From the course: Learning SAP MM (Materials Management)

SAP inventory management overview - SAP ERP Tutorial

From the course: Learning SAP MM (Materials Management)

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SAP inventory management overview

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- [Instructor] Effective inventory management keeps costs as low as possible, while ensuring customer needs are met on time. Let's look at the inventory management process in SAP. One of the key functions of inventory management in SAP is material stock management. Our stock can be measured in two different ways. First, material stock can be measured by quantity. Anytime there's a transaction in the system that affects the quantity of stock, the levels are updated. This includes any stock that is located in the warehouse, any stock that's been ordered but has not been delivered yet, or any stock that is being inspected. SAP's functionality allows for insights into a material stock level at any time. The other way that material stock is measured is on a value basis. Again, anytime there's a transaction that affects inventory, the stock value is updated. Account assignments in cost accounting are updated as the stock moves. This also impacts values in general ledger accounts. Stock value is measured at the plant level or the company code level. Another key function of inventory management is the planning, execution, and documentation of all goods movements. Goods movements are simply transactions that result in a change to stock. Goods movements track how materials move both within and outside of an organization. There are many types of goods movements possible in SAP. Let's look at three of the most frequently used. First is the goods receipt. The goods receipt is the receiving of the material that has been purchased from a supplier or has been produced internally and is being received into stock. Next is the goods issue. The goods issue is the movement of a material to the production process or the change of ownership of a material to a customer when it is sold. The third goods movement type we'll examine is the stock transfer. The stock transfer moves stock of a material between storage locations at one plant or between two different plants. Let's also explore stock reservations. Reservations literally reserve stock at the warehouse to ensure that it will be available at a later date. For example, stock can be reserved to meet the needs of an upcoming production order. Reservations for material can be made at the plant or at the storage location level. The reserve stock bucket is increased to reflect the reservation. Inventory management In SAP enables accurate stock valuation and the effective movement and reservation of stock. All these inventory management tools are leveraged to keep costs as low as possible, all while meeting customer demand.

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