Performing In-Store Inventory Management (3HR)

The figure shows the basic set-up of a Retail organization with the headquarters (US Retailer Inc.), and their distribution centers and stores. Additionally, there are the (external) business partners: suppliers for merchandise procurement, and customers (wholesale, re-sellers,..), and consumers on the sales side.

All parties are involved in this unit which centers around the store. For every brick-and-mortar Retailer, Store Operations is at the heart of the enterprise. A wide range of processes ensures that merchandise is available for sales during opening hours, with excellent customer service. Specific apps are available to support the store manager, and the store associate roles. Note: The Store Operations apps require the user assignment to a specific store. Activities in the store include merchandising functions such as ordering and receiving goods, inventory management including physical inventory, and consumer/customer sales via point-of-sale systems (POS) and sales orders. Store connectivity comprises outbound and inbound message transfer between the retailer's central system(s) and the store's POS system. For example, the POS systems are regularly updated with article and price information so they are ready to handle sales transactions, and in turn, for example sales and goods receipt/movement data is transferred from the store to the central systems.

The 5 solution processes shown in the figure, Overview: Store Operations, are the starting point to cover the wide range of available applications for store operations. The solution process 5FY explains how the ordering and receiving apps are used. Solution process 5FW, mainly looks at the store manager role. The manager assigns the store associates to the store, determines the picking sequence for click-and-collect or click-and-reserve customer orders, and uses the My Store Overview app for the real-time monitoring of current store processes. The Look Up Retail Products and Print Labels apps, covered in solution process 3HQ, are essential in the daily work of store associates. To connect store sales and online commerce, solution process 5FZ for example introduces the click-and-collect scenario. Solution process 3HR introduces the physical inventory process in the store, which involves activities for both the store associate and store manager.

Each solution process represents a lesson in this unit, and can be completed individually.

This lesson covers the solution process In-Store Inventory Management (3HR).

In the retail industry, specific terms differ from the standard terms used in other lines of business. The following terms are used synonymously in this document:

Physical Inventory (PI) is a legally required activity to balance the physical stocks with the book figures. It takes place at least once a year, and several physical inventory methods are available for retail stores, such as the following:

• In (annual) periodic physical inventory, all stocks are typically counted on, or close to the balance sheet key date, i.e. at the end of the fiscal year. Each article must be counted. Sometimes counts take place each half year, or even quarterly.

• Continuous physical inventory is performed for parts of the stock across a fiscal year. In this case, the retailer must ensure that each article is counted at least once.

• For cycle counting, cycle counting indicators are defined in central business configuration for a site. An indicator is then assigned to the materials on site level. The indicator also defines at which time intervals (cycles) a physical inventory is to be carried out for the material. Usually, these correspond to the ABC analysis of the materials. In that way, for example fast-moving articles are counted more often than slow-moving articles.

Retailers often use periodic physical inventory and continuous physical inventory.

This lesson covers the physical inventory process in a store. The process starts with creating a physical inventory document, then the stock is counted by the store associates. The store manager reviews the count results,and either accepts the count results, or triggers a recount. The process ends with posting differences to update the book quantities and accounting.

The Create Documents - Physical Inventory (WV31) app is used to create the documents for the articles to be counted. If you just enter the site number, the documents for all articles in the selected site are created. However, you can also exclude articles which have zero stock, and articles that have already been counted previously. Additionally, it is possible to determine that only the stocks of selected storage locations of the site should be counted, or of articles of selected merchandise categories.Note: Alternatively, the Create Physical Inventory Documents (F3197) app allows you to create documents for specific articles of a site, storage location, and stock type (unrestricted use, quality inspection, blocked stock). Creating physical inventory documents could be done in the headquarters, but also locally, e.g. by the store associate or store manager. The Manage Physical Inventory Documents (F0379A) app can be used to view the documents.

There are two variations of the Retail Store Operations app F1512: The Count Stock app for the store associate role, and the Manage Stock Counting app for the store manager role. The store associate starts by entering the count data, for example using a mobile device to scan / enter the count zone, the article GTIN, and the count quantity. The store manager then reviews the count data, and either accepts the count results by setting the Count OK flag, or sets the Recount flag, for example when the original count result and the book quantity differ too much. Finally, once the store manager submitted the count for all document items as OK, the physical inventory document is marked as fully counted.

Then, to finalize the process, the differences have to be posted to update the stock and accounting data, for example using the Manage Physical Inventory Documents (F0379A) app. Depending on authorizations, this could be done for example by the store manager, or by headquarters.

In general, the store physical inventory process in SAP Retail is split into four phases:

1. Prepare Physical Inventory by creating physical inventory documents
2. Count and enter the stock
3. Count results are analyzed: Accept, or possibly recount if too many deviations
4. Post inventory differences

In the first phase, the physical inventory documents are created. SAP Retail provides apps for mass creation, or individual creation of physical inventory documents. After selecting the stocks to be counted and creating the physical inventory documents, the documents are printed, or loaded to a hand-held/mobile data capture (MDC)/portable data capture (PDC) device, or processed online using a SAP Fiori app, to begin the stock count.

In the second phase, the count results are entered / loaded into the system, which then calculates the inventory differences.

In the third phase, the store manager analyzes the count data. If any of the results look dubious, a recount of the articles in question can be initiated. Once the count results are accepted, i.e. the Count OK flag is set, the physical inventory document status is updated to "counted". This allows for the next phase to take place:

In the fourth phase, the inventory differences are posted. This updates the quantity- and value-based stock, and, accordingly, the stock accounts/material ledger in Financial Accounting.

An inventory document contains the following data:

• The site and storage location in which the inventory is going to be counted

• The time at which the count is going to take place (planned count date)

• Which articles are to be counted

• Which stock types are to be counted

• The count status of the item

• The status of the inventory document

When entering the count results, the system determines the current book balance. The book balance is compared with the count quantity entered - the result of which is the difference quantity. If goods movements are posted in between the physical stock count and entry of the physical inventory count, incorrect physical inventory differences may result. To prevent this error, you can block goods movements during physical inventory processing. If you set the Posting Block indicator in the header of the physical inventory document, the system blocks goods movements for all items of that physical inventory document. The indicator can be set either when the document is created, or later, for example, just before the count starts.

If it is not possible to block a goods movement for organizational reasons, you can fix or freeze the book balance in the physical inventory document at the point of counting. To do this, you select the Freeze Book Inventory indicator in the physical inventory document. This prevents goods movements from changing the book inventory relevant for the physical inventory.

Make sure the book inventory is correct and up to date. The book inventory is changed permanently by goods movements (for example - sales, goods receipts, scrap postings). You can freeze the book inventory when creating a physical inventory document, or before the count starts; this means good movements posted at a later point in time no longer change the book inventory for the article in the physical inventory document. If you do not select this indicator, the book inventory changes with each posting until the count data is entered in the system. If you select the "Posting Block" indicator, no further goods movement postings are possible, which means the book balance can not change.

When counting, you must ensure that no goods movements take place, and that you only enter stock that has already been booked into store stock. In cases where goods are received physically but this fact has not yet been recorded in the system (no goods receipt posted yet), it must be ensured that the goods are not taken into account in the physical inventory.

The retail-specific store operations app Count Stock Ad hoc (F5563) is specifically available for store employees to spontaneously perform a physical inventory count of one or more items, as store associates have to keep track of the stock count for the products as needed for each storage location available in the store. With that, the app helps to ensure that inventory numbers are correct, which for example also adds to the accuracy of the store replenishment process.

The app also supports barcode scanning to add products to the document. For each product, it allows you to enter count data for multiple placements, and different units of measure.

When you submit a stock count, the system creates a physical inventory document which stores your count data. The completed document can be printed and/or e-mailed. Printing happens automatically if enabled in customizing. Depending on the app configuration settings, the stock and valuation update takes place automatically, that is, differences are posted simultaneously, and the corresponding material document is created. If automatic posting is not enabled, you can use the Post Physical Inventory Differences app to correct the stock quantities (post differences).

The retail-specific store operations app Adjust Mass Stock (F4959) with the tile name "Adjust Mass Stock - TODAY" completes the range of apps relating to inventory updates in a store. You can use this app to record stock adjustments for various reasons (business transactions), such as goods withdrawal for consumption or production, product shrinkage/spoilage, free-of-charge deliveries from a vendor, unplanned goods receipts, and so on. An unplanned goods receipt for example occurs if quantities of a product are delivered to a store without corresponding purchase order. This may happen if goods are unloaded which were destined for another store, but should still be accepted because a new delivery to the other store could be made within a day. Note: The Receive Products (F1248) app would be used for store goods receipts against a reference document, such as a purchase order, or delivery.

To control the business transaction, a corresponding movement type is assigned in the business configuration. For each movement type, one or more reasons can be maintained for a more detailed documentation of the stock adjustment. The business transaction description, and the movement type reasons are then available in the app to select the right reason for the adjustment. If the Add Claim option is active (by default), you can also maintain a service provider and choose a cost center for each stock adjustment item. Upon submitting the adjustment, the system right away updates the stock data. This app is RFID-enabled.

In the context of inventory management in a store, however, store associates also regularly send products to other sites (distribution centers, stores). An example is returning damaged merchandise to the distribution center. The Transfer Products (F2449) app involves collecting and packing products that need to be transferred, creating and filling out the documents and labels for transfers and checking the statuses of the transfers. With that, this RFID enabled app covers and simplifies all steps involved in a product transfer, and it enables store associates to transfer products more efficiently. For example, using the business configuration of the app, you already set the document types and packaging material for the product transfers.

Summary

The key process flows covered in the tutorials for this process are to:

• Create Documents Physical Inventory (PI)
• Count Stock
• Manage Stock Counting
• Manage PI Documents

Note

In the coming weeks, our training will introduce new tutorials/simulations to enhance the learning content.