Inventory Accuracy

 
Oracle Inventory will maintain inventory accuracy by following below methods.

ABC Analysis
Cycle Counting
Physical Inventory Counting
1.ABC Analysis:

ABC Analysis determines the relative value of a group of inventory items based on a user–specified valuation criterion. ”ABC” refers to the rankings you assign your items as a result of this analysis, where “An” items are ranked higher than ”B” items, and so on. You can optionally use the ABC analyses you compile to drive your cycle counts, where you might count items of high value (An items) very frequently, items of lower value less frequently, and items of lowest value very infrequently.
Steps Involved in ABC Analysis:

Defining and Running an ABC Compile:

Navigation: ABC Codes > ABC Compiles > New

We can define and compile an ABC analysis for your entire organization or for a specific sub-inventory within your organization. We choose the compilation criterion, the scope of your analysis, the cost type to use in determining item values, and any additional information that may be conditionally necessary, based on your compilation criterion. The combination of all these parameters constitutes an ABC compile header, identified by the ABC compile name. We use this name to identify any activity pertaining to this ABC analysis.

ABC Compile is going to assign a sequence number for all the items in the inventory to keeping the on-hand availability in descending order based on on-hand quantity.

ABC Compilation Criteria:

For each distinct compile; we can choose one criterion (such as Current On-Hand Value or MRP demand usage value) to value and rank each item included in the ABC compile. For example if we use current on-hand value as our compile criterion, then X item with an on-hand quantity of 10 units is of higher rank than item Y with a quantity of 5 units. If we use current on-hand quantity as our compile criterion and item X has a cost of $10 per unit and item Y has a cost of $25 per unit, then item Y has a higher value than Item X, since Oracle Inventory compares $100 ($10*10 units) to $125 ($25*5 units).

We have list of compile criterion options at ABC Compilation form like Current On-Hand Value, Current On-Hand Quantity, Historical Usage Value, Historical Usage Quantity, Historical Number of transactions, Forecasted Usage Value, Forecasted Usage Quantity, MRP Demand Usage Value, MRP Demand Usage Quantity, MPS Demand Usage Value, MPS Demand Usage Quantity, DRP Demand Usage Value, DRP Demand Usage Quantity, Previous Cycle Count Adjustment Value and Previous Cycle Count Adjustment Quantity.

Content and Valuation Scope:

Determine the scope of the analysis by selecting the content scope level for items to include in the compile. If we select organization, Oracle Inventory includes all items defined for your current organization in the ABC compile, even those with zero cost or zero quantity. If we select a particular sub-inventory, Oracle Inventory includes all items for which you have defined an item/sub-inventory relationship. Attention: You cannot compile an ABC analysis for a sub-inventory that is defined as a non–quantity tracked sub-inventory. We can, however, use non–asset (expense) sub-inventory for which you track quantities.

If we select the valuation scope for determining the ranking of items. Ranking must be done at the Organization level if you did not select a sub-inventory in the Content Scope field. If you only want to include items in a sub-inventory but you want the ranking to be done based on the organization wide ranking, select Organization.

Compile Specification criterion:

Select the Compile Specification criterion or method of ranking items in the ABC compile. Oracle Inventory uses the compile criterion to value the items you include in your ABC compile. After determining each item’s compile value, Oracle Inventory ranks all the items in your ABC compile.

Cost type: We can select a value here only if you selected Current on–hand quantity, Current on–hand value, Forecasted usage quantity, Forecasted usage value, MRP demand usage quantity, or MRP demand usage value in the Criterion field. If you are compiling by quantity criterion, the cost type is used for reporting purposes only.

Forecast: Select an MRP forecast name: We can select a value here only if you selected Forecasted usage quantity or Forecasted usage value in the Criterion field.

Plan Name: Select an MRP plan name: We can enter a value here only if you enter MRP demand usage quantity or MRP demand usage value in the Criterion field.

From Date: Enter a start (from) date: We must enter a value in this field if you choose an option other than Current on–hand quantity or Current on–hand value in the Criterion field.

End Date: Enter an end (to) date: We must enter a value in this field if you choose an option other than Current on–hand quantity or Current on–hand value in the Criterion field

After enter the values click on Compile button to compile the ABC Compile system internally run the below screen shot programs.

The output of ABC Descending Value Report for MI-ABC Compile will be like below.

Define ABC Classes:

We use ABC classes to identify the value groupings to which your items belong. You define these classes using your own terminology. For example, you might define classes High, Medium, Low, and later assign your items of highest rank to the High class, those of lower rank to the Medium class, and those of lowest rank to the Low class. You can add to the list of classes you have already defined.

Note: You must assign an ABC class to at least one ABC group.

We can use ABC classes to group items for a cycle count where you count “An” items more frequently than “B” items. When you use ABC classes in this way, you perform an ABC analysis and assign items to classes based on the results of that analysis. 
We can also use ABC classes to group items for planning purposes. For example, the Planning Detail Report allows you to choose an ABC class to report on. 

To Define ABC Classes

Navigation: ABC Codes > ABC Classes.

Enter the class name and Description and save the changes.

Define ABC Assignment Groups:

ABC assignment groups link a particular ABC compile with a valid set of ABC classes. This allows you to selectively reduce or increase the number of ABC classes you want to use in your item assignments for a particular ABC compile. For example, you might have five classes, A, B, C, D, and E, defined for your organization where you perform your ABC analysis by subinventory. The first subinventory is rather small. You need only three classes in which to divide your items. You define an ABC group, associating the ABC compile for the first subinventory with the classes A, B, and C. The second subinventory for which you compile an ABC analysis is much larger. There are five distinct value groupings of items. You define a second ABC group, associating the BC compile for the second subinventory with all five classes defined for your organization, A, B, C, D, and E.

To Define ABC Assignment Groups

Navigation: ABC Codes > ABC Assignment Groups.

Enter the Group Names and Compile Names and assign the items and Group Class to each group by using Assign Items  and Group Classes Buttons.
1^st click on Group Classes and assign the class names to ABC Group (MI-Grp01) like below.


Inventory Accuracy - ABC Analysis Continuation...
Inventory Accuracy - Cycle Counting read more...
Inventory Accuracy - Physical Inventory Counting read more...