PURCHASING count.doc · Web view[CYCLE COUNTING] [Module Objectives] We will cover in detail how using PRO:MAN’s [Cycle Count] module will impact your operation. This is a fully

PRO:MANEnd-User Documentation [Section CYC] [Cycle Counting]

[CYCLE COUNTING]

[Module Objectives]

We will cover in detail how using PRO:MAN’s [Cycle Count] module will impact your operation. This is a fully integrated system tool.

CONTENTS PAGE

Section I. Overview of Cycle Counting in Pro:Man 2

Section II. How to assign parts to count classes 3

Section III. How to process a cycle count 9

Section IV. How to analyze cycle counts 18

PRO:MAN Group, 1999© Page 1/tt/file_convert/5afddcfc7f8b9aa34d8e151f/document.doc Revision: 05/08/23 3:02 PM


[Section I]

Pro:Man’s cycle count module provides a method to count and verify inventory quantities on hand. The system allows the user to define groups of parts to count and process together. The system also maintains a history of cycle counts and their associated accuracy.

There are two basic reasons why a company may choose to cycle count their inventory: 1. Confirm accuracy of their book inventory and eliminate the physical inventory process. 2. Increase accuracy of quantities on hand (usually associated with MRP environments;

Inaccurate inventory is one of the two most deadly cancers of MRP implementations).

Which, or both, of these reasons should be clearly defined for your cycle count goals. The way that parts are selected to be counted and the count frequency may change depending on these goals.



[Section II]

If the primary reason to cycle count your inventory is to eliminate your physical inventory, you will need to review the requirements with the person responsible for finance at your organization. They may have to consult with your outside auditing agencies to determine what criteria are necessary to eliminate your physical inventory process.

In general, you will need to separate your inventory into classes (sometimes called ABC codes) and then count the inventory in each class a set number of times in each year. A sample of this may be:

Class Description Times counted a yearA Parts that represent top 70% of

inventory value over the last 12 monthsEach Month

B Parts that represent the next 20% of inventory value over the last 12 months

Each Quarter

C Remaining inventory. Once a year

It is a company preference as to whether your inventory stratification is based on: quantities on hand for each month end, and then averaged, or quantity of parts used during the last 12 months times their value (Pro:Man uses this), or some combination of the two choices above (Pro:Man allows manual adjustments)

You are attempting to determine what parts are normally making up your inventory value at any given time. A slow moving part that represents a large inventory value would be an “A” part if you were looking specifically at quantity on hand averages, and may be a “C” part based on dollarized usage. In this case, you will need to use the quantities on hand average method to make sure that the part will represent the current inventory on hand value (i.e., adjust Pro:Man’s generated “C” class to “A”).



The fastkey CALC.ABC is utilized to help determine this classification of your parts. You should have been using Pro:Man for at least one year before you attempt to use this fastkey. You will need to update the MCF item called ‘ABC.CODE” in the CN types first. This sets the above percentages for your company. If your company accepts the values as set in the above table, your MCF item would look like:

PORT 171,ACCOUNT jess5.0 MCF.MAINT 17:09 MONDAY 07/12/99 PRO:MAN REL 5.0, LICENSE # 777 AUTOMATED COMPUTER SOLUTIONS ------------------------------------------------------------------------------- 1 abc.code FLAG TO SET ABC LEVELS 1. ENTER PERCENTAGE TO SET "A" LEVEL PARTS 1. 70.00 2. ENTER PERCENTAGE TO SET "B" LEVEL PARTS 1. 20.00 Enter field to change 'n.n','D'-Desc,'DEL','END','TOP':

Pro:Man also generates a slightly more defined classification. The system separates the value of the parts into major classification such as “A”, “B” and “C”. It then divides each classification into three more minor sections based on the value of one part. This means that the top one third of parts in the “A” classification will receive an ABC code of “AA”, the next third will receive “AB” and the final third will receive “AC”. The break down will be done by the total accounting value of each part. The system does not take into account any quantity on hand for this break down. The idea is that if you are looking at your “A” parts, you know that an “AA” represents the most expensive per piece cost. An inaccurate quantity on an “AA” will generally be more significant than an “AC”. It is a way of alerting the user what type of “A” part they are dealing with.



Some clients wish to set their own ABC codes. If a company does not have 12 months of history, or simply wants to use inventory value at year-end, they may manually go in and set the values. It may also make sense at some point in the year to promote a part from a “C” to a “B” or “A”, depending on usage and/or inventory value. To set or modify the ABC classification, use the PARTS.STORE screen. An example is shown below:

PORT 171 ACCOUNT jess5.0 PARTS.STORE MONDAY 07/12/99 17:17 ------------------------------------------------------------------------------- *) Part Number 9930-0004 Description DIFFUSER, 40"X22", FILTER GRILLE RETURN Stock U/M EA Multi Loc Flag 0 Lot Flag 0 1) Create Location Purch U/M 2) Delete Location U/M Conv Fctr 3) Weight 0.19 Inspection Req 4) Count Class FILT Inv Type 4 5) ABC code AA Bin Item Pur/Mfg (P/M) P 6) Wh Loc 7) Non-Net Quantity 8) Loc Code Class Code \\\\\\\\ \ \\\\\\\ \\\\\\\\ Quantity On Hand 0 1 Quantity In Insp 2 Safety Stock 0 3 Alloc To Mfg 4 Alloc To Sales 0 Last Cycle Dt 07/10/99 Modifications 1-8, TOP-exit wo/update, END-file, \\\\\\\\ ^^-repaint screen, ?-help, REV-Revision

The user can confirm their ABC code assignment with a fastkey called LIST.IM.ABC. This report can list all parts, or it can display only certain codes. A useful trick with this fastkey is to list all “A” classifications (i.e. AA, AB, and AC). The following screen shows:



PORT 171,ACCOUNT jess5.0 LIST.IM.ABC 17:40 MONDAY 07/12/99 PRO:MAN REL 5.0, LICENSE # 777 AUTOMATED COMPUTER SOLUTIONS ------------------------------------------------------------------------------- Enter ABC code to print or 'A' for all, or B to bypass=A]

This will display all of the AA,AB, and AC parts, sorted by ABC code. The following is a sample printout out.

Listing of ABC codes for parts Date 12 Jul 1999 list.im.abc Page 1 ABC PART NUMBER.... DESCRIPTION............. UM. QOH.... EXT.VALUE...... Last Cyc CD Date AA 9930-0004 DIFFUSER, 40"X22", EA 0 0.000 07/10/99 FILTER GRILLE RETURN AA PART.1 TEST PART NO LOC NO LOT EA 51 510.000 *** 510.000 AB 9460-4200 FILTER, EA 86 494.500 07/10/99 29-7/16"X15-5/16"X1", ALUM. AB 9460-5200 FILTER, 10"X20"X1", EA 430 374.100 07/10/99 THROW AWAY *** 868.600 AC 9460-0700 FILTER 16 1/4X17 7/16X1 EA 54 186.840 07/10/99 ALUM. *** 186.840 1,565.440 [405] 5 items listed out of 122 items.

Some users find it advantageous to use codes other than the standard A, B, or C. These may represent parts that are maintenance items, or part of capital projects. It is normally better to assign a code to these parts of “M” or “NI” (non-inventory) than it is to leave them blank. A blank code could mean that someone has forgotten to assign the part a code, or it could mean that it is non-inventory. If a code is assigned of “NI”, we can be sure that someone has reviewed the part and assigned a proper classification.



Once the ABC code has been determined, you should have the frequency that parts need to be counted. This will help determine how many parts need to be counted at a time (normally a day). Normally, no user could count all of the “AA” parts in one day, and most certainly can not count all of the “CC” parts in a day. Therefore, the system allows the user to break these parts down to more manageable groups. You should develop a standard policy about how often your company cycle counts (every day, once a week, on second shift, on Saturday, etc.). With the total number of parts to count, and the required frequency, and the number of days that counting will be done, you can calculate the number of parts that need to be counted in each session. This is not truly a mathematical calculation. Some parts take more time to count than others do, so some human intervention needs to take place. In general, you know how many parts need to be counted (on average) each day.

It is important that once a cycle count process is started, it needs to be counted, compared, and closed as soon as possible. In a dynamic shop, the quantities can change by the minute, making it difficult to reconcile the differences.



The first step is to group all parts that are to be counted, as one cycle count process. The parts that are grouped together are assigned the same “count class”. There is no limit to the number of “count classes” that you can define. Several count classes can be cycle counted at the same time, although on different cycle counts. These parts should be selected based on the fact that they will all be counted at the same time and processed together. Some criteria to include as the parts are being selected are:

1. Parts are located together in the plant. It is sometimes easier to count all parts in a particular location or area. You should generally not pick parts all over the plant, as the person doing the actual counts will be running all over the place to count the parts.

2. Parts that have similar usage patterns. Parts that are used in high quantities may need a higher inventory on-hand accuracy.

3. Critical parts that you must never run out of. These parts are critical to an assembly and can not be easily (or quickly) obtained. They require a higher degree of inventory on-hand accuracy.

4. Parts that seem to have frequent stock outages. (LIST.STK.OUT)5. Parts that seem to have frequent inventory adjustments (use IT.RPT, type 50, for a date

range and note the number of entries by part number).6. Parts that are generally grouped together by their nature. The inventory manager will be

able to group all the parts together by their type; for instance, count all the steel plates, all the filters, all the pumps, etc.

Remember that the count class should not contain too many parts. The group must be processed all at one time, so the count classes should contain just enough parts that a worksheet can be printed, the parts counted, the results compared, and the inventory updated all at one time. This should generally be done in a matter of a couple of hours.

Once the parts have been determined as members of a count class, they must be assigned to this count class using the PARTS.STORE screen. An example of this screen is shown below:

PORT 170 ACCOUNT JESS5.0 PARTS.STORE FRIDAY 07/09/99 11:09-------------------------------------------------------------------------------

*) Part Number 9460-4200 Description FILTER, 29-7/16"X15-5/16"X1", ALUM. Stock U/M EA Multi Loc Flag 0 Lot Flag 0 1) Create Location Purch U/M 2) Delete Location U/M Conv Fctr 3) Weight Inspection Req 4) Count Class FILT Inv Type 4 5) ABC code Bin Item Pur/Mfg (P/M) P 6) Wh Loc 7) Non-Net Quantity 8) Loc Code Class Code \\\\\\\\ \ \\\\\\\ \\\\\\\\ Quantity On Hand 861 Quantity In Insp2 Safety Stock 243 Alloc To Mfg4 Alloc To Sales 0 Last Cycle Dt

Modifications 1-8, TOP-exit wo/update, END-file, \\\\\\\\ ^^-repaint screen, ?-help, REV-Revision

Again the user can confirm the count classes with a fastkey called LIST.COUNT.CLASS. (You may wish to use FS.PROGEN.MAINT on IM 20 to standardize Count classes, e.g., ans. phrase = FILT and DESC = Filters)



Listing of count class parts LIST.COUNT.CLASS 18:05:03 12 Jul 1999 PART NUMBER.... DESCRIPTION............. UM. CYCLE... COUNT ABC clas DATE CLASS CD code 9460-0600 FILTER, 16"X16'X1", EA 07/10/99 FILT CC T.A., W/ BAR 9460-0700 FILTER 16 1/4X17 7/16X1 EA 07/10/99 FILT AC ALUM. 9460-1500 FILTER, EA 07/10/99 FILT CC 18-5/8"X27-3/4"X1", ALUMINIUM 9460-1600 FILTER, 13-1/8 X 18-1/8 EA 07/10/99 FILT BA X 1 FOAM 9460-4200 FILTER, EA 07/10/99 FILT AB 29-7/16"X15-5/16"X1", ALUM. 9460-5100 FILTER, EA 07/10/99 FILT BC 14-5/8'X20-9/16"X1", ALUM., TYPE 1000 9460-5200 FILTER, 10"X20"X1", EA 07/10/99 FILT AB THROW AWAY 9460-6010 FILTER, PLEATED 16" X EA 07/10/99 FILT CC 20" X 2"

This report shows all parts in a count class with their associated data. It should be noted that in this case, we are not following a clear ABC code policy. These parts are grouped together, meaning that they will all be counted the same number of times a year. A different strategy has been used develop this class.



[ Section III ]

Once count classes have been established, all of the parts in this class will be cycle counted together. Each attempted count of this class is assigned a number. This number is generated by the system automatically and is called the cycle count number (see MCF.MAINT NN types -Next.Cycle.Nbr). It is just a sequential number. Once the cycle count has been initiated, all reports and fastkeys will ask for this number. It is printed on the top of the cycle count work sheet for reference. The process for any count class is identical regardless of the type of parts or whether they are location or lot controlled. A flow chart is provided for your review.



It is important to note that this entire process must be initiated and completed as quickly as possible. This will minimize the activity in the system from affecting your count. It is not absolutely necessary to freeze all activity in the system while counts are being completed. The system freezes the quantity on hand at the start of the process. All reports and updates to inventory are based on actual counts versus the frozen quantity. While this gives a static picture of the on-hand quantity, activity normally coincides with parts moving around in inventory. The user is cautioned that the counts in the plant must represent the quantity on hand.

For instance, if some pumps were found on the floor and counted. However, according to the system those pumps were issued into a work order, the inventory will not be updated correctly.



The cycle counting process must be clear in determining what parts are in inventory and which parts are not.

The first step in starting a cycle count process is running a fastkey called SET.UP.CYCLE.CNT. This fastkey prompts the user for a count class to process. A sample screen is shown below:

PORT 171,ACCOUNT jess5.0 SET.UP.CYCLE.CNT 18:30 MONDAY 07/12/99 PRO:MAN REL 5.0, LICENSE # 777 AUTOMATED COMPUTER SOLUTIONS ------------------------------------------------------------------------------- Sets up a Cycle Count for a Count Class by 'freezing' W/H Loc's & Lots. Enter the Cycle Count Class to process, or 'B' to Bypass =FILT

The system will respond with a comment that cycle count number 8 has been assigned to this cycle. The screen would look like:

PORT 171,ACCOUNT jess5.0 SET.UP.CYCLE.CNT 18:30 MONDAY 07/12/99 PRO:MAN REL 5.0, LICENSE # 777 AUTOMATED COMPUTER SOLUTIONS ------------------------------------------------------------------------------- Sets up a Cycle Count for a Count Class by 'freezing' W/H Loc's & Lots. Enter the Cycle Count Class to process, or 'B' to Bypass =FILT [404] 11 items selected out of 11 items. Processing Cycle Count Number 8 :

Normally the next step is to print out the worksheet to be used in actually counting the parts. The fastkey to print this out is called PRINT.CYCLE.COUNT



PORT 171,ACCOUNT jess5.0 PRINT.CYCLE.COUNT 18:32 MONDAY 07/12/99 PRO:MAN REL 5.0, LICENSE # 777 AUTOMATED COMPUTER SOLUTIONS ------------------------------------------------------------------------------- Print Cycle Count work sheets for a specified Cycle Count Number. Please enter the number of the Cycle Count to print =8

The user must enter the cycle count number previously assigned by the system. The printout will contain sufficient information for the cycle counter to go to the plant and count all of the parts. A sample printout may look like:

PRINT.CYCLE.COUNT MICRO METL CORP - INDPLS DATE 07/12/99 Cycle Count Worksheet. TIME 18:34:07 Cycle Count #8 for FILT on 07/12/99. PAGE 1 Part Part W/H Counted Counted by Lot Lot Number Description U/M Loc Quantity Whom Date Counted Nbr Qty .................................................................................................................................... 9460-0600 FILTER, 16"X16'X1", T.A., W/ BAR EA _______________ ______________ ____/____/____ _______________ ______________ ____/____/____ 9460-0700 FILTER 16 1/4X17 7/16X1 ALUM. EA _______________ ______________ ____/____/____ _______________ ______________ ____/____/____ 9460-1500 FILTER, 18-5/8"X27-3/4"X1", ALUMINIUM EA _______________ ______________ ____/____/____ _______________ ______________ ____/____/____ 9460-1600 FILTER, 13-1/8 X 18-1/8 X 1 FOAM EA _______________ ______________ ____/____/____ _______________ ______________ ____/____/____ 9460-4200 FILTER, 29-7/16"X15-5/16"X1", ALUM. EA _______________ ______________ ____/____/____ _______________ ______________ ____/____/____ 9460-5100 FILTER, 14-5/8'X20-9/16"X1", ALUM., TYPE 1000 EA _______________ ______________ ____/____/____ _______________ ______________ ____/____/____ 9460-5200 FILTER, 10"X20"X1", THROW AWAY EA _______________ ______________ ____/____/____ _______________ ______________ ____/____/____ 9460-6010 FILTER, PLEATED 16" X 20" X 2" EA _______________ ______________ ____/____/____ _______________ ______________ ____/____/____ 9460-6900 FILTER, 14 5/8"X21 3/4"X1" ALUM. EA _______________ ______________ ____/____/____ _______________ ______________ ____/____/____ 9460-7000 FILTER, 23 5/8"X14 5/8"X1" ALUM. EA _______________ ______________ ____/____/____ _______________ ______________ ____/____/____ 9930-0004 DIFFUSER, 40"X22", FILTER GRILLE RETURN EA _______________ ______________ ____/____/____ _______________ ______________ ____/____/____



Assuming that you are not using RF bar code readers, the cycle counter will take this form into the shop and manually write down the corresponding quantities counted next to each part. Blank lines are printed to allow the user room to note quantities on different shelves or different areas. It is important that the total number counted be listed on the blank line. If any confusion exists, the user may circle the total amount for each part number. Once the sheet is completed, it should be turned in to the person responsible for entering the cycle count data. This entry can be done with one of either two fastkeys. The first is called CYCLE.COUNT.MAINT.ALL. This fastkey selects the parts on the worksheet and feeds them into the CYCLE.COUNT.MAINT screen (the second option). If the CYCLE.COUNT.MAINT fastkey is used, the user will have to enter each part manually. The system will prompt the user for the initials of the person who counted the inventory and the quantity counted.

If the part is location and/or lot controlled, a window (or series of windows) will pop up asking the user to verify the locations and/or lots counted. See the separate case studies for examples of these screens.

An example of the CYCLE.COUNT.MAINT screen would look like:PORT 171 ACCOUNT jess5.0 CYCLE.COUNT.MAINT MONDAY 07/12/99 18:47 ------------------------------------------------------------------------------- *) Part Number 9460-0600 Description FILTER, 16"X16'X1", T.A. Um EA COUNT CLASS FILT CYCLE COUNT NBR 8 COUNT DATE 07/12/99 Wh Loc FROZEN QTY LOT NBR FROZEN QTY \\\ \\\\\\ \\\\\\\ 70 1) CNT BY WHOM RK 2) Qty Cntd 70 Modifications 1-2, TOP-exit wo/update, END-file, \\\\\\\\ ^^-repaint screen, ?-help, REV-Revision

In this case, cycle counter “RK” has counted 70 items for part number 9460-0600. Each part should be entered until all parts are accounted for. The cycle counter should enter a “0” (zero) if they could not find any items for a particular part number. This will ensure that the counter could not find any parts and that they did not skip the part.

If the counter returns the worksheet and advises that a count was not performed for some reason, the count should be cancelled. Even if the count is to be done on the next day, cancel the existing count and restart a new cycle count the next day. Most problems with inventory accuracy revolve around someone “knowing” that nothing has happened to a part (or parts) and then a variance is found to occur. To cancel a cycle count, use the fastkey called CNCL.CYCLE.CNT. This completely cancels the count as if it never happened. No records are updated nor are other cycle counts affected by this cancellation.



After all parts are entered for a cycle count, a compare report should be run. This compare report shows parts that were on the count worksheet. The report shows the parts with their description, and also shows the quantity at the time SET.UP.CYCLE.CNT was run and the actual quantities counted (as entered with CYCLE.COUNT.MAINT). A sample of this report may look like:

COMPARE.CYCLE.CNT MICRO METL CORP - INDPLS DATE 07/13/99 Comparison of Actual to System Quantities. TIME 08:02:13 For Cycle Class FILT and Cycle Count #8 started 07/12/99. PAGE 1 Part Part Wh System Count Var Variance Var Account Lot Frz Count Var Number Description U/M Loc Qty Qty Qty Amount Pct Value Number Qty Qty Qty ............... ............... ... .... ...... ...... ...... .......... ..... ........ ...... ...... ...... ...... 9460-0600 FILTER, 16"X16' EA none 70 70 0 0.00 0.0 1.000 9460-0700 FILTER 16 1/4X1 EA none 54 50 -4 -13.84 -7.4 3.460 9460-1500 FILTER, 18-5/8" EA none 10 5 -5 -30.20 -50.0 6.040 9460-1600 FILTER, 13-1/8 EA none 34 35 1 3.98 2.9 3.980 9460-4200 FILTER, 29-7/16 EA none 86 86 0 0.00 0.0 5.750 9460-5100 FILTER, 14-5/8' EA none 35 33 -2 -7.18 -5.7 3.590 9460-5200 FILTER, 10"X20" EA none 430 420 -10 -8.70 -2.3 0.870 9460-6010 FILTER, PLEATED EA none 26 26 0 0.00 0.0 3.900 9460-6900 FILTER, 14 5/8" EA none 7 7 0 0.00 0.0 15.350 9460-7000 FILTER, 23 5/8" EA none 50 49 -1 -3.48 -2.0 3.480 9930-0004 DIFFUSER, 40"X2 EA none 0 0 0 0.00 0.0 53.030 SYSTEM ACTUAL DIFF PCT QUANTITIES 802 781 -21 -2.6 NBR OF ITEMS COUNTED 11 DOLLAR AMOUNTS 1829.66 1770.24 -59.42 -3.2 NBR OF ITEMS WITH VAR 6

From the summary on the bottom of the report, we see that 11 parts were counted and 6 of them had a variance (based on quantities being different between counted and system). We can also see that we have a 2.6% variance when looking at total quantities of parts counted, and a 3.2% variance if we compare dollars.

If the material manager feels that some of the parts have not been properly counted, they can highlight the parts and have them recounted. Using CYCLE.COUNT.MAINT, the adjustments, if any, can be entered and the COMPARE.CYLE.CNT re-run. The process of CYCLE.COUNT.MAINT and COMPARE.CYCLE.CNT can be re-run as many times as necessary.

It is also a good idea to use the IT.QUERY screen to look for a transaction that could have occurred today (or even yesterday) that can be affecting the outcome of the process. If a transaction on IT.QUERY appears to be around the time the cycle count was being done, high light the transaction and press <return>. This will display the details behind this transaction. In the middle of the screen are the user name, date, and time the transaction was entered in the system. This might help explain some differences between counted and system quantities.

Once the compare report has been reviewed and approved, the user need only do CLOSE.CYCLE.CNT to complete the process. This fastkey will close out the open cycle count number, update some cycle count history information, and update the quantity on hand. The system does not directly copy the counted quantity to the quantity on hand. Rather, the difference from the compare report is added or subtracted from the current quantity on hand. Since some activity on the part could have occurred since the beginning of the cycle count process, the system



will update the “change” in quantity. This close process, updates the quantity on hand and also posts an inventory transaction.

The CLOSE.CYCLE.CNT screen looks like:PORT 171,ACCOUNT jess5.0 CLOSE.CYCLE.CNT 08:17 TUESDAY 07/13/99 PRO:MAN REL 5.0, LICENSE # 777 AUTOMATED COMPUTER SOLUTIONS ------------------------------------------------------------------------------- Closes a Cycle Count by updating the IM and associated IT & RA records. Please enter the Cycle Count Number to process, or 'B' to Bypass =8

In order to audit the inventory transactions from the close process, the user can run a fastkey called IT.RPT. This report displays IT (inventory transaction) records. The screen for this fastkey could be used to report these close transactions as shown:

PORT 171,ACCOUNT jess5.0 IT.RPT 08:19 TUESDAY 07/13/99 PRO:MAN REL 5.0, LICENSE # 777 AUTOMATED COMPUTER SOLUTIONS ------------------------------------------------------------------------------- Print report listing Item Transactions by Type. Please enter the Starting Date , or 'B' to bypass =7/13 Please enter the Ending date , or 'B' to bypass =7/13 Enter the type of transactions to include: 40 = WIP Receipt 47 = Issue to GL Number 41 = PO Receipt 49 = Sales Cost of Goods 42 = Scrap 50 = Inventory Adjustment 43 = Unplan Receipt 51 = Cycle Count Adjustment 44 = Issue to Work Order 52 = Physical Adjustment =>> :51 ENTER (P) FOR POSTED, (U) UNPOSTED, OR (A) FOR ALL TRANSACTIONS =a Report from (L) Live file or from (H) history (<L>,H) =l

The resulting report will show the adjustments made to inventory from the close process. Part of the report would look like:



IT.RPT MICRO METL CORP - INDPLS DATE 07/13/99 INVENTORY TRANSACTIONS PAGE 1 TYPE 51 CYCLE ADJUST Starting 07/13/99 and ending 07/13/99 PART DESCRIPTION LOGON TRANS PERIOD TRANS UM INVENTORY CYCLE ACCT DATE QTY 1-1510-4700 1-5081-0000 .................................................................................................................................... 9460-7000 FILTER, 23 5/8"X14 5/8"X1" CYCLE-8 07/13/99 -1 EA -3.48 -3.48 CYCLE COUNT FROM RK ON TOTALS FOR Part Nbr -1 -3.48 -3.48 TOTALS FOR INVENTORY ACCT 1-1510-4700 -1 -3.48 -3.48 IT.RPT MICRO METL CORP - INDPLS DATE 07/13/99 INVENTORY TRANSACTIONS PAGE 2 TYPE 51 CYCLE ADJUST Starting 07/13/99 and ending 07/13/99 PART DESCRIPTION LOGON TRANS PERIOD TRANS UM INVENTORY CYCLE ACCT DATE QTY 1-1510-5000 1-5081-0000 .................................................................................................................................... 9460-0700 FILTER 16 1/4X17 7/16X1 AL CYCLE-8 07/13/99 -4 EA -13.84 -13.84 CYCLE COUNT FROM RK ON TOTALS FOR Part Nbr -4 -13.84 -13.84 9460-1500 FILTER, 18-5/8"X27-3/4"X1" CYCLE-8 07/13/99 -5 EA -30.20 -30.20 CYCLE COUNT FROM RK ON TOTALS FOR Part Nbr -5 -30.20 -30.20 9460-1600 FILTER, 13-1/8 X 18-1/8 X CYCLE-8 07/13/99 1 EA 3.98 3.98 CYCLE COUNT FROM RK ON TOTALS FOR Part Nbr 1 3.98 3.98 9460-5100 FILTER, 14-5/8'X20-9/16"X1 CYCLE-8 07/13/99 -2 EA -7.18 -7.18 CYCLE COUNT FROM RK ON TOTALS FOR Part Nbr -2 -7.18 -7.18 9460-5200 FILTER, 10"X20"X1", THROW CYCLE-8 07/13/99 -10 EA -8.70 -8.70 CYCLE COUNT FROM RK ON TOTALS FOR Part Nbr -10 -8.70 -8.70 TOTALS FOR INVENTORY ACCT 1-1510-5000 -20 -55.94 -55.94 IT.RPT MICRO METL CORP - INDPLS DATE 07/13/99 INVENTORY TRANSACTIONS PAGE 3 TYPE 51 CYCLE ADJUST Starting 07/13/99 and ending 07/13/99 PART DESCRIPTION LOGON TRANS PERIOD TRANS UM INVENTORY CYCLE ACCT DATE QTY 1-1510-5000 1-5081-0000 .................................................................................................................................... TOTALS FOR TRANSACTION TYPE 51 -59.42 -59.42



IT.RPT MICRO METL CORP - INDPLS DATE 07/13/99 INVENTORY TRANSACTIONS PAGE 4 TYPE 51 CYCLE ADJUST Starting 07/13/99 and ending 07/13/99 PART DESCRIPTION LOGON TRANS PERIOD TRANS UM INVENTORY CYCLE ACCT DATE QTY 1-1510-5000 1-5081-0000 .................................................................................................................................... <<< TOTALS FOR THIS REPORT >>> -59.42 -59.42

This report separates the parts inventory account number, giving a page break and sub-total for each account. These same transactions can be seen with the IT.QUERY screen. The IT.QUERY screen shows the history of transactions for a part. This screen might look like:

PN 9460-0700 FILTER 16 1/4X17 7/16X1 ALUM. TRANS REFERENCE WIP... PO.... UNPLAN SCRAP. ISSUE ISSUE SALES INVENT DATE RECPT. RECPT. RECPT. WIP GL ORDER ADJUST 07/13/99 CYCLE-8 -4 F-Fwd,B-Bck,ESC-exit,ENTER-display details p1/1c1

The reference for the transaction will be the word “cycle” with the cycle number listed afterwards. Once the transaction is high lighted, press <return> to see the details. These might look like:

PORT 171 ACCOUNT jess5.0 SHOW.IT TUESDAY 07/13/99 08:27 ------------------------------------------------------------------------------- *) PART NBR 9460-0700 FILTER 16 1/4X17 7/16X1 ALUM. *) SEQ NBR 161 QTY -4 UM EA LOCATION CODE 51 TRANS DATE 07/13/99 CYCLE COUNT GL ACCT 1-1510-5000 INVENTORY AMT -13.84 PO AMT REFERENCE CYCLE-8 PO VAR COMMENT CYCLE COUNT FROM RK ON 07/12/99 POSTED DT GLT POSTED INTO PERIOD LOGON jess5.0 DATE 07/13/99 TIME 08:19AM 1> LOT NBR LOT QTY \\\\\\\\\\ \\\\\\\ 1 2 3 Modifications 1-1, TOP-exit wo/update, END-file, \\\\\\\\ ^^-repaint screen, ?-help, REV-Revision

This screen shows the details behind the summary on the first screen.

At this point, the cycle has been completed. Another cycle can be started for these parts any time after the close has been done.



[ Section IV ]

It is important to analyze the differences found in part numbers. If no analysis is done, then inventory accuracy will never improve. The first step in analyzing the differences is to know what parts they exist on. The system has also been designed to allow the user to see cycle count information when doing other transactions, helping the user to know the status of the inventory.

First, there are two reports that show the results of cycle counts. One is a summary version and the other a detail version. It is useful to the inventory manager to know the results of cycle counts at a summary level. To check the results of cycle counts so far this month, the manager might do:

PORT 171,ACCOUNT jess5.0 CYCLE.CNT.HIST.SUM 09:09 TUESDAY 07/13/99 PRO:MAN REL 5.0, LICENSE # 777 AUTOMATED COMPUTER SOLUTIONS ------------------------------------------------------------------------------- Print a Summary by Cycle Class comparing Actual to System quantities. Please enter the Starting Date , or 'B' to bypass =7.1 Please enter the Ending Date , or 'B' to bypass =7.13

This will result in the following report being printed on the printer:

CYCLE.CNT.HIST.SUM MICRO METL CORP - INDPLS DATE 07/13/99 Summary by Cycle Class comparing Actual to System quantities. TIME 09:24:49 Starting 07/01/99 and ending 07/13/99. PAGE 1 Count Nbr Pct Pct Tot Dollar Part Part Class Cts Qty Amt Difference Count Var .................................................................................................................................... FG 0 0.0 0.0 0.00 3 0 FILT 2 92.9 88.3 -42.07 11 7 TEST1 1 96.6 0.0 0.00 2 1 ===== ===== ========== ====== ====== TOTALS 99.7 88.3 -42.07 16 8

From this report the manager can see that the accuracy, month to date, is 99.7% based on quantities, and 88.3% based on dollars. This is very good news, if your inventory accuracy goals are based on MRP. Accurate quantities on hand are extremely important, regardless of the cost of the parts. If your goals were based on eliminating your physical inventory, you have more work to do. The variances should be explored further to determine what parts are generating the largest variances.



This can be done with a fastkey called CYCLE.CNT.HIST.DET report. To run the report, we would enter:

PORT 171,ACCOUNT jess5.0 CYCLE.CNT.HIST.DET 09:17 TUESDAY 07/13/99 PRO:MAN REL 5.0, LICENSE # 777 AUTOMATED COMPUTER SOLUTIONS ------------------------------------------------------------------------------- Print a detailed listing by Cycle Class from completed Cycle Counts. Please enter the Starting Date , or 'B' to bypass =7.1 Please enter the Ending Date , or 'B' to bypass =7.13 Please enter the Cycle Class to process, or 'B' to Bypass =FILT

We know the count class to look at from the summary report above. The resulting report would look like:

CYCLE.CNT.HIST.DET MICRO METL CORP - INDPLS DATE 07/13/99 Cycle Count History report for Cycle Class FILT . TIME 09:25:24 Starting 07/01/99 and ending 07/13/99. PAGE 1 Part Part Nbr Tot Dol Total Sys Total Act Number Description u/m Cts Pct Difference Quantity Quantity .................................................................................................................................... 9460-0600 FILTER, 16"X16'X1", T.A., W/ B EA 2 98.6 -0.20 142 140 9460-0700 FILTER 16 1/4X17 7/16X1 ALUM. EA 2 96.2 -1.38 108 104 9460-1500 FILTER, 18-5/8"X27-3/4"X1", AL EA 2 86.7 -1.21 17 15 9460-1600 FILTER, 13-1/8 X 18-1/8 X 1 FO EA 2 100.0 0.00 69 69 9460-4200 FILTER, 29-7/16"X15-5/16"X1", EA 2 100.0 0.00 172 172 9460-5100 FILTER, 14-5/8'X20-9/16"X1", A EA 2 -22.0 -29.79 151 68 9460-5200 FILTER, 10"X20"X1", THROW AWAY EA 2 98.6 -1.04 862 850 9460-6010 FILTER, PLEATED 16" X 20" X 2" EA 2 100.0 0.00 52 52 9460-6900 FILTER, 14 5/8"X21 3/4"X1" ALU EA 2 100.0 0.00 14 14 9460-7000 FILTER, 23 5/8"X14 5/8"X1" ALU EA 2 90.9 -3.13 108 99 9930-0004 DIFFUSER, 40"X22", FILTER GRIL EA 2 0.0 -5.30 1 0 SYSTEM ACTUAL DIFF PCT QUANTITIES 1696 1583 -113 92.9 NBR OF PARTS COUNTED 11 DOLLAR AMOUNTS 402.05 360.00 -42.05 88.3 NBR OF PARTS WITH VARIANCES 7

From this report, we can see the that the majority of the variance comes from part 9460-1500. The inventory manager could now go and review transactions for this part using the IT.QUERY screen. Noting all transactions between cycle count dates, the history should be reviewed. Some reasons for differences are explained below

First, we should note that cycle count information is available to users throughout the system. One handy place to note, is the last cycle count date is on the PARTS.STORE screen. This screen is used to set cycle count classes, and having the last date that this part was counted in helpful in assigning these classes. The last date is shown on the right hand side of the screen.



PORT 171 ACCOUNT jess5.0 PARTS.STORE TUESDAY 07/13/99 09:34 ------------------------------------------------------------------------------- *) Part Number 9460-1500 Description FILTER, 18-5/8"X27-3/4"X1", ALUMINIUM Stock U/M EA Multi Loc Flag Lot Flag 1) Create Location Purch U/M 2) Delete Location U/M Conv Fctr 3) Weight Inspection Req 4) Count Class FILT Inv Type 4 5) ABC code CC Bin Item Pur/Mfg (P/M) P 6) Wh Loc 7) Non-Net Quantity 8) Loc Code Class Code \\\\\\\\ \ \\\\\\\ \\\\\\\\ Quantity On Hand 5 1 Quantity In Insp 2 Safety Stock 0 3 Alloc To Mfg 0 4 Alloc To Sales 0 Last Cycle Dt 07/13/99 Modifications 1-8, TOP-exit wo/update, END-file, \\\\\\\\ ^^-repaint screen, ?-help, REV-Revision

It is also handy to use a macro called “]CYCLE” at this point to show all previous cycles for this part. A part with poor accuracy might be moved to a different class having a higher count frequency.

If you need to adjust the quantity on hand because it had been reported that parts were missing from inventory, the user could use a macro called ]CYCLE to display all of the cycle counts for this part. This could show that the part was just cycle counted a few days ago and that the material handler should check for the parts again before the adjustment is made. To use the macro, make sure that the part number has been entered on the screen and enter “]CYCLE” anywhere on the screen. Your screen might look like:

PORT 171 ACCOUNT jess5.0 ADJUST TUESDAY 07/13/99 08:51 ------------------------------------------------------------------------------- *) Part Nbr 9460-0600 FILTER, 16"X16'X1", T.A., W/ BAR Unit of Measure EA Quantity Onhand 70 Last Adjust Date 07/13/99 Inspect Quantity Last Adjust Quantity 0 Alloc Sales Alloc Mfg 1) A - Adjust, R - Replace, T - Transfer ]cycle 2) Adjust Quantity 3) Adjust Date 4) Reason for Adjustment

A window will pop up showing all the previous cycle counts, such as:



PORT 171 ACCOUNT jess5.0 ADJUST TUESDAY 07/13/99 08:54 ------------------------------------------------------------------------------- *----------------------------------------------------------------------------* |Page 1 IM 08:54:23 13 Jul 1999 | | | |PART NUMBER.... CYCLE CYCLE... CYCLE... CYCLE .. CYCLE .. | | NBR END DT QOH FRZ QOH DIFF | | HIST HIST HIST HIST HIST | | | |9460-0600 1 01/15/99 0 0 0 | | 2 02/15/99 5 0 -5 | | 3 03/15/99 25 22 -3 | | 4 04/15/99 2 22 20 | | 5 05/15/99 30 30 0 | | 6 06/15/99 47 47 0 | | 7 07/10/99 72 70 -2 | | 8 07/13/99 70 70 0 | | | |[405] 1 items listed out of 1 items. | | | | | F-fwd,B-bck,ESC-exit----------------------------------------------------p1/1c1

The cycle count numbers may not go in order. These are the numbers assigned by the system and other cycle counts will affect what numbers show up here. The users will not see any references to cycles that were cancelled either. This list includes only those cycles that were completed.



There are probably as many reasons for errors in inventory accuracy as there are stars in the sky. However, we have listed some of the more prevalent ones, and this list may be used as a check off list of reasons why there are variances. Most importantly, the activity of a part must be accurately represented by the transactions in the system. This information link is most certainly the cause of the problem. Check for these items:

1. One of the most common errors comes from the parts not be properly identified in the plant. When parts are not clearly marked with the system part number, the cycle counter must determine the part number. This decision point opens the process to error. If parts are not clearly marked, the cycle counter must have a higher level of expertise regarding the product, as they must be able to investigate the part and determine which part number the item really is. If this is a chronic problem, consider a label printer stationed at the receiving dock and additional printers at production points. The system allows labels to be printed from both PO.RECEIPTS and WIP.RECEIPTS.

2. Locating parts in the plant. If the parts are normally found in the stock room, but due to room, the receiving person moved the parts behind a machine, the cycle counter may not find the parts. This is a larger problem in plants where location control is not being used. If location control is being used, the movement of material must be reported in the system.

3. Make sure that the counter knows the unit of measure for the parts and understands them. Perhaps chemicals are received in drums, but stocked in gallons. The stocking unit of measure is shown on the worksheet. The counted quantity must represent this stocking unit of measure.

4. Make sure that the cycle count process was completed in a timely fashion. The quantities frozen at the start of day might very well have been accurate. If the cycle count was not done until the next day, the parts may have had activity (were used or received), causing a variance that does not really exist. If any doubt exists, cancel the cycle count and start a new one.



With the above steps being reviewed, the counts should be more accurate. The variance now must lie in reporting activity of the part from the floor. Some reasons why this happens:

1. Incorrect parts received from purchasing. The purchase order was written up for a part number and received as such. However, the part was actually a different part number.

2. Incorrect quantity received in receiving. The purchasing unit of measure could not be clearly understood by the receiving person. Perhaps the purchase order (and receiver) was in drums, but the receiver figured out that there was 220 gallons in the drums and received this quantity. The system would actually beep and alert the user because of the receipt quantity being higher than the order, but if the opposite situation occurred the user might not know. In this instance, the purchase order was in gallons, and the receiver counts and reports drums. Make sure that the receiver clearly understands the units of measure being purchased. If a new unit of measure is being used for the first time with a vendor, have purchasing alert the receiving department of its use.

3. The receipt of material not reported at all. If material shows up at the back door, it must be received into inventory. If no purchase order exists (for some reason), use UNPLAN.REC and receive the inventory.

4. Make sure that parts in inspection are clearly marked. These parts are not included in the quantity on hand in the system. Counting them during a cycle count will cause an error.

5. If your company uses “backflush” on it’s work orders, bills of material are probably the more common source of errors. The system will relieve from inventory the quantities of parts that are shown in the bill of material. In a backflush environment, the picklist should be distributed with the work order packet and the plant must advise if a different quantity other than the picklist quantity is used.

6. Substitutions of other than picklist parts are used. If the plant uses parts other than the ones on the picklist, they must update the system. There can be perfectly good reasons why these substitutions are used. But if the system is out of synch with these reasons, the correct parts must be issued from inventory and incorrect parts issued back from the work order into inventory. Substitutions are fairly difficult to reconcile on the system side. Only a trained counter would know to look at alternate parts and find a variance on those parts corresponding to the variance on the part of interest.

7. The correct quantities that were used on a work order must be reported. A similar problem can exist as it does in receiving. Special bolts might be stored in boxes, but stocked in the system in “each”. If the material handler reports that they issued 1 box of bolts from inventory into the work order, inventory will be incorrect. In this case the work order will result in a material variance (less parts used than in the standard).

8. The same unit of measure problem can occur during ISSUE.GL, when scrapping parts. Make sure that the correct quantity is reported.

9. An incorrect quantity is WIP.RECEIPT’d. This is normally a keypunch error. In many environments, this transaction is done on the floor. Inaccurate quantities, or inaccurate work order numbers, can cause the wrong quantity to be input into inventory. If your company uses routing steps and reports labor to these steps, you may find the error pretty quickly on the WO.STATUS screen. The quantities completed on the final routing step will not match the quantities received on the work order.



10. Incorrect parts shipped on a sales order are also a serious problem. Not only will the customer get incorrect goods, but also inventory on two parts will be incorrect. Making sure that the parts are clearly marked in inventory will help minimize this problem. Incorrect quantities can also be shipped. Maybe three parts were put in a box, but only two reported as shipped. The only way to catch some of these errors is to contact your customer or check bills of lading for the shipment.

11. The ADJUST screen should be used very infrequently, unless your plant has inventory transactions occurring outside the system. Perhaps a certain product line does not use work orders, and therefore, the inventory must be “adjusted” in. There are screens and processes to update inventory in Pro:Man from receipt from your vendor to shipment to your customer. None of these processes rely on the ADJUST screen. Rampant use of this screen is clearly an indication that the other processes to control inventory are not in place. This screen should be trusted to a select few people who can analyze the reasons why the adjustment is required and to ensure that the change is absolutely needed.

These are only some of the common problems with inventory inaccuracy. You may want to add some additional reasons to your list of common occurrences. It may be advantageous to make a histogram of reasons why the problem exist and then try to eliminate the more common occurrences.



Case Studies

Case 1 ……………………… Parts with no location nor lot controlCase 2 ……………………… Parts with location control onlyCase 3 ……………………… Parts with lot control onlyCase 4 ……………………… Parts with both location and lot control


Documents

PURCHASING count.doc · Web view[CYCLE COUNTING] [Module Objectives] We will cover in detail how using PRO:MAN’s [Cycle Count] module will impact your operation. This is a fully