INVENTORY

At the end of this chapter, the student will be able to:

Set up item groups and define warehouses
Manage items with batch and serial numbers
Transfer goods using goods issue, good receipt and inventory transfer
Use pick and pack in the sales process
Create new pricelists and provide discounts
Make order recommendation using Materials Requirements Planning

Items and Warehouses

SAP Business One enables you to manage all the items that you purchase, manufacture, sell, or
keep in stock. Services, such as labor, can also be defined as items. This can be useful for defined
services you sell on a regular basis. Items can also be used to describe fixed assets that are tracked for
accounting purposes.

For each item, enter the data relevant for a particular area in the system. This data is used
automatically by the system for purchasing, sales, production, managing your warehouse, and
accounting. SAP Business One, therefore, provides optimum support for your business processes.

Using the item data in the system, you can optimize your stock. You have complete control over
stock quantities at all times and can also analyze the financial aspects of stockholding at the same time.
In SAP Business One, there is a direct relationship between warehouses and items.

Defining a warehouse
Choose (1) Administration > (2) Setup > (3) Inventory > (4) Warehouses to define new warehouses.
Here, you can enter a Warehouse code and a Warehouse name.

Address Fields: Specifies address details for the warehouse. This address defaults into the purchasing
document for the ship-to address for the warehouse.

Location: Specifies the warehouse location. Use this field to classify warehouses according to their
physical location.

Drop Ship: Defines the warehouse as a drop-ship warehouse. Use this option when the company does
not manage inventory for specific items, but receives commission for every order. SAP Business One will
not calculate stock postings for this warehouse.

In the Accounting tab, you define various default accounts used for inventory management per
warehouse. To define a warehouse as a default in the MRP wizard, select the Nettable checkbox. If
unchecked, the warehouse can still be chosen in MRP, but does not appear as default.Stock Change –
Marketing Documents

Inventory Transactions

When an item is purchased or sold, warehouse inventory is automatically reduced or increased

when the transactions are entered in purchasing and sales. For example, if a delivery note is created
based on a sales order for a customer, the warehouse stock is reduced by the delivery quantity when
the delivery note is added. If an incoming invoice is entered in purchasing, the warehouse stock
increases by the delivery quantity when the incoming invoice is added.
 The purchase or sale of an item is, however, not the only transactions that result in
a goods receipt or goods issue. For example, if five pieces of an item are found damaged in
the warehouse as a result of water damage, rendering them useless, they are removed from
the warehouse. These items cannot, however, be sold because they are now useless. In this
case, you have to post a separate goods issue with the function described here.

A goods receipt may be necessary, for example, if, after carrying out a physical
inventory, you establish that you have not considered part of the quantity stored. You enter
the forgotten quantity by means of a goods receipt in the system.

Goods Receipt and Goods Issue

For goods receipts and goods issues that do not refer to a sales process or
purchasing process, you must specify the warehouse to which or from which you want to
post the goods. The system always uses the default warehouse from the item master record
if you do not specify otherwise.

A goods receipt creates a journal entry that posts the value of the received goods on the
debit side of the stock account and the credit side of the inventory offset – increase account.
You can use the Goods Receipt if there is an increase in the quantity of inventory outside the
regular purchase and sales process (e.g., Samples or freebies from Suppliers) or if you are
reconciling the system inventory count and physical inventory count (e.g. Physical inventory
count is higher than the system inventory count).

To post a goods receipt: e.g. The company received 2 A00001 from its suppliers as freebies
due to recent bulk purchase.

Go to (1) Inventory → (2) Inventory Transactions → (3) Goods Receipt.

4. On the Item No. field, click the selection list (picker’s list) button. Select A00001.
5. Input ‘2’ on the Quantity field.
6. In the Remarks field, put ‘Freebies from Suppliers’
7. Add.

A goods issue creates a journal entry that posts the value of the issued goods on
the debit side of the inventory offset – decrease account and the credit side of the stock
account. The stock accounts are retrieved from the Inventory Account fields on the
Inventory Data tab of the item master record.

You can use the Goods Issue if there is a decrease in the quantity of inventory outside the
regular purchase and sales process (e.g., Theft in the warehouse, flood/fire damaging
warehouse goods) or if you are reconciling the system inventory count and physical
inventory count (e.g. Physical inventory count is lower than the system inventory count).

To post a goods issue: e.g. The warehouse manager recently discovered a theft in the
warehouse with 5, A00001 items missing. To record the missing items:

Go to (1) Inventory → (2) Inventory Transactions → (3) Goods Issue

4. On the Item No. field, click the selection list (picker’s list) button. Select A00001.
5. Input ‘5’ on the Quantity field.
6. In the Remarks field, put ‘Warehouse theft’
7. Add.

Inventory Transfer
When you post an inventory transfer from warehouse 02 to warehouse 01, the
system creates an inventory transfer document and a journal entry. The journal entry posts
the value of the transferred goods on the debit side of the stock account of warehouse 01
and on the credit side of the inventory account of warehouse 02.

To post a stock transfer: e.g. The current branch wanted transfer 5 pcs of A00001 from
Warehouse 1 to Warehouse 2.

Go to (1) Inventory → (2) Inventory Transactions → (3) Inventory Transfer.

4. Input the following
information:
Item No:
A00001
To Warehouse: 01
From Warehouse: 02
Quantity: 5
5. Click Add.

Inventory Management
By Serial Numbers
Serial numbers can help you track items down to the level of each individual object in
your warehouse, so you know exactly which one was sold to a customer. The typical criteria
for determining if an item needs a serial number are:

 Is the item a high value item?

 Should the item be tracked for security or repair reasons?

Serial numbers are also important in Service. A serialized item can be set up to
automatically create a customer equipment card and a service contract when the item is
delivered to a customer. The customer equipment card is used to store service information,
such as valid service contracts, any service calls, and inventory transactions for the item.

Example:
Add the following item on the Item Master Data:
Item No. Description Item Group Price Managed by
 SN1000 Acer Aspire 5 A514 Laptop 30,000 Serial Numbers

OEC Computers UK received 10 items of SN1000 from Acme

Associates.
Serial Number String: OEC-AcerL-00001
Later on, OEC computers UK delivered 5 items of SN1000 to Norm
Thompson.

Go to (1) Inventory → (2) Item Master Data. Switch to Add mode (Ctrl + A).
3. Input the information above regarding the item.
4. On the general tab, there is a Manage Item By drop down list, select
‘Serial Numbers’. Management Method, ‘On every transaction’.
5. Click Inventory Data tab
6. Input the information according the warehouse assigned to
your branch. Warehouse Code: 01
Warehouse Name: General Warehouse
7. Click Add.

The whole Procurement and Sales Process should still be done completely. But for example
purposes and to address this topic directly, we will only use Goods Receipt PO and Delivery.

Go to (8) Purchasing A/P → (9) Goods Receipt PO

10. Input the following

information: Vendor:
V10000 Acme
Associates
11. Item No: SN1000
Quantity: 10
12. Click Add. Click Yes, if prompted the message “You cannot change this
document after you have added it”.
13. Serial Numbers Set-up window will appear. Click the ‘You can also’ button on the lower
right
corner of the window, and select automatic creation.

14. Automatic Serial Number Creation window will appear. Click this button
beside the Serial Number field.
15. Automatic String Creation window will appear. Input the following:
# String Type Operation
1 OEC-AcerL- String No Operation
2 00001 Number Increase
16. Click OK.
17. Click Create.
 18. Serial Number for all 10 items should be created.
19. Click Update.
20. On the Goods Receipt PO window. Click Add.

Go to (21) Sales A/R → (22) Delivery

23. Input the following
information: Customer:
C20000 Norm
Thompson
24. Item No: SN1000
Quantity: 5
25. Click Add. Click Yes, if prompted the message “You cannot change this
document after you have added it”.

26. Serial Number Selection window will appear. Click Auto Select. 5 items will
automatically selected on a First-In First-Out basis.
27. Click Update. Click OK.
28. On the Delivery window, click Add.

By Batches
Batches are used to track groups of items with characteristics in common. These
characteristics might be attributes you define such as a shade of color, granularity or PH
balance. The characteristics could be dates, such as expiration dates, manufacturing date, or
the date the items were received into inventory.

Example:
Add the following item on the Item Master Data:
Item No. Description Item Group Price Managed by
BN1000 Mousepad Accessories 50 Batches

OEC ordered and received 100 items of BN1000 from Acme Associates. Items will be divided
into 10 batches.
Batch number: Box-0001
Batch Attribute 1: OEC-MP-00001
OEC sold 27 items of BN1000 to Norm Thompson, via FIFO.

Go to (1) Inventory → (2) Item Master Data. Switch to Add mode (Ctrl + A).
3. Input the information above regarding the item.
4. On the general tab, there is a Manage Item By drop down list,
select ‘Batches’. Management Method, ‘On every transaction’.
5. Click Inventory Data tab
6. Input the information according the warehouse assigned to
 your branch. Warehouse Code: 01
Warehouse Name: General Warehouse
7. Click Add.

The whole Procurement and Sales Process should still be done completely. But for example
purposes and to address this topic directly, we will only use Goods Receipt PO and Delivery.

Go to (8) Purchasing A/P → (9) Goods Receipt PO

10. Input the following
information: Vendor:
V10000 Acme
Associates
11. Item No: BN1000
Quantity: 100
12. Click Add. Click Yes, if prompted the message “You cannot change this
document after you have added it”.

13. Batches Set-up window will appear. Click the ‘You can also’ button on the lower right
corner
of the window, and select automatic creation.

14. Automatic Batch Creation window will appear. Set the number of batchers to 10.
15. Click this button beside the Batch field.
16. Automatic String Creation window will appear. Input the following:
# String Type Operation
1 Box- String No Operation
2 0001 Number Increase
17. Click OK.
18. On the Automatic Batch Creation window, click this button beside the
Batch Attribute 1 field.

19. Automatic String Creation window will appear. Input the following:
# String Type Operation
1 OEC-MP- String No Operation
2 0001 Number Increase
20. Click OK.
21. On the Automatic Batch Creation window, click Create.
22. Batchers for all 100 items should be created.
23. Click Update.
24. On the Goods Receipt PO window. Click Add.

Go to (25) Sales A/R → (26) Delivery

27. Input the following
information: Customer:
 C20000 Norm
Thompson
28. Item No: BN1000
Quantity: 27

29. Click Add. Click Yes, if prompted the message “You cannot change this
document after you have added it”.
30. Batch Number Selection window will appear. Click Auto Select. 5 items will
automatically selected on a First-In First-Out basis.
31. Click Update. Click OK.
32. On the Delivery window, click Add.