KIRTANE & PANDIT LLP

Basic understanding of Inventory Movement in SAP

By- Bhushan Patil, Nishant Goundaje & Shravan Bishnoi

WHAT IS INVENTORY
WHAT IS INVENTORY
Inventory Management

 It is process for monitoring the flow of goods in and out in the plant ,
store or warehouse.
 It keeps track of quantity and value of the material

 Inventory management is part of material management and is

integrated with different modules sales and distribution, production
planning , Quality management ,warehouse management and finance.
 Multiple documents like goods receipt, goods issue, transfer posting ,
physical inventory as per the requirement are created
 Why it is Important to Manage the Inventory

 Daily Inventory Counting is not an Realistic

option

 Difficulty in assessing the Real Time Position

of Inventory

 Not feasible to dedicate separate

personnel to inventory monitoring
Activity on Regular Basis
Benefits of Inventory Management
Need a System to Monitor the Inventory on Real Time basis

Location of
Goods

Movement Inventory
of Goods Levels

Inward & Inventory

Outward Analysis
Goods
Different Module IN SAP
Types of Material Movements

Goods Receipt

Goods Issue

Stock  Goods Receipt: Used when goods are received from an external vendor or internal
Transf production order. Goods receipt leads to an increase in warehouse stock.
er
 Goods Issue: Used when goods are issued to a production or an internal department.
A goods issue (GI) is a goods movement with which a material withdrawal or material
issue, a material consumption, or a shipment of goods to a customer is posted. Goods
issue leads to a reduction in warehouse stock.

 Stock Transfer: Used when goods are transferred from one warehouse location to
another. A stock transfer is the removal of material from one storage location andits
transfer to another storage location. Stock transfers can occur either within the same
plant or between two plants.
Types of Material Movements

Transfer Posting

 Transfer posting : It is a general term for stock transfers and

changes in stock type or stock category of a material. It is irrelevant
whether the posting occurs in conjunction with a physical movement
or not. It can only be a logical goods movement.

Examples of transfer postings are:

• Release from material from quality inspection stock or blocked stock

• Transfer of consignment material into company's own stock
• Transferring from one WBS to another.
Understanding Movement Type in SAP

Movement type is the 3 digit identification no. of the goods movement. It helps to
differentiate between various goods movement.

 Each movement type defines a different action in which movement of stock can take place. For
e.g. Goods may be received (101), returned to vendor(122), issued for consumption(261/201),
scrapping (551), sent to be assembled (541) etc.

 Movement type decides which transactions should be allowed to post a particular type of goods
movement. This can be configured by maintaining the set of allowed transactions from where a
particular movement type can be posted.

 The field selection at item level for material document posting is determined by the movement
type.

 The movement type determines the valuation string and thus the account entries for
corresponding G/L accounts maintained.
Understanding Movement Type in SAP

Movement type is the 3 digit identification no. of the goods movement. It helps to
differentiate between various goods movement.

SAP provides preconfigured set of movement types. These covers various different movements that
are possible.

 1** - GR against reference document

 2** - GI for consumption
 3**/4** - Transfer postings
 5** - Goods movement without reference
 6** - Goods movement with reference to deliveries
 7** - Physical Inventory

 New movement types if required to be created should be created as

9**/Y**/Z** and by copying one of the existing movement type if possible and
then making required changes to it..
Life Cycle of Inventory In Company

Raw Material Inwarded

1 2 Quality Inspection
Movement 101. Movement 321
2
3

Transferred to
4
3 production
Sale of FG Movement 311
6
Movement 601
1

Subcontracting
5 Converted into SFG 4
Or FG Movements 541,543 &
Movements 261,201,101 & 131 101
7
Movement 101

Movement Type 101

Description Goods receipt for purchase order

System defaults to your last movement type 101 Goods receipt for purchase order or
order
Information If the purchase order or order has not been assigned to an account, a stock type
(unrestricted-use stock, stock in quality inspection,) can be entered
After Receipt Material Goes to QA Stock
Movement 102 vs 122 vs 161

Movement Type 102 122 161

GR Cancel against Return delivery to vendor Return delivery to vendor

Description
material document (GR rejection) against PO (Line rejection)

Using movement type 122,

you can distinguish real If a purchase order item is
return deliveries for a marked as a returns item, the
GRN Reversal , Stock gets purchase returns to vendor are posted
removed from QA Stock order or order from using movement type 161
& Gate Entry reopen for cancellations (102). when the goods receipt for
Information
New GRN, After QA GRN purchase order ( 101) is
Gets Reversed but Gate The effects of movement posted.
Entry is not remain open type 122 correspond to a Movement type 161 has the
cancellation of movement same effects as movement
type type 122
101.
Movement 321 vs 322

Movement
Type
321 322

Transfer posting quality to

Description TR quality to unrestricted .
unrestricted

The quantity is transferred from stock

in quality inspection into unrestricted-
Information use Reversal movement type for 321
stock. Here you can post the quantity
to another storage location
GRN and QC

103+105 321
(Gate Entry (Transfer from
and GRN) Restricted to
Unrestricted)

If the item is
flagged for QC, It
will be restricted
in the system For
QC

122
350 (Rejection)
101 (Transfer from
(Direct GRN) Restricted to
Blocked) 551
(Scrap)
Movement 101 vs 131

Movement
Type
101 131

Goods receipt against plan order

Description Goods receipt for purchase order
(Production booking)Parent Item

System defaults to your last movement

type 101 Goods receipt for purchase
order or order This movement type cannot be entered
If the purchase order or order has not manually. It is generated automatically at
Information
been assigned to an account, a stock type notification of goods receipt for a run
(unrestricted-use stock, stock in quality schedule header
inspection,) can be entered
After Receipt Material Goes to QA Stock
Movement 131 vs 261

Movement
Type
131 261

Goods receipt against plan order Goods issue for an plan order
Description
(Production booking)Parent Item (Consumption in-house) Child Part

This movement type cannot be This refers to all withdrawals for

entered manually. It is generated orders (for example,
Information automatically at production orders, maintenance
notification of goods receipt for a run orders), with the exception of
schedule header customer orders
Movement 551(Scrap)

Movement Type 551

Description Goods issue to scrap

Information Scrapping from unrestricted OR from production

Subcon Movements

Movement 541 Material: ABC

Movement 542(Reversal) Material: ABC

Movement 543 Subcon

Warehouse
Back-end Consumption entry

Movement 101 Material: XYZ

Movement 541 vs 542

Movement
Type
541 542

Transfer posting unrestricted to

Description Goods receipt from vendor (return as it is)
vendor

stock of material provided to vendor

With this movement type you provide
the subcontractor with the
components
Information reversal movement type for 542
required for subcontract orders. The
quantity is posted into unrestricted-
use stock of
material provided to vendor.
Movement 543 vs 101

Movement
Type
543 101

Goods issue for a sub-con order (Consumption

Description vendor end)
Goods receipt for purchase order

System defaults to your last movement type

The consumption of components for a subcontract 101 Goods receipt for purchase order or order
order is posted using goods receipt If the purchase order or order has not been
Information for purchase order ( 101) Parent Material Stock assigned to an account, a stock type
gets update & Child part Stock gets consume at (unrestricted-use stock, stock in quality
vendor inspection,) can be entered
After Receipt Material Goes to QA Stock
Movement 601 vs 602

Movement
Type
601 602

Goods issue for delivery (Customer

Description Cancell Delivery
Invoice)

In Shipping, this movement type is

created automatically with the Goods
Information issue for delivery function. The reversal movement type for 601
quantity is taken from unrestricted-
use stock.
Movement 301 vs 309 vs 311

Movement Type 301 309 311

Transfer material from a

storage location in one Transfer posting material Stock transfer between
Description plant to a storage storage location to storage
location in a different to material location inside a plant
plant

The quantity is The quantity is posted

transferred from from unrestricted-use The quantity is transferred
unrestricted-use stock in stock of the issuing from unrestricted-use stock
Information
the issuing plant to material into of the issuing storage location
unrestricted-use stock in unrestricted-use stock in to unrestricted use in the
the receiving plant. the receiving material. receiving storage location.
Movement 701 vs 702

Movement
Type
701 702

Stock increase through inventory

Description Stock decrease through adjustment
adjustment

Inventory differences in unrestricted-

use stock
This movement is generated Difference posting through
Information automatically during inventory Transaction Code MI01 , MI04 &
difference posting through MI07
Transaction Code MI01 , MI04 &
MI07
Thank You