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ABC Analysis Options

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On this tab the following fields can be viewed:

 

hmtoggle_plus1Analysis / Reclassification

The usage of each item has to be calculated by using the requirement horizon date for requirements, the history horizon date for movements or a combination of both.

 

When the source "Purchased" is selected, the price used is:

 

Source

 Price

I (Interplant)

 Material + Labour + Sub Contract + Variable Overhead + Fixed Overhead + Transfer Price

P (Purchased)

 Material

C (Customer Furnished)

 Material

S (Sub Contracted)

 Material + Sub Contract

 

If the source option "Manufactured" is selected, the price is equal to the (Material + Labour + Sub Contract + Variable Overhead + Fixed Overhead + Transfer Price)

 

On "Analysis" the usage values are shown to indicate where the value partitions should be.  When "Analysis" is selected, any values in the "Reclassification" are reset to zero.

 

On "Reclassification" it reclassifies the parts to their new ABC classification code according to the partition values.

 

RELATED TOPICS: How to perform an ABC Analysis

         How to perform an ABC Reclassification                

hmtoggle_plus1A-B Usage Value Partition

It is the value separating B class items from A class items.

 

Any value above and including the amount is classified as an A class item while anything below the amount, but higher than or equal to the B-C usage value partition is classified

as a B class item.

 

After performing the ABC Analysis and applying the 20/80 Pareto principle, an ABC reclassification must be performed.

 

An ABC Analysis is performed by calculating usage values. The reclassification routine requires you to specify the partition between A class items and B class items.

 

The partition amount entered represents a usage value that will, if exceeded, result in parts being classified as A items.

 

If the usage value partition is less than the A-B partition, but greater than the B-C partition, the part will be classified as a B class item.

 

If the usage value partition is less than the B-C partition, the part will be reclassified as a C class item.

hmtoggle_plus1B-C Usage Value Partition

Anything below the B-C usage value partition will be regarded as a C class item.  After performing the ABC Analysis and applying the 20/80 Pareto principle, an ABC reclassification

must be performed.

 

An ABC Analysis is performed by calculating usage values. The reclassification routine requires you to specify the partition between A class items and B class items.

 

If the usage value partition is less than the A-B partition, but greater than the B-C partition, the part will be classified as a B class item.

 

If the usage value partition is less than the B-C partition, the part will be classified as a C class item.

hmtoggle_plus1Division

It is populated with the division code and description from the Division table.  It defaults to the division of the signed on user.

 

The number of characters to be entered before the list is shown is governed by the value of "populate length" (mandatory).

hmtoggle_plus1Financial Year price

When checked, it will apply the part's financial year data when calculating the usage value.

hmtoggle_plus1History Horizon Date

When a history horizon date is set, the system will calculate the usage (issues) value up to the date specified.

 

A history horizon of one year is normally specified for product codes where independent demand dictates. When this field is clicked on, it will default to today's date (mandatory).

hmtoggle_plus1How to Perform an ABC Reclassification

After you have performed your ABC analysis and studied the result set, you must determine your cut-off points between the A, the B and the C value items and use the cumulative percentage value as your guideline.

 

STEPS:

 

Enter and select the data as from your analysis report parameters.

 

In the "Mode " frame, select "Reclassification".

 

Select "Update ABC Class " by clicking on the option box if you want the system to update the Part Master records.

 

In the "A -> B usage value partition " field, enter the amount as it was determined from your analysis report.

 

In the "B -> C usage value partition " enter the amount.

 

Set the reclassification sensitivity percentage .

 

Click on the "Run " button.

 

The result will be displayed on the "Reclassification Results " tab and are written to a .TXT file.

hmtoggle_plus1How to Perform an ABC Analysis

You perform the ABC ANALYSIS function to determine how the usage value of parts changed over a period of time.  See ABC Classification.  From this report you can let the system perform the reclassification automatically (e.g. change the part master data).

STEPS:

 

Enter/select the Division in the drop-down list of the Division field.

 

Select the option "This year" or "Next year" in the "Unit Price Options " frame.  The system will use the year selected part financial data when performing calculations to determine the usage value.  If the source is "Purchased" you can select the last purchase price to use in the calculation to determine the usage value instead.

 

In the Non-Fixed Account Parts frame, you have the option to include or exclude non-fixed account parts by clicking on either option.

 

In the Source frame, select the source "Purchased" or "Manufactured" by clicking on the option.

 

In the Requirements Horizon Date field, adjust the horizon date if necessary.  It can be as long as your master product schedule (MPS) horizon.  For dependent demand items, it will normally be a 1 year horizon.  Click in the field and adjust the data if necessary.

 

In the History Horizon Date field, adjust the horizon date if necessary.  For independent demand items (consumables, etc.) you might require a long history horizon and a short requirement horizon.

 

In the Product Definitions grid, you can select the analysis on all products belonging to the select division (the system default = all)

 

or

 

to a specific product, by clicking on the "Selected" option button.  The system will now display all products where you can select a maximum of five products.

 

In the "Mode" grid, you can enter a usage value.  The system will not print or display any records with a total usage value smaller than that amount.

 

Click on the "Run" button.  The result set will be shown in list box on the ABC Analysis Results tab.

hmtoggle_plus1If Purchased Since

When "Last Purchase Price" is checked, the user must enter purchase since date.

hmtoggle_plus1Last Purchased Price

Last Purchase Price is used for parts with a source of Purchased "P".  The last purchase price on the Part Master table is applied if it has a last purchase date greater than or equal to the date entered in "If purchased since.".

 

If the last purchase price does not fall within these parameters, the analysis reverts back to using the part financial year data of the year specified i.e. This year or Next year.

 

RELATED TOPIC: Last Purchase Price on the Part Master

hmtoggle_plus1Mode

In either mode, a usage quantity must be calculated in either OR both of the following ways:

 

1.  From requirements by using requirement horizon date, sum the required quantity less the issued quantity.

 

     This is for order types not equal to "TRAN" (Transfer Orders) and where the status of the order is not quote orders (Q) or closed orders (C) and the required date on the requirement

     must be equal to or less than the requirement horizon date specified in the text box.

 

2.  From movements, by using the history horizon date, add the quantity of movements from "Order" to "Requirements" and "Store" to "Requirements".

 

     When subtracting, subtract movements from "Requirements" to "Orders" and "Requirements" to "Store".  From the same movement table, each record must be of type not equal to

     "TRAN" (Transfer Orders).

 

The controlling division of the part must also be the division code that has been selected in the division combo box. The fixed account of the part whose value usage is being calculated must be Yes (Y) on the Part Master table and the source from the Part Master table must be manufactured (M).

 

When the option of "Purchased" is selected, the source from the Part Master table must be either I, S, P, or C.  

hmtoggle_plus1Next Year

When this option is selected, the financial year data for the next financial year is selected from the Part Financial Year Data table to be used in the calculation of the usage value.

hmtoggle_plus1Non Fixed Account Parts

When "Exclude" is selected, parts where fixed account is equal to No "N" on the Part Master table are not included in the analysis.

 

When "Include" is selected, all parts will be included in the analysis irrespective of whether fixed account is equal to Yes "Y" or No "N" on the Part Master table.

 

"Exclude" is the default setting (mandatory).

 

RELATED TOPIC: Fixed Account on the Part Master

hmtoggle_plus1Product Definitions

When "Selected" is chosen, the list box populates with all the product codes and descriptions from the Product Master table.

 

A maximum of 5 products can be selected.  When "All" is selected, all products are taken into account.

hmtoggle_plus1Reclassification Sensitivity %

The purpose of the reclassification sensitivity percentage is to prevent the reclassification of parts where the deviation does not really justify such a reclassification.

 

It therefore limits the sensitivity since reclassification normally also impacts on a part's order policies, its stock control technique, safety stock, and its scheduled cycle counting intervals.

 

If the calculated usage value of a part is greater than or less than the specified partition, but within the values when up adjusting or down adjusting the partition amount with the sensitivity percentage, the part will not be reclassified.

 

         Reclassification Sensitivity % can have a minimum value of 0 and a maximum value of 15.

 

The function takes the A-B and B-C usage value partitions and calculates the amount as per the specified percentage.

 

EXAMPLE:

 

A-B Partition                                                =                50000

Reclassification Sensitivity %                =                5%

 

The function calculates 5% of 50000 = 2500

 

The function then calculates the range as (50000 - 2500) and (50000 + 2500) resulting in a range of 47500 to 52500.

 

If class A item has a calculated usage value of 48200, it is less than the A-B usage value partition and should therefore be reclassified as a class B item.  However, since its value is not less than the range of 47500 to 52500, it will remain a class A item.

 

Similarly, if a class B item has a new calculated usage value of 51000, it should be reclassified as a class A item, but, since it falls below 52500, it will remain a class B item.

hmtoggle_plus1Requirement Horizon Date

When you perform an ABC analysis, you set your requirement horizon equal to the last requirement date that you want the system to include when performing the analysis (i.e. requirements from works orders and customer orders).  This field is mandatory.

 

Normally for dependent demand items, you will set the horizon to a year in the future.  For product codes with more independent demands than dependent demands you will rather use history data and not a future date.

hmtoggle_plus1Run

Once the reclassification settings have been done, click the "Run" button.  It runs through all the items and lists the results in the list box on the "Analysis or Reclassification Results" tab.

 

When the "Run" button is clicked, it checks to see that either the "Financial Year Price" or "Last Purchase Price" setting is checked.

hmtoggle_plus1Stop Printing At Usage Value

To calculate the usage value, multiply usage quantity with the price calculated. For the price value look at the financial year options frame.

 

If it is "This year", look up the current financial year's price of the product on the Part Financial Year Data table.  If "This year" was selected, it will give you the price for this year.

 

If "Next Year" was selected, it will give you the price for next year. The stop printing at usage value defaults to 100.00.

hmtoggle_plus1Source

Where the source "Purchased" is selected, an analysis is performed on all part numbers on the Part Master table where the source is Purchased "P"The price, to multiply with the usage quantity in order to get a usage value, is calculated as follows:

 

Source

 Price

I (Interplant)

 Material + Labour + Sub Contract + Variable Overhead + Fixed Overhead + Transfer Price

P (Purchased)

 Material Price

C (Customer Furnished)

 Material Price

S (Sub Contracted)

 Material + Sub Contract Price

Where the source "Manufactured" is selected, an analysis is performed on all part numbers where the source is Manufactured "M". To get the usage value for Manufactured parts, you multiply the (Material + Labour + Sub Contract + Variable Overhead + Fixed Overhead + Transfer Price) with the usage quantity.

 

"Purchased" is the default setting and a "Source" must be selected.

hmtoggle_plus1This Year

When this option is selected, the financial year data for today's financial year is selected from the Part Financial Year Data table to be used in the calculation of the usage value.

hmtoggle_plus1Unit Price Option Frame

ABC Analysis calculates the usage value of parts in the selected Division and is calculated as the (unit price * usage quantity).

hmtoggle_plus1Update Days Supply

This option is only available when in "Reclassification" mode and not when in "Analysis" mode.

 

Since the order policy of many parts is derived from the ABC classification of a part, it is logical to also adjust the order policy should the ABC Class change.

 

When checked, the function will select all parts with an order policy equal to Period Cover Interval "P" and updates the days supply on the Part Master table by selecting the                           corresponding "Days Supply Default", for the new ABC Class applicable to the part, as predefined on the Division table.

 

RELATED TOPICS: Days Supply Default Class A Items on Division

Days Supply Default Class B Items on Division

Days Supply Default Class C Items on Division

Period Cover Interval on the Part Master

Days Supply on the Part Master

hmtoggle_plus1Update ABC Class

This option is only available when in "Reclassification" mode and not when in "Analysis" mode.

 

When unchecked, it displays the results in the list box on the "Results" tab, and therefore provides the user with the opportunity to view the potential reclassification result prior to actually updating the Part Master table (records) accordingly.

 

When checked, ABC class on the Part Master table will be updated with the new class when the reclassification is performed.

 

Where "Reclassification" and "Update ABC Class" is checked and the signed on user does not possess change rights, he/she is not authorised to change the ABC class.

 

RELATED TOPICS: ABC Classification  on the Part Master

Days Supply Default Class A Items on Division

Days Supply Default Class B Items on Division

Days Supply Default Class C Items on Division