Explaining Inventory Management

After completing this lesson, you will be able to:

After completing this lesson, you will be able to:

  • Explain valuation in case of stock segmentation
  • Explain scenarios in inventory management
  • Explain the stock overview
  • Explaining special stock types in inventory management
  • Explain the vendor consignment scenario

Inventory Management


The goods you have received from your vendor need to be valued and you need to keep track of the quantities available in your warehouse. Sometimes you need to support special scenarios like vendor consignment stock, perform quality inspections, or transfer stock to other distribution centers.

Inventory Management - Valuation

Activities relevant for valuation

Material valuation is not an isolated area and most of the functions are carried out automatically. Depending on the organization the activities that are performed manually are part of the areas of inventory management, invoice verification, or accounting.

Valuation connects Logistics and Financial Accounting by accessing and updating the G/L accounts.

The value of the material stock is calculated using the following simple formula:

Stock value = stock quantity * material price.

Therefore, the stock value changes if the stock quantity or the material price changes.

The calculation can be based on the purchase price and the sales price (in pricing and revaluation, the sales price is sometimes referred to as the 'retail price').

Scenarios in Inventory Management

If the distribution center and store belong to the same company code and if goods are transferred, this is a stock transport between two plants. This kind of stock transport can be performed using various procedures. The procedures for which a stock transfer posting takes place are only used in materials management (MM) and are thus relevant for SAP Retail. The process is triggered by entering a stock transport order. The issuing plant in this case is the distribution center and the receiving plant is the store.

It is possible to specify in customizing whether a one- or two-step procedure is to be used. In a one-step procedure it is not necessary to post goods receipt when the merchandise arrives at the receiving plant.

The goods issue posting creates what is referred to as "stock in transit". The dataset can be used to monitor the stock that is currently in transit. Stock in transit is valuated but its use is not customer-specific. It is recorded on the level of the receiving plant.

The benefits of stock transport orders are as follows:

  • Delivery costs can be planned
  • The entire process can be monitored using the purchase order history

Stock transport orders are connected to material requirements planning. When the purchase order is due for shipment, the system creates an outbound delivery. In case of ARun-relevance STOs need to be allocated. For example, the merchandise can be packed and assigned to an outbound shipment. This process can, for example, be triggered by automatic replenishment planning.

If the distribution center and store belong to different company codes and it is needed to transfer goods from one to the other it is necessary to create a stock transport order with document type NB. This involves the process stock transfer with billing document. As in normal stock transport orders, an SD delivery with a specific delivery type (NLCC) is created for this combination of supplying plant and document type NB. This ensures that an invoice can be sent to the store.

Stock Overview

Stock Overview can be viewed by the standard transaction: RWBE. The figure shows a screenshot of it.

Transaction RWBE can also display stock with stock segments

Transaction MD04P shows also the MRP status of stock elements which is especially useful for Supply assignment (ARun) relevant materials where the warehouse quantity of a variant might already be allocated to customer or store orders.

In contrast to the standard transaction MD04 this new transaction shows all variants of a generic material at the same time.

Special Stock Types in Inventory Management

The figure illustrates different stock types, either visible with transaction RWBE or MD04P.

Details of statuses relevant for supply assignment (ARun) are explained in unit 4 (planning).

The Vendor Consignment Scenario

The figure illustrates the components and process of vendor consignment.

Vendor consignment

In consignment processing, the vendor provides materials and stores them on your premises. The vendor remains the legal owner of the material until you withdraw materials from the consignment stores. Only then does the vendor require payment. The invoice is due at set periods of time.

Own stock

Every material which does not belongs to a special stock.

Consignment stock

  • Special stock "Consignment"
  • Unrestricted stock

Features are:

  • Stock transfer order from Consignment stock from Plant A to Plant B
  • 1- and 2-Step
  • Intra-company and also cross-company
  • Goods Issue of Consignment stock (automatically!) depending on the stock determination
  • Preferred goods receipt (Consignment or own stock) can be different per plant
  • Retail allocation
  • Stock determination in the POS-Upload
    • Also for structured materials (with certain conditions)

  • Stock in transit
  • Cancellation
  • Returns

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