abc analysis

Cycle Counting Cycle Counting

Strategy & ProcessStrategy & Process

March 09

AgendaAgenda

� Purpose

� Features & functionality

� Business process considerations

� Setup & configuration

� Process

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� Process

� Special considerations

� Summary

PurposePurpose

� High level understanding of how Oracle cycle counting works

� Understand business process considerations

� How to setup in Oracle apps (11.5.10)

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� How to setup in Oracle apps (11.5.10)

� Best way to deploy

Features & FunctionalityFeatures & Functionality

� Part of Inventory module – One of 3 ways to count� Physical Inventory

� Replenishment Counting

� Cycle Counting

� Automates periodic cycle counting

� Identifies criteria for automating

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� Identifies criteria for automating

� Provides variance reporting

� Allows approval control

� Supports serial & lot control items

Features & Functionality (Cont’d)Features & Functionality (Cont’d)

� Allows manual adjustments

� Fully integrated with cost accounting methods

� Integrated with ABC Analysis� Required to leverage full functionality of Cycle Counting

� Provides ability to classify items into ABC ranks

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� Flexibility to update & change “on the fly”

� Target inventory to count by Subinventory or organization

� Facilitate recounts & rejects

� Reporting & Analysis of transactions

Business Process ConsiderationsBusiness Process Considerations

� What type of business?� Manufacturing

� Distribution

� Other

� What inventory accuracy is important to your company?� Business critical

Mildly important

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� Mildly important

� Not important

� What inventory control disciplines are in place?� World class (>95% inventory accuracy)

� Above 90% accuracy

� Below 90%

Business Process Considerations (Cont’d)Business Process Considerations (Cont’d)

� Logistics - Method currently in place� RF bar codes enabled

� Bar code only

� Written

� Logistics - Timing of cut-off� Multiple shifts

Resources available

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� Resources available

� Data entry

� Approval

� Management Reporting Requirements� External audit requirements

� Variance reports

� Internal audit requirements

Setup & ConfigurationSetup & Configuration

� ABC Analysis – First Hurdle� ABC’s of ABC’s

� ABC Classes

� ABC Compile

� ABC Assignment Groups

� Cycle Counting – 2nd Hurdle

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� Cycle Counting – 2nd Hurdle� Cycle Count

� Attach ABC Group

� Load ABC Items

Setup & Configuration (Cont’d)Setup & Configuration (Cont’d)

� ABC’s of ABC’s

The ABC classification process is an analysis of a range of items, such as finished products or customers into three categories:

A - outstandingly important

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A - outstandingly important B - of average importance C - relatively unimportant

as a basis for a control scheme. Each category can and sometimes should be handled in a different way, with more attention being devoted to category A, less to B, and less to C.

Setup & Configuration (Cont’d)Setup & Configuration (Cont’d)

� ABC Classes

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Setup & Configuration (Cont’d)Setup & Configuration (Cont’d)

� ABC Compile

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Setup & Configuration (Cont’d)Setup & Configuration (Cont’d)

� ABC Compile Criterion

� Current on-hand quantity

� Current on-hand value

� Historical usage value

� Historical usage quantity

� Historical number of transactions

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� Historical number of transactions

� Forecasted usage value

� Forecasted usage quantity

� Previous cycle count adjustment quantity

� Previous cycle count adjustment value

� MRP demand usage quantity

� Use the MRP demand usage quantity

� MRP demand usage value

Setup & Configuration (Cont’d)Setup & Configuration (Cont’d)

� ABC Assignment Groups

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Setup & Configuration (Cont’d)Setup & Configuration (Cont’d)

� ABC Assignment Groups (Cont’d)

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Setup & Configuration (Cont’d)Setup & Configuration (Cont’d)

� ABC Assignment Groups (Cont’d)

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Setup & Configuration (Cont’d)Setup & Configuration (Cont’d)

� Cycle Count

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Setup & Configuration (Cont’d)Setup & Configuration (Cont’d)

� Cycle Count (Cont’d)

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Setup & Configuration (Cont’d)Setup & Configuration (Cont’d)

� Cycle Count (Cont’d)

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Setup & Configuration (Cont’d)Setup & Configuration (Cont’d)

� Attach ABC Group

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Setup & Configuration (Cont’d)Setup & Configuration (Cont’d)

� Load ABC Items

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Count ProcessCount Process

� Perform Full Cycle Count� Generate Automatic Schedule Requests

� Generate Cycle Count Requests

� Cycle Count Listing

� Count items� Blind count

Record quantity

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� Record quantity

� Approve & Update� Approve cycle counts

� Request recount

� Save & Update inventory

Count Process (Cont’d)Count Process (Cont’d)

� Perform Full Cycle Count

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Count Process (Cont’d)Count Process (Cont’d)

� Perform Full Cycle Count

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Count Process (Cont’d)Count Process (Cont’d)

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Count Process (Cont’d)Count Process (Cont’d)

� Update Items

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Special ConsiderationsSpecial Considerations

� Establish timely approach

� Execution is everything!

� What about locations audit?

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� What about locations audit?

� How to handle reservations and allocations

� What about “Kits”?

SummarySummary

� Determine what type of industry and counting applies

� Understand ABC Analysis

� Analyze data ahead of time for ABC compiles

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� Analyze data ahead of time for ABC compiles

� Execute properly

� Test process thoroughly

Thanks for attendingThanks for attending

Ed McDonough

March 09

Ed McDonough

mcdonoughe@tusc.com