INVENTORY & MATERIALS MANAGEMENT Course …apps.qmuzik.com/Training/qm8pdf/Inventory and Material Management.pdfperform a mrp item ctive run setup stock locations perform a part number

INVENTORY & MATERIALS MANAGEMENT

Course Assignment VERSION 17

COPYRIGHT © 1997 BY QMUZIK

All rights reserved. The contents, nor any part thereof, nor the format, the configuration or any

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transmitted, irrespective of the mode or method thereof, or in any other way be dealt with other

than only with the express prior written permission of QMuzik..

PERFORM

AN ABC

ANALYSIS

PERFORM A

COST

GENERATION

CYCLE

COUNTING

ADD & LINK

STANDARD

ITEM PERFORM A MRP

SELECTIVE RUN

SETUP STOCK

LOCATIONS

PERFORM A PART

NUMBER SEARCH

PERFORM

AN ABC

RECLASSIFICATION

AVERAGE

COSTING

EXERCISE

PERFORM

A SUPPLY

AND DEMAND

ANALYSIS

INVENTORY

MANAGEMENT

REPORTS

INVENTORY &

MATERIALS

MANAGEMENT

Provide

Feedback

Resolve Count

(Waiting Approval)

Reject Closed for

Feedback

Mail

Submit a Cycle

Count Run Cycle Count

Report

Co-ordinator:

(Stock Adjustment)

Print Report

Define

Cycle Count Sets

CYCLE COUNTING

(OPTIONAL)

Revision 17 : 19 July 2005 Page 1 Inventory and Materials Management : Course Assignment

INTRODUCTION

This course addresses the System functions used in managing materials and inventory. The ABC analysis function assists management in deciding which order policies to apply depending on predicted usage value (quantity needed in time horizon * price). Parts, high in predicted usage value (ABC Classification = A), warrant more management effort than low usage value parts (ABC Classification = C). The Cost Generation function is used to calculate the cost of manufactured parts with a product structure. The MRP selective run function assists management in analysing future part requirements and suggests replenishment actions (Production and Purchase Orders). The Supply and Demand function is used to view and analyse all requirements and replenishments actions per part. The Store and Part Stock Location functions are used to setup Stock Locations. The setup and working of average costing is briefly illustrated.

OBJECTIVES : You will learn how to:

EXERCISE 1 : Perform an ABC Analysis for Procured Parts

EXERCISE 2 : Perform a Cost Generation

EXERCISE 3 : Perform a MRP Selective Run

EXERCISE 4 : Perform a Part Number Search

EXERCISE 5 : Perform a Supply Demand Analysis

EXERCISE 6 : Create Standard Items and Link Parts.

EXERCISE 7 : Cycle Count Set.

EXERCISE 8 : Cycle Count Run.

EXERCISE 9 : Cycle Count Report.

EXERCISE 10 : Setup Stock Locations.

EXERCISE 11 : Average Costing Exercise.

EXERCISE 12 : Inventory Management Reports.

APPENDIX A : Dangerous Goods, Controlled Defence Items and Permits

APPENDIX B : Presenter‟s Notes


IMPORTANT TO KNOW

The following security profile functions are needed to use the inventory

management course functions.

ABC ANALYSIS CYCLE COUNT REPORT CYCLE COUNT RUN CYCLE COUNT SET INVENTORY MANAGEMENT REPORTS LOCATION MASTER MOVEMENTS MRP MRP SELECTIVE RUN NUMBER CONFIGURATION PART LOCATIONS PART MASTER PART MASTER PRICE PART NUMBER SEARCH PART STANDARD ITEM PART STOCK LOCATION RELEASED PURCHASE ORDER GENERATION REPORT INVENTORY EVALUATION REPORT PRODUCTION WIP STANDARD ITEM MASTER STORE STORES FUNCTION SUPPLIER TO STORE SUPPLY AND DEMAND


EXERCISE 1 A.

PERFORM AN ABC ANALYSIS FOR PROCURED PARTS

Use the ABC Analysis function to perform an ABC analysis. An ABC Analysis is performed to classify your inventory into three classes based on usage value (Quantity Required * Unit Price). The classes are: “A” High value usage items “B” Intermediate value usage items “C” Low usage value items The ABC classes guides the decisions on which order policy apply per part. (Refer Part Master). The ABC Analysis output is used to determine the cut-off values between the different classes.

FIGURE 1.1

ABC ANALYSIS

NOTES:

An ABC analysis can be performed for a division or product/s within a division.

Follow the steps in Figure 1.1.

FIGURE 1.2

ABC ANALYSIS OUTPUT

NOTES:

The Column “Usage value” is used to determine where the cut-offs will be between the different classes.

Click on the Usage Value to search the result set on Usage Value.


EXERCISE 1 B.

PERFORM AN ABC RECLASSIFICATION

Use the ABC Analysis function to perform an ABC reclassification. The reclassification is determined by specifying the cut-off values between the different classes. The 80/20 or Pareto rule guides the decision on where the cut off will be. By spending 80% of our management effort on the let say 20 % “A” class items will be dramatically more effective than spending 80% management effort on “C” class items.

FIGURE 1.3

ABC RECLASSIFICATION

NOTES:


To physically update the ABC classification on the part master, click the “Update ABC Class” checkbox. To automatically update the days supply for the order policy “period cover interval” on the part master, click the checkbox “Update Days Supply”

FIGURE 1.4

ABC RECLASSIFICATION RESULT

NOTES:

Figure 1.4 displays the ABC reclassification results. It will only show it for parts where the classification did change.


EXERCISE 2

PERFORM A COST GENERATION

Use the Cost Generation function to perform a cost generation. The Cost Generation function is used to determine the cost of a product, assembly or sub-assembly. It uses all cost elements (Part Operation-Labour, Material Costs, Subcontract Costs etc) of the parts in the manufactured parts product structure.

FIGURE 2.1

COST GENERATION

NOTES:

Cost generation errors will be displayed on the CostGen Error tab.

The cost generation output will be displayed on the CostGen Output tab and is also recorded on your “C” drive as a .txt file (see Figure 2.2).


Step 2 indicates that we are calculating the costs but not updating it.

Two fields on the division function will determine if standard prices for the current and next year can be updated via the cost generation function: 1. Curr_Yr_Cost_Updt_Costgen 2. Next_Yr_Cost_Updt_Costgen

FIGURE 2.2

COST GENERATION OUTPUT


EXERCISE 3

PERFORM A SELECTIVE MRP RUN

Use the MRP function to perform a selective MRP run. The main function is to analyse requirements and suggest replenishment actions. The inputs are Sales Orders, Order Policies and existing replenishment orders. The outputs are new replenishment suggestions (Production Orders and Purchase orders) and suggested changes on existing replenishment orders. The MRP Selective Run can also be used to perform “what if” analysis. To disable „Auto Release‟ of Purchase Orders ensure that the Purchase Orders Order Auto Release „Horizon Days‟ is zero.

FIGURE 3.1

MRP

NOTE:

Follow the steps in Figure 3.1. to select the parts for which the MRP run must be done.

FIGURE 3.2

MRP


EXERCISE 4

PERFORM A PART NUMBER SEARCH

Use the Part Number Search function to perform a part number search. The Part Number Search function is used to search for parts where the part number is not known. Various search options are available.

FIGURE 4.1

PART NUMBER SEARCH

NOTES:

Follow the steps in Figures 4.1 to 4.3. Step 1 and 2 specifies that we want to see subcontracted production parts only.

FIGURE 4.2

PART NUMBER SEARCH

NOTES:

Follow the steps in Figures 4.2. to specify search on part numbers starting with “BIC”.


FIGURE 4.3

PART NUMBER SEARCH NOTES: Follow the steps in Figures 4.2. to specify additional columns you want to have displayed on the report.

FIGURE 4.4

PART NUMBER SEARCH

NOTES:

The Search button must be selected before results will display.


EXERCISE 5

PERFORM A SUPPLY AND DEMAND ANALYSIS

Use the Supply And Demand function to perform a supply and demand analysis. The Supply and Demand function is used to analyse stock availability, requirements and replenishments for a specific part.

FIGURE 5.1

SUPPLY AND DEMAND

NOTE:

Various setting options are available and should be selected according to the information you require.

FIGURE 5.2

SUPPLY AND DEMAND DETAIL

NOTES:

Step 2: Click on any order line to view more order details on the detail tab.

Step 1: Click to see a graphical representation of the expected inventory flow on the selected item.

TIP:

The projected available quantity displayed in the quantity available column will be green, yellow or red. Green indicates that the projected quantity available is > 0 and > the safety stock quantity. Yellow indicates that the projected quantity available is > 0 but < the safety stock quantity. Red indicates that the projected quantity available < 0 and therefore a potential stock shortage.


FIGURE 5.3

SUPPLY AND DEMAND GRAPH

NOTES:

Double-click anywhere on the column. The system will now default back to the detail tab and highlight the exact requirement/ replenishment order responsible for the planned available stock.

Click anywhere and hold it down to view the amount available for that column.

Click with your right mouse button to open the Chart Edit menu.


EXERCISE 6

CREATE STANDARD ITEMS AND LINK PARTS

Use the Standard item Master function to create a Standard Item. Standard Items are used to allow cross-referencing of parts that are essentially the same but have different part numbers. It can assists in identifying whether excess stock exist for a different parts belonging to the same standard item number prior to executing an MRP suggested order.

FIGURE 6.1

STANDARD ITEM MASTER

NOTES:

Follow the steps in fig 6.1 to add the Standard item Master.

FIGURE 6.2

PART STANDARD ITEM

NOTES:

Use the Part Standard Item function to link parts to the standard item.

Follow the steps in fig 6.2 to link parts.


FIGURE 6.3

CROSS REFERENCE

NOTES:

Using the Part number to display the Standard Item Number.


EXERCISE 7

CYCLE COUNTING SET

Cycle Counting is done to determine the accuracy of Inventory and to correct discrepancies. Qmuzik assist in the following ways: Cycle Count parameters may be defined in a Cycle Count Set. These Parameters are used to determine the Inventory records that must be counted during the Cycle Count. The Cycle Count Run uses the Cycle Count Set to produce a list of inventory records to be counted. During the Cycle Count Run the system takes a snapshot of the Cycle Count Set and saves it for audit purposes. The Report Back on the Physical Cycle Counting can be done using the Cycle Count Report function. Follow the steps in Figure 7.1 to 7.3 to define a Cycle Count Set.

FIGURE 7.1

BASE SETTINGS

NOTES:

FIGURE 7.2

INCLUDE/EXCLUDE

NOTES:

FIGURE 7.3

ADDITIONAL SETTINGS

NOTES:


EXERCISE 8

CYCLE COUNT RUN

A Cycle Count run produces the inventory records that are to be counted. Certain parameters can be set per Cycle Count Run. When submitted the Cycle Count Run produces a Cycle Count list. Study the online help before doing the exercise. Follow the steps in Figure 8.1 to 8.3 to define a Cycle Count Run and submit the Cycle Count Run.

FIGURE 8.1

DEFINE THE RUN

FIGURE 8.2

SUBMIT THE RUN

FIGURE 8.3

VIEW THE PARAMETERS USED


STATUS RULES

If the status is Created “C”, this field is disabled. The status is changed from Created “C” to Submitted “S” when the Cycle Count Run is submitted. If the status is Submitted “S”, the status can only be changed to Opened for Feedback “O”

If the status is Opened for Feedback “O”, the status can only be changed to Closed for Feedback “D”. If the status is Closed for Feedback “D”, the status can be changed back to Opened for Feedback “O”, Resolved “R” or Unresolved “U”. If the status is Resolved “R”, the status can be changed to Unresolved “U”. If the status is Unresolved “U”, the status can be changed to Resolved “R” and Opened For Feedback “O”. When the status is set to Opened For Feedback “O”, the user can begin to capture the actual quantities on hand using the Cycle Count Report function. Once it is Closed For Feedback “D”, the users cannot report actual counts anymore. The status may still be changed though. The status can only be set to Resolved “R” if all the counts (Cycle Count Report records) have a status of either “No Deviation”, “Rejected” or “Mailed”. If, however, you want to close the run while there are still unresolved counts, set the status to Closed Unresolved.


EXERCISE 9

CYCLE COUNT REPORT

This function is used to report back cycle count results against the list of inventory records to be counted. The cycle count list is produced during the Cycle Count Run. Follow the steps in Figure 9.1 to 9.3 to perform a Cycle Count Report and view the Results.

FIGURE 9.1

SETTINGS

NOTES:

Only parts that exist in this Cycle Count Run‟s list will be available for selection. It is populated with the part number and part description from the Part Master and Cycle Count List tables for the selected Run ID where the part number exists on both tables.

FIGURE 9.2

REPORT

NOTES:

Changes can be made depending on the status of the cycle count record. (Step 10)

Only „No Deviation‟ count status may be deleted since all other counts must be resolved or rejected first.

FIGURE 9.3

CAPTURE COUNTED QUANTITY ON

HAND


EXERCISE 10

SETUP STOCK LOCATIONS

This function is used to create locations in stores that can serve as default positions or lacations for specific parts. Follow the steps in Figure 10.1 to 10.3 to create a default location for a specific part.

FIGURE 10.1

LOCATION FORMAT

NOTES:

Enter the format as shown in step 3.

FIGURE 10.2

DEFAULT LOCATION

NOTES:

Enter the default Stock Location as in figure 10.2. It is only a default and not a compulsary location. The Location Maximum field is mandatory.


EXERCISE 11

AVERAGE COSTING EXERCISE

This exercise is used to illustrate the average costing setup and effect.

FIGURE 11.1

SYSTEM SETTING

NOTES:

Step 1: The System Configuration function is used to set the costing model for the company.

FIGURE 11.2

AVERAGE COSTING CALCULATION

NOTES:

Step 1: The Store function is used to define how the average costing is calculated per store.


FIGURE 11.3

PRICE AND DISPLAY OPTION

NOTES:

Step 1 & 2 shows the expected cost per unit.

FIGURE 11.4

PURCHASE ORDER 1

NOTES:

Step 1 shows the part number being ordered

Step 4 shows the quantity ordered of 5.

Step 3 shows the Unit price of 0.38 currency units.

FIGURE 11.5

PURCHASE ORDER 2

NOTES:

Step 1 shows the new average cost upon receipt of components ordered in fig 11.4


EXERCISE 12

INVENTORY MANAGEMENT REPORTS

The following Inventory Mnagement reports exists as standard reports within the system.

Use the Inventory Management Reports function.

FIGURE 12.1

REPORTS

NOTE:

FIGURE 12.2

REPORTS

NOTE:

Select the Division and accounts you want included in the report.

FIGURE 12.3

REPORTS

NOTE:

Report output will be displayed in Microsoft Excel


LESSON SUMMARY

On completion of the Inventory Management course, students will be able to do ABC analysis, MRP runs, cost generation for manufactured parts, part number search, supply and demand analysis, create Standard Item Numbers, perform Cycle Counting, setup stock locations and setup average costing.

TO DO THIS

Perform an ABC Analysis. Use the ABC ANALYSIS function.

Perform a Cost Generation. Use the COST GENERATION function.

Perform a MRP Run. Use the MRP SELECTIVE RUN function.

Search for a Part Number. Use the PART NUMBER SEARCH function.

Analyse Supply and Demand for a Part. Use the SUPPLY DEMAND function.

Create a Standard Item Number Use the STANDARD ITEM MASTER function.

Link Parts to Standard Items Use the PART STANDARD ITEM function.

Set the Cycle Count Use the CYCLE COUNT SET function.

Run the Cycle Count Use the CYCLE COUNT RUN function.

Report back on actual Cycle Count results Use the CYCLE COUNT REPORT function.

Setup Stock Location format Use the STORE function

Setup Default Stock Locations Use the PART STOCK LOCATION function

Average Costing Exercise Use the SYSTEM CONFIGURATION, STORE and PART MASTER functions

Inventory Reports Use the INVENTORY MANAGEMENT REPORTS function.


APPENDIX A

DANGEROUS GOODS, CONTROLLED DEFENCE ITEMS AND PERMITS

FIGURE 1

STORE

NOTES:

A Store classified as a Magazine is used to store dangerous goods. Only dangerous goods which have predefined locations as defined on the Part Stock Location function can be stored in a Magazine.

FIGURE 2

STORE DANGEROUS GOODS

LICENSES

NOTES: This function is used to record and manage the life cycle of storage licenses for stores where hazardous items can be kept. Before submission for approval can commence, the details of the hazard classes and volumes to be stored must be identified via the tab provided. When hazardous goods is received the system will check for storage compatibility, and the validity of the store license and its limitations in terms of hazard classes and max volumes. Where mixed storage takes places, the severity ranking of hazard classes will also be validated.


FIGURE 3

STORE DANGEROUS GOODS

LICENSES

NOTES:

See notes on figure 2

FIGURE 4

DANGEROUS GOODS REGULATION

NOTES: The tabs for UN ID numbers and Hazard classification show parts where the part inherits the hazard class from its Commodity code. A hazard division code carries a severity ranking which is mandatory. It is applied where mixed storage of hazardous goods takes place and where severity ranking, in association with storage licenses govern the maximum quantities that can be stored in a specific store/magazine. The storage license UOM is also specified via this function per hazard division code.

FIGURE 5


NOTES:

See notes in figure 4


FIGURE 6


NOTES:

See notes in figure 4.

FIGURE 7

PERMIT TYPES

NOTES:

This function is used to define and maintain all relevant permit types applicable to your business. It is most applicable to business relating to the manufacturing of explosives and other dangerous goods, as well as business in the aerospace and defense industry. If regulations in local- and foreign trade and transportation of hazardous goods or controlled defense items require permits for such transactions, this function will serve the purpose to define the required permit types.

FIGURE 8

PERMIT TYPES

NOTES:

See notes in figure 7.


FIGURE 9

PERMIT TYPES

NOTES: See notes in figure 7

FIGURE 10

PART MASTER

NOTES: Indicate if a part is classified as a controlled defence item and or dangerous goods regulation item. The Storage compatibility class field is mandatory for Dangerous goods regulation items. This allocates a compatibility class to an item for the purpose of mixed storage and its compatibility with other classes of hazardous goods.

FIGURE 11

PART MASTER

NOTES:

If a dangerous goods regulation item specify a store classified as a Magazine as the controlling store.


FIGURE 12

PART PERMIT TYPES

NOTES: This function associates 1 or more permit types with a specific part number. Only parts that have been identified as being either a Controlled defense item, or a Dangerous goods item with a hazard classification, will allow permit types to be associated with them.

FIGURE 13

PERMIT MASTER

NOTES: This function is applied to record and manage the life cycle of a permit. Where permits relate to controlled defense items or dangerous goods, the function requires that the detail of the associated orders and quantities for an intended local-or export sales shipment, or for local- or imported purchasing, be linked to the permit before submission for approval can commence. Business process such as purchase order receipts and shipping to customers, will, for all lines with part numbers that have predefined part permit types, validate if all required permit types are in order. If so, the transaction will be allowed. If not, the system will either issue a warning or will stop the actual transaction from taking place. Warnings are issued when all required permits are detected, but where 1 or more permits are not yet approved. Stops are enforced when no evidence exists for the required permits.


FIGURE 14

PERMIT MASTER

NOTES:

See notes in figure 13


APPENDIX B

PRESENTER’S NOTES

EXERCISE 1 Supply the students with the product definitions to be used. Discuss the relationship between ABC analysis/reclassification and order policies. EXERCISE 2 Note that the cost generation function can be performed only for a parent with at least one child. The part will not populate in the list box if there is no structure. GENERAL Ensure that enough data exists to perform the exercises. STANDARD ITEMS If the substitute parts must be demonstrated during the lesson, a Sales Order with a Fix-Account Part must be created. Make sure that you use a part with parts that are linked to a Standard Item Number via the Part Standard Item function.

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INVENTORY & MATERIALS MANAGEMENT Course …apps.qmuzik.com/Training/qm8pdf/Inventory and Material Management.pdfperform a mrp item ctive run setup stock locations perform a part number