4/16/13

What is difference between Cycle counting and Physical Inventory in Oracle Apps?

28th September 2012

What is difference between Cycle counting and Physical Inventory in Oracle Apps?

Physical Inventory or Cycle counting is used to streamline the inventory of the items within warehouse and the inventory shown in the sytem ( that is to tally the actual inventory and the on hand showing in the system). A physical inventory is done once a year to check and correct the accuracy of your inventory. Often used by banks to audit their investment into your company or to simply reset your stock levels so that inventory is correct and customer service is not impacted by wrong information. A cycle counts purpose is to find systemic problems, it is NOT intended to ensure your inventory accuracy or fix your on hand quantities. Those are mere bi-products of a cycle count. All inventories will have different classification of products called A,B,C,D classification. These classes are defined by the importance and movement of a product where an A item is high dollar / high mover, and a D item is something that is identified by the dust it has on the shelf. A cycle count filters through your inventory over a course of a year. A company may choose to count all their A items 4 times a year, B items 3 times a year, C items twice, and D once. The theory behind the Cycle Count is to monitor yours systems (processes and procedures). Are you pulling parts correctly, are they marked correctly, is paperwork being processed, is the receiving dept. counting items on the inbound, are product bar coded correctly, is a bill of material correct, theft, and a hundred other things that could possibly cause your inventory to go out of balance. A cycle count finds those flaws and offers you a chance to correct them. The reason an A item is counted more often than a D is not because of Value $$, yet because it is subjected to your processes a lot more. Assuming you have a very solid system/process, you constantly test it (via Cycle Counts), and you apply that same exact process to an A item as you do a D, there is a very high probablility that your inventory accuracy on the D item will be as accurate as your A, even though you only counted it once in a years span. Lastly, a good cycle count has a Hit of Miss criteria. There are always going to be acceptable levels of tolerance. Simply put, do we really care if we are off by 1 or 2 pcs. of a $0.01 part that we stock THOUSANDS of? NO! So we identify those tolerances. If your counts fall with in those tolerances, you have a HIT (good thing). IF
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What is difference between Cycle counting and Physical Inventory in Oracle Apps?

they fall outside of the tolerance you have a MISS (bad thing). Misses are investigated. Problems researched and solutions secured. THEN as a final measure you would schedule the MISS for a future cycle count, say in a couple of weeks to ensure the fix worked, the process is functioning and the system is good. Some differences of the CC and physical inventory is as follows 1)cycle counting can be done on specific items or selective items But in physical inventory we have to count all items. 2)cycle counting can be done multiple time in an year , like monthly or quarterly for high value items but physical count is done once an year or at the most twice for all the items.

3)Cycle Count : We can schedule the count Physical Inventory : We cannot schedule this. 4)Cycle Count : We cannot have a snap shot Physical Inventory : We can have a snap shot 5)Cycle Count : We can view the qty in the system Physical Inventory : We can not view the qty in system 6)Cycle Count : We cane select the items using ABC analysis. Physical Inventory : It is done for all the items. 7)Cycle Count : We need not to freeze inventory transactions. Physical Inventory : Need to freeze inventory transactions. 8)Cycle Count : Recount is possible Physical Inventory : Recount is not possible. 9)Cycle Count : We can maintain recount history. Physical Inventory : No recount, hence no history. 10)Cycle Count : Adjustments can be procesed on approval. Physical Inventory : Can be done using adjustment concurrent program Posted 28th September 2012 by Anonymous Labels: Oracle Inventory
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What is difference between Cycle counting and Physical Inventory in Oracle Apps?

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