Cycle Count Overview

Abstract: An overview of the cycle count process used to count inventory. This process is
an item based method of counting inventory.

Cycle Count Process

Overview
Select Items for Count
Cycle Count Review
Print Cycle Count Sheets
Enter Cycle Count
Print Variance Report
Approve Count
Update Count
How to Determine if an Item has been Counted and Updated
AAIs Used
How To Count Items at a Set Frequency Such As Weekly Or Monthly
Related Solution Documents

Overview
The purpose of the cycle count is to compare the computer on-hand (also called perpetual
balance) to the actual on-hand (obtained by counting) and correct the computer to match
what is actually in the warehouse or supply cabinet. This process creates Cardex records
and writes journal entries.

These are the required steps in the order that they must be completed:

1. Select Items for Count: Specify the items you want to count?
2. Print Cycle Count Sheets: Print sheets to record the counts on.
3. Enter Cycle Counts: Key the counts into the system.
4. Approve Counts: Give the Okay.
5. Update System: Change the computer on-hand to match the counts, record the
transactions, and create the journal entries.

Some of these steps can be accessed from the menu, some from Cycle Count Review
(03/G4121) and some from both. Think of Cycle Count Review as the command center
for the cycle count process. Once you have run Select Items For Count, all the remaining
steps can be done from within Cycle Count Review.

Step Program Available Available

 from Cycle
from
Count
Menu?
Review?
Select Yes
P41411 No
Items (02/G4121)
Print
Yes
Count P41410 Yes (Opt-2)
(04/G4121)
Sheets
Enter Yes Yes (Opt-
P4141
Counts (05/G4121) 3)
Approve
P41240 No Yes (Opt-4)
Counts
Update Yes
P41413 Yes (Opt-5)
System (07/G4121)

Files Used

The F4140 is the Cycle Count Header file. This file stores the cycle count number, cycle
count status and the number of items selected for count. The F4141 is the Cycle Count
Transaction file. It is shared by both the cycle count and the tag count programs. It holds
information about the items selected for count, including the on-hand quantity which
comes from F41021. This on-hand quantity in F4141 is "frozen" because it is not
changed by subsequent inventory transactions, sales, or receipts.

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Select Items For Count

Run Select Items For Count to create the F4140 and F4141 records. A single F4140
record is created and one F4141 record is created for each item location. When the
F4141 records are generated, the Total Primary Quantity field (PJTQOH) is populated
with the current Quantity On Hand (LIPOQH) from F41021. This will generate a ' Cycle
Count Number' that is assigned by the Next Numbers program ( system 41, position 5). A
report (R41411) is created listing item, item description, branch, location, lot and current
on hand.

Use the Data Selection of this DREAMwriter to specify which items to include in the
count.

You can select on any fields in F41021. Here are some fields that are often used for cycle
count data selection.

• Next Count Date (LINCDJ): Items may be selected based on the Next Count
Date field in F41021. See How To Count Items At A Set Frequency
 • ABC Codes: Items may be selected by the ABC Codes located in F4102. These
can be populated manually or automatically generated through the ABC Analysis
report (P4164). There are three ABC fields. To understand how they are
populated, see Solution Document WDS-99-0037, ABC Analysis.

Name in DW Data
Data Item Data Item Name
Selection
ABC Code 1 - Sales -
ABC Codes IBABCS
Inventory
ABC Code 2 - ABC Code 1 - Margin -
IBABCM
Margin Inventory
ABC Code 3 - ABC Code 3 - Investment
IBABCI
Investment - Inventory
• Cycle Count Category: The field is populated in the item branch record (F4102).
See Method 1
• Location: To select by location:

Do not include the separator characters

Do include the spaces, look up the width of the location fields on page 2 of the
branch/plant constants (05/G4241)
If your location format specifications are:

And your location is: 1 .A .1

In the data selection for location enter: 1 A 1 (That's 1, 1-space, A, 2-spaces, 1)

The following is an example of the report that is created by Select Items For Count.

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Cycle Count Review
This program allows options for review and advancing the cycle count status. The
program can advance the status through Entry, Print, Approval and Update. You can also
view your count, its description, current status and count details such as variances, on
hand and quantity counted.

• Cycle Status 10 thru 60: You can set the default values with processing options
1 and 2.
• Cycle Count Number - assigned by the Next Number process during Select
Items For Count.
• Description of Count - 30 character description that is entered in processing
option # 1 of the Select Items for Count program.
• Cycle Status - Indicates the last step that was completed for the specific cycle
count.
• Count Date - the specific date on which the count was started
• Locations/Items - the total number of locations and items that are in the cycle
count.

Valid Cycle Count Statuses

These statuses are defined on UDC table 41/CS and should not be deleted or changed.

To verify valid cycle status codes, press F1 in the 'Status' field and press ENTER. The
screen will display all the valid values for Status on your system.
Available Options Within Cycle Count Review

1. Detail Cycle Count Information

2. Print Cycle Count Sheets
3. Cycle Count Entry
4. Approve Count for Update
5. Submit Count for Update
6. Cancel Count
7. Reset Count

• Option 1 = Detail Cycle Count Information

Type of Variance - You may specify the type of variance

that is displayed.

• To specify a variance by quantity (EA, CA,

LB, etc.), enter "Q" in the " Variance Type" field.
• To specify a variance by dollar amount,
enter "A" in this field.

Relationship - In the "REL" field, key in a test for the

variances you want to display. The only valid tests are:

• EQ Equal to
• LT Less Than
• LE Less than or Equal to
• GT Greater Than
• GE Greater Than or Equal to
 Variance Amount - In the "AMT" field, key in the amount
limit for the range of variances you want to display. For
example, if you key in "100" in the "AMT" field and "GE"
( Greater than or Equal to ) in the "REL" field, the program
will display only those variances greater than or equal to
100.

Amount Type - You may specify the displayed variance

by percentage or by amount. In the "AMT TYPE" (Amount
Type) field, key in either a " %" (Percent) or an "A"
(Amount). Each line within the body of the screen displays
the net variance quantity and the net variance amount for
each location for an item. After A7.3 c8, the total for the
Quantity Counted field will change to 0 after Cycle Count
Update is run successfully.

• Option 2 = Print - PRINT CYCLE COUNT SHEETS (P41410)

This will submit the print job directly to batch using the
DREAM Writer version set in processing option # 3 behind
the Cycle Count Review.

After the version prints successfully, the status 20 'Printed'

will display in the 'Status' display field.

• Option 3 = Entry - RECORD RESULTS OF CYCLE COUNT (P4141)

This will take you to the Cycle Count Entry program.

Once initial results have been recorded for the cycle count,
the status 30 'Entry' will display in the 'Status' display
field.

• Option 4 = Approve - APPROVE ENTRY OF CYCLE COUNT

The 'Status' display field will now display 40 'Approved.'

The Variance Detail Print (P41403P) can be run before this

step so that the variances can be reviewed and any changes
can be made to the cycle count entry.

• Option 5 = Update - UPDATE CYCLE COUNT (P41413)

 This will submit Cycle Count Update to batch using the
DREAM Writer version set in processing option # 5 behind
Cycle Count Review.

Once this process has finished, the status 50 'Completed'

will display in the 'Status' display field.

• Option 6 = Cancel - CANCEL CYCLE COUNT

You can cancel a cycle count at any time. This is not a

required step of the normal cycle count process.

If you cancel the cycle count, F4141 does not get purged.

• Option 7 = Reset - RESET CYCLE COUNT

This will erase all previously entered counts and will

update the frozen quantity on-hand with the current
quantity on-hand. This is useful if there were any
adjustments made to items selected in this specific cycle
count after the quantities were frozen. This option will run
the P41412 Refresh Frozen Count Quantity for Physical
Count. You can perform this process up until you start the
cycle count update program. Once you proceed with the
update program, the Cycle Count Review (P41240)
prevents you from performing the 'Reset' process again.

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Printing Cycle Count Sheets

After you choose the items to include in the cycle count and have reviewed them online,
you can print the cycle count sheets that you will use to perform the actual count.

Run the Print Cycle Count Sheets DREAM Writer program to print information from the
Cycle Count file (F4141) on the count sheets. You can specify the count number that you
want to print in the data selection. The system uses the DREAM Writer version you
specified in the processing options when the report is printed through the Cycle Count
Review option.
Once you have printed the count, the status 20 'Printed' will display in the 'Status ' display
field.

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Enter Cycle Count

After you have performed the cycle count and recorded the information on the cycle
count sheets, transfer the results to your online inventory records F4141.

When the count has been entered, the quantity counted is populated into the F4141 Total
Primary Quantity Counted field PJTQCT and the fold of cycle count entry. An '*' is also
displayed to the left of the item location to signify that a quantity has been entered.

Changing the quantity counted and entered

You may increase or decrease the counted quantity by entering a

positive or negative difference quantity. For example: You counted and
entered 100. Then an additional 10 are found. Enter 10. The count
becomes 110.

You may replace the quantity counted by entering the new count and
entering a 1 in the option field. For example: You counted and entered
178. But a recount found 163. Enter 163, put a 1 in the option field.
The count becomes 163.

Quantities of 0 must be entered to populate the counted quantity in F4141, but are not
necessary for an accurate update of your count. Only quantities that have been counted
and have a quantity entered will be updated in the Item Location file (F41021).

Variance Detail Print

After you enter and review your cycle variance information, you might decide to recount
some items and subsequently revise/replace the cycle count quantity. After you recount
and revise, you can review variances again, both online and through the Variance Detail
Print report (P41403P).

The Variance Detail Print program has processing options that allow you to determine
whether to print quantity or amount variances. The are also processing options that allow
you choose whether to print percent or unit variances. You can determine an amount or
quantity value that will be included/excluded in the report.

Approve Cycle Count

Once the variances have been reviewed and items have been recounted (if necessary), the
count can be advanced to a 40 'Approved' status through Cycle Count Review.

Cycle Count Update

The Cycle Count Update will compare the perpetual quantities and the counted quantities
in F4141. The program will then update the Quantity on Hand in the Item Location file
(F41021). The program will then write Cardex (PI document type) records and General
Ledger records based on the variance amounts. Set processing option # 4, to write or not
write General Ledger records if there are no variances.

How to Determine if an Item has been Counted and

Updated
Query the F4141 for the cycle count (PJCYNO), or for the cycle count and item (PJITM)
If the query does not return any records, and if processing option 3 of the P41413 Cycle
Count Update was set to a 1 to delete the detail records from the cycle count files after
the update is run, then the cycle count was updated.
If the query returns records, look at the value in PJCCCD (Cycle Count Code).
If PJCCCD is:
• Blank: the item was not counted.
• Set to 1: the item was counted but not updated. There will be no F4111 (Cardex)
records.
• Set to 2: the item was updated. There will be a Cardex record if a variance (gain
or loss) was booked. There will be a Cardex record for a zero-variance count if
the P41413 processing option 4 was set to a 1 to write Item Ledger records
(F4111) when the variance is zero).

If you find Cardex records for some items that were to be counted, but not for others, it is
possible that the ones without the Cardex record were perfect – i.e. no loss, no gain – and
the P41413 processing option 4 was blank. You can confirm that by querying the F4141
to see if the PJTQOH (Total Primary on Hand) is the same as the PJTQCT (Physical
Quantity).

AAIs Used
The AAIs used for the General Ledger Entries are:

4152 = which provides the inventory account to offset against any count variances.

4154 = which provides the cost of goods sold account to update.

Prior to A7.3 Cume 8

You will not receive an error report. The update will appear to have run successfully and
will get a good Cardex record. But if you inquire on the journal entries for that Cardex
record, you will see that the AAIs are not setup.
Resolution: The accounts must be manually entered into the journal entry to complete the
Update and post successfully. Since the Update advances the status, it is not possible to
run the count through update a second time.

In A7.3 Cume 8 and above, you will receive an error report. To fix this, set up the AAIs
and rerun the Update.

Update Processing Options

1) Enter General Ledger Date, if left blank the system date will be used.

2) See How To Count Items At A Set Frequency

3) Enter '1' if you want to delete the records in F4141. If you leave the processing option
blank then the records in F4141 will not be deleted.

If the records are left in F4141 and an item that was included in the count is later deleted
from your system, you will not be able to run Cycle Count Update successfully. The
Cycle Count Update queries all the records in F4141 and validates whether they are a
valid item in the item branch F4102, regardless of whether they are in your current count
or not.

How To Count Items At A Set Frequency Such As Weekly Or Monthly

Method One: Date Of Next Count

You must complete steps one through five.

1. Set up UDC table 41/8 with the desired days interval between counts. These are the
default value. You may modify, add, or delete records. The value in the Description-2
field is the number of days between counts. The code field is limited to three digits,
alphanumeric.

2. To associate a Cycle Count Category with an item, go into Item/Branch 03/G4111,

inquire on the item, and F5 into the category code video. Populate the Cycle Count
Category (CYCL) field with a code from UDC 41/8. For example: If you want to count
the item weekly, use "VOL".

3. In the Cycle Count Update processing options 07/G4121, set processing option
Number-2 (Next Date Calculation) to '1'. When you run the cycle count update, it will
calculate a new Next Count Date (NCDJ) by adding to today's date, the number of days
associated with the Cycle Count Category.

4. In the data selection for Select Items For Count 02/G4121, use F16 to display all the
available fields in the based on file, page down once, and put a "Y" beside Next Count
Date field. When you run the program, you can select on any date, or you can use
*TODAY and it will select on today's system date. If you want to run the job the day
before you do the counts, you can use *TODAY+1. See Solution Document WST-02-
0001, *TODAY in Dreamwriters.

5. To get started, you have to have the Next Count Date populated for each item that you
will count. There are two ways to do this:

• Go into the Item Branch Information video 03/G4111 and

F11. You can manually populate the date in that video.
• Run the cycle count update with processing option 2 = 1.
This will populate the Next Count Date. The first time you do that,
you cannot select on Next Count Date because it will not be
populated.

Method Two: ABC Codes

1. Set up UDC table 41/NC. Description-2 is the number of days between counts.

2. Populate the Sales ABC Code by one of two methods.

a. In the Item Branch Information 03/G4111, the Sales ABC Code, populate the first
(left-most) ABC Codes field (IBABCS) as highlighted below.
 b. Run the ABC Analysis to populate the field. See Solution Document
WDS-99-0037, ABC Analysis.

3. In the Cycle Count Update processing options 07/G4121, leave processing option
Number 2 (Next Date Calculation) blank. When you run the cycle count update, it will
calculate a new Next Count Date (NCDJ) by adding to today's date, the number of days
associated with the ABC Category..

Additional Notes:

It is a standing issue as to whether you must close the doors and end all transactions
during cycle count or not. It is recommended that you do no transactions during cycle
count to avoid possible problems with you final on hand quantities. If you must enter
some type of transaction, it is advised that there is no physical inventory movement. The
crucial steps are Select Items for Count, when writing your perpetual quantities, and the
actual Cycle Count Entry. After the count has been performed and entered it is fine to
physically move inventory.

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