physical inventory counting

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Physical Inventory

Oracle Inventory provides a fully automated physical inventory feature that you can useto reconcile systemmaintained item onhand balances with actual counts of inventory.Accurate system onhand quantities are essential for managing supply and demand,

maintaining high service levels, and planning production.

1. Define a physical inventory for your whole warehouse or subdivisions within yourwarehouse.

2. Take a snapshot of system onhand quantities. You must procedurally coordinate the

snapshot of your physical inventory with your actual counting, and ensure that no

transaction activity occurs in a particular location until after you have performed youradjustments.

3.1 Generate alphanumeric tags.

3.2 Count the TAGs. Void unused or lost tags.

3.3 Approve or reject physical inventory adjustments based on approval tolerances.

4. Automatically post adjustments to inventory balances and general ledger accounts.

5. Purge physical inventory information.

Defining a Physical Inventory

You can define and maintain an unlimited number of physical inventories in Oracle

Inventory. A physical inventory is identified by a unique name you assign. You use this

name to identify any activity, such as adjustments, pertaining to this physical inventory.

You can define multiple physical inventories to count selected portions of your inventory,or you can count your total inventory. For example, if your warehouse has two large

stockrooms, each represented by a subinventory, you can define two physical inventories,

one for each subinventory. You can then perform your physical inventory of the firststockroom, independent of the second.

To define a physical inventory:Navigate to the Physical Inventories Summary folder window and choose New. The

Define Physical Inventory window appears.


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1. Enter a unique physical inventory name.

2. Select approval requirements for adjustments.

Always: Require approval of all physical inventory adjustments.

If out of tolerance: Hold for approval those counts that are outside the limits of the

positive and negative quantity variance or value tolerances.

Never: Allow any adjustment to post without approval.

3. Enter positive and negative approval tolerances If approval is required for

adjustments out of tolerance you mustenter a value in at least one of these fields. You cannot update these values after you

perform physical inventory adjustments.

Qty: Enter acceptable Positive and Negative limits (expressed as a percentage) for thedifference between the systemtracked onhand quantity and the actual tag count

quantity.

Value: Enter acceptable Positive and Negative limits for the total value of a physicalinventory adjustment.

4. Select the scope of the physical inventory.

Determines whether the physical inventory is for all subinventories or for one or more

specific subinventories. Only enter a quantity tracked subinventory.

5. Indicate whether to allow dynamic entry of tags.

Determines whether you can dynamically enter tags you manually created. If you choose


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not to allow dynamic tag entry all tags must generated before use If you do not want to

allow dynamic tag entry but you need blank tags, you can generate numbered blank tags

for counting miscellaneous items.

Taking a Snapshot of Inventory Quantities

Before you can generate tags for a physical inventory, you must take a snapshot of all

system onhand quantities for your items. The snapshot saves all current item onhand

quantities and costs. Oracle Inventory uses this information as the basis for all physicalinventory adjustments. All tag counts you enter for this physical inventory are compared

with these static quantities. This allows you to resume normal inventory operations after

you have entered your counts but before you have authorized all final physical inventoryadjustments. You can perform your recounts or investigate certain results without holding

up transaction processing.

Notes :

1. Oracle Inventory does not stop inventory processing during a physical inventory.Therefore, you must procedurally coordinate the snapshot of your physical inventory with

your actual counting, and ensure that no transaction activity occurs in a particular

location until after you have performed your adjustments.

2. It is recommended to clear the Pending Transactions and Transactions Open Interface,before taking a snapshot of inventory.

To freeze the system onhand quantities


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1. Navigate to the Physical Inventories Summary folder window.

2. Select the physical inventory you want to use.3. Choose Perform snapshot from the Tools menu. This launches the snapshot concurrent

process.

Note: You can also choose Snapshot from the Define Physical Inventory window.

4. When the concurrent process is finished, requery the physical inventory to see theeffects of the snapshot. The effects include:

The Snapshot Complete box is checked on the Physical Inventories Summary

folder window.

The Snapshot Complete box is checked, the Snapshot Date is updated, and the

Tags button is enabled in the Define Physical Inventory window.

Generating Physical Inventory Tags

You use physical inventory tags to record the physical counts of inventory items.

Physical inventory tags represent actual hard copy tags that some companies use to countinventory items. A tag contains the count for a group of a given item. Although you

can record only one item on a tag, multiple tags can reference the same item, with each

tag referring to a unique physical location for an item.

Note: A tag represent a single item number in a particularsubinventory, locator with agiven revision, lot, and serial number.


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If we are not considering serial and lot number then the single TAG might have n number

of items (in a particular sub-inventory, locator combinatio)

Oracle Inventory can generate default orblanktags for your physical inventory.

If you choose to generate default tags for each item, specify the starting tag number and

the increment by which you want to increase each digit in the tag number. Your tag

numbers may be alphanumeric, but you can increment only the numeric portion. Thealphabetic characters in the tag number stay constant. Inventory then uses these tagnumbers to generate a tag for every unique combination ofitem number, subinventory,

locator,revision, lot, and serial numberfor which the system has an onhand quantity not

equal to zero.

If you want to have some empty tags handy to record counts for stockkeeping units for

which Inventory has no onhand quantity (and therefore does not generate default tags),

you can generate blank tags. Inventory assigns tag numbers to blank tags, but does not

include any item or location detail. You specify this information when you enter your tagcounts. You can generate as many blank tags as you want.

You can also exclusively use blank tags to perform a physical inventory. If you need to

perform a complete walltowall physical inventory, you can go through your warehouse

and attach blank tags to every item and/or location you see. As you perform the count,you record the item and stockkeeping unit information along with the actual onhand

quantity.

PI Tag Counts


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Use the tags that you generated to record your physical counts. If you use default tags

for your physical inventory, you can automatically query all tags and fill in the counts.

You can also query a subset of your tags by any combination of tag number, item,revision, subinventory, locator, lot, and serial number. You would use this partial tag

query feature if you prefer to enter your counts by location or item, or for a particular tag

number range.

If you use any blank tags in your physical inventory, you can query up the tags by tagnumber. You can then enter the necessary item, revision, subinventory, locator, lot, and

serial number information, as well as the actual count quantity and the name of the

employee who performed the count.

If you enable dynamic tag entry for your physical inventory, you can enter counts for

any item and stockkeeping unit combination without a pregenerated tag number.

Adjustments and Approval

Oracle Inventory uses the counts you enter for your tags to determine if your items needquantity adjustments; and if so, whether you need to approve them.

1. If you set yourapproval option for your physical inventory toNot required for

adjustments, you are ready to process youradjustments.

2. If you set yourapproval option to Required for adjustments out of tolerance, Oracle

Inventory holds for approval all tags with counts that are outside the limits of the quantity

variance or adjustment value tolerances.


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3. If you set your approval option to Required for all adjustments, Oracle Inventory holds

all counts for approval.

Void Tags

It is important for auditing purposes to track the status of each physical inventory tag.

Therefore, if you do not use one or more of the tags Oracle Inventory generates, youshould void them in the Physical Inventory Tag Counts window. A voided tag is not

reported as a missing tag in the Physical Inventory Missing Tag Listing.

If you generated a certain number ofblank tags at the beginning of your physical

inventory, and ended up not using all of them, you would void the unused tags. When

you run the Physical Inventory Missing Tag Listing for the whole range of tags youinitially generated, the unused ones are accounted for and appear as missing tags.

If you void a default tag, (i.e. a tag that identifies a stockkeeping unit for which there is

system onhand quantity), Oracle Inventory adjusts the quantity in that location to zero.

This indicates that you did not use the tag in question, presumably because the stockkeeping unit corresponding to the tag did not exist.

Entering and Voiding Physical Inventory Tag Counts


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Navigate to the Physical Inventory Tag Counts window or choose the Counts button from

the Physical Inventories Summary folder window.

1. Enter the physical inventory.

2. Enter the employee that performed the physical inventory in the Default Counter field.Oracle Inventory uses this value as the default for the Counted By field of each tag.

3. Enter or query the tag numbers for which to enter counts using one of the following

options:

Choose the Find button. Choose Yes or No to query all tags. If you choose No,

you can either enter tag numbers individually or use the Find feature on the Query

menu to query a subset of tags.

Enter tag numbers individually. You can enter existing tags individually. When

you enter a tag number the item information for that tag appears.

Use the Find feature on the Query menu. You can query a subset of tags matchingthe search criteria you enter in the find window.

You can search by any combination of tag number, item, revision, subinventory, locator,

lot, serial number, or tag status. With tag status you can find voided or missing tags.

4. Entercounts for default tags: Since you generated default tags the item, revision,

subinventory, locator, lot, and serial number information for each item is displayed. You

enter the count Quantity, unit of measure (UOM), and Counted By information.

5. Entercounts for blank or dynamic tags

Enter the item associated with the tag.

Enter the revision of the item. You can enter a value here if the item is under

revision quantity control.

Enter the subinventory in which you counted the item.

Enter the locator associated with the subinventory. You can enter a value here if

the item is under locator control.

Enter the count quantity (number counted) for the tag.

Enter the count unit of measure (UOM).

Enter the name of the employee who counted the item (Counted By).

Enter the lot number associated with the item. This entry is required if the item is

under lot number control. Enter the serial number associated with the item. This entry is required if the item

is under serial number control.

6.Voiding Physical Inventory Tags

You can void tags that you deliberately discarded during the physical inventory. Voiding

tags allows you to account for all tags; thus, any tag numbers that appear on the missing

tag report are actually missing.


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Approving Physical Inventory Adjustments

Approval Tolerances

Oracle Inventory supports two types of physical inventory approval tolerances. For eachtype, you can specify a positive and a negative limit. When a particular physical

inventory tag count entry results in an adjustment that exceeds any one of these limits,you have a physical inventory adjustment that exceeds approval tolerances. Based on theapproval option you chose when you defined your physical inventory, this adjustment is

or is not held for approval.

If you decide that approval is required for adjustments out of tolerance you must enter at

least one positive or negative value for one type of approval tolerance. The quantityvariance tolerance is a userdefined limit for the difference between the systemtracked

onhand quantity and the actual tag count quantity. You express positive and negative

quantityvariance tolerances as percentages of the system onhand quantity. You enter these

percentages when defining your physical inventory.

The adjustment value tolerance is a userdefined limit for the total value of a physical

inventory adjustment:adj value = (system onhand qty actual count qty) x current cost,

where: Current cost is the cost at inventory snapshot.

You express positive and negative adjustment value tolerances as amounts in your

functional currency. You enter these tolerances when defining your physical inventory.

Approving Physical Inventory Adjustments


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You can view, reject, or approve physical inventory adjustments pending approval. The

adjustments you can view from this window are determined by the approval option you

defined for your physical inventory. If you approve a particular adjustment, the Process

Physical Inventory Adjustments program adjusts your inventory balance by that quantity.If you reject an adjustment, Oracle Inventory does not change the system onhand

quantity.

Notes:

1. Even after saving a count as approved/or rejeceted we can change the quantity in TAG

count till the physical inventory adjustment is processed.Example: we entered quantity 1 for item001 in tag count window and then saved it as

approved in approve PI adjustment winodw. We can again go back and change the

quantity of item001 and save it. if we requry the item in adjustment window then it wouldbe shown in None status though previously we had saved it as approved.

Processing Physical Inventory Adjustments

After you finish entering all your tag counts and approving those adjustments that need

approval, you can submit the process that automatically posts your physical inventory

adjustments. Oracle Inventory automatically creates a material transaction adjusting theitem quantity and debiting or crediting the adjustment account you specify for your

physical inventory.


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If the count of an item matches the snapshot system onhand quantity, there is no

adjustment transaction posted.

Once you run the adjustment program for your physical inventory, Oracle

Inventory does not allow new tag generation or any further updates of tag counts.

You are no longer able to make any changes to that physical inventory. Due to the irreversible nature of this program, Oracle Inventory posts no physical

inventory adjustments if you have any adjustments that are still pending approval.

You must approve or reject all of your adjustments before you can process them.

You can preview your adjustments before actually posting them by running the

Physical Inventory Adjustments Report. You can run the actual adjustment

program after you have used the report to verify your tag quantities and the value

impact of your adjustments.

Once the process "Perform physical inventory Adjustments" is complete

one can verify the physiacl inventory adjustment material transactions and

corresponding distribution accountings in material distribution window.


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Purging Physical Inventory Information


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Use this form to purge a physical inventory definition from the database. OracleInventory deletes all information associated with the physical definition. However, the

purge does not affect any adjustments or adjustment transactions made using the physical

definition. Those adjustments are not changed. You can also purge just tags if you made amistake and want to start over.

physical inventory counting

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