ABC Analysis Prequel to Cycle Count MAIN STEPS

ABC Analysis Prequel to Cycle Count

MAIN STEPS 1. 2. 3. 4. Define ABC Compile Define ABC groups Assign Classes to groups Assign Items to Classes from ABC compile 5. Query the Data

Define ABC Compile navigation-- Inventory Superuser ABC Codes ABC Compiles Press COMPILE in the end.

Info About ABC Compile • • Enter a unique name for the ABC compile. Determine the scope of the analysis by selecting the content level for items to include in the compile. – If you use the entire organization, Oracle Inventory includes all items defined for your current organization in the ABC compile, even those with zero cost or zero quantity. – If you use a particular subinventory, Oracle Inventory includes all items for which you have defined an item/subinventory relationship. Select the valuation scope for determining the ranking of items. Ranking must be done at the Organization level if you did not select a subinventory in the Content Scope field. – If you only want to include items in a subinventory but you want the ranking to be done based on the organization wide ranking, select Organization. Select the compile criterion or method of ranking items in the ABC compile. Oracle Inventory uses the compile criterion to value the items you include in your ABC compile. After determining each item’s compile value, Oracle Inventory ranks all the items in your ABC compile. The Compile Criterion field is found in the Define ABC Compile window. For each distinct compile, you can choose one of the following criteria to value and rank each item included in the ABC compile. This criterion defines what the rank of a particular item will be in the ABC compile. For example, if you use Current on–hand quantity as your compile criterion, an item with an on–hand quantity of 10 units is of higher rank than another item with a quantity of 5 units. If you use the Current on–hand value criterion, and the first item from above has a cost of $10 per unit and the second item from above has a cost of $25 per unit, the second item has a higher value than the first item since Oracle Inventory compares $100 ($10 10 units) to $125 ($25 5 units). Current on–handquantity Use the current on–hand quantity of inventory. Assign the sequence number by descending quantity. Current on–hand value Use the current on–hand quantity of inventory times the cost for the cost type. Assign the sequence number by descending value. Historical usage value Use the historical usage value (transaction history). This is the sum of the transaction quantities times the unit cost of the transactions for the time period you specify. Assign the sequence number by descending value. Historical usage quantity Use the historical usage quantity (transaction history) for the time period you specify. Assign the sequence number by descending quantity. Historical number of transactions Use the historical number of transactions (transaction history) for the time period you specify. Assign the sequence number by descending number of transactions.

Valuation Scope for Ranking Items • In the Define ABC Compile window you select a valuation scope for determining the ranking of items. If you choose to restrict your ABC compile to items within a particular subinventory, you have the option of valuing your items across all subinventories in the organization or just the one for which you have restricted the ABC compile. – For example, item RELAY 1 has an on–hand quantity of 5 units in subinventory STORES 1. The same item also exists in other subinventories in your organization, for a total on–hand quantity of 30 units in the entire organization. Item RELAY 2, has an on– hand quantity of 10 units in STORES 1 and a total on–hand quantity of 20 units in the entire organization. You choose to compile your ABCanalysis based on Current on–hand quantity. – If you restrict your ABC compile to subinventory STORES 1, both RELAY 1 and RELAY 2 are included in the ABC analysis since they both exist in STORES 1. However, the value to use is determined by what you choose in the Valuation Scope field on the Define ABC Compile window. If you choose to restrict valuation to the subinventory, Oracle Inventory uses 5 units for RELAY 1, 10 units for – RELAY 2, and ranks RELAY 2 higher than RELAY 1. However, if you choose to value the same items across the organization, Oracle Inventory uses 30 units for RELAY 1, 20 units for RELAY 2, and ranks RELAY 1 higher than RELAY 2.

COMPILE CRITERION The Compile Criterion field is found in the Define ABC Compile window. For each distinct compile, you can choose one of the following criteria to value and rank each item included in the ABC compile. This criterion defines what the rank of a particular item will be in the ABC compile. For example, if you use Current on–hand quantity as your compile criterion, an item with an on–hand quantity of 10 units is of higher rank than another item with a quantity of 5 units. If you use the Current on–hand value criterion, and the first item from above has a cost of Rs 10 per unit and the second item from above has a cost of Rs 25 per unit, the second item has a higher value than the first item since Oracle Inventory compares Rs 100 (Rs 10 10 units) to Rs 125 (Rs 25 * 5 units). Current on–handquantity Use the current on–hand quantity of inventory. Assign the sequence number by descending quantity. Current on–hand value Use the current on–hand quantity of inventory times the cost for the cost type. Assign the sequence number by descending value. Historical usage value Use the historical usage value (transaction history). This is the sum of the transaction quantities times the unit cost of the transactions for the time period you specify. Assign the sequence number by descending value. Historical usage quantity Use the historical usage quantity (transaction history) for the time period you specify. Assign the sequence number by descending quantity. Historical number of transactions Use the historical number of transactions (transaction history) for the time period you specify. Assign the sequence number by descending number of transactions.

VIEW COMPILE RESULTS

Define ABC Classes

Define ABC Group

Assign Classes To Groups

Assign the Items from the ABC compile to the Classes

define ABC assignments You can assign and update ABC classes to an ABC assignment group where an ABC compile was also entered. From the ABC Descending Value Report you determine the cutoff points for assigning ABC classes. You can then use the classifications for other purposes such as determining how often you cycle count a given item. To define ABC assignments: 1. Navigate to the Assign ABC Items window, or navigate to the ABC Assignment Groups window and choose the Assign Items button. 2. Enter the ABC group for which to assign items to classes. If you navigate from the ABC Assignment Groups window this field is already entered The Compile Name, Subinventory, Number of Items, and Total Compile Value fields display information for the compile used by the ABC Group. 3. Specify the cutoff point for each ABC class. Each ABC class must have at least one item assigned to it, and all items in the ABC compile must be assigned to an ABC class. You can use any of the following fields to determine the cutoff points: Seq: You can enter the sequence number from the ABC Descending Value Report for the last item to be included in each ABC class. Oracle Inventory automatically calculates this value if you choose to assign classes by another method. Oracle Inventory displays the last sequence number as the default for the last class. Inventory Value: You can enter the cumulative value from the ABC Descending Value Report for the last item to include in each ABC class. Oracle Inventory automatically calculates the maximum value. This maximum value is restricted to the total inventory value compiled and is displayed in the Total Compile Value field. Oracle Inventory displays the total inventory value as the default for the last class. % Items: You can enter the percent of number of items compiled from the ABC Descending Value Report to include in each class. Oracle Inventory automatically calculates this value if you choose to assign classes by another method. % Value: You can enter the percent of total compile value from the ABC Descending Value Report to include in each class. Oracle Inventory automatically calculates this value if you choose to assign classes by another method. Attention: It is possible to have several items in the ABC compile with zero value. If any item with zero value is in a class other than the last class, you may only assign items using the sequence number or item percent. For the Inventory Value, % Item, and % Value fields, if the value entered does not exactly match any item, Oracle Inventory chooses the first item with a value greater than the value entered. 4. Choose the Assign button to launch the concurrent request to assign the items to the classes in the ABC group.

Updating ABC Item Assignments If you are not satisfied with the class into which an item falls as a result of the automatic ABC assignment process, you can change it. For example, assume you compiled your ABC analysis based on historical usage value. You have a relatively new item in your inventory that was ranked toward the bottom of your ABC Descending Value Report since it has very little transaction history on record. Therefore, after the assignment process, this item was assigned to a class of low rank. However, you know that in the future, this item will have a high usage value and should really be classified as a high rank item. You use the Update ABC Assignments form to reclassify this item to now be a high rank item. Attention: Whenever you recompile an ABC analysis or change the method by which you assign your ABC classifications, you lose any changes you might have made to your item assignments. All items are reclassified based on their new ranks in the ABC Descending Value Report and the method you choose to determine cutoff points. You can also update an ABC group to include those items that were not a part of the initial ABC compile. This allows you to expand the scope of your existing ABC compiles without having to rerun any processes. For example, if you start stocking a new item in your inventory, you can make it a part of your existing ABC groupings through the update process. Otherwise, you would have to start all over by recompiling your ABC analysis and reassigning your items to ABC classes. With the whole process starting from the very beginning, you also run the risk of losing any changes you might have made to your item assignments. To update an ABC item assignment: 1. Navigate to the Update ABC Item Assignments window, or navigate to the ABC Assignment Groups window and choose Update Items. 2. Enter an ABC group whose items you want to update. If you navigate from the ABC Assignment Groups window this field is already entered 3. Enter an inventory item and a valid ABC class. You can use the Find button to display items currently assigned to the ABC group you entered. 4. Save your work.

VIEW ITEM CLASS ASSIGNMENT