Introduction
Oracle Inventory provides several tools to aid users in controlling and improving the accuracy of inventory records.
Overview
Oracle Inventory provides a fully automated physical inventory feature. Physical inventory is a periodic reconciliation of system on-hand balances with physical counts in inventory.
Physical inventory can be performed, whenever there is a need to verify the accuracy of system on-hand quantities. This can be done for entire organization or for particular subinventories within an organization. Accurate system on-hand quantities are essential for managing supply & demand, maintaining high service levels, effective planning, minimizing inventory investment and for audit purpose.
Physical inventory and cycle counting can both be a part of annual program to manage and improve inventory record accuracy. Cycle counting would be a daily, weekly or monthly activity. Physical inventories might be performed at periodic intervals - monthly, quarterly, annually and so on. One strategy is to only perform physical inventories as required to satisfy auditors of the organization.
Interfaces
Physical inventory integrates with Oracle Cost Management and Oracle General Ledger. If there is a quantity discrepancy for items, Inventory derives the item costs from Cost management and posts the inventory value changes to General Ledger.
Steps Involved in Physical Inventory
Unlimited number of physical inventories can be defined and maintained to count selected portions of inventory or total inventory. A physical inventory is identified by a unique name. To define physical inventory navigation is
Inventory -> Counting -> Physical Inventory -> Define Physical Inventory
a. Enter a unique physical inventory name in the name field
b. Select approval requirements for the adjustment. Options available are:
Oracle Inventory provides several tools to aid users in controlling and improving the accuracy of inventory records.
- ABC Analysis
- Cycle Counting
- Physical Inventory
Overview
Oracle Inventory provides a fully automated physical inventory feature. Physical inventory is a periodic reconciliation of system on-hand balances with physical counts in inventory.
Physical inventory can be performed, whenever there is a need to verify the accuracy of system on-hand quantities. This can be done for entire organization or for particular subinventories within an organization. Accurate system on-hand quantities are essential for managing supply & demand, maintaining high service levels, effective planning, minimizing inventory investment and for audit purpose.
Physical inventory and cycle counting can both be a part of annual program to manage and improve inventory record accuracy. Cycle counting would be a daily, weekly or monthly activity. Physical inventories might be performed at periodic intervals - monthly, quarterly, annually and so on. One strategy is to only perform physical inventories as required to satisfy auditors of the organization.
Interfaces
Physical inventory integrates with Oracle Cost Management and Oracle General Ledger. If there is a quantity discrepancy for items, Inventory derives the item costs from Cost management and posts the inventory value changes to General Ledger.
Steps Involved in Physical Inventory
- Define Physical Inventory
- Take a Snapshot of system On–hand quantities
- Generate Physical Inventory Tags
- Enter Counts
- Approve or Reject Physical Inventory Adjustments
- Post Adjustments
- Purge Physical Inventory information
1. Define Physical Inventory
Unlimited number of physical inventories can be defined and maintained to count selected portions of inventory or total inventory. A physical inventory is identified by a unique name. To define physical inventory navigation is
Inventory -> Counting -> Physical Inventory -> Define Physical Inventory
a. Enter a unique physical inventory name in the name field
b. Select approval requirements for the adjustment. Options available are:
- Always: Requires approval for all physical inventory adjustments. Adjustments program cannot be run until all the adjustments are approved.
- If out of tolerance: Quantity and / or Value adjustment tolerances can be entered. Adjustments exceeding tolerances must be approved before running the adjustment program. Adjustment value = (Actual count - System count) x Item cost
- Never: Allow any adjustment to post without approval.
c. Enter positive and negative approval tolerances
d. Select the scope of physical inventory. Determines whether the physical inventory is for all subinventories of the organization or for one or more specific subinventories. Enter only quantity-tracked subinventories
e. Indicate whether to allow dynamic entry of tags. Determines whether manually created tags can be entered. If the option is not to allow dynamic tag entry all tags must generated before the use.
The system will launch the concurrent request Freeze Physical Inventory
Snapshot must be completed before generating the tags. After taking the snapshot, system will no longer allow to update header information of the physical inventory.
The snapshot saves all item on–hand quantities and costs and uses this information as the basis for all physical inventory adjustments rather than the current on-hand quantity. System allows to resume transaction activities even before running the adjustments program for the physical inventory. Therefore need to procedurally coordinate snapshot of physical inventory with actual counting and ensure that no transaction activity occurs in a particular location until adjustments are launched and posted.
Once snapshot concurrent process is finished, the snapshot complete box is checked, the snapshot date is updated and the Tags button is enabled in the define physical inventory window.
3. Generate Physical Inventory Tags
Physical inventory tags are used to record the count of inventory items. Tags are referred by its alphanumeric identification code. Oracle Inventory can automatically generate tag numbers that can be used to enter inventory counts. Tags can be generated only after snapshot is completed. The system also supports using numbers generated outside the Oracle Inventory. There should be only one item on a tag but multiple tags can refer to the same item .
Physical Inventory can be performed for items under serial control. If default tags are generated, system generates one tag per item per serial number.
Option 1: Dynamic Tag Entry
a. Enter the name of the physical inventory.
b. Select the type of tag to create.
c. Indicate whether it is required to show serial numbers on the physical inventory tags. If the option is not to show serial numbers on the tags, system will generate a tag for each item but user has to match the serial numbers to the items manually. It is allowed to enter a value in this field only if tag type selected is default.
d. Enter the starting tag number for example - 0001 and say user wants the increment to be 5, then for the increment enter 1115. The increment field should have the number of digits the starting tag has and it should have 1's preceding what the actual increment value would be. Tag numbers may be alphanumeric, but increment will be done only for the numeric portion.
e. Choose the Generate button to create the tag numbers and information. Note that this process does not physically print the tags. To print the tags, user need to run the Physical Inventory Tags report using the navigation Inventory -> Reports -> ABC and Counting -> Run Physical Inventory Tags report
4. Enter Counts
Generated tags are used to record the physical counts. After recording the physical counts user must enter the quantity for each tag. To enter the Tag counts the navigation is
Inventory -> counts -> Physical Inventory -> Tag Counts.
Navigate to the Physical Inventory Tag Counts window. Enter name of the employee that performed the physical inventory in the Default Counter field. This is used as a default for the Counted by field of each tag.
If the default tags are used, the system will display the tags with relevant item information. User need to enter only the quantity counted for each tag. User can also query a subset of tags by any combination of tag number, item, revision, subinventory, locator, lot and serial number.
If blank tags are used in the physical inventory, user can query up the tags by tag number. The system displays the tags but no item information. Need to enter the count quantity as well as the item information i.e. item name, subinventory, locator, revision, lot and serial numbers.
If dynamic tags are allowed in physical inventory definition user can enter tag numbers generated outside the system. User needs to enter the count quantity as well as the item information.
Void Tags: If any of the tags are not used, they have to be voided, as this is necessary for auditing purpose. A voided tag is not reported as a missing in the Physical inventory Missing Tag Listing report. Tags can be voided if they are lost, damaged or discarded before the approval or before the adjustment process. If a default tag is voided Oracle Inventory adjusts the quantity in that location to zero.
5. Approving Physical Inventory Adjustments
Oracle Inventory supports two types of physical inventory approval tolerances i.e. quantity tolerances and cost tolerances. For each type, it is allowed to specify a positive and a negative limit. The adjustments that can be viewed from this window are determined by the approval option selected while defining the physical inventory.
If a particular adjustment is approved, physical Inventory Adjustments program adjusts inventory balance by that quantity. If an adjustment is rejected, Oracle Inventory does not change the system on–hand quantity.
Navigation to approve physical Inventory adjustments is
User must either approve or reject all adjustments of the physical inventory before running adjustments program.
Post Adjustments
After entering all the tag counts and approve the adjustments that need approval, user can submit the process that posts the physical inventory adjustments. This will automatically creates a material transaction, adjusting the item quantity and debiting/crediting the adjustment account specified for the physical inventory. If the count of an item matches with the snapshot system on–hand quantity, there will be no adjustment transaction posted.
Once the adjustment program is completed it does not allow new tag generation and no longer will be able to make changes to the physical inventory. Oracle Inventory will not post adjustments, if any adjustment is pending for approval.
User must approve or reject all the adjustments before running the adjustment program. Adjustments can be previewed before actually posting them by running the Physical inventory adjustments report. If the approval option for a particular physical inventory is Never, Oracle Inventory does not at any time prevent from submitting the adjustment process. For any tag that has no count entered, it assumes a count of zero and performs adjustment transactions accordingly.
To run the adjustment program
a. Navigate to the Physical Inventories Summary window.
b. Select the physical inventory.
c. Choose Launch adjustments from the Tools menu. The Launch Adjustments window appears.
d. Enter the Adjustment Account number against which adjustments should be charged.
e. Enter the adjustment date.
f. Choose the Launch Adjustments button to submit the concurrent request.
Purge Physical Inventory Information
Purging physical inventory will delete definition from the database. Purge does not affect any adjustments or adjustment transactions made using the physical Inventory. Options to choose while purging are ‘Tags only’ or ‘All’.
Tags Only: Purges all the tags associated with a physical inventory definition. If irreversible mistakes are made in the count-entry phase, user can start over without refreezing the inventory.
All: Purges the physical inventory definition, frozen quantities, tags and count quantities.
To run the purge program
Reports
The following reports will help during the process of performing physical inventory. Run these reports using the navigation Inventory -> Reports -> ABC and Counting -> Choose to run one of the following reports.
Report Name: Physical Inventory Tags report
Short Name: INVARPTP
Purpose: Use Physical Inventory Tags report to print the tags. This report prints all the tags or range of tags for a single subinventory/all subinventories for a specified physical inventory. Physical inventory tags represent actual hard copy of tags that companies use to count inventory items. A tag contains the count of a given item.
Report Name: Physical Inventory Tag Listing report
Short Name: INVARPTG
Purpose: This report lists all the default and blank tags that are generated and the entire dynamic tags that are entered. Use the Physical Inventory Tag Listing to review the tags created by the ‘Generate Physical Inventory Tags’ process.
Report Name: Physical Inventory Counts report
Short Name: INVARPSL
Purpose: Shows information on the tags including the item, item controls, count location, count quantity and count value.
Report Name: Physical Inventory Missing Tag Listing report
Short Name: INVARPMT
Purpose: This report lists the tags that are missing from a user–specified range of tag numbers. If the counts are not entered for the tag, it is considered as missing tag. Void tags are not considered to be missing. Use this report before initiating physical adjustments to verify all tags generated by the system.
Report Name: Physical Inventory Adjustments report
Short Name: INVARPAR
Purpose: This report shows all adjustments against each SKU of physical inventory. Run this report before processing the adjustments to get a preview of adjustment quantities and values. This report is also automatically generated after the successful completion of the adjustment program as a record of what was actually adjusted.
Report Name: Physical Inventory Accuracy Analysis report
Short Name: INVARPIA
Purpose: Review the output of this report at various stages of physical Inventory i.e. snapshot, entering tag counts..etc. This report can be used as a historical accuracy analysis tool.
e. Indicate whether to allow dynamic entry of tags. Determines whether manually created tags can be entered. If the option is not to allow dynamic tag entry all tags must generated before the use.
2. Snapshot of System On-Hand Quantities
To run the snapshot navigation is:
Inventory -> Counting -> Physical Inventory -> Define Physical Inventory -> Choose the Snapshot button
To run the snapshot navigation is:
Inventory -> Counting -> Physical Inventory -> Define Physical Inventory -> Choose the Snapshot button
The system will launch the concurrent request Freeze Physical Inventory
Snapshot must be completed before generating the tags. After taking the snapshot, system will no longer allow to update header information of the physical inventory.
The snapshot saves all item on–hand quantities and costs and uses this information as the basis for all physical inventory adjustments rather than the current on-hand quantity. System allows to resume transaction activities even before running the adjustments program for the physical inventory. Therefore need to procedurally coordinate snapshot of physical inventory with actual counting and ensure that no transaction activity occurs in a particular location until adjustments are launched and posted.
Once snapshot concurrent process is finished, the snapshot complete box is checked, the snapshot date is updated and the Tags button is enabled in the define physical inventory window.
3. Generate Physical Inventory Tags
Physical inventory tags are used to record the count of inventory items. Tags are referred by its alphanumeric identification code. Oracle Inventory can automatically generate tag numbers that can be used to enter inventory counts. Tags can be generated only after snapshot is completed. The system also supports using numbers generated outside the Oracle Inventory. There should be only one item on a tag but multiple tags can refer to the same item .
Physical Inventory can be performed for items under serial control. If default tags are generated, system generates one tag per item per serial number.
Option 1: Dynamic Tag Entry
Determines whether manually created tags can be entered or not . If the option is not to allow dynamic tag entry, all tags must be generated before the use. Dynamic Tag Entry is allowed when tag numbers are generated outside the system. For example when using third-party pre-numbered tags.
Option 2: Default Tags
- No need to run the Tag Generation program
- Use own tag numbers while entering the counts
Option 2: Default Tags
Contain information on items in the physical inventory definition. Generates a tag for each SKU i.e. unique combination of item, subinventory, locator, revision, lot number and serial number that exists in the subinventories of physical inventory.
Option 3: Blank Tags
- Specify the starting tag number and digit increments
- Run the Tag Generation program
- Use system generated tag numbers to enter counts
Option 3: Blank Tags
Blank Tags: Do not contain any information about the items in physical inventory definition. Blank tags can be generated to enter counts for those items whose locations are not currently recorded in the system.
Inventory -> Counting -> Physical Inventory -> Tags Generation -> Choose Generate button
- Specify the starting tag number and digit increments
- Specify quantity of tags or the ending tag number
- Run the Tag Generation program
- Use system generated tag numbers to enter counts
Inventory -> Counting -> Physical Inventory -> Tags Generation -> Choose Generate button
a. Enter the name of the physical inventory.
b. Select the type of tag to create.
c. Indicate whether it is required to show serial numbers on the physical inventory tags. If the option is not to show serial numbers on the tags, system will generate a tag for each item but user has to match the serial numbers to the items manually. It is allowed to enter a value in this field only if tag type selected is default.
d. Enter the starting tag number for example - 0001 and say user wants the increment to be 5, then for the increment enter 1115. The increment field should have the number of digits the starting tag has and it should have 1's preceding what the actual increment value would be. Tag numbers may be alphanumeric, but increment will be done only for the numeric portion.
e. Choose the Generate button to create the tag numbers and information. Note that this process does not physically print the tags. To print the tags, user need to run the Physical Inventory Tags report using the navigation Inventory -> Reports -> ABC and Counting -> Run Physical Inventory Tags report
4. Enter Counts
Generated tags are used to record the physical counts. After recording the physical counts user must enter the quantity for each tag. To enter the Tag counts the navigation is
Inventory -> counts -> Physical Inventory -> Tag Counts.
Navigate to the Physical Inventory Tag Counts window. Enter name of the employee that performed the physical inventory in the Default Counter field. This is used as a default for the Counted by field of each tag.
If the default tags are used, the system will display the tags with relevant item information. User need to enter only the quantity counted for each tag. User can also query a subset of tags by any combination of tag number, item, revision, subinventory, locator, lot and serial number.
If blank tags are used in the physical inventory, user can query up the tags by tag number. The system displays the tags but no item information. Need to enter the count quantity as well as the item information i.e. item name, subinventory, locator, revision, lot and serial numbers.
If dynamic tags are allowed in physical inventory definition user can enter tag numbers generated outside the system. User needs to enter the count quantity as well as the item information.
Void Tags: If any of the tags are not used, they have to be voided, as this is necessary for auditing purpose. A voided tag is not reported as a missing in the Physical inventory Missing Tag Listing report. Tags can be voided if they are lost, damaged or discarded before the approval or before the adjustment process. If a default tag is voided Oracle Inventory adjusts the quantity in that location to zero.
5. Approving Physical Inventory Adjustments
Oracle Inventory supports two types of physical inventory approval tolerances i.e. quantity tolerances and cost tolerances. For each type, it is allowed to specify a positive and a negative limit. The adjustments that can be viewed from this window are determined by the approval option selected while defining the physical inventory.
If a particular adjustment is approved, physical Inventory Adjustments program adjusts inventory balance by that quantity. If an adjustment is rejected, Oracle Inventory does not change the system on–hand quantity.
Navigation to approve physical Inventory adjustments is
Inventory -> Counting -> Physical Inventory -> Approve Adjustments
a. Select the physical inventory and choose approve.
b. Enter the name of the employee approving the adjustments.
c. Select an adjustment to approve or reject and check the Approve/Reject option.
a. Select the physical inventory and choose approve.
b. Enter the name of the employee approving the adjustments.
c. Select an adjustment to approve or reject and check the Approve/Reject option.
User must either approve or reject all adjustments of the physical inventory before running adjustments program.
Post Adjustments
After entering all the tag counts and approve the adjustments that need approval, user can submit the process that posts the physical inventory adjustments. This will automatically creates a material transaction, adjusting the item quantity and debiting/crediting the adjustment account specified for the physical inventory. If the count of an item matches with the snapshot system on–hand quantity, there will be no adjustment transaction posted.
Once the adjustment program is completed it does not allow new tag generation and no longer will be able to make changes to the physical inventory. Oracle Inventory will not post adjustments, if any adjustment is pending for approval.
User must approve or reject all the adjustments before running the adjustment program. Adjustments can be previewed before actually posting them by running the Physical inventory adjustments report. If the approval option for a particular physical inventory is Never, Oracle Inventory does not at any time prevent from submitting the adjustment process. For any tag that has no count entered, it assumes a count of zero and performs adjustment transactions accordingly.
To run the adjustment program
a. Navigate to the Physical Inventories Summary window.
b. Select the physical inventory.
c. Choose Launch adjustments from the Tools menu. The Launch Adjustments window appears.
d. Enter the Adjustment Account number against which adjustments should be charged.
e. Enter the adjustment date.
f. Choose the Launch Adjustments button to submit the concurrent request.
Purge Physical Inventory Information
Purging physical inventory will delete definition from the database. Purge does not affect any adjustments or adjustment transactions made using the physical Inventory. Options to choose while purging are ‘Tags only’ or ‘All’.
Tags Only: Purges all the tags associated with a physical inventory definition. If irreversible mistakes are made in the count-entry phase, user can start over without refreezing the inventory.
All: Purges the physical inventory definition, frozen quantities, tags and count quantities.
To run the purge program
a. Navigate to the Physical Inventories Summary window.
b. Select the physical inventory
c. Choose Perform purge from the Tools menu.
d. Choose purge option ‘Tags only’ or ‘All’
Reports
The following reports will help during the process of performing physical inventory. Run these reports using the navigation Inventory -> Reports -> ABC and Counting -> Choose to run one of the following reports.
Report Name: Physical Inventory Tags report
Short Name: INVARPTP
Purpose: Use Physical Inventory Tags report to print the tags. This report prints all the tags or range of tags for a single subinventory/all subinventories for a specified physical inventory. Physical inventory tags represent actual hard copy of tags that companies use to count inventory items. A tag contains the count of a given item.
Report Name: Physical Inventory Tag Listing report
Short Name: INVARPTG
Purpose: This report lists all the default and blank tags that are generated and the entire dynamic tags that are entered. Use the Physical Inventory Tag Listing to review the tags created by the ‘Generate Physical Inventory Tags’ process.
Report Name: Physical Inventory Counts report
Short Name: INVARPSL
Purpose: Shows information on the tags including the item, item controls, count location, count quantity and count value.
Report Name: Physical Inventory Missing Tag Listing report
Short Name: INVARPMT
Purpose: This report lists the tags that are missing from a user–specified range of tag numbers. If the counts are not entered for the tag, it is considered as missing tag. Void tags are not considered to be missing. Use this report before initiating physical adjustments to verify all tags generated by the system.
Report Name: Physical Inventory Adjustments report
Short Name: INVARPAR
Purpose: This report shows all adjustments against each SKU of physical inventory. Run this report before processing the adjustments to get a preview of adjustment quantities and values. This report is also automatically generated after the successful completion of the adjustment program as a record of what was actually adjusted.
Report Name: Physical Inventory Accuracy Analysis report
Short Name: INVARPIA
Purpose: Review the output of this report at various stages of physical Inventory i.e. snapshot, entering tag counts..etc. This report can be used as a historical accuracy analysis tool.
Report Name: Physical Inventory Trend and Summary analysis report
Short Name: INVARPTS
Purpose: While running the report choose to run either Summary Report or Trend Report
a) Summary report: Provides a summary of physical inventory adjustments by subinventory. The output shows system on–hand value, actual count value, resulting adjustment value in functional currency as well as the number of tags and adjustments performed for each subinventory.
b) Trend report: This report compares past physical inventories to gauge the accuracy level improvement over time. It provides a summary of physical inventory adjustment values by date and subinventory as well as number of tags and adjustments each subinventory required.
Conclusion
Using physical Inventory feature requires an understanding of the customer business process. Physical Inventory has to define as per the company cost and quantity discrepancy approval policy.
Short Name: INVARPTS
Purpose: While running the report choose to run either Summary Report or Trend Report
a) Summary report: Provides a summary of physical inventory adjustments by subinventory. The output shows system on–hand value, actual count value, resulting adjustment value in functional currency as well as the number of tags and adjustments performed for each subinventory.
b) Trend report: This report compares past physical inventories to gauge the accuracy level improvement over time. It provides a summary of physical inventory adjustment values by date and subinventory as well as number of tags and adjustments each subinventory required.
Conclusion
Using physical Inventory feature requires an understanding of the customer business process. Physical Inventory has to define as per the company cost and quantity discrepancy approval policy.
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