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author's profile photo Former Member
Former Member


Hi experts

gud morng to all.

Can anubody explain me..?

1.What is Physical inventory.

2.Why we are doing P.I in company.

2.What is need of Physical inventory in Company.

3.Please explain me overview abt Physical inventory in SAP with with som examples.



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    author's profile photo Former Member
    Former Member
    Posted on Feb 01, 2008 at 05:04 AM


    Physical Inventory:

    Physical stock is actual stock available in the plant / storage location & is the figure ( Nos) after physical counting is done

    Logical stock is the stock shown in the system at any point of time

    Following is the process of to match the stock.

    1.Creation of Physical Inventory document for which you want to match stock ( T code MI 01)

    2. Entry of the physical count in the system (T code MI04)

    3. Posting of inventory difference ( T code MI 07)ea


    I hope this will give you clear idea & if useful pl. reward points,

    Vivek Maitra

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  • author's profile photo Former Member
    Former Member
    Posted on Feb 01, 2008 at 04:24 AM


    Physical Inventory is nothing but You are verifing your Actual Stocks with your Book inventory Stocks...

    Various Types of Physical Inventory in SAP..

    1)Periodic Inventory Counting

    Here you use to Verify your all stocks on Balance Sheet Key Date....In Indian Scenario, they use to Verify stocks on Every Quarter..

    2)Continuous Inventory Counting

    Here According to the company procedure......some high value materials they use to count continuously....for eg. every month end

    3) Inventory Sampling

    Here instead of verifing the whole stock....they use to check randomly and based on that random count check,they arrive the result....but it may not give correct result always...

    You can use foll. transactions for Physical Inventory in SAP

    MI01------> Create Phy.Inv. Doc

    MI21 -

    > Take Printout of Phy.Inv. Doc


    > Enter Count results


    > Post Difference

    MI11-------> Recount

    Always note Phy.Inv. will be carried out at Storage location level only....

    if you have same material lyeing at different sto.loc....then you have to create diff. Phy. Inv. Document for each Sto.Loc.

    Hope this whould have given some fair idea about Physical Inventory

    Reward if useful



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  • author's profile photo Former Member
    Former Member
    Posted on Feb 01, 2008 at 04:24 AM

    Physical Inventory:

    Physical Inventory is a business process in which physical stock is matched with book (system) stock. It is legal requirement to carry out physical inventory at least once in a year.

    Physical inventory can be carried out both for a company’s own stock (Unrestricted, Quality, Blocked Stock) and for special stocks (Customer Consignment stock, Vendor consignment stock from vendor, Returnable packaging). This inventory is carried out saperately for both type of stocks.

    Physical Inventory Processes:

    Several inventory processes available for physical inventory which includes as follow:

    1. Periodic Physical Inventory

    o All stocks of the company are physically counted on the balance sheet key date

    o Every material must be counted

    o Entire warehouse must be blocked for material movements during count.

    2. Continuous Physical Inventory

    o Stocks are counted continuously during the entire fiscal year.

    o It is important to ensure that every material is physically counted at least once during the year.

    3. Cycle Counting

    o In this method of physical inventory, inventory is counted at regular intervals within a fiscal year.

    o These intervals (or cycles) depend on the cycle counting indicator set for the material in Material Master record as CC indicator in plant view data.

    o With this Cycle Counting Method of Physical Inventory allows fast-moving items to be counted more frequently than slow-moving items.

    4. Inventory Sampling

    o Randomly selected stocks of the company are physically counted on the balance sheet key date.

    o If found not much variance between the counted stock and the book book stock, it is presumed that the book inventory balances for the other stocks are correct.

    Physical Inventory Process Cycle Flow

    1. Creation of physical inventory document

    - Physical inventory document(s) is created individually or using the batch program, click for more information

    - The transaction codes for creation physical inventory are as follow

    Individual Inventory documetion creation

    MI01 - Individual physical inventory creation

    MIS1 - Inventory Sampling document creation

    MICN - Cycle count inventory document creation

    Collective Inventory document creation

    MI31 - Own stock without spcial stock

    MIK1 - Vendor consignment

    MIQ1 - Project stock

    MIM1 - Returnable Transporation material

    MIW1 - Customer Consignment stock

    MIV1 - Returnable material with customer

    MIO1 - Material provided to Vendor (Subcontracting material)

    2. Print physical inventory document

    - Physical Inventory document can be printed based on the physical inventory document status and or item status

    - Transaction code MI21 is used to print the inventory document where print default value can be populated

    3. Count the physical stock

    - Based on the inventory doucmen printout, the warehouse person will check the stock of material physically and note that on print out. This is completely physical process.

    4. Enter count in system

    - On completion of physical count, the count result is needs to be entered in the system. This can be with reference (using Tcode MI04) or without reference (using Tcode MI04) to the physical inventory document.

    - If count quantity for that material is ZERO then select ZC (zero count) column instead of putting 0 in qty field. If 0 is used for zero count then systm will consider that as "not counted"

    5. Analyze difference

    - Once count is posted in the sytem, difference analysis can be carried out using trasnaction MI20

    - The output gives information based on the input criteria i.e. physical inventory document, plant, material etc.

    - The output gives information about the book quantity, Counted quantity, difference in quantity and value.

    - From this output list, you can carry out further process ie initiate recount, change count quantity, post difference

    6. Initiate recount and follow the steps 3,4,5

    - If found unacceptable difference, recount is initiated using directly from difference analysis list (transaction code MI20) or using transaction code MI11.

    - New inventory document will be created for selected items or for entire document

    - The original document items will be deactivated once recount is initiated so original document will not be available for further process.

    - On initiating recount, you need to process same as for new count document.

    7. Post the difference

    - Several options are available for posting difference

    - Post difference after count is posted using transaction code MI07

    - Posting the count and inventory differences using transaction code MI08, here you have created physical inventory but not counted so with this you can count and post difference in sinle step.

    - Entering the count without a document reference using trasnaction code MI10, with this you can create inventory document, enter the count and post difference in single step.

    some more points for posting difference

    - Posting period must be open to post inventory difference.

    - The fiscal year is set by specifying a planned count date when creating a physical inventory document.

    - Tolerence to crear difference per user group can be set in customization.

    - The system will generate material document for the difference qty and post the value to appropriate account (for valuated stock)

    - The movement type in material document will be 701 or 702 based on gain or loss of material.

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  • Posted on Feb 01, 2008 at 08:54 AM


    During the inventory you compare the physical (real situation) of your stocks (qty, batch, location, etc) to the stock situation of your system.

    Maybe you have to do inventory once a year because it is prescribed in the law but of course you can do inventory monthly, or any time you feel it is necessary.

    If you use WM the process may differ a little bit from the inventory process mention in messages above.

    basic steps:

    LI01N - creat / activate inventory doc

    (LI02N - activate)

    LI11N - enter count result

    LI20 - clear differences WM

    LI21 - clear differences IM (please use interim storage type 999)





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    • Hi,

      You have information on stocks in SAP - it's one thing.

      Other side of the coint that mistakes (wrong bookings, etc) can happen: some material maybe have been moved from one bin into another if WH staff haven't kept the rules, someone may have stolen something, you may have received a box with a label on it: 100 pcs and you later find out that the box contains only 98 pcs, etc.

      So you may have several reasons why your stock level accuracy and the exact location of your stock, etc may differ from the information stored in your system (SAP).

      That's why sometimes it is necessary to make inventory to examine what is the reality and what is the theoretical situation in SAP...

      Or as I mentioned you may be forced by the law to make inventory once a year...

      Your WH operates very well that these kind of mistakes don't exist or the amount of these mistakes are of very low level.



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