Physical inventory Process

7/27/2019 Physical inventory Process

1/6

Physical Inventory Procedures

The R/3 System supports the following physical inventory procedures:

Periodic inventory

Continuous inventory

Cycle counting

Inventory sampling

Periodic Inventory

In a periodic inventory, all stocks of the company are physically counted on the balance sheet

key date. In this case, every material must be counted. During counting, the entire warehouse

must be blocked for material movements.

Continuous Inventory

In the continuous inventory procedure, stocks are counted continuously during the entire fiscal

year. In this case, it is important to ensure that every material is physically counted at least once

during the year.

Cycle Counting

Cycle counting is a method of physical inventory where inventory is counted at regular intervals

within a fiscal year. These intervals (or cycles) depend on the cycle counting indicator set for the

materials.

.


2/6

Inventory Sampling

In MM Inventory Sampling randomly selected stocks of the company are physically counted

on the balance sheet key date. If the variances between the result of the count and the book

inventory balance are small enough, it is presumed that the book inventory balances for the other

stocks are correct

Physical inventory Process: -1. Create Physical inventory documentT Code MI01 Create single inventory documentT Code MI31 Create multiple physical inventory documentsI. Enter the desired fields i.e. material, material type, site, storage location, andMaximum number items / Documents 100, etc Press EnterII. Click on Process SessionIII. Select the line items and click on the processIV. System displays a dialog box, select Background and click on process. Inventorydocument is created2. Print Inventory Document and handed over to responsible person say Manager3. Enter Physical Inventory count

T Code MI04i. Enter the physical inventory document number Fiscal year, count date Pressenterii. Enter the Material Quantity and click on post4. Listing of difference

T Code MI20Enter the physical inventory document number and execute, system displays ascreen, wherein we will be able to view the differences5. Post the differences

T Code MI07 & Mov Type 701 & 702Enter the physical inventory document number, year, posting date, enter thedifference and post

What is A, B, C and D Indicator for a material for cyclic

count?


3/6

All the material may not be important for cyclic count purpose, it may be

required to count

some items frequently and some items rarely.

A cyclic count indicator A or B or C or D is allocated to material in the

material master

based on either consumption value (consumption X rate) or forecast value

(forecast quantity X rate).

The item with more consumption value are classified as A, and with minimum as

D.

A indicator items will be counted frequently (say every month), D will be

less frequently

(say every 6 months or every one year). Daily a number of items will be taken

for count, some

may be with A indicator, some with B and so on.

Mark all materials that are to be included in cycle counting with a cycle

counting indicator

in the material master record (storage data). The cycle counting indicator isused to group

the materials together into various cycle counting categories (for example,

A, B, C, and D).

There is an option in SAP to have a fixed indicator for a material say Afor

a material which

does not have a high consumption value but it is important to count it every

month, then the

material can be marked as A indicator in material master with indicator

fixed

In Customizing OMCO, for Inventory Management, you can define for each

category the time

intervals at which the materials are to be counted.

Fields :No. of phys. inventories per fiscal year for cycle counting

For e.g. A - 12, B - 6, C - 3, D - 1

Specifies how often during the fiscal year a physical inventory is to be

carried out for a

material subject to cycle counting.

The system uses this specification to convert the count interval into

workdays.

Fields : Physical inventory interval (in workdays) for cycle counting

For e.g. A = 12 times per year and your Total Factory Calendar days = 300

The interval will be calculated as 300 / 12 = 25 days


4/6

Specifies after how many workdays following the last inventory count another

physical

inventory has to be carried out for a given material.

The count interval is determined automatically on the basis of the number of

physical

inventories specified for the fiscal year.

Fields : Float time (in workdays) for cycle counting

For e.g. A - 10, B - 20, C - 30, D - 0

Indicates the number of workdays by which the planned count date may vary

from the current

date.

For examples :-

For the plant, the float time is five days.

A physical inventory has been planned for a material belonging to category C

for June, 1.

On expiration of the float time (after June, 6), the physical inventory has

not yet been

carried out.

Irrespective of the category, the material is parked for the next cycle

counting run.

Fields :- Percentage of performance measure for cycle counting ind.

Specifies the percentage allocation of the materials to the individual cycle

counting

categories.

The percentage value is used for automatic assignment of the cycle counting

indicator.

For example :-

In the given plant, 200 materials are subject to the cycle counting physical

inventory

procedure.

In Customizing for Inventory Management, the following percentage allocation

has been defined

for the plant:

A materials: 50%

B materials: 25%

C materials: 15%

D materials: 10%

----

100%

----


5/6

In the cycle counting analysis, the materials are sorted by consumption.

After completion

of the analysis, the cycle counting indicator is assigned as follows:

The first 3 materials (sorted in descending order according to consumption)

represent 50% of

the consumption and have the indicator A.

The next 12 materials represent 25% of the consumption and have the indicator

B.

The next 49 materials represent 15% of the consumption and have the indicator

C.

The remaining 136 materials represent the rest (10%) of the consumption and

have the

indicator D.

You can use the program ABC Cycle Counting Analysis (MIBC - RMCBIN00) to

perform an analysis.In this analysis, the system assigns the materials to the individual

categories according to

consumption or requirements (forecasts).

You can also specify whether this analysis is to consider only the materials

with cycle

counting indicator or all materials. The cycle counting indicator in the

material master

records can be updated automatically by this program.

Marking Materials for Cycle Counting

This step is only required if you perform cycle counting for the first time

or if you want

to update the cycle counting indicators.

In the material master record (storage data), maintain the cycle counting

indicator for all

the materials that are to be included in cycle counting.

You can set the indicator in one of the following two ways:

1. manually in the material master record. To do this, choose

Material -> Change from the Material Master menu.

2. automatically using ABC analysis To do this, chooseSpecial procedures -> Cycle counting -> Set CC indicator from the Physical

Inventory menu.

SAP process flow:1. MI01 Create Phsical inventory document : Initial screen2. MI22 Display Physical Inventory Documents for material


6/6

3. MI21 Print physical inventory document4. MI04 Enter inventory count: Initial screen5. MI20 List of Inventory Differences6. MI11 Enter recount: Initial screen7. MI22 Display Physical Inventory Documents for material8. MI21 Print physical inventory document

9. MI04 Enter inventory count: Initial screen10. MI20 List of Inventory Differences11. MI07 Post inv. Differences: Initial screen

Physical inventory Process

Documents

Transcript of Physical inventory Process