Inventory Management in SAP MM
1. Give an
overview of Inventory management in SAP system?
Inventory management in the SAP
system helps record and track stocks of materials. It also involves the
planning and documentation of all goods movements..
2. What tasks
are covered under Inventory Management?
Inventory management is an important
part of materials management (MM). Optimal inventory management not only
ensures an uninterrupted supply of the material at the required time, but also
prevents wasting items. MM covers the following tasks:
·
Material stock management
·
Planning, entry, and documentation of goods transfers from and to the inventory
· Physical stocking of items
3. What is
Physical Inventory?
·
Physical inventory is a process in which all the
transactions related to the movement of goods are stopped and the company
physically counts inventory. It is required in financial accounting rules or
for placing an accurate value on the inventory for tax purposes.
4. What are
the initial configuration steps for physical inventory?
The steps for purchase acquisition
are as follows:
·
Defining the default values for the physical inventory document
·
Reporting batch inputs
·
Recording tolerances for physical inventory differences
·
Inventory sampling as well as configuration of cycle
counting
5. What is
the difference between managing stock by quantity and managing stock by value?
·
Transactions that make changes in the stock result in stock updates that are
recorded in real time. At any point in time one can view the stock overview,
which represents the current situation at that time. That is the essence of
stock management by quantity, and can applied to the following stock types:
o Located in the
warehouse
o Ordered but not yet
received
o Located in the
warehouse and reserved for a particular purpose
o Reserved for quality
inspection
·
The managing stock by value option reviews the stock materials qualitatively
rather than quantitatively. The valuatioNof stock is done either at the plant
level or at the location level. Updates that can be done when managing stock by
value are as follows:
o The quantity and
value for the goods movement
o The accounts that
are assigned for cost accounting
o The G/L accounts for
financial accounts, with automatic assignment of accounts
· The valuation area is the organizational level at which the
stock value is maintained. It can be either at plant level or storage level.
6. What are the special stocks in SAP?
Special stocks are defined as stocks
that must be managed separately by a company. They can be either company owned
or external stocks. They can be categorized as follows:
·
Consignment
·
Subcontracting
·
Stock transfer using stock transport order
·
Third-party processing
·
Returnable transport packaging
·
Pipeline handling
·
Sales-order stock
·
Project stock
7. With which modules in SAP is the inventory management integrated?
Inventory management is an
important part of the SAP MM module. The business activities of an organization
revolve around the inventory of materials, which serves as the input for the
manufacturing process or the inventory of prepared goods for delivery or sale.
The material is purchased from the appropriate vendors on the basis of requests
from the materials requirement planning (MRP) module. The delivered items are
recorded as the goods receipt in inventory management. The materials are then
stored, either for delivery to the customer or for manufacturing processes.
Inventory management is integrated with other modules, such as financial
accounting (FI), sales and distribution (SD), production planning (PP), project
system (PS), and quality management (QM).
8. How is the inventory management integrated with MM?
·
Inventory management is directly linked with the MM module because any movement
of goods to and from inventory happens under the MM module. MRP, purchasing,
and invoice verification are some of the MM components that are also linked
with inventory management. After material is ordered it is posted as a goods
receipt with reference to the purchase order. The actual data of the quantities
are checked in the vendor's invoice.
9. What are the
initial configuration steps for inventory management?
The steps for inventory management are
as follows:
·
Defining plant parameters
·
Defining system message attributes
·
Defining number assignment
·
Defining goods issue, transfer posting, screen layout
·
Maintaining copy rules for reference documents
·
Setting up dynamic availability checks
·
Confirming the negative items
10. What is
Goods movement? What type of documents is created after goods movement?
Goods movement refers to the
movement of stock. This movement of stock could be either inbound from the
vendor, outbound to a customer, between different plants, or even between
different stocks within a plant. After goods movement, the SAP system creates
two types of documents: material documents and accounting documents.
11. What are
the goods movements that take place in MM?
The goods movements can be defined as the physical
or logical movements of materials that lead to a change in stock levels or
results in material consumption. The goods movements are part of the MM policy.
The goods movements in SAP are as follows:
o Goods receipt—
Represents the physical movement of goods or materials into the company. It
increases the stock quantity. The goods receipt can be of the following types:
§ Goods receipt with reference to a purchase
order
§ Goods receipt with reference to a
Production order
§ Goods receipt without reference
o Goods issue— Represents the physical movement
of goods or material ouTof the company. It reduces the stock quantity. The
goods issue can be of the following types:
§ Goods consumption in the company
§ Goods delivery to customers
o Stock transfer—
Represents the movement of materials from one location to another location. The
locations can be either within the same plant or different plants.
o Transfer posting—
Represents the stock transfer that can either be physical or logical. In
logical stock transfers, goods are transferred only in records, while the
actual stock transfer does noToccur. Some examples of physical stock transfer
are:
§ Stock transfer between two storage
locations in a plant
§ Stock transfer between two plants
§ Transfer of materials to customer
consignment stock
·
Some examples of logical stock transfer are:
o Release of materials
from stock in quality inspection
o Transfer of
materials from vendor consignment stock to own stock
o Batch splitting
o Transfer
posting material-to-material
12. What is
Goods Receipt & Goods Issue?
·
Goods receipt is the process that enables the receipt of material from a vendor
or from the in-house production process. There are other types of goods
receipts in SAP that include initial stock creation. The goods receipt process
also increases stock due to one of the following processes:
o Receipt of
production order
o Receipt of purchase
order
o Initial inventory
entry
o Others
·
Goods issue is a process in which the stock in the warehouse is reduced due to
any of the following reasons:
o Shipment to a
customer
o Stock withdrawal for
a production order
o Return of materials
o Material required
for sampling
o Scrapping of
materials
13. Why is
goods receipt important to a company?
Goods receipt indicates a receipt
or inward movement of stock of materials or goods. When an external vendor
provides stock to the company, the goods receipt is generated as a purchase
order, and when the material is produced in-house, the goods receipt is
generated as a production order. A goods receipt is important to a company
because using a goods receipt moves material into stock, updates the stock
levels, and thereby indirectly enables the production process
14. How is a
goods receipt performed?
·
The steps to perform a goods receipt are as follows:
o Enter the header
data.
o Select the movement
type and the purchase order number.
·
The document is posted in the database.
15. How do you
post the goods if the PO number is not known?
If the purchase order number is
not known, you must enter search criteria for the purchase order in the initial
screen. As a result, the list of purchase orders is displayed. The desired
purchase order items can then be copied.
16. How is the
vendor returned processed without a purchase order reference?
·
You first need to observe the Return column and then select Item Detail
> MIGO_GR > Goods Receipt for Purchase Order. If the intention is to
deduct the stock, then movement type 161 is used; otherwise, 162 is used to
undo the changes. Lastly, you must ensure that the document is a return
purchase order. The document is then saved.
· Alternatively, you can use the M21N transaction code for
this purpose.
17. What
happens when a goods receipt is posted?
While posting a goods receipt, the
following events occur:
·
The material document is created.
·
The accounting document is created.
·
Three printed versions of goods receipt notes are modified.
·
The stock level changes.
18. What is
the result of goods movement?
The following events are initiated when goods
movements take place:
·
First, a materials document is generated, which is proof of the goods
movements.
·
Accounting documents are generated if the movement of goods requires a change
in the financial accounts.
·
The stocks of the materials quantities are updated.
·
The stock values in the material master are updated.
·
Financial and material documents are updated.
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