mm inventory management

8/3/2019 Mm Inventory Management

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1

MM – Configuration

Inventory ManagementObjective

To understand

Goods Movements & Movement typesStock Determination

Valuation and Account Assignment

Split ValuationAccount DeterminationPhysical Inventory



2

Goods Movements & Movementtypes



3

Goods Movements

Any material movement is addressedthrough the term Goods Movement in

SAP.

Each material movement is associatedand identified with movement type.

Material document and/or Accountingdocument will be generated for each

material movement.



4

Goods movement Contd..

Important classification of goodsmovements are

Goods issue

Goods Receipt

Transfer posting

Reservation



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Movement type

Movement type determines the

•Accounting entries i.e. GL accountto be posted

•Update the quantity

•Controls field display

•Type of transaction



6

Goods Issue

When material is issued forconsumption or sales, it is termed as

goods issue.

Example:•Components issued for production

•Products issued against sales order

•Products issued against free

replacement



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Goods Issue (GI) movement type

Goods issue will reduce the inventoryfrom the storage location.

Goods issue for different purpose is

identified by different movement type.

Example:-

261 – indicates GI for production

601 – indicates GI for sales order



8

Goods Receipt (GR) movement type

When the material is received into thestorage location, it is termed as Goods

Receipt.

GR will increase the inventory.

Example:-

101 – indicates GR from vendor

561 – indicates GR initial stock upload



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Transfer posting

When the material is transferred fromone storage location or plant to

another storage location or plant it isknown as transfer posting.

Transfer posting will reduce the stock

from one location or plant andincrease the stock in another locationor plant.



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Transfer posting movement type

Each transfer posting is identified bythe different movement type.

Example:

311 – indicate transfer from onestorage location to another

301 – indicate transfer from one plantto another plant



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Reservation

It is a request to keep materials readyto withdraw when it is required.

Reservation contains

Material number

Quantity

When required

From and To



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Reservation & Movement type

•Each reservation contains only onemovement type.

•It can be created automatically ormanually

•Reservation has the documentnumber

•MRP will consider the reservation fornet requirement calculation



ReservationCreated for

Components(Automatically)

Goods IssueFor production

Order

Mvt.type 261

Production

Order

or

ProcessOrder

GI & GR flow

Goods ReceiptFor production

OrderMvt.type 101

Adjust reservationsReduces inventoryAccounting entriescreated

Increases stockAccounting entriescreated



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STOCK DETERMINATION



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Stock Determination

•It is a strategy to withdraw material forGI and Stock transfer.

•Automatically determines the stock &

storage location from where materialsare to be withdrawn.



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Stock Determination Contd..

Following stocks can be handledthrough stock determination.

Unrestricted use stock

Vendor consignment stock

Pipeline stock

Sales order stock

Project stock



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Valuation andAccount Assignment



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Valuation and Account assignment

It defines

• How the material is to be

valuated

• the link between Materialsmanagement and Finance



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Material Valuation

Materials can be valuated at

Company code level

or

Plant level

Level at which the material valuation

is done is known as valuation area.



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Valuation at company code level

Material price and price control arecommon at company code level.

It ensures material is valuated at same

price at all plants belong to thatcompany code.



Plant IND6Stock 50 units

Company code level valuation

Material valuation in 9100 company:

Price = 6 Units/pieceInventory value = 650*6 = 3900

Company code9100

Company code9200


Plant 9201Stock 200 units

Plant 9202Stock 400 units

Material valuation in 9200 company:

Price = 3 Units/pieceInventory value = 600*3 = 1800



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Valuation at plant level

Material price and price control areunique at plant level.

Material can have a different price at

each plant which are under the samecompany code.




Plant level valuation

Material valuationin IND6 plant:

Price = 6 Units/piece

Inventory value =50*6 = 300

Company code9100


Material valuationin IND7 plant:

Price = 4 Units/piece

Inventory value =600*4 = 2400



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Valuation Data - Material Master

Following are the essential materialmaster data for valuation

•Valuation class – to determine

the stock account for postings•Price control – moving average or

standard price•Price unit – indicates pricing unit.



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Valuation Procedure

Valuation of inventory will beperformed

For each valuation area

According to the price control

(price control ‘S’ - standard or

‘V’ – Moving average)



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Valuation Procedure Contd..

Price Inventory valuation

control

If ‘S’ Qty * standard price

If ‘V’ Qty * moving average

price



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Split Valuation

S



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Split Valuation

Split valuation allows to use differentvaluation price for different stocks.

Example:

A material can have one price when itis procured inland and different value

when imported.

O i f li l i



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Over view of split valuation

A material may be subjected to

different procurement type

different country of origin

different grade

A material can have differentvaluation classes.

Data flow in split valuation



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Data flow in split valuation

ValuationCategory

ValuationTypes

With A/c cat.Reference(Val.class)

Activated atPlant level

IMG

Master Data

In create modeFor the same

Material

Mention valuationType in the

org.data

CreateMaterial &

Assign

Val. CategoryIn A/c 1 view

& Save

Select rightValuation class

In the A/c.1View &Save

D t fl lit l ti t



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Data flow split valuation cont..

During each Material transactionselect the right valuation type.

System determines the right valuation

class through valuation type.

One material can be posted todifferent accounts using splitvaluation.



Account Determination

A t D t i ti




Movement type and valuation classtogether determines the FI accountingentries through posting key.

Valuation group code defined for

valuation areaCompany code

Chart of accounts

Valuation group code is linked with postingkey

A t t & V l ti l



Account category & Valuation class

Account category reference

Valuation classes are created and linkedwith account category reference.

Account category references are assignedto each material type.

Effect :-

When creating material, according to thematerial type, predefined valuation classeswill appear to select.

A t d t i ti & t t



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Account determination & movement type

Posting key attached with eachmovement type

Each posting key also attached withvaluation class and GL accounts

Effect:-

Movement type automaticallydetermines the accounting entries

Acco nt determination & mo ement t pe



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Account determination & movement type

MovementType

960 (GR)

Value String

WA01

Transaction KeyFR1 (freightClearing A/c.)

Transaction KeyWRX (GR/IR A/c.)

Transaction KeyBSC (Stock A/c.)

Dr.Stock 600005 Cr.GR/IR 600006

Transaction keys Example



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Transaction keys - Example

Following are the Goods receipt relatedtransaction keys for your ready reference.

BSX – Inventory posting

WRX – GR/IR Clearing AccountPRD – Cost/Price difference

UMB – Revenue / Expense from revaluation

GBB - Offsetting entry to the stock posting



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Physical Inventory

Physical Inventory



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Physical Inventory

This is a process of physically counting thematerial at storage location level to keep the

accurate stock of material.

Four types of physical inventory are

Periodic

Continuous

Cycle countingSampling

Physical Inventory stock type



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Physical Inventory stock type

Following stocks are subjected to physicalinventory

Unrestricted use stockQuality stock

Blocked stock

Physical inventory can be performed onlyfor the above stocks.

Physical Inventory steps



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Physical Inventory steps

Steps involved in physical inventory are

1. Physically count the stock

2. Set the block for the material – to avoid anyother posting during counting

3. Create physical inventory document

4. Post the count result

5. Post the difference in inventory

6. Posting documents generated by thesystem in the background automatically

Physical Inventory tolerance



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Physical Inventory tolerance

Tolerance limit to post the inventorydifference can be defined for each user

Two ways of defining the limits are: -

1. Maximum amount per inventory count2. Maximum amount per document item

Summary



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Summary

You must have understood

Goods Movements & Movement types

Stock DeterminationValuation and Account Assignment

Split Valuation


Physical Inventory

mm inventory management

Documents