Scrapping via IM

[Former Member]

What is the process of scrapping using inventory management (PID) and what are the financial implications of this steps (including pros and cons of using the step rather than issue to scrap)

[Former Member]

Thanks but would what would be the pros and cons of using PID for the scrapping process and how to distinguish it

[Former Member]

Hi,

You can always differentiate the scrapping process using the movement types (702 and 551).

But using the zero stock count and the variance warning can cause the system to issue an undesirably large number of warning messages.

Regards

Vijay

[Former Member]

Using PID for scrap will move the inventory cost to a specified inventory adjustment G/L account, which then appears as any other inventory adjustment without differentiation of scrap vs. other reason for the adjustment. Further, there is often a reserve set for scrap and if the scrap is not processed using the appropriate scrap movement type (as Vijay provided), then the cost will not hit the appropriate account for scrap. Lastly, using PID for scrap can also negatively impact the reported inventory record accuracy metric.

It is best practice to use the appropriate movement types to ensure the costs move to the correct accounts.

Regards,

Moss

[Former Member]

Hi,

In standard SAP, we can scrap the material using three movement types,

551-> withdrawl for scrapping from unrestricted -use stock

553-> withdrawl for scrapping from stock in quality

555-> withdrawl for scrapping from blocked stock

Scrapping  causes a reduction in  the stock and the value of scrapped material is posted from stock account to a scrap account.

Regards

Vijay

[Former Member]

Thanks but client standard is via a creation of Physical Inventory Document

In essence steps include:

MI01

MI04 (set to zero)

MI07

The question is for this step, it will posted to the same account as that of inventory.  How do we distinguish this?

[Former Member]

Dear Jay ,

Physical inventory will hit your  account relevant for inventory adjustment.

Thanks

Jinoy