Cycle Counting

Cycle counting is the periodic counting of individual items throughout the course of the year to ensure the accuracy of inventory quantities and values. Accurate system on–hand quantities are essential for managing supply and demand, maintaining high service levels, and planning production. We can use cycle counting along with ABC analysis to count items of greater importance more frequently than those of less impotance. Cycle counting supports scheduled counting based on value or counting by location, and can be set up at the organization level or the sub-inventory level.

Benefits of Cycle Counting:

Cycle counting enables you to keep inventory records accurate by correcting errors between the system on-hand (perpetual) and actual on-hand (physical) quantities.

Defining and Maintaining a Cycle Count:

A combination of parameters constitutes a cycle count header, identified by the cycle count name. We use this name to identify any activity pertaining to this cycle count. We can define and maintain an unlimited number of cycle counts in Oracle Inventory. For example, we can define separate cycle counts representing different sets of sub-inventory in your warehouse.

Prerequisites

Define ABC classes.

Define your workday calendar.

When determining cycle count classes based on ABC analysis, we must compile an ABC analysis and assign to our compiled items’ ABC classes.

To define a new cycle count:

Navigation: Counting > Cycle Counting > Cycle Counts > New

Navigate to the Cycle Count Summary folder window by selecting Cycle Counts on the menu and choose New to open the Cycle Counts window.

1. Enter a unique name for the cycle count.

2. Enter the workday calendar to use for this cycle count. Inventory uses this calendar to determine the days on which to automatically schedule cycle counts.

3. Enter the general ledger account to charge for cycle count adjustments.

4. Count Controls:

Inactive On: Optionally, enter the date on which the cycle count becomes inactive. As of this date, you cannot generate schedules or perform any counting activities for this cycle count.

Late Days: Enter the number of workdays that can pass after the date the count request was generated, before a scheduled count becomes a late count.

Starting Seq.: Enter the sequence number to use as the starting number in the next count request generator. The count sequence number uniquely identifies a particular count and is used in ordering the cycle count listing.

Unscheduled Entries: Determine whether you can enter counts for items not scheduled to be counted (Unscheduled Entries).

Display system Qty.: Determine whether to display system on–hand quantities during count entry.

5. Automatic Recount: Determine whether Inventory automatically assigns a status of Recount to out–of–tolerance counts and includes them in the next cycle count listing. If you turn this option on, navigate to the Maximum field and enter the maximum number of times Inventory can generate an automatic recount request. Once this number is reached the adjustment must be approved or rejected.

6. Count Subinventories: Determine the subinventory to include in the cycle count. If you choose Specific subinventory, you can navigate to the subinventory region and select the subinventory to include in the cycle count.
 
Adjustments and ABC Info Tab:

1. Approval: Determine when approval is required for adjustments:

Never: Inventory automatically posts adjustment transactions where entered counts differ from system balances.

If out of tolerance: Inventory does not automatically post adjustment transactions for counts outside a specified approval tolerance. You must approve such adjustments before posting.

Always: You must approve all cycle count adjustments, regardless of tolerance levels, before Inventory can post any of them.

2. Approval Tolerances: A cycle count is a count of a subset of items, counted during the working day rather than after freezing stock levels. When the actual count and the system on-hand quantity do not agree, cycle count is compared to an approval tolerance.

Oracle Inventory supports two types of cycle count approval tolerances, Quantity variance and Adjustment Value Tolerance. For an each type, we can specify a positive and negative limit which can differ from each other.

Qty Variance Tolerance:

It is a user defined limit for difference between the actual count and the system tracked on-hand quantity. We enter the positive or negative quantity variance tolerances as percentages of system on–hand quantity. We enter these percentages when we define Cycle Count Header, Cycle Count Class and Cycle Count Items. Oracle Inventory uses the percentages 1^st at Cycle Count Items, if not Cycle Count Classes, if not Cycle Count Headers, if we have not define for the header Oracle Inventory assumes that there is no limit to the approval tolerances.

Adjustment Value Tolerance:

It is a user defined limit for the total value of a cycle count adjustment. The adjustment value is calculated: Adjusted Value = (system on–hand quantity - actual count )* Current Item Cost. We enter these percentages when we define Cycle Count Header and Cycle Count Class. Oracle Inventory uses the percentages 1^st at Cycle Count Classes, if not Cycle Count Headers, if we have not define for the header Oracle Inventory assumes that there is no limit to the approval tolerances.
Hit/Miss Tolerance Analysis:

It is also a user defined limit for difference between the actual count and the system tracked on-hand quantity. We enter the positive or negative Hit/Miss tolerances as percentages of system on–hand quantity. A account is considered a “Hit” if it is within these tolerances, and a “Miss” if it is outside them. The Hit/Miss Tolerance allows us to evaluate the actual accuracy of our inventory. We enter these percentages when we define Cycle Count Header, Cycle Count Class and Cycle Count Items. Oracle Inventory uses the percentages 1^st at Cycle Count Items, if not Cycle Count Classes, if not Cycle Count Headers, if we have not define for the header Oracle Inventory assumes that there is no limit to the approval tolerances.

3. ABC initialization: Optionally, enter ABC initialization or update information:

Group: Enter the ABC group name on which to base the cycle count item initialization or update.

Option: Choose one of the following options:  

None: Do not change to the list of cycle count items.

(Re) initialize: Use the ABC group specified to load all items and their ABC assignments into the list of items to include in your cycle count. If you already had items defined for your cycle count, this

action deletes existing information and reloads the items from the ABC group.

Update: Use the ABC group you specified to insert new cycle count items. If you chose the Update Class Check Box: Indicate whether to update classes. If an item’s ABC class assignment in the ABC group you specified is different from the cycle count class this item is assigned, Inventory updates the cycle count class for the item with the ABC assignment in the specified ABC group.

Delete In-used Items Check Box: Indicate whether to delete unused item assignments that are no longer referenced in the specified ABC group.

Save the changes and re-query for cycle count MI-CC01 now the status will be Completed.

To Defining Cycle Count Classes:

In the Cycle Counts window choose Classes. The Cycle Count Classes window appears.

ABC Class Name: Enter the name of the ABC class to use to define your cycle count classes.

Count Per Year: Enter the number of times per year you want to count each item in this class. The counts per year for a class ensures that all items in that class are scheduled at least that many items in a year. That is, if the counts per year for a class are 10 and the class has 100 items, then each of the 100 items in the class is scheduled at least 10 times.

Approval Variance: Optionally, enter positive and negative tolerances. If you do not enter tolerances, Inventory uses the values you entered in the Cycle Counts window.

Quantity %: Enter the percentage variances of count quantity to on–hand quantity beyond which adjustments are held for approval.

Adjustment Value: Enter the adjustment values beyond which adjustments are held for approval.

Hit/Miss %: Enter the percentage variances of count quantity to on–hand quantity beyond which Inventory considers a count entry a miss for hit/miss reporting. Note that the hit/miss percentage is based on the first count of an item, not recounts.
Cycle Count Items:

We need to load items into our cycle count before we can schedule or count them. There are two methods we can use to do this.

Specify an existing ABC group from which to automatically load your items.

Manually enter, delete, or update the items you want included/excluded.

The first Method When we specify an existing ABC group from which to load our items. Oracle Inventory automatically includes all items in the ABC group you choose in your cycle count. Inventory also copies the ABC classes for that ABC group into the current cycle count classes and maintains the same classifications for the included items. You can then change the classifications of your items for your cycle count independent of the ABC classes.

Once you have generated your list of items to count from an ABC group, you can periodically refresh the item list with new or reclassified items from a regenerated ABC group. Using the Cycle Counts window, you can choose whether to automatically update class information for existing items in the cycle count based on the new ABC assignments. You can also choose to have any items that are no longer in the ABC group automatically deleted from the cycle count list.

The second method of maintaining the cycle count item list is to manually enter, delete, or update the items you want included/excluded using the Cycle Count Items window. You may want to use this form to load all your items for a cycle count, or to simply add items as they are defined in the system rather than recompiling your ABC group and doing a complete re-initialization of your cycle count items.

Defining Control Group Items: When you choose the items to include in your cycle count, you can specify which items make up your control group. When you generate automatic schedules you can indicate whether to include items in your control group as a control measure.


Cycle Counting Continuation...