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Cycle Counting - Part 4 of 5
Part 1    Part 2    Part 3    Part 4   Part 5

Cycle counting is a technique of vital importance to anyone responsible for effective manufacturing and distribution planning and control. A basic under-standing of the subject is essential for maintaining a high level of record accuracy.

The objective of cycle counting is not counting but to get accurate records. If this can be assured without counting, then this is the ultimate objective.

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Cycle Counting Work In Process

There are two methods of cycle counting work-in-process (WIP). The method selected depends on whether shop orders are used or not.

With shop orders, the method of cycle counting work-in-process uses the same logic as for inventories in stock­rooms. The shop order can be visualized as a small stockroom within the total of all the WIP.

If shop orders are not used, then the WIP is a "four wall" inventory. In this case, companies issue material from a controlled stockroom to "floor" inventory. This inventory is relieved by reverse explosion (backflushing) of the bill of material after production is reported, in some cases after each operation but in most cases after the product is completed. Error causes will be similar to those for shop orders but will also include bill of materials errors, substi­tutions of parts not notified to the system, and engineering changes in process.

Computer Applications

The computer helps by minimizing manual errors of entry and arithmetic. Lists of items to be counted can be prepared by the computer using selection criteria too extensive to maintain in a clerical system.

• Computer support is necessary in high-part-count assembly environments where a product exists in various states of completion between operations. When it is necessary to report the components used in a partially completed assembly at operation "X* the sys­tem can determine the items added at a specific operation. The system adds the items consumed to the work center location total to facilitate the work center location count reconciliation.
• Linking bill of material components to the operation where they are used is accomplished by carrying the work center in the component detail record. This feature provides material "backflushing" capability through work center count reporting.
• In a Lot control/Traceability environment it is essen­tial to maintain the integrity of the lot number of an item with its location. This implies that when lot controlled items are cycle counted a three way match is required between count, lot numbers and their locations. This is a mandatory requirement of systems that provide cycle counting functionality of lot con­trolled inventory.
Management reports can be prepared by computer summa­rizing historical information on adjustments, variances, items counted, etc. These reports can be used to monitor the effectiveness of the cycle counting system.

Final Phase of Cycle Counting

The final phase of cycle counting is the elimination of the counting process. Two methods have been developed to achieve this Utopian goal.

Zero counts are when a stock picker removes the last of an item from the shelf. A pre-formatted document is filled in by the stock picker, giving part number, location of a random location part, time, and date. The stores supervi­sor checks at the cutoff time if more of this part has been received between the count and the cutoff. If yes, the zero count card is destroyed. If not, it is processed as a valid cycle count.

The second method applies to serialized loads or batches, which are uniquely identified, and issued only in these batches. A small file of a portion of these serialized loads is created as a control group monthly. All transactions are processed against the inventory records as normal but are also tested against the small file of serialized loads. Any time a transaction carries a serial number that matches the small file, the transaction's details are compared with the inventory file. If they match, that is a good cycle count. If they don't, an error is indicated requiring analysis and reconciliation is indicated. At the end of the month, cycle count only those items on the small file that didn't have transactions against them.

Part 1    Part 2    Part 3    Part 4   Part 5

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