Hi everyone! I am still learning the ropes with scheduling. Today I learned that cycle counts are used to keep track of inventory amounts without having to shut down the shop for a physical inventory. What a great idea! I am not sure how this works.
What does ABC stand for in ABC codes? Why do\should we use ABC codes?
Why can’t the inventory be kept up to date without performing a cycle count? What makes cycle count necessary?
Who normally performs the cycle count and adjustments? What activity triggers this to happen?
Nate - this is a long, and company specific conversation, but I’ll try to cover it at a high level. There is documentation on all of this in the ERP docs, but this is a fairly universal and abundant data can be found on Cycle Counting and inventory concepts on the internet.
ABC - is a method of classifying inventory value into schedulable cycles for counting. Your usage completely depends on how you value inventory. Generally someone will put the parts that make up 80% of the value inventory (not the count/qty) in the A group and cycle count them often. Then you split the next 20% of value into B and C and count them less frequently.
Up to Date inventory - Sure it can, but it takes more discipline than is found in 99% of the shops out there. Inventory is inevitable fouled by forces outside of the standard receive/issue, produce/ship, inspect/reject/accept transactions Cycle counting is an alternative to doing a full physical, but is often used in conjunction with a full physical. Talk to your accountants about ‘inventory expense’ adjustments and why they never look good to auditors. This will explain more about the WHY than the HOW but you’ll learn a lot about the financial side of inventory.
Who counts? Everyone. Everyone but the guys in charge of inventory. This is a General Accounting Principles (GAP) practice of ‘checking the checkers’ - auditing the inventory - and it’s usually by those whose job is not affected by the count (so the counting is true, in contrast to someone ‘adjusting the count’ to match the Inventory QOH report - a big NO NO). Again, talk to your accounting/auditing team for more rationale.
Thanks Mike! This is great information. I am planning to talk with some of the accounting folks soon. They clearly need to be a part of this. I did find that we already have 4 ABC codes setup for timeframes from 30 days to 1 year. This may have just been setup by the installer, as not many people here know about them.
Thanks again for your time!
This is what we learned the hard way after a year of this in the manufacturing plant. We are trying again in the aftermarket sales division and it is better but still challenging.
I feel ignorant, but I just did not anticipate the impact of all the moving pieces. I knew timing of receipts was one piece and general disorganization was another. But in MFG, jobs (WIP) are a hard moving target to hit. In the sales division, picking and packing is the moving target.
Another thing, we did the paper tags for cycle counting. It’s the easiest way to get going, and that’s how we do physical inventory with dozens of people. But for cycle counting, I would say the only way is to count electronically. It can be tablets, handhelds, a REST app you make, anything live-linked to Epicor.
Reason is that there’s this “Activity Before Count” field in Epicor that really bedevils you when doing paper counts but if you do this digitally, it’s really intuitive and helpful.
Also, read up on resetting the LastCCDate on PartWhse via a data fix you must request from Epicor. This is a must.
(And vote for my Epi Idea to make that part of the system.)
Edit - One more thought: I find counting C parts to be colossally counterproductive. By the typical definition, you have TONS of C parts and they are bizarre, obscure parts in weird corners of the building or on high shelves piled in a Gaylord with 23 other part numbers, and no one knows what they look like so you spend an inordinate amount of time looking for them and counting them. And all of this is to account for like 5-10% of the value of what’s in the building.
People here are in love with the idea of cycle counting so that we never have to shut down for physical inventory. But the C parts are justification enough to do a physical. I say cycle-count the A’s and maybe the B’s, and leave the C’s for a year-end count.
You can have Epicor calculate the ABC codes for you or you can set them up manually by part. This can come in handy as epicor will calculate based on on hand value and projected usage (if you choose to include it). But if you have a $ .01 Part that is critical for the assembly line to run, you should probably count that part more frequently to make sure the on hand quantities are correct. Those are the parts that you want to set the ABC code manually on the Part.
In our system I see that we have 4 codes setup already. are A, B, C, and D, codes kind of universal? Do most companies use 30, 90, 180, and 365 day cycles? Is that how Epicor sets the codes when you use calculate ABC codes?
I cant speak for other companies. We have 5 codes, we also include an E code that is not counted. this is for items we want to exclude from cycle counting.
The 30, 90, 180, and 365 day cycles are how I set up my ABC codes when I was an Inventory manager many moons ago.
