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ManEx Case Solution
ManEx has an integrated cycle counting module. This allows users to setup and control their cycle counting activities. It has provisions for assigning and managing ABC codes and their count frequencies, automatically selecting components to count each day, comparing daily counts to system counts, and reporting on the results.
Setup - To setup the cycle counting module in ManEx users must decide how to calculate ABC codes, define ABC codes and parameters, and the count frequency for each code.
Calculate ABC Codes - The three options in ManEx are: Manual, $ EAU, and $ On-Hand. Both EAU and On-Hand also factor in the component lead time.
- If manual, then ABC codes are assigned when parts are created based on their class and type and must be updated manually as needed.
- If $ EAU, then ABC codes are assigned based on the value of the estimated annual usage and/or component lead time. Users must run the "Calc EAU" and "Calc ABC Codes" programs to refresh the EAU and ABC codes.
- If $ On-Hand, then ABC codes are assigned based on the value of inventory on hand and/or the component lead time. Users must run the "Calc ABC Codes" program to update and refresh the component ABC codes.
Define ABC Codes - ManEx allows up to 36 alphanumeric ABC designations. ABC codes are applied to Buy and Make parts separately.
- If calculation is based on $ EAU or $ On-Hand, then users must also define the Pareto limits and lead time limits for each ABC code.
- The "% of Value" determines the which components will be included in the ABC code based on where their value falls within the total value Pareto (i.e. if A parts have a "% of Value" of 80, then all components comprising the top 80% of value will be included, if B parts have a "% of Value" of 15, then all components comprising the next 15% of value will be included, etc). A full 100% must be assigned to both Buy and Make parts.
- The "LT>" determines which components will be included in the ABC code based on their purchasing lead time. This will include all components with an applicable lead time regardless of the on-hand or EAU value.
Count Frequency (Cycle Count) - Users enter the Cycle Count Days for each ABC code. This is used to determine the number of parts to count each day. This is based on calendar days and may need to be adjusted for work days if you will not be cycle counting seven days a week.
Implementation - The three steps to completing cycle counting activities in ManEx are: create an new list, count and record results, and reconcile differences.
- Create a New List - Users can generate a new list of parts to count by clicking the "Run Cycle Count Setup" button (Add button).
- Count and Record Results - Users should count all components on the list and record the results of the count in ManEx.
- Reconcile Differences - Counts with variances outside of user defined acceptable limits (as defined in the system setup) will result in an unfavorable record and require user to document the reason for the discrepancy.
In addition to standard cycle counting, ManEx offers the ability to spot count when closing a kit. This process displays the expected return quantity and allows users to adjust as needed. Completing this process will allocate component shortages to the job responsible for the shortage, and increase inventory accuracy. Components counted in this process will still be included in cycle counting activities, but should have a lower instance of count discrepancies.
Shortly after implementing cycle counting, NE Company discovered that their count accuracy was actually below 90%. Further study indicated that most of their shortages resulted from employees not recording some inventory transactions and higher than expected attrition on average. By servicing their machine feeders and slightly adjusting the attrition levels, they were able to significantly reduce unexpected component shortages. They also retrained employees on inventory handling processes.
NE Company has been cycle counting and spot counting for over six months now. Their count accuracy is up to 98.3%. Based on discussions with their auditors, they expect that they will not need to do a physical inventory at their year end. Although difficult to quantify, management believes that the relatively small investment in cycle counting has yielded a significant return and has been worth the time and effort.
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