Inventory Configuration

A Step by Step Guide to the SAP MM Inventory Management and Physical Inventory Configurations

Table Table of Cont ents Objective .................................................. ........................................................ ............................................................................................. ..................................... 3 IMG Menu – The Starting Point ................................................... ........................................................ 4 Start of the SAP MM Inventory Management Configurations................................. ............................ 5 The Basic Material Material Master Configuration : Units of measurement...................................................... measurement ...................................................... 5 Where does the user maintain the UOM? ........................................................ ............................................................................................. ..................................... 7 Industry Type for Material Master....................................... ....................................................... ................................................................. .......... 8 Delete or Add in Storage Storage Location for the new Plant Plant ........................................................ ......................................................................... ................. 11 General Plant Settings in Inventory Management .................................................... .............................................................................. .......................... 11 Define the Attributes of System Messages ...................................................... ......................................................................................... ................................... 13 Start of the Number Range Configurations ..................................................... ........................................................................................ ................................... 15 Define Number Assignment for Accounting Documents................................ ................................... 15 Define Number Assignment for Material and Phys. Inv. Docs .................................................. ........ 18 Define Number Assignment for Reservations ................................................. ................................... 19 Start of the Individual Fields IMG Settings Settings..................................................... ........................................................................................ ................................... 20 Field Selection for Goods Movements Initial/Header Initial/Header Screens.......................................... ................. 20 Field Selection for MIGO .................................................... ........................................................................................................... ............................................................... ........ 21 Field Selection per Mvt Type ....................................................... ............................................................................................................. ...................................................... 21 Define Screen Layout for Movement Type ..................................................... ........................................................................................ ................................... 22 Settings for Transactions and Reference Documents ........................................................ ......................................................................... ................. 24 Create Storage Location Automatically..................... Automatically............................................................................. ......................................................................... ................. 26 Set Manual Account Assignment for Movement Type ..................................................... ...................................................................... ................. 27 Maintain Copy Rules for Reference Documents ...................................................... ................................................................................ .......................... 28 Set Up Dynamic Availability Check............................................. ...................................................... 29 Generate Physical Inventory Documents for Goods Movements....................................................... Movements.......... ............................................. 32 Allow Negative Stocks ........................................................ ............................................................................................................... ............................................................... ........ 33 Set Missing Part Check ........................................................ ............................................................................................................... ............................................................... ........ 34 Default the “Delivery Completed” Indicator ................................................... ................................... 35 For GR-Based GR-Based IV, Reversal of GR Despite Invoice ................................................. .......................... 36 Record Reason for Goods Movement.............................................................. Movement...... ........................................................................................... ................................... 37 How to Define, Copy or Change a Movement Types? ...................................................... ....................................................................... ................. 38 Default Print Print Control for Material Document...................... Document............................................................................. ............................................................... ........ 41 Define Stock List Display for MMBE ................................................... ............................................. 47 Define Valuation Class ........................................................ ............................................................................................................... ............................................................... ........ 49 Configure Automatic Postings to G/L Accounts ...................................................... ................................................................................ .......................... 51 Storage Location Indicator to to allowed/disallowed allowed/disallowed Physical Physical Inventory Freezing ............................... 58 Configuration for Vendor Consignment ................................................ ............................................. 59 Business Process Flow for Vendor Consignment ..................................................... ............................................................................... .......................... 60 The Initial Inventory during Implementation .................................................. ................................... 63 Static versus dynamic data conversion .................................................. ............................................. 66 A Sample note on Inventory Inventory Balance Conversion........................ ...................................................... 66 Appendix A: The Inventory Goods Movement Configuration Links Explain ................................... 67 Appendix B: Restrict Restrict the Storage Location from from any Goods Movement........................................... Movement ........................................... 68 Appendix C: Allows/Disallowed Allows/Disallowed Goods Movement Posting to Previous Period............................... Period.............. ................. 70 Appendix D: How to to Archive the Materials Materials Documents? ................................................. ................. 71 Appendix E: Configure the Cycle Count in SAP................................................................................ 76

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© 2004

Trademarks ABAP/4 is a registered trademark of SAP AG. SAP, R/2, R/3, SAPoffice, Smart Forms, SAPscript, SAP EarlyWatch, and SAP Business Workflow are registered trademark of SAP AG. All other products mentioned in this documentation are registered or unregistered trademarks of their respective companies.

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Copyright www.sap-img.com.. All rights reserved. www.sap-img.com www.sap-img.com makes no warranties or representations with respect to the content hereof and specifically www.sap-img.com makes disclaims any implied warranties of merchantability or fitness for any particular purpose. www.sap-img.com assumes www.sap-img.com assumes no responsibility for any errors that may appear in this document. The information contained in this document is subject to change without notice. www.sap-img.com reserves www.sap-img.com reserves the right to make any such changes without obligation to notify any person of such revision or changes. www.sap-img.com makes www.sap-img.com makes no commitment to keep the information contained herein up to date.

© 2004

Trademarks ABAP/4 is a registered trademark of SAP AG. SAP, R/2, R/3, SAPoffice, Smart Forms, SAPscript, SAP EarlyWatch, and SAP Business Workflow are registered trademark of SAP AG. All other products mentioned in this documentation are registered or unregistered trademarks of their respective companies.

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Objective The objective of this paper is to provide the SAP MM consultant with a step-by-step guides at configuring the SAP MM Inventory Management module. It is structure in the form of how-to-do configurations method. When you d o the SAP configuration, sequence is not r ea When eally lly i mport ant as long as all the MM Inventory Management modules Features that need to be used have been configured.. configured Notes: Initial IMG Action : Required Required (this are dynamic data which are unique to the company) Initial IMG Actio n : Usually Usually Not required (it depends on the customer requirement) Initial IMG Actio n : Not required (normally this kind of configuration is quite static, most of the customer will accept the SAP default and may request for changes after going live for a period of time)

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IMG Menu Menu – The Startin g Point Poin t Before doing any SAP Configuration (or IMG) , all SAP consultants MUST be MUST be aware of the transaction SPRO SPRO.. This transaction code is the heart of the whole SAP configuration. Click the button and you will be shown all the configuration tree for the various SAP modules like SD, PP, FI, CO etc. Transactio n SPRO

The SAP SAP IMG IMG configu ration t ree for all the modu les

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Start of the SAP MM Inventory Management Config uratio ns Now, you will go through each of the SAP Inventory Management Configurations to get your SAP Inventory transaction functioning. After all the configurations are completed, Appendix A: (The Inventor y Goods Movement Confi guratio n Lin ks Explain) will link all the related configurations for you so that you can understand the relationship.

The Basic Material Master Confi guratio n : Unit s of measur ement Initial IMG Action : Usually Not Required As a rule of thumb, always RECOMMEND the user to set the base unit of measure for a material to the smallest unit that can be used. That is, don't set it as FT (foot), but set it as IN (inch). Never set EA as base unit for something that can be divided and consumed in smaller quantities. Please take note that y ou CANNOT change your Base Unit of Measure onc e there are any OPEN TRANSACTIONAL POSTING done by the user. For e.g. Available Stocks, Open Purchase Order, Open Production Order, Dependent Reservations already exists, Open Sales Order etc. If you try to change, a SAP message will appear asking you to click the button. It will list all the OPEN DOCUMENTS to you. Tip: Determi ne the low est UOM as the Base Unit of Measure Transaction : CUNI

Menu Path : IMG – General Settings – Currencies – Check units of measurement

Click the button Units of measurement to see the UOM settings.

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Double click on the Unit to see the individual UOM settings. Create the New button to create a new UOM.

A sample of a UOM setti ngs. You can ignore the ALE/EDI sections if your company is not using any EDI.

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Where does the us er maintain t he UOM? For this IMG settings, the user will maintain it in the Material Master Record ( MM01/MM02). Maintain the Base unit of measure Transaction : SAP Menu Path : Logistics – Materials Management – Material Master – Material – Change – Immediately – Select Basis data 1 MM02

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Maintain the UOM Conversion Menu Path : Logistics – Materials Management – Material Master – Transaction : MM02 Material – Change – Immediately - Select Basis data 1 - Additional Data – Units of measure

For e.g. assuming that the Materials Master Base UOM is SH - Sheet and you need to transact in KG. Input the X (Denominator) and Y (Numerator) for Conversion to Base Units of Measure column and the system will automatically calculate the Number column for you once you hit the Enter key. Please note that you may enter only whole numbers in the numerator and denominator fields; that is, if 3.14 m² correspond to one piece, you must enter integer multiples (314 m² = 100 PC). In this case, the quotient is therefore 100/314 (the numerator being 100 and the denominator 314).

Indust ry Type for Material Master Initial IMG Action : Usually Not Required Industry type are used for classifying your company industry sectors. SAP used it to control the Field attributes o f yo ur Material Master . There are no other usage. The SAP default industry sectors are : • A for plant engineering and construction • C for the chemical industry • M for mechanical engineering • P for pharmaceuticals Note: You cannot change the industr y type after it i s being inpu t. The only way to change the indust ry ty pe to is to Flag the materials for deletion and archive it. Then create a new material with the correct in dustr y type. Define new o r Change the existing Industry Type IMG Shortcut : OMS3

Menu Path : IMG – Logistics General – Material Master – Field Selection - Define Industry Sectors and Industry-Sector- Specific Field Selection

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The Field r eference above poi nts to the Fields in Tcode MM01/MM02/MM03 where the user used f or m aintaining their Material Master Record. If you intend to create a new Field ref., it has to begin with a y or z. IMG Shortcut : OMS9

Menu Path : IMG – Logistics General – Material Master – Field Selection - Maintain Field Selection for Data Screens

Double click on Field ref.

Double click on and you will see the Fields of each Material Master. The attributes of Field Sel. Group have a higher p rior ity than the Field reference .

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For e.g. Field selection grp 1 contains the following fields which are all Required Entry as you can see from the above screen.

Default the Material Industry Type If you have only one industry type, you can default and hide it. This saved the users the need of entering the industry type. When there are different Industry Sector for different users, you can also teach them to default it in MM01 – Default s -> Industr y secto r IMG Shortcut : OMT3U

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Menu Path : IMG – Logistics General – Material Master – Configuring the Material Master – Maintain User Settings

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Delete or Add in Storage Location fo r th e new Plant Initial IMG Action : Required A storage location is the place where stock is physically kept within a plant. Some companies will break their area to be managed by different Plant and Storage Location and you will define IMG Storage Location Plant by Plant. Each Plant may have different sto rage location requirement to track the mov ement and quantities of st ocks. For e.g. defective stocks, warehouse stocks etc. For naming convention, you can recommend them to use the building number follows by two characters to represent the inventory type. For e.g. Building 9, the storage location for Finished Goods can be 09FG, Defective Goods can be 09DF etc. Storage Location is a required fields when user do entries for Goods Movement related transaction code such as MB1A – Goods Issue, MB1B – Transfer Posting, MB1C – Other Goods Receipts etc. User must know where they want to keep the Inventory. Configure the Storage Location Transaction : Menu Path : IMG – Enterprise Structure – Definition – Materials Management - Maintain Storage Location OX09 Click the New entries button to enter a new Storage Location.

General Plant Setti ngs in Inventory Management IMG Action : Not requir ed You shoul d not make any IMG settings using this overall maintenance screen. Use this screen for checking purpose as you can view all the Individual Configuration on a single screen. Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory - Plant Parameters - Double click t he Plant and you’ll be able to see the Plant Inventory Settings

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Double click o n the Plant to view the next screen.

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Define the Attr ibut es of System Messages Initial IMG Actio n : Not required In any of the Inventory Management goods movement transactions posting, the system will issues messages to the user screen to inform the user about certain system responses or data situations (for example, a message indicating that the order item is flagged "delivery completed"). An example is given in Appendi x B: (Restric t t he Storage Location fr om any Goods Movement) to see how you can make used of the Attributes of the System Messages. There are three attributes where you can define the type of system message for a version: W – You can set a warning message and after reading the message, the user is allowed  to hit enter and proceed with the entries and save the record. E – You can set an error message and the user have to correct the mistake or the  system will not allow the user to proceed further or to save the record entry. Space - No message will be issue to the user.  Transaction OMCQ

Menu Path : IMG - Logistics – Materials Management – Inventory Management and Physical Inventory – Define attributes of System Messages - Settings for System Messages

From the System Messages screen, you can see that the SAP default for all messages that can be controlled are stored in version 00 and the Inventory Management, the application area M7 is predefined.

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You are allow to create a new version (for example, ZZ) and this is maintained as a parameter ID MSV in the user master record, thus representing a user or a user group. Transaction : SU01

Menu Path : IMG - Logistics – Materials Management – Inventory Management and Physical Inventory – Define attributes of System Messages - Maintain Users

Step to configure the SAP System Messages Proceed as follows to control messages according to your needs: 1. Copy the messages (for which you would like to change the type) into a separate version (for example, ZZ ). 2. Change the type of these messages in the new version. 3. Allocate the corresponding version to the users as follows: Define a value (for example, ZZ ) for the parameter ID MSV in the user master record by selecting Goto -> Parameters . Please note that if you did not specify any parameter ID for a given user, the system uses version 00. If there are no entry maintain in the table for a certain version the default message is a warning.

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Start of the Number Range Configur ations In the SAP Inventory Management modules, for every valuated post ing, the system will auto create a Material and a Financial Document. These documents will be preassigned with a range of running numbers. During the initial number range IMG, no action is required on your side (unless your company want to changed it) as SAP have preconfigured the system with a set of pre-defined running numbers.

Define Number Ass ignment for Account ing Documents Initial IMG Action : Might b e required for A ccount ing Documents For every Valuated Inventory Posting, two documents (a material document and a accounting document) will be generated automatically by the system. By default, SAP has already defined a range of unique number for each document type. Companies are allowed to change them if they prefer another set of numbers. Transaction : OMBA

Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory - Number Assignment – Define Number Assignment for Accounting Documents

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Configure t he Financial Document Type wit h t he relevant Number Range Financial Accounting documents are split into document types in order for the system to differentiated document number assignment, which is the basis for distinguishing between the various accounting operations. A number range is assigned to each document type. In a company code, you have to define number intervals for each number range and fiscal year. In inventory management, the transaction determines which document type is used. To view the Financial Accounting Document Types: Click Financial accounting document types 



Double click on Type AA to view the details



Copy down the Number range No For e.g. 04

To maintain the number assignment for accounting documents. - Click the Financial accounti ng num ber ranges button

  

Input your company code and click Click For e.g.

to input the Number range

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In the standard SAP Inventory Management System, no change is required as the following the document types have been predefined: • WA for goods issues, transfer postings, other goods receipts • WE for goods receipts with reference to purchase orders • WF for goods receipts with reference to production orders • WI for inventory differences • WL for goods issues with reference to deliveries (SD) • WN for net posting of goods receipts • PR for revaluation documents Click the Goods issue document type and you can view the default Doc. Type that have been pre-defined.

You can see that each document type has been assigned a number range. In company code 0001, number intervals are defined for each number range both for the current and the previous fiscal year. • Number range 49 with the year-related interval 4900000000 to 4999999999 is assigned to the document types for all goods movements, except goods movements with reference to purchase/production orders. • Document type WE is used for goods receipts with reference to purchase orders and production orders. This document type is assigned number range 50 with the yearrelated interval 5000000000 to 5099999999. Please note that the net postings of goods receipts (document type WN) are not active in the standard system. If you want to post goods receipts net, you have to assign document type WN (instead of WE) to the transaction MB01. • Document type WI is used for posting inventory differences . This document type is assigned the number range 01 with the year-related interval 0100000000 to 019999999999.

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Define Number Ass ignm ent for Material and Phys. Inv. Docs Initial IMG Actio n : Not required The Physical Inventory module is used to adjust your company Stock balance after the company Physical stock-take. Physical Inventory Documents are created to captured the stock data entries. No action is required unless you wish to change the number assignment for the following documents: material documents  physical inventory documents  Transaction : OMBT

Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory - Number Assignment – Define Number Assignment for Material and Phys. Inv. Docs

Refer to OMBA – Allocate Document Type to Transaction

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Define Number Assignment for Reservations Initial IMG Actio n : Not required You can only used internal number assignment for reservations. The default number range 01 with the interval 0000000001 - 9999999999 has been predefined for reservations. No action is required from you unless your company preferred another range of numbers. Transaction : OMC2

Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory - Number Assignment – Define Number Assignment for Reservations

(a) OMJK - Maint ain Number Range Interval

(b) No. range res/dep.rq

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Start of t he Individu al Fields IMG Setting s As you probably know, SAP is a pre-written software that caters to many companies around the world. There will b e data fields that your company do es not required, opti onal or fields th at are mandatory. Therefore, SAP provides you the flexible to control those non-critical fields so that each companies can set their own fields attribute although they may used the same transaction screen to input the data.

Field Selection for Goods Movements Initial/Header Screens Initial IMG Actio n : Not required The goods movement screen, MB1A, MB1B, MB1C contains many fields for data entry. Some companies may prefer to hide those un-used fields not required for any data input. Note that the field selection for the item screens depends on t he movement type and is confi gured in s eparate steps. For testing, click Hide for field Document header text . Goto transaction MB1A, MB1B, MB1C and have a look. Change it back to Input and check again. Double click on the Modifiable field for more fields.

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Field Selecti on for MIGO Initial IMG Actio n : Not required MIGO is the new enjoy transaction code for Inventory Goods Movement. It combines the transaction MB1A, MB1B, MB1C and MBST The IMG here allows you to change the attribute of those fields in MIGO. Transaction : OMJX

Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory – Settings for Enjoy Transactions – Settings for Goods Movements (MIGO) – Field Selection for MIGO

To change to field attribute, just tick accordingly on the one of the option buttons.

Field Selectio n per Mvt Type Initial IMG Actio n : Not required Here you maintain all the settings for field selection by movement type. This step replaces the activity Define Screen Layou t for the Enjoy transactions. The settings from Define Screen Layout are adopted in these settings automatically so that you do not need to maintain new entries here.

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You can specify for each field whether it is an optional entry or a mandatory entry. In the table, you see all fields that are visible. You can access the setting Field Invisib le by deleting the appropriate entry from the table. There is no distinction between different special stock indicators in these entries. Special stock fields are always suppressed automatically. Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory – Settings for Enjoy Transactions – Settings for Goods Movements (MIGO) – Field Selection for Mvt Type

Define Screen Layout for Movement Type Initial IMG Actio n : Not required Here you set the field selection for the movement types including goods issues and transfer postings. When creating a goods movement, the field selection determines which fields • can be filled (optional entry) • must be filled (required entry) • are suppressed fields In Inventory Management, the field selection depends on the movement type. The field selection defined for a movement type is valid for entering goods movements and reservations. Transaction : OMBW Transaction : OMCJ Transaction : OMJ9A

Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory – Goods Issue / Transfer Postings – Define Screen Layout Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory – Goods Receipt – Define Screen Layout Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory – Automatic Movements – Define Screen Layout

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This is the first scr een. Double click on the Movement Type

This is t he Second screen. Double click o n any of the Select grou p Field e.g General data

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This is the Last screen where you change the Field Input Options

Settin gs fo r Transactions and Reference Documents Initial IMG Actio n : Not required No action is required here unless you want to limit the number of selectable transactions (goods receipt, goods issue, and so on), reference documents (material document, delivery note), and movement type that the system propose for every reference document in transaction MIGO, MIGO_GI, MIGO_GO, MIGO_GR For example in MIGO, you can see the Selectable posting transaction and Reference Documents type on t he top left of the screen. Transaction : SAP Menu Path : SAP menu – Logistics - Materials Management – Inventory Management – Goods Movements (MIGO) MIGO

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If you need only certain transactions (for example, goods receipts or goods issues), you can choose from the following preset transactions code: MIGO - Used to enter all goods receipts.  MIGO_GR - Used to enter goods receipts from external procurement.  MIGO_GO - Used to enter goods receipts for production orders.  MIGO_GI - Used to enter goods issues.  Configure the settin gs for tr ansactions and reference docum ents: 1. Choose the transaction with which you want to enter goods movements. 2. For each transaction, define which transactions and reference documents you want to reference when you post goods movements. Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory – Settings for Enjoy Transactions – Settings for Goods Movements (MIGO) – Settings for Transactions and Reference Documents To configure the Reference document, select a Tcode and click Reference document of the left screen.

Just Tick or Untick the Active column and the Reference document will appear or disappear accordingly when the user use the transaction MIGO - Goods Receipt fo r Purchase Order .

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Create Storage Locatio n Auto matically Initial IMG Actio n : Usually Not r equired The default setting for all the storage location data is created automatically for all inventory goods movement that results in a change in the INVENTORY STOCK BALANCE. The setting does not apply to Create Reservation transaction movement ( MB21). This is because no actual goods movement has taken place during materials reservation. Note: if you need to create a reservation to a stor age location that have not been created, you can use transaction MMSC to cr eate the storage location. For each configuration, first of all you have to allow automatic creation per plant and then you have to explicitly allow the creation of storage location data for each movement type. A tick means storage location created automatically and vice versa.

Auto matic Creatio n of Stor age Location for Goods Issues and Transfer Posti ngs Specify whether the automatic creation of storage location data is allowed for goods issues and transfer postings. This is advisable if you work with negative stocks and a material's first movement may be an outward movement. Note that the reversal movement for a goods issue, for example, movement type 202 or 262, is not considered as an issue but as a receipt. If you only use the automatic creation of storage location data for reversals of goods issues, you do not have to allow negative stocks. The storage location data is only created if the quantity is posted to 'standard' storage location stock. It is not created for receipts into a special stock (for example, into sales order stock). Transaction : OMB2

Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory - Goods Issue / Transfer Postings – Create Storage Location Automatically

Auto matic Creatio n of Storage Location fo r Goods Receipts Specify whether the automatic creation of storage location data is allowed for goods receipts. This is advisable if you want to post a goods receipt without having to maintain the storage location view of the material master record in advance.

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The storage location data is only created if the quantity is posted to 'standard' storage location stock. It is not created for receipts into a special stock (for example, into sales order stock). Transaction : OMB3

Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory - Goods Receipts – Create Storage Location Automatically

Auto matic Creatio n of Storage Loc ation fo r Autom atic Goods Movements Specify whether the automatic creation of storage location data is allowed for automatic goods movements. This is advisable for goods movements via Shipping or when you post physical inventory differences, for example. The storage location data is only created if the quantity is posted to 'standard' storage location stock. It is not created for receipts into a special stock (for example, into sales order stock). Transaction : OMJ8

Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory - Automatic Movements – Create Storage Location Automatically

(a) Plant

(b) Movement Type

Set Manual Acc ount A ssi gnment fo r Movement Type Initial IMG Actio n : Not required In the R/3 System, account assignment is predefined via the automatic account determination facility. When you enter material movements that are assigned to a cost account, you can enter the account number manually. In doing so, you change the account assignment predefined as offsetting entry for inventory posting. Define the movement types for which you want the G/L account to be ready for input. This happens to movement type “ 201 – Consumpti on for c ost center from warehouse ” , where user are required to enter the cost center which is tied to a G/L a/c. @ www.sap-img.com

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You can specify this four choices:

These are the IMG transaction and Menu path where you can configure the Set Manual Account Assignment. You can have a look but no changes are necessary. Transaction : Menu Path : IMG – Materials Management – Inventory Management and OMB6 Physical Inventory – Goods Issue / Transfer Postings – Set Manual Account Assignment Transaction : Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory – Goods Receipt – Set Manual Account Assignment OMCH Transaction : Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory – Automatic Movements – Set Manual Account OMJ9 Assignment

Maintain Copy Rules fo r Reference Documents Initial IMG Actio n : Not required Configure whether the items of the reference document are proposed as selected on the item selection list when entering a document with reference, or not. In the standard system, the items are propos ed selected . The user can delete the check marks manually on the item selection list if she/he does not want to adopt some items. It is useful to set this indicator if usually all or most of the items of the reference document are to be adopted. Specify for every tr ansaction whether the it ems of t he reference document are to be pre-selected or not b y making a Tick on Untick on the Selection Bo x. Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory - Goods Issue / Transfer Postings – Maintain Copy Rules for Reference Documents Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory - Goods Receipt – Maintain Copy Rules for Reference Documents

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Set Up Dynamic Availabilit y Check Initial IMG Actio n : Not required Dynamic availability check is link to the SAP Material Requirement Planning system. The system checks whether the material to be withdrawn is available and issues a message, if necessary. In Inventory Management, two types of availability check are carried out. availability check during the entry of reservations  availability check during the entry of goods movements  The availability check is only carried out if: • the material master record contains a checking group for the availability check (MM01/MM02 - MRP 3 View) • a checking rule is assigned to the transaction in Customizing Transaction : OMCP Transaction : OMCM

Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory - Goods Issue / Transfer Postings – Set Up Dynamic Availability Check Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory - Goods Receipt – Set Up Dynamic Availability Check

Figure 1: The Main Menu for Availability Check

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You can define • for each movement type which type of message is issued (object Movement typ e) • which checking rules are supported (object Checking rule) • per checking group and checking rule: which objects (documents, stocks, material requirements) are included in the availability check (object Define checking r ule) • per transaction of Inventory Management: which checking rule applies (object Transaction codes) In the standard system, the message type A (warning in t he case of non-availability, otherwise no message) is set for all relevant m ovement types . The Movement Type button :

For Inventory Management, the checking rule 03 is provided. The checking rules are also used by other applications (Sales & Distribution) and can also be maintained by them. If you want to define new checking rules or change existing rules, it is recommended that you contact and work with the other applications consultants for Sales & Distribution, Material Requirements Planning. Steps to carri ed out: 1. Define the movement types for which an availability check is to be carried out and which type of message is issued. 2. Check the checking rule that you want to use in Inventory Management. Define a new checking rule, if necessary, and define for each checking group which objects are included in the availability check for this checking rule. 3. Check the availability checking rules for each transaction. Assign other checking rules to the transactions, if necessary. In the Define Checking Rule button , Double click o n the Check Rule for the Individu al Settings

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The IMG settings is straight for ward. Just tick or unti ck those stocks or documents you want to inc lude or exclude during the MRP checking . Normally, accept the standard default and change it as the user get famili ar with t he system.

In the Transaction code butto n, accept t he standard default checking rule assigned. Changes are usually not necessary fo r ot her tcode.

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Generate Physic al Inventor y Documents f or Goods Movements Initial IMG Actio n : Not required Define for each plant and movement type whether a physical inventory document is automatically generated when posting a goods movement. You can create a physical inventory document in addition to the material document at the time of a goods movement. This function is important when inventory differences are posted from the Warehouse Management System. These inventory differences are thereby documented in Inventory Management with a physical inventory document. In order to create an inventory document in addition to a material document for a goods movement, the following conditions must be met: • In the plant, you must define the transaction/event type WV for automatically generated physical inventory documents. You must define the document number assignment for this transaction/event type. • Automatic generation of physical inventory documents must be allowed for the movement type. You may only enter the transaction/event type WV (inventory difference from Warehouse Management system). In the R/3 System, automatic generation of physical inventory documents is allowed for movement types 711 to 718. Transaction : OMCC Transaction : OMJC

Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory - Goods Issue / Transfer Postings – Generate Physical Inventory Documents for Goods Movements Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory – Automatic Movements - Generate Physical Inventory Documents for Goods Movements

1. Specify the plants for which you want the R/3 System to create a physical inventory document. Enter transaction/event type WV for these plants.

2. Check the movement types for which you want a physical inventory document to be created. Set the number assignment for the given transaction/event type.

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Al low Negati ve Stoc ks Initial IMG Actio n : Usually Not r equired Although negative stocks are allowed by the system, most companies prefer not to used this function as it is not a good business practice to draw stocks in advance. Most auditors will also disapprove of this bad Inventory Movement practice. It is similar to your Bank Overdraft facility where you are allowed to draw more than what you have in your Bank Balance. You can configure whether negative stocks are allowed for the unrestricted-use stock in the valuation area, in the plant, and in the storage location . The default IMG setting is negative sto cks are not allowed . If negative stoc ks are needed in your company, proceed as follows : 1. Set the indicator Neg. stoc ks allowed in the valuation areas in question. (A valuation area can be a plant or a company code, depending on the configuration.) 2. Choose a valuation area and specify per plant whether negative stocks are allowed for special stocks. 3. Choose a plant and specify in which storage locations of the plant negative stocks are allowed. 4. Save your settings. 5. Afterwards, you must change the plant data of all materials for which negative stock balances are allowed. The indicator for negative stocks is contained in the Sales: general/plant view of the material m aster reco rd (MM01/MM02).

Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory - Goods Issue / Transfer Postings – Allow Negative Stocks You can allow Negative Stoc ks at Plant or Storage Location l evel. To defin e at Storage Location Level, select the Valuation area and click the word Storage location on th e left screen. Transaction : OMJ1

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Set Missi ng Part Check With the aid of the missing parts check, the system checks at the time of a goods receipt, other receipt, or transfer posting whether the material posted is a missing part. If so, the system issues a warning message and sends a mail message to the responsible MRP controller in the plant. Acti vatin g the mis si ng parts check The missing parts check is only carried out if it is active in the plant • •

a checking rule is defined for the transaction a checking group is defined for the availability check in the material master record (MRP data)

Transaction : OMBC Transaction : OMJD

Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory - Goods Receipt – Set Missing Parts Check Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory – Automatic Movements – Set Missing Parts Check

(b) Transaction Code

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Default the “ Delivery Completed” Indicator Initial IMG Actio n : Usually Not r equired Define the system to automatically suggests th e delivery com pleted indicator for goods receipts if the delivered quantity li es within the under/over delivery tol erances . The "delivery completed" indicator has the following effects: • The item is r egarded as closed, even if the tot al quantity was not delivered. • A furth er delivery is n ot expected , may, however, arrive. • In the next goods receipt, the item appears on the selection list but has no selection indicator. • The item can be reorganized even if the total quantity has not been delivered. Even if the "delivery completed" indicator has not been set, an item is considered closed once the total quantity has been delivered. This means that the "delivery completed" indicator is not necessary in this case. Specify for each plant whether the R/3 System proposes the "delivery completed" indicator automatically. Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory - Goods Receipt – Set “Delivery Completed” Indicator

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For GR-Based IV, Reversal o f GR Despite Invoice Initial IMG Actio n : Usually Not r equired Here you specify for each movement type whether, with GR-based invoice verification, a reversal with reference to the purchase order or a return delivery can be entered, even if the invoi ce relating t o the goods receipt d ocument has already been posted. If reversals are not allowed, you must cancel the invoice before you enter the reversal of the goods receipt or the return delivery. If reversals are allowed, you can post the material document and enter cancel the invoice at a later time. If you do not wish to cancel the invoice, you can enter the goods receipt with reference to the reversal document or the return delivery, so that the reference to the invoice continues to exist. Tips : Majori ty of t he companies will not allow ed material docum ent to be cancelled witho ut fi rst canceling th e Invoices as this can cause data inconsi stencies after a period of ti me. Transaction : OMBZ

Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory - Goods Receipt – For GR-Based IV, Reversal of GR Despite Invoice

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Recor d Reason for Goods Movement Initial IMG Action : Usually Required When you enter a goods movement, you can only enter reason which have been defined for the movement type here. Most of the time only movement type that deduct stocks need a reason as a form of control. Reason for Goods Movement are a required field when posting Goods Issue with MB1A for movement type 551 – Withdrawal for scrapping. Normally, in a company, the Quality Department will be the one that are allowed to used this movement type as they are the one who approved whether the materials should be scrapped or not. Transaction : OMBS

Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory - Movement Types – Record Reason for Goods Movements

(a) Control Reason – Accept the default , clic k the Reason field to change the options

(b) Reason for Movement – Click New entries bu tton to enter the Reasons

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How to Define, Copy o r Change a Movement Types? Initial IMG Action : Usually Not Required When you enter a goods movement, you must always enter the movement type. The movement type has important control functions in Inventory Management. It is essential for: • updating the quantity fields • updating the stock and consumption accounts • selection of the fields used for entering documents • printing • goods receipt/issue slips Note : Never tri ed to create a new movement type wit hout c opyin g an existing one. Additional movement type are sometimes required to differentiate the different purpose of the Goods Movement Transaction. For e.g. Companies may create additional movement type to differentiate between an Internal Scrap 551/552 or Customer Scrap Z51/Z52. Transaction : OMJJ

Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory - Movement Types – Copy, Change Movement Type

Al ways copy an existin g movement t ype to th e new o ne you wish to create . Don’t forget to copy the reversal movement type and change it. To copy, just select the movement type you want to copy and click the

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button.

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Double click on the Movement Type to view the detail IMG Settings For e.g. if you Tick the Automatic PO Field, a purchase order is created automatically at the time of goods receipt.

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For example, if you create a new movement type Z51 copy from 551, don’t forget to copy the reversal Z52 copy from 552.

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SAP Version 4.6c


Default Print Cont rol f or Material Document Initial IMG Action : Usually Not Required After saving their records, users are allowed to print the goods receipt/issue slips for the goods movements. In this IMG, you can make the following settings: • on which printers the goods receipt/issue slips can be printed • whether these printers support barcode and multiple printout • for which movement types goods receipt/issue slips can be printed • which printer is located in a specific plant/storage location and how the printout of an output type is controlled for this printer Transaction : OMBR

Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory – Print Control – General Setting

First find out the Print version that is use for the Inventory Transaction code

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Depending on the Print Method you used, you may need to check the Print Item settings for this Movement Type. Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory – Print Control – OMB5 - Maintain Print Indicator for Goodds Recept Documents OMB4 - Maintain Print Indicator for GI/Transfer Posting Documents OMJL - Maintain Print Indicator for Automatic Movements Once you have the Print Version and Print Item Setting, proceed to MN21 to create the condition records for which Output Type you want to used to activate the printing. Transaction : Menu Path : IMG – Materials Management – Inventory Management and MN21 / MN22 Physical Inventory – Output Determination – Maintain Conditions – Create/Change Condition: Inventory Mgmt

For eg. WA03

For this example: Trans./event type – WA (look at the Title bar, only the first 2 char. Is required) Print version – 3 (Collective goods receipt/issue slip) Print item – 1 (Material document printout)

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Double click on line item Material document printout

Leave the rest as it is, only specify the Number of messages (1 for print once, 2 for print twice etc.)

Other Print Setting s you need to ch eck: Transaction : Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory – Output Determination – Maintain Output Type M706 Double click on WA03 to reach the next screen:

Check the Print param. to ensure that it ties with the Print Method you used.

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For the default p rint out of the Material Document , you can specify One of the method. Most will use Method 3 which is the easiest or Method 1 (can be a bit tricky due to the Storage Location). Method 1: Transaction : OMJ3

Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory – Output Determination – Printer Determination – Printer Determination by Plant/Storage Location

Specify the Plnt, Sloc, Output Device, whether to print Immediate or Not

Method 2: Transaction : OMJ4

Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory – Output Determination – Printer Determination – Printer Determination by Plant/Stor. Loc./User Group

Specify the Plnt, Sloc, User gr p, Output Device, whether to print Immediate or Not

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Method 3: Transaction : OMJR

Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory – Output Determination – Printer Determination – Printer Determination by Output Type/User

Specify your Condition type

Specify the User Name, Output Device, whether to print Immediate or Not

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SAP Version 4.6c


Although you have configure the default printer for the user, when they want to print the Material Document Slip automatically after saving the record, they have to tick the Print field indicator in order for the configuration to work. The Print field indicator can be pre-selected if the parameter NDR (Print via output control in MM - Inventory management) has been set to X (capital letter) in the user master record (SU01).

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SAP Version 4.6c


Define Stock L ist Display for MMBE Initial IMG Action : Usually Not Required In this step, you define which fields are displayed in stock lists (transaction MMBE). The R/3 System distinguishes between stock lists using version numbers . For each version num ber, you can open up to three window s in which yo u can display different stock li sts. For each window, you can define up to three stock types (for example, blocked stock returns or unrestricted-use stock). The following list versions are preset in the standard SAP R/3 System: • 1 standard display, long • 2 standard display, short • 3 special display Acti on fo r you : Maintain the default settings as follows: 1. Under Display versio n • Assign a version number for each version • Define which fields are to be displayed 2. Under Rules for displ ay of stock balances , assign the following to each version number: • The windows you want to open • The stock types in the columns 3. Under Detail sc reen for stock balance display , define additional stock categories. Transaction : OMBG

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Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory – Reporting – Define Stock List Display

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The Rules for Stock Balance Displ ay button decide the column in MMBE

To check your Configuration: Transaction : Menu Path : SAP Menu – Logistics - Materials Management – Inventory Management – Environment – Stock – Stock Overview MMBE

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Define Valuation Class Initial IMG Action : Required If a user creates a material in MM01, he must enter the Material's Valuation Class in Acco unti ng View 1. The R/3 System uses your default settings to check whether the valuation class is allowed for the material typ e. The valuation class is a group o f materials with th e same account determination . If a transaction is to be posted to different accounts depending on the valuation class, create an account determination for each valuation class in the step Configure Automatic Postings (transaction OMWB). The valuation classes allowed depend on the material type. Several valuation classes are generally allowed for one material type. A valuation class can also be allowed for several material types. The link between the valuation classes and the material types is set up via the account category reference (transaction OMSK). The account category reference is a combination of valuation classes. Precisely one account category reference is assigned to a material type. The Valuation Class is very imp ortant b ecause it define the General L edger Ac count code that will be posted in Financial Accounting . This will impact the Profit and Loss Account. Valuation Class cannot be change once transaction pos ting begins fo r th e Material. If you want to change it, all Open Sales Order, Purchase Orders, Produc tion Orders etc. have to be close. Transaction : OMSK

Menu Path : IMG – Materials Management – Valuation and Account Assignment – Account Determination - Account Determination Without Wizard – Define Valuation Classes

1. Define the Account category reference 2. Define the Valuation class for which Account category reference 3. Define the Material type for which Account category reference

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Acco unt categor y reference

Valuation class

Material type for wh ich Ac count category r eference

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Configure Automatic Postings t o G/L Account s Initial IMG Action : Required For this IMG settings, you will configure the link between Inventory Management and Financial Accounting. What do you mean by automatic po sting s? For many years, SAP has study and fine tune the Business Accounting practice around the world. The current Inventory programs is able to Debit or Credit correctly any transaction postings that are made to the system. The programs will find all the necessary G/L accounts codes that have been configured by you and automatically post it to the relevant Financial Entries. For e.g.: Posting lines are created in the following accounts in the case of a goods issue for a cost center: Credit - Stock account (Inventory Deducted) o Debit - Consumption account (Increase in Consumption) o During inventory goods movement, the user does not have to enter a G/L account, since the R/3 System automatically finds the accounts to which postings are to be made using the following data: The Company Chart of accou nts In the R/3 system, every company is identified by a company code and each Strategic Business Unit in the company is identified by a plant. User are required to entered a plant for every data entry and the System will determine the chart of accounts which is valid for the company code. The Finance department user will maintain the Master record for the Chart of Account in transaction “ FS00/FSP0/FSS0” before you define it inside the IMG under the automatic account determination individually for each chart of accounts. 

Valuation groupi ng co de of the Valuation Area (per Plant) Group the various valuation areas into a single valuation group help to reduce the number of entries both in the configuration and creation of G/L accounts code. For example: With Valuation Grouping, you only need one entries for the configuration irregardless of how many valuation area you have. Valuation Group Valuation Class G/L Account 0001 01 12345 0001 02 12345 

Without Valuation Grouping, you will need to maintain each entry for every valuation area you have. Valuation Group Valuation Class G/L Account 0001 01 12345 0001 01 65432 0002 02 67890 0002 02 56565 Grouping all t he Valuation area as one is t he recommended configur ation method. @ www.sap-img.com

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Configure the Valuation Valuation Class Class Groupin g Transactio n Menu Menu Path Path IMG – Materials Management – Valuation and Account Assignment – OMWM Account Determination Determination - Account Determination Determination Without Without Wizard – Define Valuation Control OMWD IMG – Materials Management – Valuation and Account Assignment – Account Determination Determination - Account Determination Determination Without Without Wizard – Group Together Valuation Areas To use the Valuation grouping, first set Valuation grouping code to active in “ OMWM OMWM”. ”.

You can now do the grouping in “ OMWD OMWD”. ”. For example, you group all the Valuation area to the same valuation group. Val. Val. Area CoCode Company name Chrt/accts Val.grp Val.grp g.cod e AA 0001 ABC Engineering Engineering Ltd XYZ 0001 BB 0001 ABC Engineering Engineering Ltd XYZ 0001 CC 0001 ABC Engineering Ltd XYZ 0001 Transaction/eve Transaction/event nt k ey (internal processing key) The posting key refers to the inventory movement that the user has to specific during any inventory posting. The movement type will enable the system to determine the correct entries record to post into the system. 

Acco Ac coun untt g roup ro upin in g (only for offsetting entries, consignment liabilities, and price differences) The posting transaction " Offse Offsetting tting entry for inventory posting" is used for many different transactions posting (for example, goods issue, scrapping, physical inventory), which are assigned to different G/L accounts (for example, consumption account, scrapping, expense/income from inventory differences). Therefore it is necessary to divide the posting transaction according to a further key: account grouping code. An account account grouping is tied to each movement type in inventory management which make use of the posting transaction " Offse Offsetting tting entry for inventory posting" . In the posting transaction " Offse Offsetting tting entry for inventory posting" , you must assign a G/L accounts for every account grouping. If you wish to post price differences to a different price difference accounts in the case of goods receipts for purchase orders, goods receipts for orders, or other movements, you can define different account grouping codes for the transaction key. With the account grouping, you can also have different accounts for consignment liabilities and pipeline liabilities. 

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Valuation Valuation c lass of material or (in case of spli t valuation) the valuation type The valuation class allows you to define automatic account determination that is dependent on the material. The user will define the valuation in the Material Master ( MM02 MM02 – – Accounting Accounting 1 View ) decided decided by Finance which which will tied each Valuation Valuation class class to a G/L Account code. code. For example: example: you can can post a goods goods receipt receipt of a raw material material to a different different stock account than if the goods receipt were for trading goods, even though the user enters the same transaction for both materials. You can achieve achieve this by assign ing di fferent valuation classes to the materials materials and by assigni ng diff ere erent nt G/L G/L accounts t o the posting transaction for every valuation class. If you do not want to differentiate according to valuation classes you do not have to maintain a valuation class for a transaction. 

The G/L account assignments for the charts of accounts INT and INT and the valuation grouping code 0001 are 0001 are SAP standard. Configure the Valuations Valuations Class Class Li nk to the G/L G/L Acco unt Path : IMG – Materials Management – Valuation and Account Transaction Transaction : Menu Path OMWB Assignment – Account Determination Determination - Account Account Determination Determination Without Without Wizard – Configure Automatic Postings (a) (a) At the Initial Initial scr een, een, click th e Account As signm ent button t o view this s creen.

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(b) Double Double above line item to this screen Define the Valuation and G/L Account code. If you have multiple Company codes, then you have to maintain for multiple Chart of accounts. When Whe n you fi rst enter this s creen, the system will promp t you to ente enterr the Chart Chart of Acco Ac coun unts ts . Subsequently, if you wish to change the Chart of accounts click Edit – Change chart/acct. Notice the first column Valuation modif., modif. , if you did not group the Valuation Area, then you’ll have to define each Valuation Area for each Valuation class for each G/L Account. If you have four Valuation Area, then everything will be multiply by four.

At the above above screen, screen, click the Rules Rules button button and you are allowed the followings options on how your G/L Accounts are determined. Most common options will be to tick the followings:

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Take Take note of the General General modifi cation col umn i n GBB

You can find the relevant relevant Accoun t Modificatio n for each of the movement types. IMG Short cut Menu Path : OMWN IMG – Materials Management – General Settings for Materials Management – Valuation and Account Assignment – Account Determination – Account Determination without wizard – Define Account Grouping for Movement Types For example, Vendor Consignment movement type is 411 411 and and special stock K . You can see that the Account modification is VBR VBR..

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For you to be able to configure the Valuation Class and G/L Account, you’ll have to wor k with the Finance Department or FI Consultant as they need to provide you with all the G/L Account for the Material Valuation Class. The follo wings are the Inventory Transaction that you need to confi gure: Define Single G/L Acc ount Description Tranaction Expense/revenue from consign.mat.consum. AKO Expense/revenue from stock transfer AUM Materials management small differences DIF Purchase offsetting account EKG Freight clearing FR1 Freight provisions FR2 Customs clearing FR3 Customs provisions (optional) FR4 External activity FRL Materials management exch.rate diffs KDM MM exchange rate rounding differences KDR Price diff. offset. entry (cost object) (optional) KTR Price differences (cost object hierarc.) PRK Neutral provisions (optional) RUE Gain/loss from revaluation UMB Unplanned delivery costs (optional) UPF Input tax VST GR/IR clearing acct (mat. ledger) (old) (optional) WRY Define Valuation Class t ies to G/L Ac count Description Change in stock account Inventory posting Purchase account Purchasing freight account Offsetting entry for inventory posting Consignment payables Cost (price) differences GR/IR clearing account

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Tranaction BSV BSX EIN FRE GBB KON PRD WRX

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Valuation Class Configu ration Checking Upon Completion, you can return to the main screen OMWB to do some Simulation. Click the button Simulation for the next screen.

Type in a Plant, Material. Click the transaction you want to do, for e.g. GR goods receipt and click the Choose button.

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Click the Account assi gnments button and from the system message, you will be able to tell if there are errors in your Account assignments.

You can also check which G/L Accounts is tied to which Valuation Class by clicking the button

in transaction “OMWB”.

Enter the company code and click the Execute button.

The report will list all the Valuation Class under the G/L account.

Storage Location Indicator to allowed/disallowed Physical Inventory Freezing Initial IMG Action : Usually Required It is not necessary to have stock count for all the storage location. At time, certain storage location might not be subject to stock-take and you can untick the field Freeze book inventory. Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory – Physical Inventory - Allow Freezing of Block Inventory Balance in Storage Location ‘ ‘ – Disallowed Physical Inventory Freezing Tick – Allowed Physical Inventory Freezing

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SAP Version 4.6c


Configuration for Vendor Consignment Vendor consignment means that the vendor will provides the materials and stores them on your premises. The advantage for this arrangement is that the vendor remains the legal owner of the materials until you withdraw the materials from the consignment stores. Payment to the vendor is then activated. There are less downtime as materials are always available at your company premises. The disadvantage is that you need to provide a warehouse, insurance, manpower to manage the warehouse for the Vendor materials. To use the SAP Vendor cons ignment, you have to do t he follow ings IMG: Step 1: Act ivate Consign ment Prices via Info Records IMG Shortcut Menu Path : OMEV IMG – Materials Management – General Settings for Materials Management – Activate Consignment Prices via Info Records - Activate Consignment Prices via Info Records

Step 2: Config ure the Consig nment Autom atic Posting Acc ount Code IMG Shortcut Menu Path : OBYC IMG – Materials Management – General Settings for Materials Management – Valuation and Account Assignment – Account Determination – Account Determination without wizard – Configure Automatic Postings Description Offsetting entry for inventory posting Consignment payables Cost (price) differences

Transaction GBB KON PRD

You must define the Account Assignment for Consignment payables – KON GBB and PRD can be optional as the G/L account code can be the same.

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Business Process Flow for Vendor Consignment There might be a slight difference with the business process of your company but overall, your company will still have to go through the same SAP tcode. 1. First a contract will be drawn and sign between your company and the vendor. The vendor will provide you with the materials price which the Purchaser will input to tcode ME11 – Creating Info Records f or Consignment Stocks .

2. For any materials that you need from the vendor, the Purchaser will create a Purchase Order with tcode ME21N – Create Purch ase Order f or Consig nment . The system will identify the Consignment PO by the Item category K which the Purchase enter in the PO. In a consignment PO, no material price is required to be entered.

3. Once the Vendor delivered the materials to your company premises, the Store personnel will entered a Goods Receipts with reference to the PO with tcode MIGO – Goods Receipt for Purchase Order .

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4. You can view the consignments for each materials with tcode MMBE – Stock Overview. A line item with the field named Vendor consignment will appear. Double click on the Quantity and you will be able to view the Vendor who supply the materials. Any stocks that remain in the line item Vendor consignment belongs to the Vendor and no payments is required. To view all the Open Consignment stocks, use tcode “ MB54”. 5. To used the consignment stocks, the Purchaser have to transferred it to your company stocks which is the field Unrestric ted used column. The Purchaser will used tcode MB1B – Enter Transfer Posting with Movement type is 411, Special Stock ‘K’ and the Vendor c ode that the materials you want to used (assuming that you have multiple Vendor that supply the same materials). At this point, the system will read the PRICE from the Vendo r Materials Info Record (ME12) and create a Financial documents. After the transfer, the stocks belongs to your company and payment will be made according to the agreement.

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6. At the payment intervals agreed, Finance department will print the Consignment Settlement list with tcode “ MRKO” . The list will be passed to the Purchase Department for verification. Once verified, Finance will do a Consignment Settlement with tcode “MRKO” and the Vendor will be paid.

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The Initial Inventory during Implementation Task 1: Set the Initial MM Period for your Company Code During the Initial MM Implementation, ensure that the start of the MM Period for the company code is maintain in OMSY. This IMG will allows the user to start inputting the Material Master Records which later allows them to input the Inventory Records. Transaction : OMSY

Menu Path : IMG – Logistics General – Material Master – Basis Settings – Maintain Company Codes for Material Management

Maintain the Current Period (Start of your Implementation) and h it Enter. For e.g. going live on 2004 01 (January 2004). Please note that 2004 01 doesn’t always represent January 2004. It depends on how your period is begin setup by the FI consultant. Some company go-live on July 2004 and the period begins 2004 01. So remember to check how your company period is begin organized.

Subsequently, every end of the month, you will close the current month Inventory and Open the Next Inventory Period with transaction MMPV. The Period is always the Next Perio d. Transaction : MMPV

Menu Path : SAP Menu – Logistics - Materials Management – Material Master – Other – Close Period

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Task 2: Transferring t he Current Inventory Balance to th e SAP System The next thing you need to asked the User to prepare before going-live is the Initial Opening Inventor y that your company have. Assuming there is a current Manual Inventory system that your company is using and you need to transferred the last Inventory Balance to the new SAP system. If the Inventory transaction is not too many, you can asked them to input manually into the SAP system with transaction MB1C. The last day before going-live is usually declared a stock-take day by the company as they need to freeze all Inventory Posting so that the Last Inventory Figures can be accurately transferred to the New SAP System. If the transaction is too many, you can suggest to them to engage an Abaper to write an Initial Inventory Quantity transferred program. The user will maintain all the Materials quantity, storage location and plant in the Excel file and this will then be exported into the SAP Inventory system.

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SAP Version 4.6c


To enter the Initial Opening Inventory Transaction : Menu Path : SAP Menu – Logistics – Material Management – Inventory MB1C Management – Goods Movement – Goods Receipt - Other SAP have assigned movement type 561 as the initial Inventory value entry. For wrong entry, enter the same information with movement type 562 and the Inventory figures will be reverse. After the Initial Inventory transferred, no one shoul d be author ized to used 561/562 anymore.

On the second screen the user just need to enter the Material and Quantity. To enter more materials click on the Menu Edit – New it ems

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SAP Version 4.6c


Static v ersus dynamic data conversion In general, data could be classified as begin either static or dynamic data. Static data includes items that are relatively stable such as vendor master, material master, BOM, routing, work centers, customer master, price agreement, material group, activity prices, cost centers etc. Dynamic data includes items such as inventory balances, A/R balances, A/P balances, GL balances, Open Production Orders, Open Sales Orders, Open Purchase Orders and Planned Independent Requirements. In general, we will have lots of time to convert the static data but insufficient time to rush the dynamic data into the system. This is because dynamic data must be converted with a clear cut-off date. This means th at the balances must be that of the same point in time in or der to ensure the integrity of data. Where the volume of data in relation to the number of end users is high, we will consider automating the conversion, provided that data is available from the old system. If the volume is low or if data is not available from the present system, users should key the data directly into SAP. This approach has an added and import ant benefit of tr aining the end users in the operation of the SAP system.

A Sample note o n In ventory Bal anc e Conver sion This information will be extracted from the current system and uploaded into SAP automatically. The conversion process will generate the following accounting entries:  

Dr Inventory Control Accounts Cr Inventory Conversion Control Account (e.g. 999999)

If done correctly, the balance in the Inventory Conversion Control Account should become zero. Both the existing system extraction program and the SAP batch input record formatting program must be ready by Month 99 for the trail run.

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SAP Version 4.6c


Ap pendix A : Th e Inventor y Goods Movement Confi gurati on Links Ex pl ain Now, let see what are the Inventory Goods Movement Configurations that are related before the user can post any Goods Movement:1. Configure the Valuation Class ( OMSK) which the user will then maintain it in transaction MM01/MM02 – Accounting 1 View . The Valuation Class will allows the system to post to the correct General Ledger Account in the Financial Accounting Modules. 2. Maintain the Storage Location by Plant ( OX09) which the user will then have to specify when they do any Inventory Posting with the Goods Movement transaction like MB1A, MB1B, MB1C, MB01, MB31, MIGO. If you have accept the default configuration Create Storage Location Automatically ( OMB2, OMB3, OMJ8), then user does not need to create the Storage Location ( MMSC) for the material manually every time they post a new Storage Location for the material. 3. Set the Printer Determination (OMJ3 or OMJ4 or OMJR) if the user wish to print the Material Document after Goods Movement have been successfully posted. 4. Maintain the Reason for Movement (OMBS) for the Material Scraps Movement type 551. 5. Optionally, you may want to Hide Unnecessary Fields by Movement Type ( OMJX, OMBW, OMCJ, OM9A) that your company does not need.

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SAP Version 4.6c


Ap pendix B : Restr ic t t he Stor age Loc ati on fr om any Goods Movement If you want to restrict the users from performing any Goods Movement, first Flag for Deletion the Material Storage Location and then set the Message M7 127 to ‘E’. Step 1 :- Flag for deletion the Sloc To Flag fo r Deletion the Storage Location, goto transaction MM06

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Next, tick the Storage location and Save

Step 2 :- Set Message M7 127 to ‘E’ (Error) IMG Shortcut OMCQ

Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory - Define Attributes of System Messages

This SAP Message will pop-up when t he users try to do a Goods Movement :Material Testing Plant SLOC flagged for deletion Message no. M7 127 The material master record V has been flagged for deletion. Depending on the system setting, the system issues either a warning or an error message. • If the message is a warning ( W), the system will accept your entry, but simultaneously issues a warning to prevent you from making the wrong entry. • If the message is an error message ( E), the system will not accept your entry.

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SAP Version 4.6c


Ap pendix C: Al lows /Dis all owed Goods Movement Pos ting to Prev ious Period This transaction code allows you to control the Inventory Posting for the Current and Previous Period (SAP terms for month) after the Month-end Closing. The purpose of setting this indicator is to stop the user from posting any Inventory transaction after the beginning of a new Month. This is usually a request from Finance department because they will not be able to determined the Previous Month stocks figures if user to continue to post entry to the previous month as Financial Document will be created for any valuated materials that the user post to the previous month. Menu Shortcut MMRV

Menu Path : SAP Menu – Materials Management – Material Master – Other – Allow Posting to Previous Period

To prevent user from posting to the Previous Month, untick Allow posting to previous per. and tick Disallow backposti ng generally as shown below and vice versa.

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SAP Version 4.6c


Ap pendi x D: How to Ar ch iv e the Materials Documents ? In Inventory Management, for every transaction posting, the system will create a Material Documents. After a period of time, depending on your company transaction, your database will grow and deletion of passed data is required. Archiving is normally done by the Basis team, but you may required to do it, if you does not have one (For e.g. SAP server is outsource to a Data Center). Upon successful deletion, the Basis person or the Data Center will backup the archive files into a TAPE before removing it from the SAP server. Archiving the Material Documents requires two steps: 1. Create the Archive files – the system will CREATE an archive files that reside in the SAP server. 2. Actual Deletion from the SAP database – the system will READ the archive files that have been created and remove them from the Inventory database (or tables). First check yo ur Material Documents Li fe. The formula is: Current date – Material Documents Posting Date > Material Documents Life Transaction : Menu Path : IMG – Materials Management – Inventory Management and Physical Inventory – Define Document Life OMB9

Ar chivin g the Materials Docum ents: Transaction : Menu Path : SAP Menu – Tools – Administration – Administration – Client Administration - Archiving SARA Type the Material Documents Object name is “ MM_MATBEL” and Hit Enter. Figure 1:

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Figure 2: If you are doing it for the first time, click the Customizing button.

Figure 3: In the Archiving object-specific Customizing, Click the Technic al settings

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Figure 4: Customize the Test Variant to Test and the Production Variant to Production: TestSessVariant – Click Variant -> Values -> Tick Simulation and Log Prod. Session Variant – Click Variant -> Values -> Tick Log Save it and return to the Archiving Main Menu (Figure 2).

Figure 5: With the above settings, you can now proceed to do the Archiving. At the Main Menu (Figure 2), Click the Archiv e button. Type in a Variant Name and click the Maintain button.

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Figure 6: Depending on your company Financial Year Configuration, your document year might not follows the normal Calendar year. For e.g. 200401 refers to July 2003 and 200412 refers to June 2004. Save your Variant.

To start the Archive, Click the Start button in Figure 5, then Save button.

follows by the

The Start date will change to Green Light and you can now click the Execute

button.

Check the Spool Request and reconfirmed that the Archive Material Documents are those that you wish to delete.

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Actu al Deletion fr om the SAP Database If everything is ok, you can proceed to Figure 2 and click the Delete button to start the Actual Delete from the SAP database. Click the Archiv e selectio n to select the Archive files.

Tick the Archiv e files and hit the Enter key. Next maintain the Start date button as Immediate. You can tick the Test session button to do a test first before starting the Actual Delete. Once you are comfortable, Untick the Test session button and do an Actual run and the Material Documents will be Physically deleted from the database.

When the Deletion Jobs is completed, you can check the spool log in tcode SP01 and do a random check with transaction MB03 to verify that those Archive documents does not exists anymore.

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Ap pendix E: Configure the Cycle Coun t i n SAP Complete the system settings for the physical inventory method of cycle counting by defining the individual cycle counting indicators for the given plant. The cycle counting indicators are used to group the materials together into individual categories. Normally, the cycle counting indicators are assigned when an ABC analysis is run. However, different indicators can be defined, if necessary. 1. Define the allowed cycle counting indicators in the plant. 2. Make the required settings for each indicator. Remember that the total of the percentages must be 100 if you want to assign the indicator to the individual materials as part of an ABC analysis.

Change Settings fo r Cyclic Countin g Transaction: OMCO

Menu Path: IMG – Materials Management – Inventory Management and Physical Inventory – Physical Inventory – Cycle Counting

To set the cyclic count indicator automatically If you does not wish to set the A,B,C,D indicator manually, SAP can help you to set it automatically. However, take note that the auto SAP A,B,C,D classification is based on the consumption/usage value or requirement (forecast) value. For Example, In a 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% @ www.sap-img.com

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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. Transaction: MIBC

SAP Menu Path: Logistics – Materials Management – Inventory Management – Physical Inventory – Special Procedures – Cycle Counting – Set CC Indicator

Note:If you tick the All sto ck materials, all material includi ng thos e who do not have the cycli c count i ndicator are also taken.

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Field explanation: Field Descrip tion Plant code for which the cycle count indicator Plant is to be put. Material Type

To enter the material type for which cycle count indicator is to be put.

Materials with deletion flag Al l sto ck materials

Tick this box if even the material with deletion flag are also to be included.

Key figure radio button

Change cc percentages check box Processing radio button

If this check box is ticked, all material including those who do not have cyclic count indicator are also taken. Select radio button “consumption usage” if past consumption should decide indicator or select “requirements” if forecast to decide the indicator. Also put from and to date for option chosen default is 3 months past and 3 months future respectively. Put tick if you want to do changes for the default percentages set for A, B, C, D Use radio button “Display list first” or “update without list”. The names show what is the function

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Mandatory No, but at least one selection option to be given. No, but at least one selection option to be given. No. Why include Material that is already flag for deletion? No, but recommend.

Yes

No

Yes

SAP Version 4.6c


Create the Physical Inventory Document for Cycle Counti ng For every cycle count pre-determined period, run this program to create the physical inventory document for your cycle count. The rest of the process is exactly like the physical inventory count. SAP Menu Path: Logistics – Materials Management – Physical Inventory Transaction: MICN – Special Procedures – Cycle Counting – Create Phys.Inv.Docs

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Inventory Configuration

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