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.

Creating Physical Inventory Document

The following procedure can be used in creating and processing of the 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.ž
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.

Step 5)

Optional step.

1. On header level, you can edit the data entered during the creation of the physical
inventory document.
You are now finished with creating (and changing the physical inventory document). You can
display the document with MI03 transaction code.

Entering the Counting Results

In the following topic, I will show you how you can enter the counting results in the physical
inventory document.

The process is fairly easy, but it needs to be accurately executed because the error in entering
the counting results in poor stock balances later. So, there is high need that the counting process
as well as entering process both be accurate.

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).
After I have corrected my entry to 124 pcs, I will save the transaction data.

Posting the Differences

After you have possibly recounted and reentered 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.