Physical inventory procedure with Warehouse Management

Hello friends,
Through this post, I would like to share with you the procedure to do physical inventory in SAP, when warehouse management is involved.

Let us first begin with a comparison between pure Inventory Management(IM) scenario & Warehouse Management(WM) scenario:
1. In IM scenario, physical inventory is carried out at the storage location level. Whereas, in a WM scenario, it is carried out at the storage bin level.
2. In IM, any stock differences found as as result of physical inventory is cleared through one step in IM module. Whereas in WM, it is first cleared in 2 steps, first in WM, and then in IM.
3. The transactions for IM are MI01, MI21, MI04, MI20 & MI07.  Whereas for WM, the transactions applicable are LI01N, LI02N, LI04, LI11N, LI20 & LI21.

There are various methods of doing physical inventory; they are:
1. Annual inventory (done at the year end)
2. Cycle counting (with A/B/C classification and counting intervals for each class)
3. Continuous inventory (wherein PI is triggered automatically when an empty bin is loaded with stock or when a bin becomes empty) and
4. Manual inventory

We will see how the manual inventory method works with WM.
The manual inventory requires all transactions are to be executed manually. Because it is manually done, the scope is usually restricted to a few storage bins/materials.

Let us look at the IMG settings that are required:
The 1st IMG setting is the defaults for storage types: here we maintain the default values like tolerance for differences, material display in warehouse list, bin display while counting etc.

Next settings is the inventory method per storage type: Here we define the default PI method per storage type. In our case, it would be PZ.

Next setting is for movement types for differences and limit for number of document items.

Next is the setting for clearing difference movement types for each stock type:

Next is the setting for allowing difference posting.

 Next is the number range for PI records:

Next is the parameter for foreground/background execution of PI transactions:

After having done the above IMG settings, we will now see what are the preparations for doing the physical inventory.

1. Identify bins and materials to be inventoried using txn. LX03

2. Process/Close Open Transfer Requirements for the concerned materials using txn. LB11
Use the option Create TO in background to process the posting change.

3. Process/Close Open Posting Change Notices for the materials using txn. LU04.  

Use the option Create Transfer order. If system gives error, go to LU02 and change status of posting change to Processed.

4. Confirm Open Transfer Orders for the material using txn. LT24

Use option confirm TO in the background.

Finally, we get down to doing the actual physical inventory.

Th

Step1:  Record stock before physical inventory:

a. Record WM bin stocks using txnLX03  (make note of available stock)

b. Record IM S.Loc stock using txnMB52  

Make note of unrestricted use stock

Step 2. Create Physical inventory record

    Transaction LI01N

Step 3: Activate physical inventory record – Txn LI02N

Inventory active (IA) indicator set for quants – transaction LX03

Step 4: Print Warehouse Inventory List  Txn: LI04

Step 5: Enter count results

 Transaction LI11N

    • Enter physical count in the “Counted qty” column

• Check the “zero” indicator if the bin has zero stock

• For zero stock item, system gives additional message,  press Enter to proceed.

4.   Step 6: Clear differences in WM -txn LI20

View list of differences in the report.

Verify count information for each difference item

Write off differences for each bin, after verifying the count information

After the above step, Transfer Orders generated in the background, only for the difference quantities in LT22  (TO by storage type).

Step 7: Clear differences in IM - txn  LI21

•PI differences are stored in storage type 999 & storage bin = Inventory record number

• Specify the warehouse, storage type = 999 and storage bin = “Inventory record #”

•Differences are shown in available stock, but with opposite sign

• Material without differences not shown

• Select storage bins and click “write off” icon

Material document posted

• Accounting document gets generated

Step 8: Verify stocks after Physical inventory

• WM stocks using LX03 – confirm that bin stocks have changed as per PI

•  Zero stock material has vanished from the list

•  Inventory active indicator has been unchecked as before

• Verify IM stocks using MB52

• Confirm that unrestricted stocks have changed in Storage location as per physical inventory

Some other useful transactions:

a.Transaction LX22 –  using this single txn. we can

•activate PI

•print  PI

•write-off  differences in WM

b.Transaction LI14  -  Recount

Hope this post was of some use to you.

Please share your feedback / comments about the same.

Thanks & Regards

Prabhu