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How To Setup and Define a Cycle Count [ID 66634.1]

Modified 22-APR-2010 Type HOWTO Status PUBLISHED

Applies to:

Oracle Inventory Management - Version: 11.5.10 and later [Release: 11.5 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 Analysis
and 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

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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.

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 for

performing 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. When
the 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 resubmit

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compile.

2. Define ABC Classes

Enter the Classes

Name =
Define class names that suit your business environment
Use 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 = <98stores>
ABC Compile =
ABC Classes
Sequence =
Name =

An ABC 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 Number

Base 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 Percent

Base 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 items
to class A, then you must choose a value between 0% and 40% for
the next class.

Assign Inventory Value

Base your assignment on the inventory value of the items in you
compilation.

Choose the cumulative inventory value that corresponds to the last

item in each class.

Assign Value Percent

Base your assignment on the percentage of inventory value of the
items 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 value
between 0% and 40% for the next class.

Unmatched Items and Numbers

If the value that you enter does not exactly match an item, then Oracle
Inventory chooses the first item with a value greater than the number
That 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 Items

Add 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 usage

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Value. 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 Classes

You 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 if

you choose not to use an ABC compilation as a basis for class
Assignments.

ABC ANALYSIS REPORTS AND INQUIRIES

Use reports and inquiry forms to verify ABC analysis information.

Reports
ABC Assignments Report--list items and the ABC classes of the
items.

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 within
And ABC group.

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

PERFORM CYCLE COUNT: OVERVIEW

Cycle Counting
Cycle counting is the periodic counting of individual items throughout
the year.

Count items of higher value more frequently than items of lower

value.

You can perform cycle counting instead of performing physical

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

Initialization
Initialization is the process identifying the items that you want to
cycle count.

Initialize you cycle count by choosing an ABC group that you

defined.

Automatic Scheduling
Automatic scheduling is the process of choosing the specific item to
Count 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 time

Interval for which Oracle Inventory schedules items to cycle count.

Manual Scheduling
Manual scheduling is the process of requesting counts for any item at
Any time.

Request counts for specific subinventories, locators, and items, and

Set 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 to
identify any further activity for this cycle count.

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Define and maintain an unlimited number of cycle counts for

your organization.

For example, you can have two separate cycle count headers for two
sets 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 of
your organization.

For example, the cycle count "ORG98 includes all items in

organization AUS.

Subinventory Level Cycle Counting

Enter periodic counts items that exist in specific subinventories
of your organization.

For example, the cycle count FLOOR98 includes all items in

subinventory 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 to
cycle 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 associate

an ABC group with you cycle count header.

Oracle Inventory uses the ABC group to determine the items

in your cycle count header.

Initialize Cycle Count

Oracle 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 count

within your organization or subinventories.

You may add an ABC class to your cycle count without running
The initialization program. In this case, you must manually add
items to the ABC class within your cycle count header.

Enter Count Frequencies

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

Typically, you would count ABC classes of high relative value

more frequently than you would count ABC classes of low
relative value.

Enter Scheduling Parameters

Enter Cycle Count Calendar
Specify a manufacturing calendar and exception set combination
so that Oracle Inventory can automatically schedule counts for
valid workdays.

The cycle count calendar can be different from your

organization's workday calendar. For example, you can choose
to 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 the

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frequency with which you run the scheduler and the frequency
with which you count each class of items.

Schedule Daily
Run the automatic scheduler every day.
The scheduler picks the items to count on each day.

Schedule Weekly
Run the automatic scheduler once week.
The scheduler picks the items to count in each week.

Schedule Every Period

Run 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 Date

Oracle 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 activity

when 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 the
scheduler on the system-specified Header Next Schedule Date.
You can change the Header Next Schedule Date to the current
date and then run the scheduler. In this case the automatic
scheduling program schedules those items that it would have
scheduled on the day on which you should have originally run
the program.

Schedule Zero On-hand Quantity Items

Specify whether or not Oracle Inventory should schedule items
that 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 stock
keeping unit has a system on-hand quantity of zero.

Enter Count Entry Controls

Enter Default Adjustment Account
Oracle Inventory posts cycle count adjustments to an
adjustment account

The adjustment account that you enter defaults into the Enter
Cycle Counts form, but you can override and enter any account
when entering count results.

Choose one of three approval options for your cycle count.

Required for all Adjustments
Use the Approve Cycle Count Adjustments form to approve
all adjustments.

Oracle Inventory requires you to approve all adjustments

regardless 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 Tolerance

Enter 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 soon

as you approve your adjustments and save your changes.

Not Required for Adjustments

You do not have to use the Approve Cycle Count Adjustments
form to approve any adjustments.

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Oracle Inventory updates system on-hand quantities as soon as

you save your changes.

Enter Approval Tolerances For Your Cycle Count

Quantity Variance tolerances
A quantity variance tolerance is a user-defined limit for the
difference between the system tracked on-hand quantity and
the actual count quantity

In oracle Inventory, you express positive and negative quantity

tolerances as percentages of the system on-hand quantity.

Adjustment Value Tolerances

An adjustment value tolerance is a user-defined limit for total
value 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 negative

adjustments value tolerances as amounts in you functional
currency.

Three Levels of Approval Tolerances

Specify 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 class
level. Tolerance that you set at the class level override
tolerances that you set at the header level.

Define Measurement Errors

You may specify a positive and a negative cycle count
measurement 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
the specified measurement error.

Since these measurement errors actually prevent adjustments

from taking place, you would use them on an exception basis
for items you cannot accurately count. For example, if you
count 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 analysis
reporting.

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 counting

procedures.

Enable Unscheduled Counts

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

Specify Late Count Days

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

Oracle Inventory uses the late count days to calculate the

due date for each count.

Choose Automatic Recounts

Specify whether or not Oracle Inventory should generate
for adjustments that exceed tolerances.

You must enter another count for an item to which Oracle

Inventory assigns a status of "account."

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Recount items automatically appear on the next cycle count

listing.

You must specify the maximum number of recount requests

that Oracle Inventory can generate.

After the last recount, Oracle inventory requires you to

Approve or reject the count.

Generate Automatic Schedule

Generate Schedule Requests
The 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, because
the 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 each
scheduling interval.

Schedule Control Group

Specify whether or not you want Oracle Inventory to generate
schedule 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 stock
keeping unit has a system on-hand quantity of zero.

Generate Cycle Count List

Generate Cycle Count List
The cycle count list has detailed information on the stock
keeping units to cycle count and blank fields in which one can
Record actual counts.

Oracle Inventory uses the output of the count generation

Program to produce the count list.

Enter Cycle Counts

Enter 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.

You can query your counts by any level of detail.

Enter Unscheduled Counts

If you enabled unscheduled count entry in your cycle count
header, 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 Recounts
Enter quantities for those adjustments that Oracle Inventory
request recounts.

If a recount adjustment exceeds an approval tolerance, then

Oracle Inventory requests recounts until you reach the
maximum number of recounts.

If a recount adjustment exceeds an approval tolerance after the

maximum number of recounts, then Oracle Inventory requires
you to either approve or reject the adjustment.

Cycle Count Adjustments

Oracle Inventory processes cycle count adjustment for those
counts that do not need approval.

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Oracle Inventory performs a cycle count adjustment by creating

a material transaction for the quantity and sign (plus or minus)
of the adjustment.

Approve Cycle Count Adjustments

Approve Adjustments
Oracle Inventory requires you either approve all counts that you
entered or only those counts that exceed approval tolerances.

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

reject an adjustment.

A recount request appears on the next cycle count listing that

you generate.

Oracle Inventory automatically adjusts all cycle counts that

you approve on this form.

Enter Approved Counts

Enter counts that Oracle Inventory automatically adjusts
without requiring further approval.

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

Related

Products

Oracle E-Business Suite > Logistics > Logistics > Oracle Inventory Management

Keywords

ABC ASSIGNMENTS; ABC COMPILES; ABC CLASSES; ABC GROUPS; DEFINE CYCLE COUNT

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