Inventory Management Overview

Inventory Management is a part of a Material Management module. - Inventory management means managing the material stock by maintaining proper records or material movements. - Inventory management works on two ways

On Qty updating (at store location) b) On Value updating (at A/c)

Inventory Management is fully integrated with PP, SD, QM, FI/CO

In SAP PP

IM is responsible for the staging of the components required for production orders - The receipt of finished products in the wear house is posted [Here, when material issued to production, IM will check the availability of the stock and release the material for production]

In SAP SD

Issue the stock for Sales Order - It is possible to create Sales order stock

In SAP QM

In the case of goods movement, the system determines whether the material is subject to inspection operation. If so the corresponding activity is initiated for the movement in QM

In SAP FICO

The issue to production           

Consumption A/c - Scrap                                   

Scrap A/c - Issue to Sale                       

Sales A/c - Before Invoice – FI - After invoice --CO

Goods movement

There will be a transaction resulting in a change in stock. Types of Goods movement:

• Goods Receipt (GR)

• Good Issue (GI)

• Stock Transfer

• Transfer posting

Goods Receipt (GR)

It is a goods movement, with which the receipt of the goods from vendor or production is posted. A good receipt leads to an increase in warehouse stock

Goods Issue (GI)

It is also a good movement, with this

  • Material with drawl
  • Material Issue
  • Material consumption
  • Shipment of goods to a customer - is posted

A goods issue leads to a reduction in warehouse stock

Stock Transfer: It is also one more goods movement - It means removal of material from one storage location (or plant) to other storage location (or other plant) with in or between company codes

Transfer Posting: It is a general term for changes in stock type or stock category or stock status of a material

  • Transfer posting from material to material
  • Release from quality inspection stock

[Note: It is irrelevant whether the posting occurs in connection with physical movement or not] Result of Goods movement. When you enter a goods movement

    • A Material document is created

SAP MM Tutorials

  • If the movement is relevant for financial a/c accounting document will also be created
  • Stock quantities of the material are updated
  • The stock value of the material master is updated
  • Depending on the movement type additional updates are also carried out like in case of a good issue for the cost center the consumption values of the items are also

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Document concept

  • The account principle of ‘No posting without document” applies even IT-based Inventory management system
  • A document is a proof that a transaction involving stock changes has taken place
  • When a good movement is posted, a Material Document is generated as proof of the movement.
  • If the movement is relevant to the financial accounting (i.e. if it leads to an update of G/L accounts) an accounting document will be generated parallel to the material document.

Inventory Document Concept

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Material Document consists of                                              Accounting Document consists

        Document Header                                                                  of Document Header                                                                                  

Posting date, Movement type                                                 posting date Name of the person who created   

 at item level Quantity                                                                   Document currency At item level         

The associated amount posted Plant                                              G/L Account no Storage location   

 

Note: The Material and Accounting Documents are independent documents

Document type in Inventory management

WA – Goods Issue WE – Gross Goods Receipt WN – Net Goods Receipt WI – Physical Inventory Document WL - Transfer posting

Movement Type

  • It is a three-digit identification key
  • In order to differentiate various goods movements, movement type is used
  • Movement type has an important control function in Inventory Management
  • Updating the quantity fields o Updating the stock and consumption accounts o Determining which fields are to be displayed during the entry of a document in a system
  • An example of Movement type is

Movement Type Document

Some Important Movement types: Movement Type

Note1: Movement type + 1 = reversal

Note2: for 121 – no reversal movement type

Movement Types

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Tcodes in Inventory Management

1. Material documents

a. MB51 – List of Material documents

b. MR51 – List of Accounting documents

2. Stock

MMBE – Stock Overview MB52 -- Warehouse Stock MB53 – Plant Stock Availability MB5B – Stock between Posting Dates MB5T – Stock in Transit MBLB – Stock with Subcontract Vendor ME2o -- Stock provided to the vendor MB50 -- Total Stock all materials MB5S -- List of GR/IR balances

3. MB1A – Goods Issue

4. MB1B – Transfer Posting

5. MB1C -- Good Receipt MIGO Transaction code is meant for

• Goods Receipt

• To display of the material document

• Goods Issue

• Releasing of GR Blocked stock

• Place in storage

• Removal from storage

• Cancellation of material document

Inventory Management IMG settings

Plant parameters - Number Assignment in INV Mgmt - Define number assignment for accounting doc (for GR, GI&PI) - Set tolerance limits for Goods Receipt (B1, B2, and VP) - Create Storage loc automatically in Inv. Mgmt - Set Delivery completed indicator - For GR based IV, Reversal of GR despite invoice