Inventory Management in SAP

Introduction

Under Inventory Management in SAP MM, Procurement starts with requirement gathering and ends with procuring goods/services from vendors.

Once the goods/services are procured from the vendor, it is required to place them at the company’s premises. Inventory management deals with the management of the stock and goods movement, either on value or quantity basis. It includes planning and keeping records of all the goods movement.

There are several transactions and functions in inventory management. The most important of them are:

  1. Movement Types
  2. Goods Receipt
  3. Reservation
  4. Goods Issue

Let’s explore them one by one.

Movement Types

When goods movement is entered into the system, a movement type is defined to differentiate between the various goods movement. It is a 3-digit identification number for goods movement.

When a goods movement is entered into the system, following chain of events starts in the system:

  • A material document is generated, that updates all the stock quantity and value in the inventory.
  • Accounting documents are generated if the movement is relevant to Financial accounting.
  • The stock quantities are updated.
  • The stock values in the master record are updated.

All the updates are based on the information contained in the material document and the financial account document.

The important movement types are:

  • 101: Goods receipt(GR) for purchase order(PO) into warehouse/stores
  • 102: Goods receipt(GR) for purchase order(PO) into warehouse – reversal
  • 201: Consumption for cost center from warehouse

To know more movement types, enter T-code MIGO in common field. A new screen will appear.

Select “Goods receipt” from the drop-down. On pressing F4 on the goods receipt input box, a list of movement types will appear. Depending upon the requirement, select the appropriate movement types for different goods movement.

Movement Types: Inventory Management in SAP
Movement Types: Inventory Management in SAP

Goods Receipt

After receiving the material from the vendor, the purchasing department prepares a goods receipt that can be used later for any discrepancy. A goods receipt is a goods movement that is used to post goods received from the external vendors or from in-plant production which results in an increase in stock in the warehouse.

Goods receipt has 2 scenarios:

  • Creation Goods receipt
  • Cancellation of Goods receipt

To create a Goods receipt

Step 1: Enter T-code MIGO in common field. A new screen will appear.

A Goods receipt can be posted against various documents. Select the required document from the drop-down list. Select the movement type as per the requirement.

MIGO Goods Receipt: Inventory Management in SAP
MIGO Goods Receipt: Inventory Management in SAP

Step 2: Enter reference document. Based on the reference document, it will fetch all the details such as material, quantity, storage location, plant, etc.

Enter Details Goods Receipt: Inventory Management in SAP
Enter Details Goods Receipt: Inventory Management in SAP

Step 3: Select the check tab and click on Save.

After click on “Save”, goods receipt is posted against the selected document and a material document number is generated.

To cancel a Goods receipt

Step 1: Enter T-code MIGO in common field. A new screen will appear.

Select “Cancellation” against the material document from the drop-down list. Enter the material document number.

MIGO Cancel a Goods receipt: Inventory Management in SAP
MIGO Cancel a Goods receipt: Inventory Management in SAP

Step 2: The system will fetch all the details from the material document number.

Cancel a Goods Receipt: Inventory Management in SAP
Cancel a Goods Receipt: Inventory Management in SAP

Step 3: Select the check tab and click on “Save”.

After clicking on “Save”, the goods receipt is cancelled, and a material document number is generated.

Reservation

Reservations are made to block the materials in advance so that that they can be available at some particular time. It ensures the availability of the stock at a particular point of time.

T-code to view the reserved quantity is MMBE.

To make a reservation

Step 1: Enter T-code MB21 in common field. A “Create Reservation” screen will appear.

Enter the date, the movement type and the plant for which the reservation has to be made.  Click on the “New Items” button.

MB21 Make A Reservation: Inventory Management in SAP
MB21 Make A Reservation: Inventory Management in SAP

Step 2: Enter the order number against the reservation has to be made. Provide details of the materials and the quantity that has to be reserved.

Create Reservation: Inventory Management in SAP
Create Reservation: Inventory Management in SAP

After clicking on “Save”, a reservation has been made for the order.

Goods Issue

To post Goods Issue

 Step 1: Enter T-code MIGO in common field. A new screen will appear.

Select Goods Issue from the drop-down list. A Goods Issue can be posted against various documents. Select the required document from the drop-down list. Select the movement type as per the requirement.

MIGO Goods Issue: Inventory Management in SAP
MIGO Goods Issue: Inventory Management in SAP

Step 2: Enter reference document. Based on the reference document, it will fetch all the details such as     material, quantity, storage location, plant, etc.

Enter Reference Document Goods Issue: Inventory Management in SAP
Enter Reference Document Goods Issue: Inventory Management in SAP

Step 3: Select the check tab and click on Save.

After click on “Save”, Goods Issue is posted against the selected document and a material document number is generated.

Leave a comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.