Physical Inventory Procedures The R/3 System supports the following physical inventory procedures: Periodic inventory Continuous

inventory Cycle counting Inventory sampling

Periodic Inventory In a periodic inventory, all stocks of the company are physically counted on the balance sheet key date. In this case, every material must be counted. During counting, the entire warehouse must be blocked for material movements.

Continuous Inventory In the continuous inventory procedure, stocks are counted continuously during the entire fiscal year. In this case, it is important to ensure that every material is physically counted at least once during the year.

Cycle Counting Cycle counting is a method of physical inventory where inventory is counted at regular intervals within a fiscal year. These intervals (or cycles) depend on the cycle counting indicator set for the materials. .

Inventory Sampling In MM Inventory Sampling randomly selected stocks of the company are physically counted on the balance sheet key date. If the variances between the result of the count and the book inventory balance are small enough, it is presumed that the book inventory balances for the other stocks are correct

Physical inventory Process: 1. Create Physical inventory document T Code MI01 Create single inventory document T Code MI31 Create multiple physical inventory documents I. Enter the desired fields i.e. material, material type, site, storage location, and Maximum number items / Documents 100, etc Press Enter II. Click on Process Session III. Select the line items and click on the process IV. System displays a dialog box, select Background and click on process. Inventory document is created 2. Print Inventory Document and handed over to responsible person say Manager 3. Enter Physical Inventory count T Code MI04 i. Enter the physical inventory document number Fiscal year, count date Press enter ii. Enter the Material Quantity and click on post 4. Listing of difference T Code MI20 Enter the physical inventory document number and execute, system displays a screen, wherein we will be able to view the differences 5. Post the differences T Code MI07 & Mov Type 701 & 702 Enter the physical inventory document number, year, posting date, enter the difference and post

What is A, B, C and D Indicator for a material for cyclic count?

All the material may not be important for cyclic count purpose, it may be required to count some items frequently and some items rarely. A cyclic count indicator A or B or C or D is allocated to material in the material master based on either consumption value (consumption X rate) or forecast value (forecast quantity X rate). The item with more consumption value are classified as A, and with minimum as D. A indicator items will be counted frequently (say every month), D will be less frequently (say every 6 months or every one year). Daily a number of items will be taken for count, some may be with A indicator, some with B and so on. Mark all materials that are to be included in cycle counting with a cycle counting indicator in the material master record (storage data). The cycle counting indicator is used to group the materials together into various cycle counting categories (for example, A, B, C, and D). There is an option in SAP to have a fixed indicator for a material say A for a material which does not have a high consumption value but it is important to count it every month, then the material can be marked as A indicator in material master with indicator fixed In Customizing OMCO, for Inventory Management, you can define for each category the time intervals at which the materials are to be counted. Fields : No. of phys. inventories per fiscal year for cycle counting For e.g. A - 12, B - 6, C - 3, D - 1 Specifies how often during the fiscal year a physical inventory is to be carried out for a material subject to cycle counting. The system uses this specification to convert the count interval into workdays. Fields : Physical inventory interval (in workdays) for cycle counting For e.g. A = 12 times per year and your Total Factory Calendar days = 300 The interval will be calculated as 300 / 12 = 25 days

Specifies after how many workdays following the last inventory count another physical inventory has to be carried out for a given material. The count interval is determined automatically on the basis of the number of physical inventories specified for the fiscal year. Fields : Float time (in workdays) for cycle counting For e.g. A - 10, B - 20, C - 30, D - 0 Indicates the number of workdays by which the planned count date may vary from the current date. For examples :For the plant, the float time is five days. A physical inventory has been planned for a material belonging to category C for June, 1. On expiration of the float time (after June, 6), the physical inventory has not yet been carried out. Irrespective of the category, the material is parked for the next cycle counting run. Fields :- Percentage of performance measure for cycle counting ind. Specifies the percentage allocation of the materials to the individual cycle counting categories. The percentage value is used for automatic assignment of the cycle counting indicator. For example :In the 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 B C D materials: materials: materials: materials: 50% 25% 15% 10% ---100% ----

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. You can use the program ABC Cycle Counting Analysis (MIBC - RMCBIN00) to perform an analysis. In this analysis, the system assigns the materials to the individual categories according to consumption or requirements (forecasts). You can also specify whether this analysis is to consider only the materials with cycle counting indicator or all materials. The cycle counting indicator in the material master records can be updated automatically by this program. Marking Materials for Cycle Counting This step is only required if you perform cycle counting for the first time or if you want to update the cycle counting indicators. In the material master record (storage data), maintain the cycle counting indicator for all the materials that are to be included in cycle counting. You can set the indicator in one of the following two ways: 1. manually in the material master record. To do this, choose Material -> Change from the Material Master menu. 2. automatically using ABC analysis To do this, choose Special procedures -> Cycle counting -> Set CC indicator from the Physical Inventory menu.

SAP process flow: 1. MI01 Create Phsical inventory document : Initial screen 2. MI22 Display Physical Inventory Documents for material

3. MI21 Print physical inventory document 4. MI04 Enter inventory count: Initial screen 5. MI20 List of Inventory Differences 6. MI11 Enter recount: Initial screen 7. MI22 Display Physical Inventory Documents for material 8. MI21 Print physical inventory document 9. MI04 Enter inventory count: Initial screen 10. MI20 List of Inventory Differences 11. MI07 Post inv. Differences: Initial screen