Inventory Management Process

In SAP MM ( Part 3)
 Overview Process
1) Automatic Batch Determination
2) Configuration in SAP :
▶ Define Condition Table
▶ Access Sequences
▶ Batch Strategy type
▶ Batch Search procedure
▶ Import Standard SAP Characteristics
▶ Creation of a Class
▶ Material Master Settings
▶ Sort sequence in cu70 and assign your characteristic value to it. ( FEFO / FIFO )
▶ Create Batch Search Strategy: ( FEFO / FIFO )
3) Test Functionality :
▶ First Expired, First Out ( FEFO )
▶ First In, First Out ( FIFO)
▶ Last In First Out ( LIFO )
 1) Automatic Batch Determination

 Purpose. In the logistics process, that is from procurement

to sales, you are required time and again to specify
batches for individual business transactions.

 You can use batch determination for all types of goods

movements from the warehouse to find batches that
meet defined specifications.
 2) Configuration in SAP :
Define Condition Table

Condition Table: In Batch determination process, condition table consists of

number of field. Among those fields particular fields are selected and assigned to
the condition table.
IMG  Logistics  General  Batch Management  Batch Determination
and Batch Check  Conditions Tables  Define Inventory Management
Condition Tables
 2) Configuration in SAP :
Define Condition Table
We are going to use standard condition table : 024 Movement type/plant/material
 2) Configuration in SAP :
Access Sequences

 For each strategy type, there is a batch determination access sequence.

The main function of the access sequence is to allow the strategy type to
access the condition tables in the sequential manner.
 The access sequences ME01, ME02 are predefined in the SAP system. And
these access sequences should not be modified. The user created
access sequences should start with ‘Z’.
 ME01: Movement Type/Plant/Material
 2) Configuration in SAP :
Access Sequences

IMG  Logistics-General  Batch Management  Batch Determination and Batch Check -

Access Sequence.
Transaction Code: OMCX (MM)
 2) Configuration in SAP :
Batch Strategy type

It is the procedure to select what type of criteria to be used during batch determination
process.
IMG  Logistics General  Batch Management  Batch determination and Batch Check
 Strategy Type
OR Transaction code - OMCW
 2) Configuration in SAP :
Batch Search procedure:

Batch search procedure defines how the search procedure is defined for the batches.
IMG  Logistics General  Batch Management Batch determination and Batch Check
 Batch Search procedure Definition for Inventory Management

OR Transaction code OMCY.

 2) Configuration in SAP :
Batch search procedure activation.

In this you can assign the search procedure for the particular Movement Type.
IMG  Logistics General  Batch Management  Batch determination and Batch Check
 Batch Search procedure allocation and Check activation for Inventory Management
OR Transaction code OMCG.
2) Configuration in SAP :
activate SLED for your plant and movement type 201.
 2) Configuration in SAP :
Import Standard SAP Characteristics

You need to import all the important standard SAP characteristics, that is you need to
copy them from the client 000. These characteristics are hard coded in the ABAP
functions.
Transaction Code – BMSM
 2) Configuration in SAP :
Creation of a Class

create a class named as Z-CLASS1 of Class type “Batch (023)” and assign a standard
SAP Characteristics “LOBM_VFDAT – Expiration date, shelf life” and LOBM_LWEDT- Date of
Last Goods Receipt to this class.
 2) Configuration in SAP :
Material Master Settings ( MM01 )

Add the class to it in classification view.

 2) Configuration in SAP :
Material Master Settings ( MM01 )

In purchasing view activate batch management.

 2) Configuration in SAP :
Material Master Settings ( MM01)

Plant storage1 view give data for remaining shelf life and total shelf life
 2) Configuration in SAP :
create sort sequence in cu70 and assign your characteristic value to it.

IMG  Logistics  Batch Management  Batch Determination and Batch Check-

 Define Sort Rule
Enter Sort sequence “name” – ZFEFO1 ( if you use FEFO method )
 2) Configuration in SAP :
create sort sequence in cu70 and assign your characteristic value to it.

Enter Characteristics. We will use standard Batch Characteristic LOBM_VFDAT. This is used for
Shelf Life Expiration Date (SLED). Check Ascending column. Ascending tells the system to use
the earliest batches based on SLED.
 2) Configuration in SAP :
create sort sequence in cu70 and assign your characteristic value to it.

IMG  Logistics  Batch Management  Batch Determination and Batch Check  Define
Sort Rule
Enter Sort sequence “name” – ZFIFO1 ( if you use FIFO method )
 2) Configuration in SAP :
create sort sequence in cu70 and assign your characteristic value to it.

Enter Characteristics.
We will use standard Batch Characteristic LOBM_LWEDT. This is used for Date of Last Goods
Receipt. Check Ascending column. Ascending tells the system to use the earliest batches
based on SLED.
 2) Configuration in SAP :
Create Batch Search Strategy: Initial Screen

SAP Menu  Logistics  Central Functions  Batch Management  Batch

Determination
 Batch Search Strategy  For Inventory Management  MBC1  Create
Enter Strategy type ME01. This is the condition type for key combination Movement Type,
Plant and Material.
 2) Configuration in SAP :
Create Batch Search Strategy: Initial Screen

Enter Movement Type 201 , a plant and the material number.

Fill in other fields as required or needed.
 2) Configuration in SAP :
Create Batch Search Strategy: Initial Screen

Hit the “Selection criteria” icon

Add Classification
 2) Configuration in SAP :
Create Batch Search Strategy: Initial Screen

Hit the “Sort Rule” icon – On this screen enter the Sort Rule created in previous step.
ZFEFO1 base of the FEFO (You can add / remove Sort Rule based on your
requirements.)
Here is FEFO
 2) Configuration in SAP :
Create Batch Search Strategy: Initial Screen

▶ Hit the “Sort Rule” icon – On this screen enter the Sort Rule created in previous step.
ZFIFO1 base of the FIFO (You can add / remove Sort Rule based on your requirements.)
Here is FIFO
 3) Test Functionality :
First Expired, First Out ( FEFO )

 FEFO is a system that helps you with your inventory, especially and most
specifically your inventory organization. It also keep track of every
information about your business that you may need and, by doing that,
keeps an easier flow.
 The literal meaning of FEFO is “First Expired, First Out”, that is basically the
politics that the product that is about to expire on stock and inventory is
the one that is going to be shipped away first.
 This generates an organization not based on the lot of the product, but
focusing on the expiring date, so nothing is tossed away or goes bad. This
also allows you organize physically everything so the product can easily go
to the next step of production without any issues or confusion.
 3) Test Functionality :
First Expired, First Out ( FEFO )

Do a GR using 501 and enter SLED related details.(production date and exp date values)
Repeat the above step and enter different values for SLED details

Total Shelf life : 60 days

Min. Rem. Shelf Life : 10 days
 3) Test Functionality :
First Expired, First Out ( FEFO )

Do a GI using 201 movement type in MIGO and enter * in batch field(system will
determine the batch using the SLED value based on the criteria (ascending or
descending which was set in the sort rule.)
You can see here the system offer the first expire batch :
3) Test Functionality :
First Expired, First Out ( FEFO )
 3) Test Functionality :
First In, First Out ( FIFO)

 First In, First Out, commonly known as FIFO, is an asset-management and valuation
method in which assets produced or acquired first are sold, used, or disposed of first.
 For tax purposes, FIFO assumes that assets with the oldest costs are included in the
income statement's cost of goods sold
the system offers the oldest entry
3) Test Functionality :
First In, First Out ( FIFO)
 3) Test Functionality :
Last In First Out ( LIFO )

What is the definition of LIFO ?

 The LIFO method is most commonly applied to an organization’s inventory
valuation procedures. There are a lot of different valuation methodologies applied to
inventory, and often management has to make a strategic decision to determine
the most
advantageous method to use.
 Under LIFO, the valuation is structured around the concept that the last unit of inventory
received (the newest inventory) is the first unit of inventory used.
 Depending on the unit cost and timing of inventory transactions, the LIFO method
can generate a number of tax benefits due to profitability impacts on the income
statement.
 3) Test Functionality :
Last In First Out ( LIFO )

IMPORTANT :
You can create a new rule or you can use the same rule ( FIFO) but if you use the
same rule you should change configuration like this << ASCENDING >> to <<
DESCENDING >> FIFO become LIFO
 3) Test Functionality :
Last In First Out ( LIFO )

The system offers the most recent entry

3) Test Functionality :
Last In First Out ( LIFO )