CycleCountings

Infoblox Cycle Counting – Inventory Infoblox Cycle Counting – Inventory AccuracyAccuracy

Agenda

• Inventory Accuracy• Periodic Physical Inventory• Cycle Counting• Cycle Counting in Oracle• How to get started!

Sound familiar?

• Can’t find parts your system says you have?• Expediting too many items?• Wasting time looking for parts?• Holding excess inventory “just in case?”

Types of Transactions

– Receiving– Put away– Transfer from one

location to another– Material issue– Extra issue of

material– Backflushing

– Shipments– Removal to QA– Return from QA– Completions– “Loans” to Sales,

Engineering, R&D etc.

Two methods of “keeping inventory accurate”

• Periodic physical inventory count• Cycle count program

Periodic PhysicalInventory Count

• Periodic physical count of inventory– Annually– Quarterly– Monthly

• Expensive• Shut down production/shipping – sometimes

for days• Unidentified or misidentified material

Periodic PhysicalInventory Count

• Inexperienced, reluctant counters• Temptation to cut corners• Missing documents• Count, recount, audit counts• Cannot track down causes of errors• Often introduces more errors than it fixes

Accounting vs Manufacturing

• Physical inventory counts often get close to actual dollar value of inventory (what accountants are looking for)

• Individual item accuracy abysmal (What manufacturing is looking for)– Too many item A, Not enough item B, Dollars even

out, but accuracy suffers

(If you must) Tips to Improve Physical Inventory Counts

• Set date early – time for prep• Determine counting method– Bar code– Count cards– Count Sheets

• Determine who will count – train!• Map of facility


• Clean up first• Reduce inventory as low as you can– Ship what you can– Delay incoming materials

• No receiving or shipping during count• Keep supplies on hand (Dots!)


• Pre-count (and audit) surplus supplies and slow moving items

• Audit while your people are still counting• Don’t move misplaced material during count

(note and move later)• Oracle Physical Inventory can help!

Cycle Counting– APICS Dictionary

• Inventory counted on cyclical schedule• Count on regular, defined basis• Most effective - counting a certain number of

items daily w/prescribed frequency for each item

Cycle Counting Cycle

Continual improvement

Find error

Research error Identify cause

of error

Eliminate cause of error

Common Causes for Errors

• counting procedure/equipment• untrained personnel• carelessness• poor forms design• poor document control• inventory adjustments• lack of transaction discipline• midnight requisitions

Deciding What to Count

• ABC analysis• Location counting• Negative on-hand items• When order placed• When order received• Today’s problems• Control Group

Deciding How Often to Count

• ABC• After specified number of transactions• What’s possible with staffing level

Oracle Cycle Counting Set Up

1. Define ABC classes2. If using ABC, compile an ABC analysis and

assign your compiled items' ABC classes


3. Define a cycle count for the organization or subinventory level– Enter control and scope information– Enter autoschedule information – Define adjustments and ABC information – Enter ABC classes to include in your cycle count – Define cycle count items


4. Define cycle count classes 5. Define cycle count items 6. Automatically schedule item counts using

ABC count frequencies 7. Manually schedule counts for the following

inventory control details – items, or specific revisions, lots – subinventories or specific locators

Oracle Cycle Counting Process

1. Generate daily, weekly, or period count requests and lists based on your schedule Enter counts

2. Count items generated3. Approve, reject, or request recounts for

cycle count adjustments based on approval tolerances

Step 1 – Controlled Test

1. Pick 100 representative parts2. Divide into 25/day – Mon thru Thur3. Friday for clean up4. Begin with accurate count5. Note and investigate variances each day6. Keep track of daily accuracy percentage

(spreadsheet)


6. Cycle Counter uses checklist to investigate possible root causes

7. Oracle Transaction Summaries report will show transactions in system (go back one week)

8. After finding root cause, correct inventory record (spreadsheet)


9. Record of cause, who will fix and when10. Keep checking until you’ve attained 100%

accuracy for two or three weeks (Predictable results)

11. If time available, also check negative on-hand items

Results of Step 1

• You have begun to establish the discipline necessary to maintain an accurate inventory

• You have identified and corrected most of the errors that are causing inaccurate inventories

Step 2 – An Expanded Test

1. Expand to a larger number of items (600 to 700?)

2. Use ABC categories– A – count bimonthly– B – count monthly– C – count quarterly

3. Keep inventory accuracy and cause records (spreadsheets)


4. Example formula for counts– Counting 4 days/week– A’s – every 2 weeks (once every 8 days)• 100 A items = 100/8 = 13 items/day

– B’s – monthly (once every 16 days)• 200 B items = 200/16 = 13 items/day

– C’s – quarterly (once every 52 days)• 400 C Items = 400/52 = 8 items day


All 600 items can be divided into 34 items/dayIn a quarter, all A items will have been counted

6 times, B items 3 times, C items once.5. Continue until you’ve attained 100%

accuracy for two or three weeks (Predictable results)

Step 3 – Full Cycle Counts

• Once the root causes are identified and are being dealt with for the items in the Expanded Test, and the Cycle Counting procedures have been reviewed and are in place, the Cycle Counting program should be expanded to include all of the inventory items.

97% + Accuracy

• You can achieve 97%+ accuracy• If accuracy level maintained long enough –

you may be able to eliminate periodic physical inventory counts

Documents

CycleCountings