Background

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Inventory is an important  ERP element


  • An accurate inventory is a foundation of any ERP system.
  • Inventory is an important element of any business and its supply chain.
  • Planning, Purchases and Production also depend on accurate inventory.
  • If the inventory is not properly managed, the business will suffer financially.

Physical Inventory Count


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  • Physically counting entire inventory
  • Conducted Once/ twice a year
  • During Non operating hours (shutdown period)
  • Mainly done for Balance Sheet purposes

What is Cycle Count?

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  • Inventory auditing procedure under inventory management.
  • A small subset of inventory, in a specific location, is counted on a specified day.
  • No Shut Down (Can conduct during operating hours)
  • Continuous Inventory adjustments
  • If the count agrees to the ERP Cycle Count record, the inventory is considered as correct.
  • If not, investigate the cause of the difference; post the adjustment, and record the reason for the difference.

Steps in Cycle Counting

Step 1: Checking Inventory

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  • Complete data entry on all inventory transactions, so the inventory database is fully updated.
  • Print a cycle counting report, which states the bin locations that are to be counted, and assign it to the warehouse staff.
  • The cycle counters compare the locations, descriptions, and quantities stated on the report with the shelf for variations.
  • Alternatively, the descriptions and locations can be given to warehouse staff without quantity, so that they could enter counted quantity.

Step 2: Investigating Errors

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  • Investigate all differences found and discuss them with the warehouse manager, and determine whether there is a pattern of errors that may require further action
  • Adjust the inventory record database to remove the error found by the cycle counter.
  • If further action is required, alter procedures, training, staffing, or whatever else is needed to eliminate the error.

Benefits of Cycle Counting

  • Accurate data and a full audit trail
  • More accurate inventory records
  • Problems and Discrepancies are more easily spotted and corrected.
  • Examine the leading causes of differences and change your processes to eliminate those differences.
  • Staff diligence – When staff understand inventory is accurately counted, they become more diligent in caring for your inventory.

Challenges

  • If  the inventory records are not first updated with all outstanding inventory transactions, it is possible that a cycle counter will detect an error and adjust it.
  • Cycle counts can introduce inventory errors if the cycle count process is poorly executed.
  • This challenges can be mitigated by using ERP software like SAP Business One.

Features in ERP Software

  • Built in functionality facilitate good inventory cycle counting
  • Scheduling and work order capabilities makes easier to manage.
  • Location tracking in the scheduling of cycle counts.
  • Flexibility in adjusting discrepancies found.
  • Advanced reporting and management dashboards  conveying information.

Cycle Counting in SAP Business One

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Process available

  • Cycle Count Recommendations

               This function lets you view cycle count recommendations and launch inventory counting for the selected items.

     

  • Inventory Counting Transactions

               Selecting Items to Count

               Printing Out Lists of Inventory Counting Items

               Recording Inventory Counting Results

               Reconcile item quantities with the results of inventory counting



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