Inventory & Warehouse Management Processes

Proprietary & Confidential
Inventory & Warehouse

management
Purpose
Understand the concept of Logistics Execution
Understand the importance and the definitions of global purchasing
master data.
Understand a to-be global procurement processes for JCI
Understand the definitions and Best Practice Solutions for the Source
Determination
End to End Process Overview
End to end Process-Overview P2P incorporating

SAP processes
Planning
Plan to Fulfill
Develop Source
Strategies
Master
Data
Procurem
ent
Purchasing
Process
Requisitions for
Goods & Services
Receive
Products
Inventory
Assure Quality of
Goods and Services
Received
Procure Goods &

Services
Goods
movement
Pick and
Pack
Org. Structure
Accounts
Payable
Process Invoice
verification
Process Payment
Benchmarks
Measure Performance Benchmarks and Metrics, Produce Periodic Reports
Functionality of Inventory Management

and Warehouse Management
Inventory Management is used to:

manage stocks on a quantity and value basis
plan, enter and provide evidence of all goods movements
Warehouse Management is used to:

manage stocks on a quantity basis and on storage bin level
enter and provide evidence of all goods movements
select storage bins automatically according to set up strategies
Stocks Types and Special Stock in

Inventory Management
Overview: Stock Types
Unrestricted Stock
Quality Inspection Stock
Blocked Stock
Customer Returns
GR Blocked stock
Batch restricted use Stock
Only if batch management is active!
Stock Types in SAP
The Stock Types describe the different usabilites of stocks
Unrestricted
Use
Stock
Stock is
available
for every
authorized
units of the
compony
Fully available
in
ATP check
Stock is
valuated
Quality
Inspection
Stock
Stock in Quality
Inspection at
Goods receipt
Stock can be
excluded from
ATP-check
Stock is
valuated
Blocked Stock
Non usabled
Stock (e.g.
Damaged
Goods)
Stock is
excluded from
ATP-check
Stock is
valuated
Customer
Return Stock
Stock for
Customer
Returns to be
inspected
Not available
for other Sales

deliveries
Belongs to the
client is not
valuated
Batch
Restricted Use
Stock
Stock with
Batch
Status not
free
Stock can be
excluded from
ATP-check
Stock is
valuated
Demo 1 Display Material Master

Material Number:
QS6X20
Description: Hexagon head screw ISO4017 M6x20-8.8-A1C
1 Display Material Master Purchasing View

Quality inspection indicator
2 - Display Material Master Plant/ Storage location View
Demo 2 Display Stock
Material Number:
QS6X20
1 Stock Overview of Plant 1000
1000
MM
0001
1,000 pc
Block - 2,000 pc
Quality Insp. - 10 pc
0002
Plant
28,010 pc
0088
21,000 pc
Storage location
4000 pc
GR Block Stock 10 pc
2 Display Warehouse & BIN stock for Plant 1000 > Storage location 0088
WM
001
Warehouse No.
001
Storage type
01-02-05
01-02-06
1875 pc
125 pc
02-02-05
1875 pc
03-02-05
125 pc
Storage bin
10
Special Stock
E Sales Order Stock

K Vendor Consignment
M RTP Stock
RTP = Returnable Transport Packaging
O - Subcontracting
Q Project Stock
V Returnable Packaging
W Consignment at Customer
11
Special Stock
Sales Order stock
Stock that is used for a sales order. It is directly allocated to a sales order.
Components can only be used to produce material ordered by the customer
and the finished product can only be delivered to the customer via the sales
order.
Subcontracting
In subcontract order processing, the vendor receives materials (components)
with which it produces the end product.
- It is managed as part of your total valuated stock, and is available for MRP
- It is only managed at plant level, since it is not stored at your own company
but on the vendor's site
Project Stock
Quantity of a material which is held in stock for the completion of a project.
The project stock is allocated to a work breakdown structure (WBS) element.
Components can only be withdrawn for the WBS element.
12
Usage of Unit of Measure

in Inventory Management
The Usage of different Units of Measure

in Inventory Management
Base unit of measurement in inventory management
Creme
Base unit of measurement: piece =
12
Unit
of measurement
in
Mengeneinheit
fr
inventory
Bestandsfhrung
management
72
Alternative
Unit of measurement
Sales
Deliver / Transport
Purchase
Unit of measurement
Unit of measurement
Unit of measurement
SAP AG 2000
14
The Usage of different Units of Measure in

Base unit of measure
This is the unit of measure in which the stocks of a material are
managed. The system converts all quantities entered in other units to
the base unit of measure
Alternative units of measure
Individual departments may have their own units of measure. For
example, Purchasing may use a different unit than Sales or
Warehouse Management (WM). All units of measure other than the
base unit of measure are referred to as alternative units of measure.
15
The Usage of different Units of Measure in

16
Goods Receipts
Goods Receipt Process within JCI

Vendor
Warehouse
Shipment is
Checked against
damages
Material is
delivered
Delivery note:
Delivery note number
Purchase number
Material number
Qty, Text
Problems in
GR process
GR slip is
printed out
Goods Receipt
Consignment
Goods Receipt
Subcontracting
Yes
Goods receipt is not valuated in JCIs

financial books
If material is shipped:
Too early
Damaged
Discrepancy
Wrong parts
No
Goods Receipt
into GR
Blocked
Goods Receipt
Shelf Life Control
Material
Production date
or expiration date
has to be entered
Goods Receipt
For PO
Material
Master
Material is
Moved
into GR Blocked
Stock area
Business decision if
conditions for
acceptance are
met
Quality Insp.
Material?
Yes
QM Stock type
QM Stock type
No
Material is
returned
Return delivery
to Vendor
PO will be reOpened
Released GR Blocked
Stock via Mat. Doc.
Unrestricted
Unrestricted
use Stock type
use Stock type
Manual
Quality
processes
Put-away
Warehouse/
Storage Location
Blocked Stock
Blocked Stock
type
type
18
Overview of Goods Receipts

Transactions
Receipts of goods from an external vendor or from production are
posted. A goods receipt leads to an increase in warehouse stock.
There are three different ways of goods receipts:
1. Goods receipts with reference to a reservation
2. Goods receipts with reference to an order (production order or
purchase order)
3. Other goods receipts
Goods receipts are posted with transaction MIGO
19
Goods Receipts Transactions

Transactions for Goods Receipts
4.6C
Other goods
receipts
Transaction code
MB1C
Enter
return delivery
Goods receipt
for known
purchase order
Transaction code
MB01
MIGO
4.6C
Goods receipt for
order
Transaction code
MB31
Goods receipt
for unknown
purchase order
Transaction code
MB0A
Display material
document for goods
receipts
Release
blocked stock
Cancel material
document for goods
receipts
20
Goods Receipts without references
Tuesday
Dec.
18, 1994
Tuesday
Dec.
18, 1994
Goods receipt
Preplanning
Initial entry of stock balance

Without purchase order
Without purchase order

Without production order
Without production order

Receipt of by- products
Delivery free of charge
Returns from customer
With the initial entry of inventory data (movement type 561), physical warehouse
stocks from a legacy system is transferred to the newly implemented SAP R/3 MM
System.
The valuation of the inventory data to be transferred is dependent on the price
control procedure and prices specified in the material master (accounting view). The
price is eiher maintained as standard price or moving average price.
21
Material Document Goods Receipt Example
22
Material Document
No posting without a document !
A material document is generated and stored in the system for every
transaction/event that causes a change in stock.
The material document is generated when a goods movement is posted in the
Inventory Management system and serves as proof of the movement and as
a source of information for any applications that follow.
If the movement is relevant for Financial Accounting (that is, if it leads to an
update of the G/L accounts), an accounting document is created parallel to
the material document
The G/L accounts involved in a goods movement are updated through an
automatic account assignment.
23
Goods Receipt into different Stock Types

Goods Receipt Blocked Stock
Unrestricted-use stock
Mvt
101
Stock in quality inspection

Blocked stock ( valuated)
Non- stock materials

Mvt
101
Stock
Consumption
Vendor
Conditional
acceptance
Cost center
Project
Other
GR blocked stock
Mvt 103
24
Goods Receipt into different Stock

Types
At goods receipt, the material is posted to consumption or to stock.

Goods receipts can be posted to unrestricted, blocked or quality stock. The
posting depends on the settings in the material master, purchase order and
input during processing of the goods receipt.
Stock can be also managed as GR blocked stock. In this case, stock is
posted to blocked stock and is not valuated (posting with movement type
103). Once a material has fulfilled the acceptance conditions, it can be
released. It is then valuated automatically
However, Quality Inspection indicator can be used to store goods as a
different stock type. JCI quality processes will be done through SAP. Once a
decision is made, the goods can be transferred back into unrestricted stock.
25
Goods Receipt GR Blocked Stock

Goods Receipt Blocked Stock and Release
Purchase order
history
updated
GR blocked
stock
updated
Release to warehouse
Conditional acceptance
(GR blocked stock)
OR
Vendor
Return to
vendor
26
Goods Receipt Quality Stock Type

(Without QM)
Goods Movements and Stock in Quality Inspection
Material
Vendor
Unrestricted use stock
Quality inspection
Sampling
Material
Stock in QI
stor . loc .:
in another
laboratory
GR blocked stock
Blocked stock
27
Return Deliveries
Return delivery to
vendor
Shipping docmts
Packing
Picking
Returns for purchase

order
Delivery via shipping
With ref. to purchase

order from warehouse
stock
With ref. to purchase

order from blocked stock
28
Return Deliveries
Reversal
Reason for movement

(optional entry)
(e.g.: wrong stor . loc.)
Without
Goods rcpt/ issue slip
Return
delivery
Reason for movement

( mandatory entry )
(e.g.: material damaged )
With
return delivery slip
The return delivery slip is

returned to the vendor along
with the material.
29
Returns from Customers
Returns from Customer

Return Sales
Order
Delivery
Item 1
Item 2
Delivery
SD
Creation of
Transfer Order
Post
Goods Receipt
IM
Transf.
Item 1
Item 2
Confirmation of
Transfer Order
WM
31
Processes in Customer Returns

S/O
broken
Delivery
Return Order
Return Delivery
Invoice
Receive in
Blocked Stock
Inspection
Transfer to
Unrestricted
Stock
Wrong part/
over shipment
w/o return
Return Order
Credit memo
request
Return Delivery
Receive in
Unrestricted Stock
Credit memo
Credit memo
Credit memo
32
Processes in Customer Returns
S/O
e.g.
Parts are
broken
Create
Return Order
Specify
order reason
Receive parts and

RA form
Invoice
Order
blocked for delivery
and billing/ credit
Select Order
Check Report
blocked RAs
Clarify warranty
situation
Create
Return Delivery
Quality
inspection
stock
Create and Post

Credit memo
Send
credit note to
customer
Release or reject
Return order
If released send
RA form to customer
If not
inform customer
33
Goods receipt at
Subcontracting Process
What is Subcontracting Process in SAP?

SAP Definition of Subcontracting:
The subcontracting business process means to add value on a product by
an external vendor.
In this process the purchasing company has to provide components for
the subcontracting process.
The components can be provided from our own stock or can be delivered
directly from another vendor to the subcontractor.
The purchasing company is the owner of provided stock for components
unless the sub assembled item are received.
The inventory management of SAP supports the stock overview and the
stock movements of the provided components.
Required components and components quantities for the subcontracting
process can be defined in a bill of material.
In most cases JCIs` understanding of a subcontracting process is

external procurement of erection in the contracting business.
35
Subcontracting process Conclusion: Best Practise & Key Benefits

The SAP subcontracting process offers an integrated process including
procurement processes, inventory management, shipment of
components, stock monitoring, invoice verification
Master Data: Capability to maintain Master Data especially to subcontracting
process (BOM, Material Master, Purchase info record). Well prepared master
data is basis for a smooth process flow.
Procurement: Capability for automating of procurement process from
Purchase requisition, Source determination and Purchase order
Inventory Management: Tracking and monitoring of components provided
to subcontractor
Subsequent adjustment: Adjustment of real consumption of components
Integration: Direct integration to other SAP components, especially to
finance and Controlling. Open decision of integration with shipment of
components (SD).
3rd Party Delivery of Components: The system supports this process to
reduce own stock value and additional transfer and goods movements
36
Subcontracting Process Goods receipt of sub assembled products

A goods receipt has to be entered when the vendor delivers the sub
assembled product.
The goods receipt will be entered with reference to purchase order.
The goods receipt for the subcontract order are posted in the same way
as for a standard purchase orders.
The system determines the sub assembly product for each order item
and creates a goods issue item for each component. As a result, the
material document consists of the following items:
Goods receipt items for the materials supplied by the vendor
Goods issue items for the components
37
Subcontracting Process Overview

Sub
assembling
PO for
subassembly
Delivers
subassembly
to JCI
Subcontractor
Subcontracting
PReq & PO
Material
Master
Purchasing
Reports
Components issued
with Goods Issue Note
and Subcontracting PO
SC Purchase
Info Rec
Manufacturing
Warehouse
Monitoring &
reporting
MRP
Transfer
Components to
Subcontractor
Copy PO
Finance
Inventory
Reconciliation
Goods receipt
with ref to PO
(subassembly)
Consumption of
SC components
Bill for
subassembly
Invoice
Verification
38
Subcontracting Process
Goods receipt from subcontractor
Integration of goods receipt of sub assembled products and consumption of components
automatically
Components
Sub assembled products
Integration to
Finance & Controlling
Components
Subcontracting Stock (located at the vendor)
Unrestricted-use
Stock
Stock
Transfer
Quality Inspection
Stock
Consumption
of components automatically
PO
Subcontracting
Goods receipt
Costs for
consumption of components
& sub assembling
Bill of
Material
39
Goods Receipt with Inbound

Delivery
Goods Receipt via Inbound Delivery

The goods receipt process for inbound deliveries is an essential part of
the supply chain. This process includes the steps after creation of the
purchase order:
Notification
the inbound delivery
subsequent putaway of goods
and the goods receipt posting of the ordered goods.
The significant advantage of depicting the goods receipt process through

the inbound delivery function is that you can execute many processes in
advance, even before the actual goods receipt posting takes place.
You have all the necessary information beforehand because the supplier
notifies you of the inbound delivery ahead of time. The inbound delivery
describes exactly which materials or pallets can be received on what
date and at what time.
41
Goods Receipt via Inbound Delivery
Purchase
Order
The system creates an inbound delivery automatically if you receive a

shipping notification via Electronic Data Interchange (EDI). You can also
create an inbound delivery manually if you do not use EDI to communicate
with your supplier
Delivery
Item 1
Item 2
Inbound
Delivery
SD
Transf.
Creation of
Transfer Order
Goods
Receipt
IM
Item 1
Item 2
Confirmation of
Transfer Order
WM
42
2) Ways of creation an Inbound Delivery

An inbound delivery can be created with:
reference to a purchase order

collective processing for several purchase orders
reference to a stock transport order
reference to a customer return
Purchase
Order
Collective
processing run
EDI
Manually
Inbound
Delivery
43
Features of the Inbound Delivery

Execute many processes in advance, before the stock arrives
You have all the necessary information beforehand because the supplier
notifies you of the inbound delivery ahead of time
The inbound delivery describes exactly which materials or pallets can be
received on what date and at what time.
Inventory management of packaging materials
Automatical creation of inbound deliveries through a collective processing run
Inbound delivery monitor
Determination of goods receiving point
Incompletion log
Change documents
Document flow for inbound delivery
44
Main Differences between the two

Goods Receipt Methods
Conclusion: Use the Inbound delivery process if you want to take
advantage of the additional functionality.
Tasks
IM before WM postings
Packing possible
Electronical Receipt of
Shipping notification possible
Goods Receipt for

Purchase Order
Inbound delivery
ye
s
no
no
ye
s
no
ye
s
45
Goods Issue
Goods issue
Goods issues can be posted the following ways: material withdrawal,
material issue or a shipment of goods to a customer (without the
involvement of the SD Shipping component). A goods issue leads to
a reduction in warehouse stock.
The Inventory Management system supports the following types of
goods issues:
- Withdrawal of material for production orders
- Scrapping and withdrawal of material for sampling
- Return deliveries to vendors
- Other types of internal staging of material (goods issue for a cost
center, project,
maintenance order, asset)
- Deliveries to vendors without the involvement of the SD Shipping
component
47
Overview of Goods Issue

Goods Issues
From w/house
From consgmt
Goods issue
Consumption
From pipeline
Issue
Cost center
Sampling
Asset
Scrapping
Sales
Order
48
Goods Issue
The goods issue posting is dependent on the movement type
49
Overview of Goods Issue
With reference
Pl
an
ne
d
To reservation
reservation
To
Selection
Direct input
Search by material
To order
To bill of material
Goods issue
U
np
la
nn
W/o reference
ed
Direct entry of
required data
(material, quantity,
account
assignment, ...)
Using
stock determination
to determine the
storage location and
stock
50
Goods Issue
Results of a goods issue posting
Material document is created

Accounting document is created
Goods receipt/issue slip is created
Stock update
Update of G/L accounts
Consumption update
Reservation update
Order update
Update in other applications
Transfer requirement is created when the Warehouse Management
System is configured (localization)
51
Stock Transfers and Posting

Changes
Overview of Transfer Processes
Transfer Postings
Miscellaneous
Transfer Postings
Stock transfer
Plant to
plant
Storage location
to storage
location
Material to
Material
Quality stock to
unrestricted stock
Consignment
to storage
location
53
Examples of Posting Changes

Posting changes
Storage location 0001

Goods
receipt
Wareneingang
Quality stock
1
32
2
32
349
350
Unrestricted stock
34
3
34
4
Blocked stock
Warenausgang
Goods
issue
54
Reports in Inventory
Management
Controlling the Inventory
Reporting
Stock controlling
Stock per Material

Availability at
plant level
Stock movement lists
Inventory controlling
ABC- Analysis
Inventory value
Range of coverage
Stock/requirement list
Slow moving items
Stock per plant /

storage location
Standard Analysis
56
Q&A and Conclusion
57

Inventory & Warehouse Management Processes

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Inventory & Warehouse Management Processes

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Proprietary & Confidential