Cycle Counting in SAP MM
Document Objective The main objective of this document is to explain the cycle counting process in SAP. A brief brief explanation about Physical inventory types and ABC analysis is also covered here along with reasons for conducting Physical nventory.
Document Detail Physical Inventory: Physical inventory is a process where a business physically counts its entire inventory. A physical inventory may be mandated by fnancial accounting rules or the tax regulations to place an accurate value on the inventory, or the business may need to count inventory so component parts or raw materials can be restocked.
Types: here are are three types o! physical inventories. inventories.
1) As Required: As re"uired inventories are usually conducted by direction o! the State#s Property Manager $PM% or a &epartmental Property '(cer $&P'%. An )As *e"uired+ inventory is ust that--it is not normally scheduled, scheduled, and is generally conducted in response to a given situation or loss. )As re"uired+ inventories are limited in scope and are o!ten conducted when a change in Property Custodian, or responsible hand receipt holder occurs.
) !yclic: Cyclic inventories are a type o! periodic inventory. hey are conducted monthly, "uarterly, or semi-annually, in place o! an annual inventory. hen using a cyclic inventory method, the &P' notifes the Property Custodian as to which specifc items to inventory in a given period. he obective o! this type o! procedure is to have a /00 percent inventory o! all items completed by the end o! each fscal year. 1n most cases, the State re"uires an annual inventory, but this may not be practical !or all departments.
") Annual: Annual inventories are conducted during a specifed time window during each fscal year and involve a /00 percent inventory inventory o! all items within a department. Annual inventories re"uire a greater time resource and more coordination than cyclic inventories, but have less total disruptions disruptions on operations because they occur only once each fscal year.
Reasons #or !onductin$ Physical Inventory here are are !our important important reasons reasons why a department department conducts a physical inventory inventory22
Cycle Counting in SAP MM 3 o veri!y or ascertain the physical count, condition, and location o! an inventory item and to ensure that it is properly documented 3 o identi!y, document, and add items to its inventory list that are on-hand and meet "uali!ying criteria, but are not currently shown as part o! the inventory 3 o ensure that legitimately trans!erred or disposed o! items are no longer carried on the inventory listing4 and fnally 3 o identi!y any missing or damaged items that need to be located, repaired, or replaced.
What is ABC Analysis?
A5C analysis is a business term used to defne an inventory categori6ation techni"ue o!ten used in materials management. 1t is also known as Selective Inventory Control. Control . A5C analysis provides a mechanism !or identi!ying items that will have a signifcant impact on overall inventory cost, while also providing a mechanism !or identi!ying di7erent categories o! stock that will re"uire di7erent management and controls. hen carrying out an A5C analysis, inventory items are valued $item cost multiplied by "uantity issued8consumed in period% with the results then ranked. he results are then grouped typically into three bands. hese bands are called A5C codes.
A%! codes /. 9A class9 class9 inventory will typically typically contain contain items that account account !or :0; o! total value, or <0; o! total items. <. 95 class9 inventory inventory will will have around around /=; o! total value, value, or >0; >0; o! total total items. >. 9C class9 inventory inventory will will account !or the remaining =;, or =0; =0; o! total total items. A5C Analysis is similar to the Pareto principle in that the 9A class9 group will typically account !or a large proportion o! the overall value but a small percentage o! the overall volume o! inventory. Another recommended breakdown o! A5C classes2 /. 9A9 appro approximat ximately ely /0; o! items items or ??.?; ??.?; o! o! value <. 959 appro approximat ximately ely <0; o! o! items or or <>.>; <>.>; o! value value >. 9C9 appro approximat ximately ely @0; o! o! items or or /0./; /0./; o! value value
Cycle Counting in SAP MM
Cycle Counting Inventory in SAP
Purpose 1n cycle counting inventory, you enter your material stocks physically at regular intervals within a fscal year. 5y dividing materials into various classes $!or example, A, 5, C, &, and so on%, you speci!y !or those materials at which intervals or cycles the inventory is to be per!ormed. his allows you to inventory !ast-moving materials in your warehouse more o!ten than slow-moving materials.
Prerequisites •
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ou ou have used the the cycle counting counting indicator to defne material classes and corresponding inventory cycles in customi6ing. ou ou have assigned assigned every material to be inventoried inventoried using cycle cycle counting to a material class. ou make these assignments by setting the Cycle Counting indicator in the Storage view Storage view in the material master.
Customization:
Cycle Counting in SAP MM
Physical inventory indicator #or cycle countin$ his indicates indicates that the given material is subect to the cycle counting method method o! inventory. he indicator also defnes at which time intervals a physical inventory is to be carried out !or the material. his indicator groups the materials together into various cycle counting categories. Bsually, these categories correspond to the A5C analysis o! the materials. owever, they can be defned at the userDs discretion in Customi6ing !or 1nventory Management.
&o' o# phys' inventories per (scal year #or cycle countin$ Specifes how o!ten during during the fscal year a physical inventory is to be carried out !or a material subect to cycle counting. he system uses this specifcation to convert the count interval into workdays. Physical inventory interval in *or+days) *or+days) #or cycle countin$ Specifes a!ter how many workdays workdays !ollowing !ollowing the last inventory count another another physical inventory has to be carried out !or a given material. he count interval is determined automatically automatically on the basis o! the number o! physical inventories specifed !or the fscal year. ,loat time in *or+days) #or cycle countin$ 1ndicates the number number o! workdays by which which the the planned planned count count date may vary !rom the current date.
Percenta$e o# per#ormance measure #or cycle countin$ indicator his specifes the percentage percentage allocation o! the materials to the the individual cycle counting categories. categories. he percentage percentage value is used !or automatic assignment o! the cycle counting indicator.
Cycle Counting in SAP MM
Material Master Settings:
Physical inventory indicator #or cycle countin$ his indicates that the given given material material is subect to the the cycle cycle counting counting method o! inventory. inventory. he indicator also defnes at which time intervals a physical inventory is to be carried out !or the material. his indicator groups the materials together into various cycle counting categories. Bsually, these categories correspond to the A5C analysis o! the materials. owever, they can be defned at the userDs discretion in Customi6ing !or 1nventory Management. Enter an indicator i! the material is to be subect to cycle counting. his indicator can also later be updated automatically by the system using report report *MC51F00 $M15C .Code%. .Code%.
!! indicator is (-ed his specifes that the the cycle counting indicator cannot be changed changed !or !or cycle cycle counting by an A5C analysis. he only way to change this indicator is through manual maintenance o! the material master record. Set this indicator i! the material is always to remain in the specifed cycle counting category.
How to set Cycle count indicator automatically?
Cycle Counting in SAP MM Set the cycle count indicator automatically using .Code M15C.
5ased on the selection parameter, !or a plant and selected material types, system selects material.
Cycle Counting in SAP MM
ou ou can click on on countin$ e.ort indicator to know the counting e7ort
Create Physical Inventory ocuments using !"Code MIC#
Cycle Counting in SAP MM
5atch input will be created !or selected materials.
Cycle Counting in SAP MM
Bse SM>= .Code to process the session
Physical nventory cocument will be created. !ou !ou can print this document and enter the count. "ifferences can be posted and stoc# will be adjusted accordingly. accordingly.
Cycle Counting in SAP MM
