ABC Codes are a grouping of inventory items by value, count or adjustment history. Items are grouped using a Pareto analysis of item value or count based on MRP planned usage, on-hand value, on-hand quantity, or transaction history. ABC coding follows a general rule that a relatively few number of items represent a high percentage of item value or count. This is also sometimes referred as the 80/20 rule, which states that 20 percent of your items represent 80 percent of the value. By focusing on the 20 percent and managing it well, 80 percent of the value is well managed.
ABC Codes are used by Oracle Inventory to determine cycle count frequency. By counting A value item more frequently than B value items, and B value items more frequently than C value items, you put your resources to more effective use.
Define ABC Compiles
|Navigate to:||ABC Codes> ABC Compiles|
You can define and compile an ABC analysis for your entire organization or for a specific subinventory within your organization. You choose the compilation criterion, the scope of your analysis, the cost type to use in determining item values, and any additional information that may be conditionally necessary, based on your compilation criterion. The combination of all these parameters constitutes an ABC compile header, identified by the ABC compile name. You use this name to identify any activity pertaining to this ABC analysis. The compile result is a ranking of all items included in the compile based on the compile criterion used to value the items.
In the ABC Compiles window you will see all previously defined compiles:
Compile Name: Will display the name of the Compile.
Description: Will display the description of the Compile.
Criterion: Will display the criteria selected for the Compile.
Compile Status: Will display the status of the compile.
Subinventory: If Subinventory is chosen for Content Scope and Valuation Scope, the chosen subinventory will display here.
Click on the New button at the bottom of the window to open the Define ABC Compile window.
Enter the Following:
Compile Name: Enter a unique name for the compile.
Description: Enter a description of the compile.
Enter the Following Content Scope:
Organization: If checked, the compile will be run for all items in the organization.
Subinventory: If checked, the compile will only be run for the items associated with a subinventory. If you select “Subinventory” enter the name of the subinventory in the field below.
Enter the following Valuation Scope:
Organization: If selected, Oracle will value the items across the entire organization in all subinventories. If the Content Scope is Organization, the Valuation Scope must also be Organization.
Subinventory: If selected, Oracle will value only the quantity in the selected subinventory.
Enter the Following Compile Specification:
Criterion: Use the List of Values (LOV) to select the criteria for the compile. Oracle uses the compile criterion to value the items you include in your ABC compile.
Cost Type: Use the LOV again to select the cost type. Value “Frozen” is the default.
Forecast: If you chose one of the “Forecast” criteria, enter the forecast name.
MRP Plan: If you chose one of the “MRP” criteria, enter the MRP plan name.
From Date: If you choose any criteria except Current on hand value or quantity, you must enter a beginning date here.
To Date: If you choose any criteria except Current on hand value or quantity, you must enter an ending date here.
Save your work and select the Compile button. This will submit a request to run the compile program. Click on the OK button.
Select the YES or NO button.depending on whether you want a print out of the compile.
Define ABC Classes
|Navigate to:||ABC Codes> ABC Classes|
Enter the Following:
Class Name: Enter a unique name for the class
Description: Enter a description of the class
Inactive On: Used only to inactivate a class.
Save your work.
Define ABC Groups
ABC assignment groups associate ABC classes with an ABC compile.
|Navigate to:||ABC Codes> ABC Assignment|
In the ABC Assignment Groups
Group Name: Enter a unique name for the assignment group.
Compile Name: Enter the name of an ABC Compile.
Subinventory: Displays the subinventory, if any, associated with the compile.
Valuation Scope: Displays the scope of the compile.
Save your work. Click on the Group Classes button.
In the ABC Group Class Assignment window:
Priority: Sequence number in which the classes are ordered. The lower the number, the higher the importance. The default is the next available integer.
Class Name: Enter the name of the class to use.
Description: Displays the description of the class.
Save your work. Close this window and return to the ABC Assignment Groups window. Click on the Assign Items button.
In the Assign ABC Items header window:
ABC Group: Displays the group name.
Compile Name: Displays the compile name.
Subinventory: Displays the subinventory if chosen.
Number of items: Displays the number of items in the compile.
Total Compile Value: Displays the total value of the compile.
In the ABC Assignments section:
Class: Displays the predefined classes.
Item: Will display the item name.
Seq.: The sequence number from the ABC Descending Value Report for the last item to be included in the class. If you are assigning classes another way, this field will be automatically calculated.
Inventory Value: Enter the cumulative gross inventory value. If another method of assigning classes is chosen, the field is automatically calculated.
% Items: Enter the cumulative percentage of items to include in the class. If another method of assigning classes is chosen, the field is automatically calculated.
% Value: Enter the cumulative percentage of the value to include in the class. If another method of assigning classes is chosen, the field is automatically calculated.
Item Description: Displays the description of the item.
Note: When using either the Inventory Value, % Items, or % Value fields to assign items to a class, the system will take the number you entered and adjust it to the nearest number on the compile. In the example above, the A class was entered as 80%. The nearest number to 80% was 77.25%, so the system adjusted the entry to 77.25%. You can adjust these numbers before selecting the Assign button to get the closest possible results to how you want the assignments to be (e.g. 80/20 rule).
Click on the Assign button to launch the concurrent request to assign the items to the classes in the ABC group.
Save your work.