Physical Inventory And Cycle Counting
A physical inventory is the process of getting an actual count of how many of every inventory item is currently in stock. For some companies, the process of taking a physical inventory entails closing down the entire company for a period of weeks, in order to obtain accurate on‑hand figures.
A good way to keep these figures accurate without doing many physical inventories is to institute a cycle counting program. In cycle counting, the inventory is being counted on a constant, cyclical basis. For example, a certain number of inventory items might be counted today, and their on‑hand values updated in the Inventory Item File. The other set of items would be counted tomorrow, etc. You might decide to count items which have been classed as Category A items on a more frequent basis than Category B or C items, and thus to keep their on‑hand values as current as possible.
Many accountants, in preparation for producing a company's financial statements, insist that a full physical inventory be done. But it is quite possible that if you can demonstrate a high degree of accuracy in a selected sample of items kept current by way of an on‑going cycle counting system, the accountant might waive the physical inventory requirements, and accept the computer's record of inventory value on‑hand.
To expedite entry of initial inventory a default item may be loaded to determine default field values. A function key will prompt you after the basic information on the item has been entered to accept the remaining fields as defined in the default item. To utilize this option an item must be entered with an item number of Default‑Item.
The Default‑Item is treated by the system as a regular inventory item. It should therefore be deleted after the initial inventory has been loaded. It is created the same as any other item using the Add function of this application.
Use of the Default‑Item allows the user to completely bypass the entry of the second and third screens of the Item File. If the system finds this item on file, it will prompt the user with a function key option to default remaining fields during entry of the new item. The function key prompt appears during two field entries on the first screen of item entry. These field entries include the Product Category entry and the Backorderable question.
NOTE: This applies to an item that has any stock on hand, allocated, on order, backordered or PTD or YTD accumulators, at any location other than the Default or manufacturing location.
By selecting Notes from the Item File Maintenance menu bar, you can define any additional requirements for each item record on file. The benefit of this feature is apparent when you need special information that isn't present in any other file maintenance application. The Notes function displays a window that enables entry of the item's number. You can enter up to 5 lines 30 characters each of additional comments plus one date and one amount field. This option must be setup in the I/M Setup application from the Util_setup pull down window.
In fact, most of the fields in the Inventory Item record are not used directly by the Inventory Management package. They are present so that the I/M package can interact with the other manufacturing packages. Those packages which draw heavily on the Inventory Item File will be Customer Order Processing, Bill of Material Processor, Purchase Order and Receiving, Material Requirements Planning and Master Scheduling.
If you do not plan to implement all of these packages at once, you will not be forced to enter data for every field in the Inventory Item File. As you put into use each subsequent package, you could then go back and fill in the data that is needed.
Select Item File from the pull down I/M Maintenance window. The following screen will then be displayed:
The following options are available:
* Select the desired mode from the Item File menu bar
* Enter the data requested on the screen
To return to the menu bar, press the ESC or F10 key. To leave this application, press X for EXIT when positioned at the menu bar.