3/6/2018 220.227.2.173/usermanuals/mm/PhysicalInventory.

htm

Defini on:-
The recording of actual stock levels (quantities) of materials by counting, weighing, or measuring at a given storage location
at a specific time.

Why we do physical inventory:-

1. To know the correct stock in hand. Due to some inconvenience like some material have been stolen or broken, it
may lead to stock reflec ng in sap system and differs from the actual stock in storage loca on.
Physical inventory is then carried out to synchronize to stock in hand with the stock reflec ng in sap system.

2. In many countries there is a law that company has to do physical inventory to check the current inventory in hand
and that stock taken into considera on in company’s financial statement.

At which level physical inventory is carried out:-

1. Material
2. Batch
3. Storage Loca on
4. Special Stock
5. Material Type

Process flow of Physical Inventory:-

Create Physical inventory
document
MI01

Enter Recount
Enter the Count MI11
MI04

Post the difference

MI07

1. Use T. code. MI01 to create the Physical Inventory Document.

2. Material Status before crea on of physical inventory document.

3. Put the plant and storage loca on for which you want to do physical inventory. Tick on the Pos ng Block so all the
transac ons for materials will be blocked in backgrounds which are included in physical inventory. Press Enter and put
the materials.

A er saving you will get below message

Now when you see the material Phy. Inv. Block Status, you got this.

http://220.227.2.173/usermanuals/mm/PhysicalInventory.htm 1/4
3/6/2018 220.227.2.173/usermanuals/mm/PhysicalInventory.htm

4. Use t. code MI04 for enters the physical count of the material.

5. Put the quan ty of the material which you actually have at your storage loca on.

6. Before doing this check your storage loca on in sap system.

7. When you save this you will get below message.

8. Use t.code MI07 for pos ng the inventory difference.

9. It shows the difference between your actual quan ty of material and Sap system inventory quan ty.

10. A er saving this a material document is generated with the movement type 701 or 702.

11. You can check this document in t code. MB51.In this t. code. You will also find the accoun ng document for that
transac on.

Material Document for physical inventory is WI.

T. Code for Physical Inventory:-

Activity Transaction Code

Create Physical Inventory Document MI01

Change Physical Inventory Document MI02

Display Physical Inventory Document MI03

Print Physical Inventory Document MI21

Process List of Differences MI07

Create List of Differences with Document MI08

Create List of Differences Without Document MI10

Print List of Differences MI20

Recount Physical Inventory Document MI11

http://220.227.2.173/usermanuals/mm/PhysicalInventory.htm 2/4
3/6/2018 220.227.2.173/usermanuals/mm/PhysicalInventory.htm

Now we will focus on theore cal part of Physical Inventory:-

Physical Inventory Document:-

From a physical inventory document we can get following informa on

1. Where the coun ng has been taken place (plant, storage loca on)
2. Count date.
3. Which are the materials to be counted?
4. Status of the materials.

Post Difference:-
1. When inventory difference is posted a material document and if the material is valuated material then an
accoun ng document is also generated.
2. While pos ng the difference one can also maintain the reason for that.

Pos ng Block:-
When you ck the Pos ng Block check box at the ini al screen, it will not allow any goods movement for that
material un l the count results are posted.
If we don’t ck on it then it may occur inconsistency in coun ng result because of goods movement.

Freeze Book Inventory:-

When you ck the freeze book inventory check box for physical inventory document, it will allow the goods
movement but that will not reflect in the system un l the count results are posted. If the me dura on between
the
Physical inventory document crea on and coun ng is high then this indicator is set.

Procedure for Physical Inventory:-

1. Annual Physical Inventory:- In Annual physical inventory, all materials are counted once in a year on a pre-
determined date. On this date, all materials are blocked for any inventory movement ll the physical inventory
count is complete. This is more common for Plant / Storage loca ons which do not hold too much inventory. For
warehouses with a lot of inventory, this method tends to become imprac cal to implement.
2. Cycle Coun ng: - In cycle coun ng, all materials need not be treated the same way. It allows fast moving
materials to be counted more frequently than slow moving materials or high value items to be counted more
frequently than low value items. A cycle coun ng indicator is set in material master which determines for a given
plant, how frequently the material has to be counted, as in, once a year, twice a year, thrice a year and so on.

1. Maintain CC phys. Inv.ind.in plant data/stor.1 view in material master.

2. Use t.code. MIBC for ABC Analysis for Cycle Coun ng (Phys. Inv.) can be used to assign materials to different cycle
coun ng categories viz. A, B, C and D. This transac on analyses the materials based on the configura on of category A,
B, C and D and proposes / assigns a corresponding cycle coun ng indicator.
http://220.227.2.173/usermanuals/mm/PhysicalInventory.htm 3/4
3/6/2018 220.227.2.173/usermanuals/mm/PhysicalInventory.htm

(i)Put the plant

(ii) Put the Material type
(iii) Tick the op ons for material
(iv)Choose the indicator on the basis of Consump on or Requirement
(v) If you want to change the CC Percentage than make a ck on it.
(vi) Then Execute.

A er Execu on you will get the CC Indicator for the materials.

A er that run the t. code. MICN for Crea ng Physical Inventory Documents

A er that we follow the above described method for Count and Post the differences.

Movement types used in the Cycle Coun ng.

703 GR phys.inv: QI
704 GI phys.inv: QI
707 GR phys.inv.:blocked
708 GI phys.inv.:blocked
711 GI InvDiff.:whouse
712 GR InvDiff.:wrhouse
713 GI InvDiff: QI
714 GR InvDiff: QI
715 GI InvDiff.:returns
716 GR InvDiff.:returns
717 GI InvDiff.: blocked
718 GR InvDiff.: blocked

http://220.227.2.173/usermanuals/mm/PhysicalInventory.htm 4/4