Inventory Management Overview

- Inventory Management is a part of a Material Management module.

- Inventory management means managing the material stock by maintaining the proper records or material  movements.

- Inventory management works on two ways

 a) 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 PP

- IM is responsible for 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 SD

- Issue the stock for Sales Order

- It is possible to create Sales order stock

 In QM

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

o In FI/CO

- 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

• If the movement is relevant for financial a/c accounting document will also be created

• Stock quantities of the material are updated

• Stock value of the material master is updated

• Depending on the movement type additional updates are also carried out like in case of good issue for cost center the consumption values of the items are also

Document concept:

• The account principle of ‘No posting with out document” is 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 a proof of the movement.

• If the movement is relevant to the financial accounting (i.e. if it is leads to an update of G/L accounts) an accounting document will be generated parallel to the material document.


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Material Document consists of                                                        Accounting Document consists of

Document Header                                                                                           Document Header

Posting date                                                                                                       posting date

Name of he person who created                                                                    Document currency

At item level                                                                                                      at item level

Quantity                                                                                                              G/L Account no

Storage location                                                                                                 Associated amount posted

Plant, Movement type

            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

o Up dating 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

• Example of Movement type is


Some Important Movement types:


Note1: Movement type + 1 = reversal

Note2: for 121 – no reversal movement type


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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 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