INVENTORY MANAGEMENT

Inventory management refers to the process of storing, ordering and

selling of goods.
Purpose of Inventory management to ensure there is enough goods
or material to meet demand without creating overstock or excess
inventory
Different types of process involved in Inventory management
1. Goods receipt (GR)
2. Goods issue (GI)
3. Transfer posting (TF)
4. Physical inventory (PI)

Goods Receipt (GR)

A goods receipt is used to receive material from a purchase order or
an in-house production order.
Goods receipts are mainly used for receiving stock from an external
vendor via a purchase order (PO) or for receiving material from in-
house production via a production or a process order.
Goods receipts are also used for movements that initially create
inventory in the system or for entering materials received without a
PO.
Goods receipts are important because they move the material into
stock, updating the stock levels and allowing production to occur.

LinkedIn | K Rajitha
Mail id – [email protected]
Standard Document Type for GR is WE
a). Goods Receipt for Purchase Order
T Code: MIGO
A goods receipt is a company’s formal acceptance that materials
were received from a vendor against a PO. After the material is
received and the transaction is completed, the value of the material
is posted to the general ledger (G/L).
Let’s create a PO in ME21N
Material 0060010009
Vendor 2110000000

Standard PO created under the number 4500023031

Let’s go to MIGO screen and do the GR against PO
Movement Type – 101

LinkedIn | K Rajitha
Mail id – [email protected]
Material document 6000000323 posted
After doing GR stock of material is going to increase
Let’s check in MMBE T code

We have to use suitable movement type and we have to manually

enter the all information about material and quantity.

LinkedIn | K Rajitha
Mail id – [email protected]
b). Goods Receipt without Purchase Order
T Code: MIGO
We have to use suitable movement type and we have to manually
enter the all information about material and quantity.
Movement Type – 501
Material 0060010015
Before receiving material through GR lets check stock of material in
MMBE

We can observe that no stock is available for material, let’s go to

MIGO and receive the material without PO

LinkedIn | K Rajitha
Mail id – [email protected]
Material document 490399 posted
After GR let’s check the stock of material

LinkedIn | K Rajitha
Mail id – [email protected]
c). Initial entry of Inventory
T Code: MIGO
Purpose to carry out an initial entry of stock balances during
implementing the SAP System in order to transfer physical
warehouse stocks from an existing system into the SAP System as
inventories. No physical movements actually take place.
Movement Type – 561 (GR for initial entry of stock balances into
unrestricted stock)
Material 0060010018
Before receiving material in MIGO screen let’s check the stock in
MMBE

LinkedIn | K Rajitha
Mail id – [email protected]
Let’s go to MIGO and receive goods

Material document 490400 posted

Let’s check the stock of material

Same as 561 Movement type

LinkedIn | K Rajitha
Mail id – [email protected]
Movement Type – 563 is used to (GR for initial entry of stock
balances into quality stock) and
Movement Type – 565 used to (GR for initial entry of stock balances
into block stock)

LinkedIn | K Rajitha
Mail id – [email protected]
 Goods Issue (GI)

A goods issue is the removal of goods from out of the ware house. In
short, it means the issuing of goods or materials from the warehouse
to the production. When goods are issued, it reduces the number of
stock in the warehouse.
Goods issued for production orders, sampling, scrapping, and against
the cost center. Each of these GI the system will create both financial
and material document
Standard document type for Goods issue WA
a) Goods issue for consumption
T code: MIGO
Movement type  201
Let’s check the stock available of material—0060010007

LinkedIn | K Rajitha
Mail id – [email protected]
Material document 490402 posted
After issuing goods let’s check stock

Accounting entries in GI

LinkedIn | K Rajitha
Mail id – [email protected]
b) Goods issue for asset
T code: MIGO
Asset is a Non moveable Tangible items called as asset (Asset
number is provided by FI Team)
Movement type 241

LinkedIn | K Rajitha
Mail id – [email protected]
c) Goods issue for Production order
T code: MIGO
Production order number has to provide by PP team
Movement type  261

d) Goods issue for Scrapping

T code: MIGO
When any item in organization has been lying for long time and
we are not going to use it so we are scrapping that material
Movement type 551
Material  0060010007
Check stock in MMBE

LinkedIn | K Rajitha
Mail id – [email protected]
Material document 490403 posted
Check stock after issuing goods

LinkedIn | K Rajitha
Mail id – [email protected]
Accounting entries in GI for scrapping

LinkedIn | K Rajitha
Mail id – [email protected]
 Transfer Posting

It signifies movement of goods from one place to other, it signifies

transfer of material from one storage location to another is called
transfer posting.
Transfer posting is a logical process of goods movement which
means there could be actual movement of goods or sometimes
there would not be any actual movement only the material status
is changed i.e. from quality stock to unrestricted use or from
blocked stock to unrestricted use etc.
Types in Transfer posting
1. Transfer posting between Plants
2. Transfer posting between storage locations
3. Material to material Transfer
1. Transfer posting between Plants
a. One step
b. Two step
a. One step transfer posting
Movement type 301

LinkedIn | K Rajitha
Mail id – [email protected]
 Plant -----1 Plant ---2

Mvt type 301

Prerequisite
Material should exist and both plant
We are using this one step method when plants are very near
Material 0060010007
Plant 1R900
Plant 2R901

Now go to MIGO screen or MB1B

LinkedIn | K Rajitha
Mail id – [email protected]
Material document 490404 posted

Stock after posting

LinkedIn | K Rajitha
Mail id – [email protected]
 b. Two step transfer posting

Movement type 303 (Remove material from storage)

Movement type305 (Place material in storage)

Plant-1 Plant-2

Mvt type mvt type

303 305
When distance between plants is more we are using 2 step methods.
Material should exist in both plants
Material 0060010007
Plant 1R900

LinkedIn | K Rajitha
Mail id – [email protected]
Plant 1R901
Stock overview before posting

Movement type303 (Remove material from storage)

Material document 490405 posted

LinkedIn | K Rajitha
Mail id – [email protected]
Stock overview after performing 303

Let’s do Movement type 305 (Place material in storage)

LinkedIn | K Rajitha
Mail id – [email protected]
Material document 490406 posted
Stock overview after performing 305

2. Transfer posting between storage locations

a. One step
b. Two step
a. One step transfer posting
Movement type 311

LinkedIn | K Rajitha
Mail id – [email protected]
 MVT Type 311

Storage loc-1 storage loc – 2

Material 0060010007
Plant 1 R900
Storage Locations 1.R900
Storage Locations 2.R901
Stock before MMBE

In MIGO Movement type 311

LinkedIn | K Rajitha
Mail id – [email protected]
Material document 490407 posted

Stock after posting

STORAGE LOC -1

LinkedIn | K Rajitha
Mail id – [email protected]
 Mvt Type 313 Mvt Type 315

STORAGE LOC -1 STORAGE LOC -2

Movement type313 (Remove material from storage)

Movement type315 (Place material in storage)

Material 0060010007

Plant 1R900

Storage Locations1.R900 2.R901

In MIGO Movement type 313 (Remove material from storage)

LinkedIn | K Rajitha
Mail id – [email protected]
Material document 490408 posted

In MIGO Movement type  315 (Place material in storage)

Material document 490409 posted

LinkedIn | K Rajitha
Mail id – [email protected]
 3. Material To material Transfer

Movement type  309

Business scenario for Material to material transfer : Our client is a

beverage industry who produces wine he already produced wine

with 70% of concentration , in other side he procures same wine

with 10% of concentration and he processes this wine makes it 70%

concentrated & finally he transfers this processed wine to 70%

concentrated wine
LinkedIn | K Rajitha
Mail id – [email protected]
In MIGO Movement type309

Material document 490412 posted

Material 0060010024Wine with 70% concentration

Material 0060010025 wine with 10% concentration

Stock of both materials in MB52

Accounting entries

LinkedIn | K Rajitha
Mail id – [email protected]
LinkedIn | K Rajitha
Mail id – [email protected]
 Disclaimer

© Copyright TagSkills. The copyright in this

work is vested in TagSkills. Please note and
abide by copyright laws. This presentation is
for educational purposes only, all logos,
photos, and information, etc used in this
Presentation is the property of TagSkills. SAP
is a registered trademark of SAP AG in
Germany and many other countries. We are
NOT ASSOCIATED with SAP.

LinkedIn | K Rajitha
Mail id – [email protected]