Auditors may dictate cycle counting procedures to be followed, especially when a company is utilizing a cycle count program in place of an annual physical inventory of the entire facility.
Rootstock has these features (as of v18.8) to support cycle counting:
2. Inventory Reconciliation Review & Processing (to enter, process counts)
3. Inventory Cost Transactions or Cost Transaction Query (to view the resulting inventory adjustments from processed counts).
This document covers the following business process steps:
ABC Analysis for one specific set of business rules
Determine which items should be A’s, B’s, and C’s.
Based on history
Based on forecast
Based on both
Reclassify items
Determine the number of A’s, B’s, and C’s to count on each count day.
Master Data / Data Loading
ICCOMCOD contains the ABC Class, which is then defaulted to ICITEM.
ICITEM / ICLOCITEM / ICITEMSRL Last Count Date, Last Count Date (Text) fields
ICITEM Date of Last Auto Cycle Count
Daily counting:
Temporarily suspend operational processes: receiving, WO issue, SO pick
Physical should match the system – for example:
Physically put away anything already received in the system
Physically pick anything already issued to a WO or picked for a SO line in the system.
You may use an early or late shift for counting; and may need some operational controls to pause processes that would impact the system inventory.
Create the count batch (including the logic of last auto cycle count)
Create a blind count sheet [Custom report]
Count; Enter and hold counts
Review variances [Custom report]
Edit and process counts
Resume operational processes
Exception Processes:
If a batch was not able to be counted prior to inventory operations resuming
3b: Create the Count Batch
Navigation
Inventory Reconciliation Automatic Generation
Processing
Enter # of A’s B’s C’s to be counted and Click <Select Items to be Counted>.
Click <Generate Reconciliation Detail>.
When the task completes, click OK.
3c: Create Blind Count Sheet
Report from INVRECON for a specific batch number. Check to ensure that the report is sorting in the same sequence as the Inventory Reconciliation Review & Processing UI.
Add to Quick Access Menu from Inventory Reconciliation Review & Processing.
3d: Enter and Hold Counts
Navigation
Inventory Reconciliation Review & Processing
Processing
Select the batch number and click Get Batch Records.
Enter counts and check the Hold check box on each line.
Click Reconcile Selected.
3e: Review Variances
Client-provided Custom Report: For a specific batch #, add a custom report to slide out menu.
The report may need to include the following:
Item
Serial Numbers (if applicable)
System Quantity
Counted Quantity
Variance Quantity
Cost of Variance Quantity
ABC Class
3f: Edit and Process Counts
Navigation
Inventory Reconciliation Review & Processing
Processing
Select the batch number and click Get Batch Records.
Select all
Edit counts as needed.
Uncheck the Hold check box on each line.
Click Reconcile Selected.
As needed, Rootstock creates adjustments between system quantity and actual quantity. These result in Cost Transactions.
Appendix: ABC Classification Theory (RB)
A’s:
Represent 80% of the total component material cost over a span of time. Typically, you find that this is 10% of inventory items. Manage inventory accuracy of the A’s most frequently (Ex: monthly or quarterly)
B’s:
Represent the next 15% of the total component material cost of the same span of time. Manage inventory accuracy of the B’s less frequently than A’s (Ex: quarterly or every 6 months)
C’s:
Represents the remainder of the total component material cost of the same span of time. Manage inventory accuracy of C’s less frequently than B’s (Ex: every 6 months or annually)
No Classification:
Represents items that you don’t count because the cost is negligible or you maintain a high quantity on hand.
Item Usage:
Determine the span of time for analysis
For each item, get extended cost of component usage, sort descending.
Get total extended cost for all items.
Get running total extended cost as each item is included with the ones above – express as % of the total extended cost.
When you reach 80%, all items from top to there should be ‘A’.
Continue getting running total extended cost by adding more item – express as % of the total extended cost.
When you reach 95%, all items from the end of A’s to there should be ‘B’.
Rest are ‘C’s (unless you don’t want to count them, then they should be blank).
RS Tools to Assist:
Item Usage History – by Accounting Period, gives quantity and extended cost. Group/subtotal by item. Item Usage Forecast – use to extend the ABC analysis data by forecasting out component usage.
Appendix: Determining # of A, B, C's to count on each count day
Determine count days for each month in the year. Sum and divide the total by 12 to give average count days/month (A’s), by 4 to get average count days/quarter (B’s), by 2 to get average count days / 6mo (C’s).
Run a report of Inventory Item Master – summarize by ABC Class.
Divide # of total A’s by # of average count days for a month (round up). This gives you the number of A’s you must count each count day in order to have counted all A’s once in the month.
Divide # of total B’s by # of average count days for a quarter (round up). This gives you the number of B’s you must count each count day in order to have counted all B’s once in the quarter.
Divide # of total C’s by # of average count days for 6 months (round up). This gives you the number of C’s you must count each count day in order to have counted all C’s once in the 6 month period.
Put these 3 results in your SOP for Batch creation. Each count day, the person creating the batch will request the same number of A’s B’s C’s until you recalculate and update the SOP. You may choose when to do this based on one or more factors such as if you’ve added a lot of new items or if you have done a reclassification based on item usage history and/or forecast.
Appendix: Date Object and Fields related to Cycle Counting
