrganizationalRequirements

Page 20

Define the Program

A clear statement of what it is you are trying to accomplish is necessary. It is dollar accuracy you are looking for? Part accuracy? Location accuracy? What are the ground rules?

Getting There

Defining "Accuracy"

Categorization of PartsLEAD TIME

COST

PROJECTED USAGE...

Statement of Performance Goals

Page 22

Accuracy

Accuracy means many things to many parts. It is necessary to classify your parts and determine measurement methods that are appropriate to the form, fit, and function of those parts. PRMS uses history to calculate ABC, not projected usage. This can be compensated for with the Manual ABC assignment.

Getting There

Defining the Organizational Requirements

Definition of ResponsibilitiesWAREHOUSE

TRANSACTIONS

RESOLUTIONS

Assignation of Performance Goals

Page 24

Org Requirements

Very often, the reasons for not having accurate inventories reside in the delegation and assignation of responsibilities for transacting those inventories. If the warehouse manager is not responsible for the transactions that effect his/her inventory then there may certainly be problems in correcting the processes.

Getting There

Defining the Organizational Requirements (cont.)

Material and Data Flow Analysis

Refresher Education

Sample Counts

Resolve Immediate Issues

Update Goals

Page 26

Org Req

Very often the transactions and configurations of warehouses has remained since implementation. It is wise to review this configuration and insure that it fits the business processes. Remedies can often begin even before the counting process.

Setting Up



Scheduling

Workbench

by

Production

Line

Work Order/

FPOMaintenance

Pick SlipPrint

Stage Request

Consolidated

Pick

SHOP

FLOOR

CONTROL


Auto Allocation to

Lots

RMS/TeachkitPage 29

PRMS Physical Inventory/Cycle Counting Process Flow

MXB,2000

Physical or Count by Location

Count by Master Count Schedule

Count Schedule

Generation

Count Day Setup

ABC Analysis

and Update

Count Day Initiation

Count Day Maintenance

The Counting Process

Setting Up

or

Print Counting Tags

Count Entry Maintenance

Count Adjustment

Entry

Count Adjustment

Posting

TM

(IN0603) (IN0601)

(IN0610)

(IN0620)

(IN0640)

(IN0644)

(IN0650)

(IN0660)

(IN0665)

Tracking File Purge

(IN0690)

Accounting Warehouse Write-Off

9.0

9.0

(IN0685) (IN0687) (IN0694)

Page 30

Counting Process

This picture is used at each major section of this course. It highlights each of the functions within the Physical Inventory module. Use it to highlight the next several subjects you will be discussing.

A Counting Commitment

The Counting Process

Master Count Schedule or Location?

Follow a Regular Schedule

Resolve Discrepancies Immediately

Don't Panic

Improve Methods

Page 32

Counting Process

The primary decision to make at a warehouse level is whether you will be counting via a Master Count Schedule according to ABC classifications or by location. Generally, if items in a particular warehouse are stored in random locations, then counting by location is a preferred method. The reason is the time it may take to go to every location where an item is stored, perform the count and perform the reconciliation. Generally, if items in a particular warehouse are stored in fixed locations, then counting by a Master Count Schedule is effective. There certainly are other considerations, for instance, the allocation process, the picking process, the types of parts, etc.

Each one of our RMS/Teachkit courses and training presentations are available for your selection.Choose the full color, 'Present' format for self-review or your presentation document for the class throughyour projection system. If you would like to print student manuals, select '+ Print' format. In addition toreceiving the 'Present', you will receive an additional file specifically configured and optimized fortwo-sided student workbook production. Submit to your own laser printer or send outside. If you prefer,you can choose the 'Present' format only and order the student manuals from us! All our printing is crisp,laser printing, two-sided, soft bound and delivered on time 100% of the time.

Present + Print Present + Print

Education & Reference

General ManufacturingWelcome to PRMS 99.00 199.00 Product Definition 199.00 349.00

PRMS Overview 199.00 349.00 Manufacturing Planning 199.00 349.00

Version 9 Enhancements 99.00 199.00 Shop Floor Control 199.00 349.00

'Canned' Reports & Inquiries 99.00 199.00 Router Training 149.00 299.00

Distribution InventoryForecasting Workbench 149.00 299.00 Inventory Control 99.00 199.00

Customer Order Processing 199.00 349.00 Cycle Count & Phys. Inv. 99.00 199.00

Order Entry Training 149.00 299.00 Lot Control 99.00 199.00

RGA's & C/D Memos 149.00 299.00 FinancialReplenishment Orders 99.00 199.00 Standard Costing 149.00 299.00

Purchasing & Receiving 199.00 349.00 Accounts Payable 149.00 299.00

Online TutorialsThe Keyboard & PRMS 99.00 Navigating PRMS 99.00

Purchasing Overview 99.00 Requisition Processing 99.00

Measuring ExecutionPerformance 99.00

Contact us: [email protected] u.s.800-304-5914, 520-886-5914, fax 520-298-5525

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prms cycle counting and physical inventory count_phys inv sample.pdf · · 2009-04-20prms cycle...

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