What is A, B, C and D Indicator for a material for cyclic count

All the material may not be important for cyclic count purpose, it may be required to count some items frequently and some items rarely. 

A cyclic count indicator A or B or C or D is allocated to material in the material master based on either consumption value (consumption X rate) or forecast value (forecast quantity X rate).

The item with more consumption value are classified as A, and with minimum as D. 

“A” indicator items will be counted frequently (say every month), D will be less frequently (say every 6 months or every one year). Daily a number of items will be taken for count, some may be with A indicator, some with B and so on.

Mark all materials that are to be included in cycle counting with a cycle counting indicator in the material master record (storage data). The cycle counting indicator is used to group the materials together into various cycle counting categories (for example, A, B, C, and D). 

There is an option in SAP to have a fixed indicator for a material say A for a material which does not have a high consumption value but it is important to count it every month, then the material can be marked as A indicator in material master with indicator “fixed”

In Customizing OMCO, for Inventory Management, you can define for each category the time intervals at which the materials are to be counted. 

Fields : No. of phys. inventories per fiscal year for cycle counting

For e.g. A - 12, B - 6, C - 3, D - 1

Specifies how often during the fiscal year a physical inventory is to be carried out for a material subject to cycle counting.

The system uses this specification to convert the count interval into workdays.

Fields : Physical inventory interval (in workdays) for cycle counting

For e.g. A = 12 times per year and your Total Factory Calendar days = 300

The interval will be calculated as 300 / 12 = 25 days

Specifies after how many workdays following the last inventory count another physical inventory has to be carried out for a given material.

The count interval is determined automatically on the basis of the number of physical inventories specified for the fiscal year. 

Fields : Float time (in workdays) for cycle counting

For e.g. A - 10, B - 20, C - 30, D - 0

Indicates the number of workdays by which the planned count date may vary from the current date.

For examples :-

For the plant, the float time is five days.

A physical inventory has been planned for a material belonging to category C for June, 1.  On expiration of the float time (after June, 6), the physical inventory has not yet been carried out.   Irrespective of the category, the material is parked for the next cycle counting run.

Fields :- Percentage of performance measure for cycle counting ind.

Specifies the percentage allocation of the materials to the individual cycle counting categories.

The percentage value is used for automatic assignment of the cycle counting indicator.

For example :-

In the given plant, 200 materials are subject to the cycle counting physical inventory procedure.

In Customizing for Inventory Management, the following percentage allocation has been defined for the plant:

A materials: 50%
B materials: 25%
C materials: 15%
D materials: 10%

In the cycle counting analysis, the materials are sorted by consumption. After completion of the analysis, the cycle counting indicator is assigned as follows:

The first 3 materials (sorted in descending order according to consumption) represent 50% of the consumption and have the indicator A.

The next 12 materials represent 25% of the consumption and have the indicator B.

The next 49 materials represent 15% of the consumption and have the indicator C.

The remaining 136 materials represent the rest (10%) of the consumption and have the indicator D.

You can use the program ABC Cycle Counting Analysis (MIBC - RMCBIN00) to perform an analysis.  In this analysis, the system assigns the materials to the individual categories according to consumption or requirements (forecasts). 

You can also specify whether this analysis is to consider only the materials with cycle counting indicator or all materials. The cycle counting indicator in the material master records can be updated automatically by this program. 

Marking Materials for Cycle Counting

This step is only required if you perform cycle counting for the first time or if you want to update the cycle counting indicators. 

In the material master record (storage data), maintain the cycle counting indicator for all the materials that are to be included in cycle counting. 

You can set the indicator in one of the following two ways:

1. Manually in the material master record. To do this, choose 
   Material -> Change from the Material Master menu. 

2. Automatically using ABC analysis To do this, choose 
   Special procedures -> Cycle counting -> Set CC indicator from the Physical Inventory menu.  

See also
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