Cycle Count Procedure

Cycle Count Procedure

There are two components that make up the Interline cycle counting program, Scheduled and Flagged counting.

Scheduled Counts:

Products are counted on the following schedule:

Rank A – 3 times per year (every 119 days)

Rank B – 2 times per year (every 175 days)

Rank C – 2 times per year (every 175 days)

Rank D – 1 time per year (every 357 days)

When the cycle count is first set up or newly re-sequenced for a branch, all of the products in each rank are apportioned evenly over the number of days allocated to count them all, taking into account weekends and holidays. For example, a branch with 1400 ‘A’ items would initially be setup to count 16 per day. This would insure that all 1400 items were counted during the 85 working days that occur over a 119-day period.

A new cycle count list is generated for each branch every night, Sunday through Thursday. For each item on the count list, the in-bin value is stored. In-bin represents the amount of product that the system expects to find in all of the items picking locations, combined. We consider an item picked from the bin when it has been scanned at a shipping station.

The worksheet will contain a separate line for each location associated with that item. If an item exists in five locations (1 primary location and 4 alternate locations) it will appear on the worksheet on five separate lines. The lines on the worksheet will be sorted in location order and the report will page break at every section change. All lines will display USN, description, location, and contain a blank space to record count. In addition, lines representing primary locations will display the average cost, in-bin amount, open pick-up quantities, and open non-pickup quantities. Open quantities are those that have printed but have not yet shipped. These quantities appear on the primary location line but are representative of the combined quantities for this item across all of its locations. The worksheets will print in landscape format on the pick ticket printer at each warehouse.

Flagged Counts:

In addition to its normal schedule, an item will be flagged for counting if any of the following conditions occur:

• RGA – item was on an RGA with any of the following reason codes:
• Customer accommodation
• Customer goodwill
• Missing items
• Warehouse error
• Instant credit
• A/B – Items with rank A or B that have less than a one-day supply of available stock. These items are added to the worksheet at the beginning of each week.
• SET – item was flagged specifically, through a new utility available to Operations as well as Accounting and Replenishment management.
• UNMERGE – item was un-merged and counts need to be verified.
• XFER – item had a transfer receiving discrepancy. Item flagged at sending and receiving warehouses.
• XOFF – item was crossed off from one of the three warehouse utilities capable of performing a cross off.
• NDC – item was adjusted with the NDC receiving error code.
• LOW – when an item with a monthly demand greater than 14 units falls below a 3-day supply of inventory. Once flagged, this condition cannot re-occur until a receipt is performed on the item.
• NEWLOC – when an item is found at a previously unknown location through the bin audit program.

For counting to be accurate,

-Counting must be performed before any new picking begins for the day.

-Items received prior to list creation must be put away before counting begins.

-Items received after list creation must not be put away until after counting ends.

-Items picked must be scanned through a shipping station before the list generates each night.

Once counting is completed, the data needs to be entered into the system. Normal warehouse operations may resume at this point. The screen for entering cycle counts will be formatted to match the worksheet. There will be a line for each location for which an item is configured and the screen will display entry lines in location order. Only the count at each location needs to be entered for each line. If no units were found at a listed location a zero must be entered. When done entering the day’s counts, the user will have the option of generating a discrepancy report or performing the final update. The discrepancy report will list all of the non-zero adjustments with counts by location so that further investigation can be performed before the adjustments are booked. When the final update is performed, all locations where zeros were entered will be removed from their respective items. If, during final update, any location for an item has not had any value (including zero) entered, that item will not be adjusted and it will still appear on the next day’s worksheet (the in-bin is recalculated). For all other items, any difference between the total of the entered counts for all locations and the saved in-bin amount will automatically generate a CC adjustment of inventory for the difference. It should be noted that delaying the final update process would increase a DC’s exposure to cross-offs and backorders.

When a scheduled item is counted, it is rescheduled for X days from its last scheduled date, regardless of the date the item was actually counted. The value of X is determined by the product’s rank (see first paragraph). When a flagged item is counted, the flag is removed and the item is rescheduled for X days from the date the item was counted. This is done so that items are not counted more times than required by their corresponding rankings.

Location Audits:

Every location that is known to the system at each branch will be stored in a Location Matrix file. Each time a location is added (through any process that can perform this function) it will be added to the Location Matrix, as well. Periodically, a review of this file will be needed to determine if certain locations can be deleted. [Note: Ultimately, this file would contain all existing locations and a special program would be used to add or remove locations. No warehouse function could be performed on a location that was not in this file. We are not quite ready for that level of location control.]

Each warehouse must audit every location once per quarter. Each location in the Location Matrix will have an “audit by” date. Initially, the expected audit date for each location will be distributed evenly over three months. As each location is audited the new “audit by” date will be set to three months from the current date. This date will be used to track each DC’s progress and to detect missed locations, but will not be used to generate specific lists to audit.

RF-based Process

The RF process will include a utility that will return the location most recently audited and the location least recently audited. This should help the user to decide where to start auditing for the day. Once started, the decision of which bin to audit next should be made by the user not the computer.

The RF bin audit program starts by asking for a location. If known to the system, all of the items at that location are listed on the display. As each item is scanned (or entered) it will be removed from the display. If an unexpected item is scanned the user will be asked if this item should be added to the location. When a new location is scanned, or END is entered, the audit of the previous location is considered complete. If there were items expected but not entered (these will still be displayed on the screen) the user will be given three options:

-Continue to scan items found at this location,

-Agree to remove the un-scanned items from the location, or

-Proceed to the next location without removing the un-scanned items from the location.

When a location is successfully audited, the time, date, user id, number if items added and number of items removed will be recorded. We will retain this information for the last 10 audits. The “audit-by” date will also be update to three months from the current date.

Reporting will be able to show number of audits and amount of change by period, by branch and by operator. We’ll also be able to provide a list of known locations that have not been audited in the target time frame.

Non-RF-based Process

At the beginning of each audit cycle, each location in the Location Matrix will be assigned a “date to audit by”. The utility that generates the aisle verification report will display the location that should be reached today. It will then ask for a beginning location and either an end location or number of locations. This will give the user the responsibility of keeping track of where he is at in the process but also give him more flexibility in adapting his auditing to reality in the warehouse. For tracking, we could record the beginning location entered each time the report is requested. When the entire warehouse is audited, the “audit by” dates will need to be reset for the next round.

Programming Work:(13 man weeks / 7 weeks with two programmers)

Redesign the worksheet:(2 weeks)

-Separate box for each location

-Report sorted by location, not product

-New data in primary location box (in bin, qty open)

-Page break on new section

-Control records will need to change to reflect location

Redesign entry screen:(3 weeks)

-Entry by product/location instead of by product.

-If zero is entered, remove location from that item.

-If no entry is made for any location of an item, that item is considered uncounted and should not be adjusted.

-Must add up counts in all locations to perform final adjustment.

RF bin audit changes:(2 weeks)

-Display changes to show all items in location. Update display to show remaining items after each scan.

-Options to handle un-scanned items at a location.

-Record audit info to the Location Matrix file.

New flagging logic:(2 weeks)

-Recognize items that meet the demand and on hand criteria for flagging.

-Mark items so they cannot be flagged again until received.

-Reset items upon receipt so they can be selected for this flagging, again.

-Flag items when NDC adjustments are performed.

Reporting:(2 weeks)

-Dave’s report format

-Other reports that come up.

Miscellaneous:(2 weeks)

-Update the location matrix file from all programs where locations can be added.

-Re-sequence bin audit due dates for non-RF auditing.

-New entry screen to generate aisle verification and record location entered.