Managing Goods Movements

Objectives

After completing this lesson, you will be able to:

  • Recall the basic process steps involved in managing goods movements

Current Process Step

We will now move on to the business process step Receiving.

Please select the business process steps below, if you want to see the selected scope items in detail:

Having created the purchase orders, we now need to consider how we manage our inventory. In general, we need to differentiate in between inventory management in MM and warehouse management in EWM.

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Inventory Management Tasks

Inventory Management in the area of logistics, covers the following tasks:

  • Management of material stocks on a quantity and value basis
  • Planning, entry, and documentation of material movements
  • Carrying out the physical inventory

Material Stock Management on a Quantity and Value Basis

Managing Stocks by Quantity

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:

  • Stock quantities in unrestricted-use stock
  • Stock quantities in quality inspection
  • Stock quantities already ordered but not yet received
  • Stock quantities that are in the warehouse, but that are already reserved by the system for production or for a customer

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). Inventory management can also manage many of its own and external special types of stock, such as consignment stocks, separately from the normal stock.

Managing Stocks by Value

In addition to managing stocks by quantity, stock is also managed by value. With each goods movement, the system automatically updates the following data:

  • Stock quantities and stock values for inventory management
  • G/L accounts for financial accounting by means of automatic account determination
  • Account assignments for cost accounting (provided the internal accounting is active)

The valuation area is the organizational level at which material’s stock value is managed.

Because we will also use the production part of SAP S/4HANA, our valuation level is at the plant level.

Planning, Entry, and Documentation of Goods Movements

In inventory management, a distinction is made between the different types of goods movements:

  • Goods receipt (GR) - A goods receipt is a goods movement that is posted with the goods received from external vendors and production. A goods receipt leads to an increase in warehouse stock.
  • Goods Issue (GI) - 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.
  • Stock transfer - 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.
  • Transfer posting - Transfer posting is a category of goods movement that is higher than stock transfer. It 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.

Take a look at the graphic below, to learn more about goods movements:

How to Post Good Receipt and Display Stock Overview

Post good receipt for a purchase order and display the stock overview.

Integration to Finance

While posting the goods receipt for our purchase order, we create a material document and a financial document. FI documents consist of individual line items, as you already learned.

Here we receive two-line items:

Post Stock Material

As we post a valuated GR for our PO, for the stock material we post a stock account (balance sheet account) and the GR/IR account. The GR/IR account ensures that the Goods Receipt corresponds to the Invoice Receipt.

FI Posting:

  • Debit Stock Account
  • Credit GR/IR Account

How to Show Financial Impact

Show Financial impact – Show Accounting document and process flow

Product Valuation

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