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Dear All,

Hope you all are doing Great!! In this blog i would to like explain the process of Physical Inventory in both Functional and Technical Perspective. Hope this helps all to understand the dynamics of Physical Inventory at both Level. I have also written separate Blogs to understand Physical Inventory both MM and WM level.

Hope this blog serves you to understand the concept better.


This is a high level document that will help you understand the complete cycle of physical inventory done both at MM and WM through SAP. The document also aims at helping with functional cycle along with technical implementation for the same through programming.


Basic understanding of the Inventory flow along with Basic functional Knowledge with respect to MM and WM Module.

What is Physical Inventory?

Before getting deep into the subject in SAP terms let us first understand this process. Physical Inventory is a process that commence across stores and ware houses during which they check stock available with them physically and post the same in the back end system. This also ensures that the quantity both physically and with respect to system always matches with each other. This also help them to understand the business flow in terms of revenue.

Clients use different applications to run their business, this document is a guide where SAP is used as a backend application. This documents explains the complete cycle on how this process is recorded in the back end in functional terms and how we can achieve this through programming.

Steps of Physical Inventory

The inventory process steps may vary slightly with respect to stores and Ware houses, however below steps are categorized in a general format that is applicable for both.

  • Create Physical Inventory Document

    • A SAP Reference number which will point out to all the materials entered for Physical Counting.

    • In this step we just notify the system on all the objects (Materials/Storage Bins) that are part of this cycle.

    • System Generates the Document Number with respect to the objects (Materials/Storage Bins) that are given as Input.

  • Count the Materials against the created Physical Inventory Document

    • Once the inventory document is generated, system sets the document number to allow us to enter the input for quantity.

    • This step will be different for MM and WM cycle.

    • Quantity is entered against each Material which is recorded against the Physical inventory document number as mentioned in above step.

  • Re-check the Quantity entered

    • Quantity is double checked and altered of there is any discrepancy.

  • Post the Quantity to the back end system

    • All the counted quantity will be posted against the respective material in the back end system. This is the first instance where the financial accounts will take a hit.

All these steps above will be explained in detail below with respect to stores and ware houses as there will be small deviation with both.

Now we shall discuss the complete cycle with respect to Stores and Ware houses separately.

To understand the functional and technical cycle of Physical Inventory with respect to MM please follow the below Blog.

Physical Inventory with respect to MM

To understand the functional and technical cycle of Physical Inventory with respect to WM please follow the below Blog.

Physical Inventory with respect to WM



Hope this blog helped you understanding the basic flow. Thanks for your time.

Hope you Enjoyed Reading!!! I would love to receive your feed backs and corrections.

Thanks to SCN for giving this wonderful opportunity!!!



“Lets Learn Share and Collaborate” ? ? ?


Thanks and Regards,

Satish Kumar Balasubramanian
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