Physical Inventory
Physical inventory is a process of determining that the inventory quantities are
exact, or if there are differences in quantity mentioned physically present and
that mentioned in the SAP system. Basically, after you are finished with
physical inventory, your system and physical stock levels must be the same.
It is mandatory for legal reasons, and in the most of the times it is conducted
once a year.
To simplify the process, check the below diagram, these are the most common
steps for doing physical inventory.
Creating Physical Inventory Document
Step 1)
1. Execute the transaction MI01.
2. Enter document date and planned date for counting (leave the default for
today).
3. Enter Plant/Storage location/Special stock indicator.
4. Choose if you want Posting Block (if there is a possibility that someone
will do a posting while physical inventory is in progress enable this –
material level), Freeze book inventory (current book inventory balance
will be recorded in the physical inventory document if this option is
enabled), and if you want to count batches with deletion flag (self-
explanatory). Press ENTER.
Step 2)
1. Enter the material number(s) you want to include in this physical
inventory document.
2. Save the transaction data.
You will be informed of the newly created physical inventory document
number.
Step 3) Optional step.
1. Execute the transaction MI02 to make changes to the document (if
needed).
2. Double click the item if you want to check if the counting has already
been done.
3. If you need to delete the document, you can set the deletion indicator.
Step 4) Optional step.
1. You can see in the item level that our material has not yet been counted.
You can display the document with MI03 transaction code.
Entering the Counting Results
Step 1)
1. Execute the transaction code MI04.
2. Enter physical document number and fiscal year.
3. Enter the counting date if it differs from the one suggested.
4. Enter the variance percentage. This means that if you had 100 pcs on
stock before the physical inventory process, and you enter 107 pieces as a
counting result, you will be informed with a warning message of the
difference between the previous stock quantity and the counted quantity.
Press ENTER.
Step 2)
1. Enter the quantity that is counted for this material.
2. Press ENTER.
You will be informed that there is a quantity difference of 20 pcs, if you haven’t
made a mistake while entering the quantity, you can bypass the warning by
pressing ENTER. If you made a mistake while entering the quantity, you can
correct the entry (124 pcs in my case) and hit ENTER again.
If you get the warning message, and you think that there might be a mistake in
the counting process, you can recount the item again and correct the results
(check out MI05 transaction code, and MI11 if needed).
Posting the Differences
After you have possibly recounted and re-entered quantity information for
problematic materials, you can post the differences by using the
transaction MI07.
Step 1)
1. Execute the transaction MI07.
2. Enter your physical inventory and fiscal year.
3. Enter posting date. Goods posting will be done according to this date.
Some companies use 31.12. In the annual physical inventory as the last
day of fiscal year.
4. You can use the threshold value to enter the maximum allowed
differences value in local currency. If you don’t want a limit leave this
field blank. In order for this to work, materials need to have the standard
or variable price maintained.
5. Press ENTER.
Step 2)
1. You can see the difference quantity. This means that we have found 4
pieces more than it was previously stated in the system.
2. Value isn’t shown as our controlling/accounting department didn’t yet
release the prices for this material. This needs to be done in a production
environment. You cannot post a difference of 4 pieces with the respective
value of 0,00 Eur.
We can see that our posting is done by creating the resulting material
document 4900547510.
Step 3) Optional.
We can check the material document in MB03.
1. We can see a quantity of 4 pcs in the material document.
2. Movement type used for goods receipt from physical inventory difference
posting is 701.
This means that 4 pieces are added to the inventory.
For a reference of standard movement types, used for physical inventory, see
the below table.
701 – Goods Receipt for unrestricted stock
702 – Goods Issue for unrestricted stock
703 – Goods Receipt for quality inspection stock
704 – Goods Issue for quality inspection stock
707 – Goods Receipt for blocked stock
708 – Goods Issue for blocked stock
You are done with physical inventory. You can now continue with regular
warehouse activities.
