Part I:  Cycle Count Planning

Dynamics 365 for Finance and Operations (D365FO) offers a variety of options that can be used in managing inventory counting.  As with any function within a business, a direction or strategy is the first step in creating and managing a process.  Will you manage your counts by item or location?  How often will you count?  How many items or locations should be counted?  Who will count?  These are just a few of the possible questions that may arise when making a cycle counting plan.

In this blog series, we will discuss how to create and execute a cycle counting plan in D365FO.

In this first installment of the series, we will discuss creating and configuring a cycle counting plan.  As mentioned above, there are several questions to be answered to create a cycle counting strategy. 

Before we get to that, we must first determine if cycle count work will be created automatically or manually. 

Automatic Work Creation

To create work automatically, there are two options; Cycle Count Plans or Cycle Count Thresholds.  In both cases, cycle counting work is created based on the defined parameters of the plan or the threshold.  These plans or thresholds can be applied to either items or locations.

The Cycle Count Plan is where the answers to the questions mentioned above will be answered.  This is where the parameters of the cycle count will be defined.

To create a Cycle Count Plan, enter the information noted below:

1. Cycle Counting Plan ID:  The name of the plan.  You may have multiple plans that apply to a group of items or locations and another plan for other items or locations.  For example:  If you use an ABC strategy, you can create a plan for each ABC group.  You would then assign the “A” items to “A” plan in step
2. Description: A description of the plan. 
3. Work Pool ID (Optional):  If using work pools, the work created by the plan will be assigned to the defined work pool ID.
4. Maximum Number of Cycle Counts:  The number of cycle count work items that will be created each time the plan is processed.  This can be used in conjunction with Days Between Cycle Counts and a little math to create a strategy that will ensure each location will be counted during a given cycle period (monthly, quarterly, yearly etc.).  For example:  If you have 2500 location in your warehouse and you need to count each location every quarter you can divide the number of working days in a quarter which is about 65 to determine how many locations should be counted daily if the Days Between Cycle Counts is set to 90.  If it were set to 180, then that number would obviously be cut in half.
5. Days Between Cycle Counts:  How many days should pass after a cycle count before the location or item is counted again.  See example directly above.
6. Empty Locations:  Three options:  Should empty location be included, excluded, or count only empty locations.

7. Once the plan has been defined it must be applied to either a location(s) or item(s) if applicable.  To apply the plan to locations, select “Select Locations” in the ribbon bar and enter the criteria in the provided query.

8. If you do not plan to count by location, apply the plan to an item, select “Select Items” and then enter the criteria in the provided query.

Now that cycle count plan has been set up, it must be processed to create work.  By clicking the “Process cycle counting plan,” the plan can be processed now, scheduled for a later time, and/or scheduled to run at regularly scheduled times.  Remember that this, along with applying plans to location and/or items, must be done for each cycle counting plan ID.

Cycle Count Thresholds

Cycle Count Thresholds can be used instead of or alongside Cycle Counts Plans to automatically generate work.  The key difference between a threshold and a plan is the fact that a plan is driven by the item and/or locations themselves while thresholds are driven by the inventory of those items and/or locations.

Thresholds can be a set quantity (when inventory level for item x gets below 50 then create cycle count work) or by percentage (when inventory level of item x gets below 90% of the previous inventory level).

To create a Cycle Count Threshold, enter the information noted below:

1. Cycle Counting Threshold ID:  The name of the threshold.  You may have multiple thresholds that apply to a group of items or locations and another for other items or locations. 
2. Description:  A description of the threshold or how it applies
3. Threshold quantity:  The quantity of the threshold when using Quantity as a threshold type.  Cycle Counting work is created when this threshold is crossed.  If the threshold quantity is 20 and the physical on-hand is 30 and 11 units are picked for an order, work will be created once the pick is made.
4. Unit:  The unit of the item(s) to which the threshold applies
5. Capacity threshold based on percentage:  The percentage of the threshold when using Percentage as the threshold type.  If the threshold is 50% and the physical on-hand is 20 and 11 are picked for an order, cycle counting work will be created when the pick is made.
6. Cycle counting threshold type: Choose either Quantity or Percentage
7. Process cycle counting immediately:  When selected Yes, work will be created immediately when the threshold is met.
8. Days between cycle counts:  How many days should pass after a cycle count before the location or item is counted again.  See example directly above
9. Work Pool ID(Optional):  If using work pools, the work created by the plan will be assigned to the defined work pool ID.

10.  Now that the threshold criteria are complete, they must be applied to items and/or locations.  This is done in the same fashion as noted above in Cycle Count Plans.

Manual Work Creation

To create work manually there are also two options: by item or by location.  This can be done in Warehouse Management>Cycle Counting>Cycle Counting Work by Item or Cycle Count Work by Location.  This manual creation of cycle count work can be used in lieu of the automated cycle count work creation or with the automatic work creation.  This approach can be used for an ad-hoc count on an item or group of items as well as locations.  NOTE:  To allow for cycle counting, a location “Location Profile” must allow for cycle counting and an item must be assigned to storage dimension group that uses warehouse management processes.  The warehouses in which counting occurs must all use warehouse management processes.

Cycle Counting Work by Item:  Cycle count work can be created by item number, inventory dimensions, any other criteria entered in the query.  This query can be run on-demand or as a recurring scheduled task.

Cycle Counting Work by Location:  Cycle count work can be created by location, warehouse, or other criteria associated with locations.  This query can be run on-demand or as a recurring scheduled task.

1. Maximum Number of Cycle Counts:  The number of cycle count work items that will be created.
2. Work Pool ID (Optional):  If using work pools, the work created by the plan will be assigned to the defined work pool ID.
3. Records to Include:  Select the Filter button to enter item or location-based selection criteria depending on if you are creating Cycle Count Work by Item or Location. Multiple criterion can be used to narrow down the count to specific items and or locations.

Once the above query is submitted, the work is created and cycle counts are ready to be performed.

Spot Counting

A third cycle count option is available for quick adjustments or count validations that can be made without creating work.  Spot counts can be performed using only a mobile device with the D365O Warehousing App.

Spot counts would be performed “on-the-fly” when inventory issues are identified throughout the warehouse.  For instance, if product is dropped and it breaks, a spot count could adjust that inventory level.  Another scenario would be if an inventory variance is noticed in On-Hand that just seems incorrect.  A spot count could be performed to correct or validate that inventory.

Prerequisites

1. Warehouses where cycle counting will occur and the items to count must use warehouse management processes.
2. Cycle counting menu item must be set up for the mobile device.  System directed, user directed, Cycle count grouping and spot count cycle count menu item must be created.  In addition, it is helpful if a “Work List” menu item is set up for user directed cycle counts.
3. Worker accounts must be set up for the mobile device users.  A cycle count supervisor can be set here.  Limits as to how big inventory variances can be before requiring cycle count supervisor approval can be set here as well.
4. The locations’ profiles must “Allow cycle counting”.
5. The default adjustment type code, work class ID, and work priority must be specified in the Cycle Counting tab of Warehouse Management Parameters

Now that the cycle count strategy is set up, stay tuned for Cycle counting in D365O Warehouse Management Part II:  Cycle Counting with a Mobile Device!  Comment below with your questions to get the conversation started.