10. Warehouse management Part 2

Warehouse Management
(Part 2)
EGN 5622
Enterprise Systems Integration
Spring, 2015
Process Management and Control
Physical Inventory
SAP Implementation
WM Part 2 Overview
WM Process Management and Control
◦ Logistics Execution: Goods Issue (outbound
◦ Goods movement: Stock transfer and
transfer posting
WM Physical inventory procedures
Logistics Execution - Process Overview:
Goods issue
Goods Issue Process for Outbound
Delivery Steps
Goods Issue Process for Outbound Delivery
The next step after sales order is to create an
Outbound delivery.
creation of outbound delivery, a picking
storage location is determined for each item in the
outbound delivery. If the storage location has been
assigned a warehouse number, the outbound
delivery displays the warehouse number.
addition, the system assigns an overall picking
status and a stock removal status.
Goods Issue Process for Outbound Delivery:
Transfer order
outbound delivery, the removal from storage is
carried out using transfer order.
is no transfer requirement for creating a
transfer order for a delivery.
completion of picking process is reported to
the system through confirmation of the transfer
Goods Issue Process: Good Issue
After confirmation of transfer order (TO), the nest step is
to post the goods issue for the outbound delivery in
inventory management (IM).
Goods issue is a goods movement activity in which we issue
goods from our inventory system.
During goods issue, we need to reference that sales order
and retrieve data from the sales order to verify material,
quantity, and so on.
Effects of Goods:
1) Update physical inventory and stock value.
2) Update inventory G/L account automatically.
3) Update sales order history with the good issue.
Goods Movements
Goods Movement: Transfer posting and
stock transfer
Transfer posting: A change in the stock ID
(material number) or the stock category of a
material (unrestricted, under QA, or blocked).
Transfer posting is not necessary to involve an
actual (physical) goods movement.
Stock transfer: Movement of materials from a
particular storage location into another storage
location. Stock transfer can take both within the
same plant and between two plants. The two
plants can be in the same company code or
between different company codes. Physical
goods movement is involved.
Goods Movement: Transfer posting and
stock transfer
Example of Transfer posting:
- Stock to stock (Under QA to unrestricted)
- Material to material
Example of Stock transfer:
- Storage location to storage location
- Plant to plant
Transfer Posting/Physical Stock Transfer
Only for unrestricted stocks and
one FI document is created
Only for unrestricted stocks and
two FI document are created
Goods Movement: Transfer posting and
Stock Transfer
One-Step and Two-Step Procedures:
A stock transfer/transfer posting consists of a
goods issue from issuing point and a goods
receipt at a receiving point.
For one-step procedure, a transfer posting or
stock transfer can be done with a single posting
for all transfer posting or stock transfer.
- Advantage of one-step procedure is that only a
single transaction is generated.
Goods Movement: Transfer posting and
stock transfer
Two-Step Procedures:
For some stock transfers, two-step procedure
may be selected and two separate postings will
be created.
- Advantages for two-step procedure are enable
to monitor stock status. Once goods issue has
been posted from the issuing point, the stock is
regarded as in transfer as the receiving point.
- In the case of stock transfers between plants,
the two-step procedure must be used if users have
operation authorization only for one plant.
One-Step/Two-Step Procedures
Goods Movement: Transfer posting and
stock transfer: Financial Accounting
For a plant-to-plant transfer, both financial
accounting and material requirement planning are
- A cross-plant stock transfer (in the same
company code) leads to a value update in the stock
accounts. An accounting document is generated
parallel to the material document for the stock transfer.
The stock transfer is valued at the valuation price of
the material in the issuing point.
- in the case of a cross-company-code stock transfer,
two accounting documents are created: one for
each company code. The offsetting is then made to a
company code clearing account.
Cross-Plant Stock Transfer
In the case of a plant-to-plant stock transfer, the two plants can
be belong to the same company code or to different company
Plant to Plant: One-Step/Two-Step Procedures
In the case of one-step procedure, the goods issue and goods receipt are posted in a
single material document. In two-step procedure, valuation always take places at
the time of the first step.
Goods Movement: Stock Transport Order
Stock transport order is similar to a purchase
order, but the vendor is replaced by a supply plant.
Stock transport order is integrated with MRP. A purchase
requisition generated by MRP can be converted into stock
transport order.
The receipt by stock transport order can be planned at
the receiving plant.
Can add delivery costs and a forward/carrier in the stock
transport order
Goods receipt can be posted directly to consumption.
In the case of a goods receipt into the warehouse, you
may post the material to stock in quality inspection or
blocked stock.
The entire process (goods issue and goods receipt) can
be monitored via the PO history.
Stock Transport Order
Physical Inventory
Reasons for physical inventory:
- Material requirement planning: for correction of incorrect stock
- Accounting: Determination of material stocks for current assets.
Physical Inventory
Physical inventory is carried out on the basis of stock
management units, or stock keeping unit (SKU).
A stock management unit is a non-divisible part of a stock of
materials for which a separate book inventory exists. A stock
management unit is uniquely defined by:
1) Material
2) Plant storage location
3) Stock type
4) Batch
5) Special stock, such as consignment stock
Each stock management unit of a material is counted separately,
and the inventory differences are posted per stock management
For example, you must record the quantities of unrestricted-use
stock, stock in quality inspection, and blocked stock of a
material at a storage location of a plant separately in each case.
Phases of the Physical Inventory
The physical inventory process comprises three phases:
1). Creation of physical inventory documents
2). Entry of count
3). Posting of inventory difference
1. In the first phase, you create the physical inventory (PI)
documents and print out the documents in order to start the
counting process.
2. In the second phase, you enter the count results in the system.
System then determines the inventory differences. If some of the
results seem doubtful, you can arrange for a recount of the stock
management units affected. In this case, further PI documents are
3. In the third phase, you post the inventory differences that have
been identified. In the process, the stock quantity and stock value
are updated and the stock accounts are updated in accounting.
Phases of the Physical Inventory
Physical Inventory Document
PI document is created per plant and storage location.
For special stocks, PI document may be created per plant, storage
location, special stock, and vendor or customer or project.
Storage bin or material group may be specified as futher grouping
When creating a PI document, you can specify a physical inventory
number in the document header (this number should not be confused
with the number of the PI document). The physical inventory number
facilitates selection of the PI documents to be processed during entry
of the count data, posting of differences, and in evaluations.
The status of an item indicates whether or not the item has been
processed, counted, posted, or recounted. You can use the status
of a PI document item as a selection criterion in searches for
physical inventory documents.
Physical Inventory Document
- You can make the following changes to a PI document header:
1) Change the planned count date
2) Set or unset the posting block or freeze book inventory
3) Create or change the physical inventory number
- In a not-yet-counted item
• Change the stock type or change the count unit of measure
• Set the deletion indicator
- Enter new items (as long as no count has yet been entered)
- Delete the document
Physical Inventory Document
Figure 256
Blocking Goods Movements
You can block all goods movements relating to a stock
management unit for the purposes of a physical inventory. The
system blocks all the stock management units of the relevant
PI document by means of the Posting Block indicator in the PI
document header.
In the Storage Location view of the material master record, the
Physical Inventory Block indicator shows the value X (material
blocked for movements due to physical inventory).
If it is not possible to block the goods movement for
organizational reasons, you can freeze the book inventory in the
PI document at the time of the count.
To do so, you set the Freeze Book Inventory indicator in the PI
document. This prevents goods movements from changing the
book inventory figure that is relevant to the inventory-taking
Figure 257
Blocking Goods Movements
Freezing the Book Inventory
Physical Inventory Status of an Item
For physical inventory count, you must print out the PI
document and distribute to the persons responsible for the
The stock figures can be entered with or without reference to
a PI document.
When entering the physical inventory count, you can enter a
percentage variance of the count quantity from the book
inventory, above which the system issues a warning
message. When the entered data is saved, the system
determines the book inventory in the system. The difference
between the count result and this book inventory is the
inventory difference.
Physical Inventory Status of an Item
You can analyze this difference via the list of differences. The list
of differences contains the following information on each item:
1) Quantity counted
2) Book inventory
3) Difference quantity
4) Difference dollar amount
You can perform the following functions with the list of
1) Enter, change, display count
2) Post difference
3) Display or change document
4) Recount document or item
Physical Inventory Status of an Item
Posting of Inventory Differences
You can post the inventory differences either via the list of
differences or via separate transactions. When an inventory
difference is posted, the system creates a material document
that corrects the stock figures, and an accounting document
recording the necessary account movements.
If a document exceeds the document tolerance defined for
the user group, a user who is assigned to this physical
inventory tolerance group may not post an inventory
difference for this document. If the total value of the
document lies below the document tolerance, but certain
items exceed the maximum amount per item, the user may
not post the differences for these items. User can process
the other items.
Figure 260
Posting of Inventory Differences
Figure 260
Combining Physical Inventory Steps
Regular three basic phases for PI:
1) Create PI document
2) Enter count
3) Post inventory difference
You have options of combining individual phases and performing them
in a step.
1) Enter count without PI document (1 and 2 combined)
The system will automatically create a PI document.
2) Enter count and post PI difference (combined 2 and 3)
The counts are entered for an already existing PI
document, and PI differences are immediately posted
these results are saved.
3) Enter count without PI and post PI difference (combined 1, 2, and 3)
All three phases are carried out in one step. When count results
are posted, the system generates PI document and posts the PI
Combining Physical Inventory Steps
Figure 261
Global Bike, Inc.
Organizational Structure
Outbound Delivery Status 1:
Outbound delivery created
Outbound Delivery Status 2:
after Transfer order created
Goods Issue Process for Outbound Delivery
– Transfer order
Outbound Delivery Status 3:
after Transfer order confirmed
Outbound Delivery Status 4:
after goods issued
Outbound Delivery Status 4:
after Billing
WM Multiple Choice Question
Name: ________________________
How can you assign organizational levels in SAP Warehouse
Management? Please choose the correct answer. (One correct
You can assign a plant-storage location and a storage
area combination to one warehouse number.
You can assign several plant-storage location
combinations to one warehouse number.
You can assign the plant-storage location
combination to several shipping points.
You can assign a plant-storage location to multiple
warehouse numbers.
(Due Date 4/3/2015)
Case Study 3: Process outbound delivery
Create sales order
Display materials inventory
Create outbound delivery
Display material inventory
Pick materials with transfer order
Run Bin status report
Confirm transfer order
Run bin status report
Display materials inventory value
Ship material
Display materials inventory
Display materials inventory Value
Create invoice
Receive payment