Objective
With in-house production (that is internal procurement), the components are made available for production by inventory management and the goods receipt is posted for the end product.
On the other hand, material is not only withdrawn from the warehouse for internal production, but also for the delivery of sales orders. When the system generates the delivery, it marks the quantity to be delivered as delivery to customer and deducts it from the total stock when the goods issue (GI) is posted.
Inventory management maps the physical stock in real time by recording all stock-changing transactions and the resulting stock updates. An overview of the current stock situation of a material is always available. For example, you can differentiate between the following:
The storage location is the organizational level on which the material's stocks are managed by quantity. Exceptions are some special stocks that are only managed at plant level (for example, customer consignment stock).
If a material is to be subdivided further into lots, a batch can be created for each lot, which is then managed individually in the stock. Inventory management can also manage many of its own and external special stock forms, such as consignment stocks, separately from the normal stock.
Stocks are managed not only on a quantity but also on a value basis. With each goods movement, the system automatically updates the following data:
The valuation area is the organizational level at which a material's stock value is managed.
Note
The valuation area can correspond to a plant or company code. Inventory management generally operates at plant and storage location levels. When you enter a goods movement, you only need to enter the plant and the storage location of the goods. The system derives the company code from the plant based on the valuation area.
In general, a transaction that causes a stock change is marked as a goods movement. When you post a goods movement, documents are created that form the basis for the quantity and value updates and are also used in the verification process for the movement.
We distinguish between goods receipts, goods issues, stock transfers, and transfer postings:
A goods receipt is a goods movement that is posted with the goods received from external vendors as well as production. A goods receipt leads to an increase in warehouse stock.
A goods issue is a goods movement in which a material withdrawal, material consumption, or goods shipment is posted to a customer. A goods issue leads to a decrease in warehouse stock.
A stock transfer is a goods movement in which materials are removed from a particular storage location and placed into another storage location. Stock transfers can take place both within the same plant and between two plants.
A transfer posting is a superordinate term for stock transfers and changes the stock identification or qualification of a material, regardless of whether the posting is linked to a physical movement. Examples of transfer postings include the release of the stock for quality inspection, the transfer posting from material to material, and the transfer of consignment material to own stock.
The material document serves as verification for the goods movement and as a source of information for all subsequent applications. The material document consists of a header and at least one item. The header contains general data about the movement type, such as the date and delivery note number. The items describe the individual goods movements.
A material document is identified by the document number and the material document year.
If the movement is relevant for financial accounting, or in other words If the movement leads to an update of the G/L accounts, the system creates an accounting document parallel to the material document. Using automatic account determination, the system updates the G/L accounts that are affected by a goods movement.
An accounting document is identified by the company code, the document number, and the fiscal year.
Hint
As well as the creation of the documents mentioned previously, the entry of a goods movement triggers other transactions in the system. For example, the stock quantities and values are updated in the material master record. The system also updates any other applications involved in the transaction.
With physical inventory, you carry out a physical stock-taking in your warehouse. You compare the actual physical material stock with the data stored in the system. By writing-off the determined inventory differences, you update the accounting inventory data according to the results of the physical inventory. You can carry out physical inventory for both your own stock and external stock.