Saturday, 11 June 2016

Physical Inventory

Entering the Counting Results

In the following topic, I will show you how you can enter the counting results in the physical inventory document.
The process is fairly easy, but it needs to be accurately executed because the error in entering the counting results in poor stock balances later. So, there is high need that the counting process as well as entering process both be accurate.
Step 1)
  1. Execute the transaction code MI04.
  2. Enter physical document number and fiscal year.
  3. Enter the counting date if it differs from the one suggested.
  4. Enter the variance percentage. This means that if you had 100 pcs on stock before the physical inventory process, and you enter 107 pieces as a counting result, you will be informed with a warning message of the difference between the previous stock quantity and the counted quantity.
    Press ENTER.
Step 2)
  1. Enter the quantity that is counted for this material.
  2. Press ENTER.
You will be informed that there is a quantity difference of 20 pcs, if you haven't made a mistake while entering the quantity, you can bypass the warning by pressing ENTER. If you made a mistake while entering the quantity, you can correct the entry (124 pcs in my case) and hit ENTER again.
If you get the warning message, and you think that there might be a mistake in the counting process, you can recount the item again and correct the results (check out MI05 transaction code, and MI11 if needed).
After I have corrected my entry to 124 pcs, I will save the transaction data.

Posting the Differences

After you have possibly recounted and reentered quantity information for problematic materials, you can post the differences by using the transaction MI07.
Step 1)
  1. Execute the transaction MI07.
  2. Enter your physical inventory and fiscal year.
  3. Enter posting date. Goods posting will be done according to this date. Some companies use 31.12. In the annual physical inventory as the last day of fiscal year.
  4. You can use the threshold value to enter the maximum allowed differences value in local currency. If you don't want a limit leave this field blank. In order for this to work, materials need to have the standard or variable price maintained.
  5. Press ENTER.
Step 2)
  1. You can see the difference quantity. This means that we have found 4 pieces more than it was previously stated in the system.
  2. Value isn't shown as our controlling/accounting department didn't yet release the prices for this material.This needs to be done in a production environment. You cannot post a difference of 4 pieces with the respective value of 0,00 Eur.
We can see that our posting is done by creating the resulting material document 4900547510.
Step 3)
We can check the material document in MB03.
  1. We can see a quantity of 4 pcs in the material document.
  2. Movement type used for goods receipt from physical inventory difference posting is 701.
This means that 4 pieces are added to the inventory.
For a reference of standard movement types, used for physical inventory, see the below table.
  • 701 – Goods Receipt for unrestricted stock
  • 702 – Goods Issue for unrestricted stock
  • 703 – Goods Receipt for quality inspection stock
  • 704 – Goods Issue for quality inspection stock
  • 707 – Goods Receipt for blocked stock
  • 708 – Goods Issue for blocked stock
You are done with physical inventory. You can now continue with regular warehouse activities.

Thursday, 9 June 2016

All About Physical Inventory

What is Physical Inventory?

Physical inventory is a process of determining that the inventory quantities are exact, or if there are differences in quantity mentioned physically present and that mentioned in the SAP system. Basically, after you are finished with physical inventory, your system and physical stock levels must be the same.
It is mandatory for legal reasons, and in the most of the times it is conducted once a year.
To simplify the process, check the below diagram, these are the most common steps for doing physical inventory (not only in SAP ERP).
Besides the legal reasons it is extremely helpful having the correct stock quantities in the system matching the physical stock. Management can have the correct information on the value of stock materials. ATP for sales is correct. MRP is done using the correct input parameters (material stock quantities).
Not having the correct stock levels in the system means quite the opposite. Management has the wrong picture on the financial aspect of the stock in possession. ATP uses the wrong data (sales might not be able to sell something physically on stock but not existing in the system, or system might allow selling something that isn't physically present in the warehouse). MRP is inaccurate (production planning and other material planning processes might be in a big problem as they are required to calculate the needs for production/procurement based on stock levels and several other information).
Now you see that having a clear and correct stock levels is of immense importance for a lot of processes in a company. Now you will see how physical inventory is done in MM module.

Types Of Physical Inventory

The following physical inventory procedures can be used in SAP system:
  • Periodic inventory
  • Continuous inventory
  • Cycle counting
  • Inventory sampling
Periodic inventory Most of the time companies use this kind of inventory. In most cases, it is done once a year, and this kind of inventory is called annual physical inventory. That means that material stock is counted once a year. Most of the times at the end of the year or after the season ends (in seasonal industries).
Continuous inventory All materials are counted at some point in the year, but that can be at any day appointed for. So we can count some material in February, others in April and so on. A single material can be counted on a single date. This type of inventory is mainly utilized in warehouse management based warehouses, but it can be done in inventory management too.
Cycle counting This type of inventory allows us to set a period for regular intervals for physical inventory on the material level. So a fast moving and high value material can be counted four times a year while slow moving and low value material can be counted once a year. The indicator for this is set in material master in the Plant/Storage Location 1 View, in the field
CC phys. Inv. IndInventory sampling Only a number of randomly selected materials are counted on the balance sheet key date, and if those materials show small enough differences, the other materials can also be considered to have a correct stock levels. Not really used that often, as it is essentially an approximation, but in some cases it can be used if material and warehouse structure imply that.
We will explore the most common – annual inventory option in the following topic.

Creating Physical Inventory Document

The following procedure can be used in creating and processing of the physical inventory document.
Step 1)
  1. Execute the transaction MI01.
  2. Enter document date and planned date for counting (leave the default for today).
  3. Enter Plant/Storage location/Special stock indicator.
  4. Choose if you want Posting Block (if there is a possibility that someone will do a posting while physical inventory is in progress enable this – material level), Freeze book inventory (current book inventory balance will be recorded in the physical inventory document if this option is enabled), and if you want to count batches with deletion flag (self explanatory). Press ENTER.
Step 2)
  1. Enter the material number(s) you want to include in this physical inventory document.
  2. Save the transaction data.
You will be informed of the newly created physical inventory document number.
Step 3)
Optional step.
  1. Execute the transaction MI02 to make changes to the document (if needed).
  2. Double click the item if you want to check if the counting has already been done.ΕΎ
  3. If you need to delete the document, you can set the deletion indicator.
Step 4)
Optional step.
  1. You can see in the item level that our material has not yet been counted.

Wednesday, 8 June 2016

Transfer Posting Of Goods

Transferring a quantity from one storage location to another can be accomplished by either using MIGO transaction or MB1B.
I will demonstrate the transfer posting process using MB1B as you have already seen MIGO in action.
Step 1)
  1. Execute the transaction MB1B.
  2. Enter movement type (311), source Plant and Storage location. HitENTER.
Step 2)Enter receiving storage location,
  1. material number,
  2. quantity,
  3. unit of measure.
Save the document and the transfer posting will be completed.
The material document number is assigned.
If you need to cancel this posting, you can use either MBST or MIGO transaction.

Tuesday, 7 June 2016

How To Issue Goods

Another important process in inventory management is goods issue posting. Reservations are considered a specific process on their own, but essentially reservation use a goods issue logic. When we created a material document for reservations, we have issued goods from warehouse to the cost center, production order etc.
Now, we can talk about other goods issuing processes. The most important of all is for outbound delivery. The process works as follows -
  1. We have an inbound delivery for our material 10599999 incoming from sales department.
  2. After the goods are loaded in the truck we should do a goods issue posting for the delivery.
  3. We are sent the delivery number 80072673 created for out material 10599999 and we need to process the delivery in inventory management by posting the goods issue.
It is done in sales transaction VL02N mostly used by the MM users in logistics. Departments that use this transaction can vary depending on the organizational structure in the company.
Step 1)
  1. Open VL02N transaction.
  2. Enter the delivery number you need to process.Hit ENTER.
Step 2)
  1. Enter the Plant and Storage Location.
  2. Enter picked quantity. If full quantity has been picked and loaded, enter 20 PCS but if for some reason loaded quantity is 12 PCS (e.g. truck already full) you will enter 12 in Deliv. Qty field and in the Picked Qty fields.
  3. Post Goods Issue.
You are done
If for some reason you need to reverse/cancel goods issue for outbound delivery, you can use the transaction VL09.
  1. Execute transaction VL09.
  2. Enter the appropriate delivery number.
  3. Press the execute button.As you can see, you can use this function for inbound deliveries too.
Step 2)
  1. Select the line with the delivery you want to process.
Confirm if asked. If you get the message that the goods issue is reversed successfully, you are done.
If not, there's a problem in the processing which has to be identified by superuser or consultant.
Other types of processes where posting a goods issue is needed
You can see the MIGO transaction for reference to more options for posting a goods issue.
Choose A07 - goods issue, and in the next drop-down menu you will find several options. To give you a little "homework", you can explore the options by yourself, here's just a short look on them.
  • R02 - Material Document (post goods issue for a material document)
  • R08 - Order (post goods issue for a production order)
  • R10 - Other (without the reference document)
  • R01 - Purchase Order (PGI for a purchase order)
  • R09 - Reservation (PGI for reservation – I have demonstrated this process by using MB1C transaction)

Monday, 6 June 2016

Reservation Of Inventory

Reservations are system documents that show a requirement for a certain amount of good for production, cost center and any other need.
Reservations are important in planning/MRP/ATP as the system reserves needed quantities before they are posted. If there weren't reservations in the system, we might encounter a problem that we need to use the goods for production order, but we can not post the goods issue because a sales order has taken the goods just few minutes ago. When we create the reservation, system doesn't allow any other document to reserve the goods for other purpose. This also depends on the system settings for MRP/ATP. You might give reservations a privilege to always take the goods off the stock, even if it is already reserved by the sales order or delivery (not quite good solution). But you can also customize the system that sales orders don't check the reservations when performing availability check.
You can create a reservation for the material for a number of reasons. System can also create the reservation if the MRP settings imply that kind of system behavior.
This is done either by the system automatically or by using MB21 transaction code.
Step 1)
  1. Execute the transaction MB21.
  2. Fill in the fields as needed.
Reservation can be made for consumption for a cost center (movement type 201), production order (movement type 261), stock transfer (311), sales order, project, network etc.
Choose the appropriate movement type according to your needs. Choose movement type 201.
If you entered movement type 321 (from the above screen), you surely got the error message. It means that this movement type cannot be used for creating a reservation.
It also means you aren't following my steps closely. Please read the text above it says that we are going to use movement type 201.
Step 2)
  1. Enter cost center.
  2. Fill in the item data. Material number, quantity, source storage location.
Save the document. You will get the reservation number you need to use in the next step.
Now we have to create a material document for the reservation. We can do that through MIGO, but this time let's learn another transaction.
We can use the transaction code MB1A to create a goods issue with reference to material reservation.
Step 1)
  1. Execute the transaction.
  2. Choose button To Reservation...
Step 2)
  1. Enter reservation number.
  2. Confirm.
Step 3)
  1. If you need to change any of the fields, quantity, storage location etc. do it and save the document.
You will get the material document number in the status bar message.
Let's say that we want our reservation cancelled.
Of course, it can be done using MIGO transaction, but let's find out about another transaction.
Step 1)
  1. Execute the MBST transaction code.
  2. Enter the document number created in the previous step.Hit ENTER.
Step 2)
You can see that for this purpose system uses movement type 202 – reversal for cost center.
That is because we have defined it as a reversal movement type for Mvt.type 201 in OMJJ transaction.
Save the transaction data and your previous document is reversed.
Now you can create material document for the same reservation again, or cancel the reservation itself by using t-code MB22.
Step 1)
  1. Execute the transaction.
  2. Enter reservation number.Hit ENTER.
Step 2)
Click the check box to mark the reservation completed (it means that it isn't expected to be any more goods postings for this reservation).
You have successfully dismissed the reservation from further processing.

How To Cancel Goods Receipt

After you have posted the goods receipt in MIGO, you can check stock levels in MMBE transaction code.
  1. Execute the transaction.
  2. For the requested material you will be shown stock levels for plants, storage locations and stock types (unrestricted, quality, blocked).
  3. In the Quality inspection column, you can see that our material is posted there 2 PAL = 24 PCS.We also have unrestricted stock from some of the previous receipts.
Let's say that we have made a mistake, we wanted in this special case, our material to be posted directly to unrestricted stock. Therefore, we need to cancel the posting to reverse the process and do it again properly.
We can use MIGO transaction to cancel a posting.
Step 1)
Choose A03 CancellationR02 Material document, enter the material document that has been created after posting the goods receipt from purchase order. Execute.
Step 2)
  1. Check the indicator that item is OK.
  2. Post.
Step 3)
Check in MMBE if our goods receipt cancellation is in effect. As you can see, the quality inspection column is empty. It means that we have successfully reversed/cancelled our goods receipt posting.
It also means that we can use the purchase order number in MIGO to post the goods receipt again, this time with the correct settings.

Saturday, 4 June 2016

How To Create Goods Receipt

To create  goods receipt, you can use MIGO or MB1C transaction.
Mostly people use MIGO as it's designed to have all the options for all of the movement scenarios.
Step 1)
  1. Execute the MIGO transaction.
  2. Choose A1 – Goods receipt process.
  3. Choose R01 – Purchase order.
  4. Enter your purchase order number here.
  5. Click on execute button.
Step 2)
Our material is transferred to the item overview section.
Choose posting and document date (recommended t stay as today like it's default).
Step 3)
  1. You can choose on the header level – Vendor tab view vendor information.
  2. If you click on the line item number, you will see several tabs in the bottom of the screen appear, and you can choose any of those to view some specific information about the item.
  3. If you choose Material tab, you will see the general material data.
Step 4)
Check the Quantity information in this tab. You can do goods receipt for less than the initial value if you change it. You will still see the ordered quantity in the bottom of the screen.
Step 5)
The next tab contains information about the destination for the goods.
  1. You can see the movement type used for receipt process,
  2. destination plant and storage location,
  3. as well as stock type upon receipt. We can see that this material is going to be posted to quality inspection (this indicator is set in material master and has been referenced in earlier topics), so it will not be available for use until confirmed to be in satisfying quality.
  4. There's also information about goods recipient and unloading point.
If you need to change the storage location, or override the stock posting type, you can do it here..
Step 6)
You can find purchase order related data in this tab.
  1. You can change the update type for delivery completed indicator (on the purchase order). It is set to be automatically updated upon posting, but you can change it if your process requires a different approach.
  1. After review of all of the tabs, and after you have assured that your data is accurate, you can flag the items as OK. Now you can post the document.
Upon posting, you will see that material document has been generated.
Now you can check the material document by using transaction code MB03.
  1. Execute the transaction MB03.
  2. Enter material document and document year.
  3. Press ENTER.
You can see some basic information about the document and items.
Double click the item.
On item details, you can see some additional item information.
You are done with posting the goods receipt. The process is the same for the production order, as well as for the inbound delivery.