Inventory

A-B-C Analysis:

Classification is based on consumption value

• A-class items
• Usually 5-10% items accounts for 70-75% of money spent on material
• These items require detailed & rigid control
• Need to be stocked in smaller quantities
• B-class items
• Usually 10-15% items accounts for 10-15% of money spent on material
• These items do not need detailed & rigid control
• Normally stock are reviewed once in 1 or 2 months
• C-class items
• Usually 70-80% items accounts for 5-10% of money spent on material
• Do not require close control
• These items need to be procured infrequently in bulk to get quantity discount
• Application of A-B-C Analysis:
• Degree of control
• Stock records
• Safety stock level
• Price discounts
• Value engineering

Cycle Counting :

• Performed periodically to ensure accuracy of inventory quantities & values.
• Frequency of counting item may be based on the classification of items.
1. Example:
• Class A items shall be counted 4 times a year
• Class B items shall be counted 2 times a year
• Class C items shall be counted once in a year
• A method of taking inventory that does not require the inventory organization to shut down in order to count actual inventory items.

System Reference

• Oracle Inventory: ABC Codes
• ABC Compiles.
• ABC Classes.
• ABC Assignment Groups.
• Inventory, Vision Operations (USA): Counting > Cycle Counting > Cycle Counts

User Responsibilities



The store’s in-charge is responsible for:
• Setting up the cycle count parameters and scheduling.


The store’s person is responsible for:
• Printing cycle count requests.
• Performing the item counting.
• Entering actual item counts.
• Resolving inventory discrepancies in the database with Finance department.

Ownership

The Head of Material’s Department is responsible for ensuring that this document is necessary, reflects actual practices and supports company policy.

Prerequisites

• Item classification shall be done (by finance and material dept)
• Frequency of counting shall be decides (by Material dept)
• System setup shall be done (by Material / IT)

Steps for ABC Analysis

1. Creating a ABC compile.
2. Generating ABC descending value report.
3. Defining ABC Classes.
4. Defining ABC Assignment Group.
5. Associating classes and assignment group.
6. Assigning items to classes.
7. Updating item assignment.
8. Generating the ABC assignment report.

1. Create a ABC compile



The ABC compile ranks all the items in your inventory based upon compile criteria. This ranking is used to assign classes to your items.


Compile Criterion:
ABC analysis is done based on the value of consumptions. But initially till next 6 months from the date of Oracle implementation it will be based on Stock-in-hand value. Moving ahead it will be shifted to Consumption base.

MOVE ORDERS

Move order Types

Move Orders can be created from different sources. These move orders are identified by Move order type at the header level. Different types of move orders are:

Move Order Requisitions: These are created from the move order form. Based on the setup at the organization and item level, move orders require approval before they can be allocated and transacted. These requisitions can be created to charge an account or move the material from one subinventory to another.

Replenishment Move Orders: These are auto-created with pre approved status. Depending on the planning type you can replenish the quantity in a subinventory for an item. Three types of replenishment plans (in relation to move orders) are available:

1. Min-max Replenishment Planning
2. Kanban Replenishment Planning
3. Replenishing Count planning

Based on these sources, when appropriate programs are run, move orders are automatically created.
Pick Wave Move Order Requisitions: These move orders are specifically for the sales order picking process. When Pick Releasing program is run move orders are created as preapproved and allocated. Pick Confirm process transacts these pick wave move orders.

SLAM  (Sub Ledger Accounting Method ) :

Its accounting rule based on sub ledger transactions from all oracle applications.

Any modification should be done in SLAM.