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What are the special stocks used in MM?
Special stocks are stocks that are managed separately regardless of whether they
belong to your company. The company manages material by using a data record, which
contains all the required information. The different types of special stocks are as follows:
- Sales order stock
- Returnable packaging with customer
- Consignment stock at the customer
- Vendor consignment stock
- Returnable transport packaging
- Subcontracting
- Pipeline
What are the differences between company-owned special stocks and externally-owned
special stocks?
The differences between company-owned special stocks and externally-owned special
stocks are listed in the following table:
| Company-Owned Special Stocks | Externally-Owned Special Stocks |
| Stocks that belong to the company but are stored with the wholesaler or the customers are called company-owned special stocks. | Stocks that belong to the wholesaler or the customer but are stored at the company are called externally owned special stocks. |
| Company-owned special stocks are managed at the production level. | Externally-owned special stocks are managed at the place where they are stored. |
Why is negative stock needed in an organization?
Organizations need negative stock when a material is shipped to a customer and production
is not confirmed or there is not enough stock to satisfy the requirement. The system still
allows the issuing of the material, and inventory shows a negative quantity of stock until the
production of the material is confirmed.
What are special procurement types?
In a normal purchasing system, the customer purchases the goods from the
wholesaler/retailer, and the possession of the goods transfers from the wholesaler/retailer
to the customer. This might not be the case with special procurement types, where the
transfer of goods may not necessarily be from the wholesaler/retailer to the customer
directly. For example, you might
order a good for a friend of yours, who, in turn, purchases the good from the
wholesaler/retailer and then transfers the goods to you. The friend is the third party involved
in this process. Therefore, the possession of the good indirectly transfers to the customer.
This type of procurement is called the special procurement type. The special procurement
type defines the external procurement or in-house production of the material. The following
list shows the special procurement types available in the SAP system:
- Consignment
- Subcontracting
- Stock transfer using the stock transport order (STO)
- Production in another plant
- Third/party processing
- Returnable transport packaging
- Pipeline handling
Define consignment stock. What are the main features of consignment stock?
Consignment, in a general sense, is the act of holding the ownership of materials but storing
the materials at some other premises until the materials are sold or shifted somewhere
else. The stored materials are known as consignment stock in the SAP system. Therefore, a
stock that is stored at the customer’s premises but is the supplier’s property is transferred
to the customer’s stock list and is called the consignment stock. The main features of the
consignment stock are as follows:
- You can combine the consignment stock with your available stock at any point in time.
- You can evaluate the consignment stock in any currency.
- The price of the consignment stock fluctuates. This means that you can determine the
- price of the consignment according to the market conditions.
- You can price the consignment stock in any unit.
- You can use different features of purchasing, such as discounts, in the consignment
- stock.
- The consignment stock is evaluated at a price quoted by different vendors.
How is the pricing of consignment stocks done? What information does consignment info record contain?
Prior to ordering material from a vendor or posting a goods receipt to the consignment
stock, you need to obtain the consignment price. If the consignment material is ordered
from several vendors, the system maintains the consignment stock of each vendor
separately. The reason the system maintains the consignment stock separately is that
the price of the consignment stock may vary from one vendor to another.
The consignment information (info) record contains the consignment price required for
the purpose of material valuation and accounting.
How are the consignment stocks created?
Consignment stocks are created in the normal purchase order (PO) or requisition, but the
main thing to consider is that you must enter the K category for the consignment item. As a
result, the goods issued are posted to consignment stores and the invoice receipt is not
generated.
How can you do invoicing in case of consignment stocks?
You can invoice in the case of consignment stocks by performing either of the following:
- Invoice with PO
- Invoice without PO
What do you mean by subcontracting?
Subcontracting can be defined as the processing of materials by an external supplier.
How is subcontracting used in case of MM?
Subcontracting is the process by which the vendor receives the materials to produce the
end product. Subcontracting involves the following procedures:
- You order the end product by using the subcontract order. The components that the
vendor needs to manufacture the end product are mentioned in the PO. - During the inventory management process, the components are posted to the stock of
material provided to the vendor. Later, the components are supplied to the vendor. - The vendor then processes the service and delivers the materials ordered. The
consumption of the components is posted. - If, after posting the goods receipt, the vendor notifies you that the quantity of the
components actually consumed is different than planned in the PO, you must make an
adjustment. - The vendor then charges for the service, for which the invoice is posted in invoice
verification.
What information does the subcontracting info records contain?
A subcontracting info record consists of ordering information related to subcontract orders.
For example, if you entered into a contract with an outside source for the assembly of a
component, the subcontracting info record would contain the price specified by the vendor
for the assembly work.
How do we create subcontracting PO?
Perform the following steps to create a subcontracting PO:
Enter the material to order and the category of the item for subcontracting (L) in the
order item.
Press the Enter key to display the screen for component processing.
In the component processing screen, enter the components required by the vendor to
manufacture the ordered material (end product). When entering the components, you
need to take care of the following points:
You do not need to enter the date required for the components. The system
proposes this date when you press the Enter key. It is calculated as follows:
Delivery date of the item (planned delivery time)
If you do not wish the quantity of the components to be altered, even if the order
quantity of the end product is changed, then set the indicated field to a fixed
quantity.
If you want to allocate a particular batch of the component to the vendor for the
manufacture of the ordered material, enter the desired batch.
To determine whether or not the components are available on the date required,
Select Component List > Component Availability.
When you enter a bill of material as the material in the subcontract order, the
components are automatically created.
You can also determine the components in the bill of material at a later date (for
example, if the bill of material is subsequently changed) by selecting Item > Go
to > Components > New BOM Explosion. The existing entry of the components
is removed and again determined in the bill of material.
Save the PO.
When you print the PO, the components are printed per order item.
How can we view the stocks provided to vendor?
The stocks of material provided to a vendor can be viewed by using the SC Stock Monitoring
for Vendor report. The report can be accessed by selecting Purchase Order > Reporting > SC
Stocks per Vendor from the menu. With this report, the current status of the stocks, planned
issues, and planned receipts can be viewed.
What are the initial configuration steps for physical inventory?
The steps for purchase acquisition are as follows:
- Defining the default values for the physical inventory document
- Reporting batch inputs
- Recording tolerances for physical inventory differences
- Inventory sampling as well as configuration of cycle counting
What is the difference between managing stock by quantity and managing stock by value?
Transactions that make changes in the stock result in stock updates that are recorded in
real-time. At any point in time, one can view the stock overview, which represents the
current situation at that time. That is the essence of stock management by quantity and can
applied to the following stock types:
- Located in the warehouse
- Ordered but not yet received
- Located in the warehouse and reserved for a particular purpose
- Reserved for quality inspection
The managing stock by value option reviews the stock materials qualitatively rather than
quantitatively. The valuation of stock is done either at the plant level or at the location level.
Updates that can be done when managing stock by value are as follows:
- The quantity and value of the goods movement
- The accounts that are assigned for cost accounting
- The G/L accounts for financial accounts, with automatic assignment of accounts
The valuation area is the organizational level at which the stock value is maintained. It can
be either at the plant level or storage level.
What is Goods movement? What type of documents is created after goods movement?
Goods movement refers to the movement of stock. This movement of stock could be either
inbound from the vendor, outbound to a customer, between different plants, or even
between different stocks within a plant. After goods movement, the SAP system creates
two types of documents, material documents and accounting documents.
What are the goods movements that take place in MM?
The goods movements can be defined as the physical or logical movements of materials
that lead to a change in stock levels or result in material consumption. The goods
movements are part of the MM policy. The goods movements in SAP are as follows:
Goods receipt – Represents the physical movement of goods or materials into the
company. It increases the stock quantity. The goods receipt can be of the following
types:
- Goods receipt with reference to a purchase order
- Goods receipt with reference to a Production order
- Goods receipt without reference
Goods issue – Represents the physical movement of goods or materials out of the
company. It reduces the stock quantity. The goods issue can be of the following types:
- Goods consumption in the company
- Goods delivery to customers
Stock transfer – Represents the movement of materials from one location to another
location.
The locations can be either within the same plant or different plants.
Transfer posting – Represents the stock transfer that can either be physical or logical. In
logical stock transfers, goods are transferred only in records, while the actual stock
transfer does not occur. Some examples of physical stock transfers are:
- Stock transfer between two storage locations in a plant
- Stock transfer between two plants
- Transfer of materials to customer consignment stock
Some examples of logical stock transfers are:
- Release of materials from stock in quality inspection
- Transfer of materials from vendor consignment stock to own stock
- Batch splitting
- Transfer posting material-to-material
What is Goods Receipt & Goods Issue?
Goods receipt is the process that enables the receipt of material from a vendor or from the
in-house production process. There are other types of goods receipts in SAP that include
initial stock creation. The goods receipt process also increases stock due to one of the
following processes:
- Receipt of production order
- Receipt of purchase order
- Initial inventory entry
- Others
Goods issue is a process in which the stock in the warehouse is reduced due to the
following reasons:
- Shipment to a customer
- Stock withdrawal for a production order
- Return of materials
- Material required for sampling
- Scrapping of materials
Why is goods receipt important to a company?
Goods receipt indicates a receipt or inward movement of stock of materials or goods. When
an external vendor provides stock to the company, the goods receipt is generated as a
purchase order, and when the material is produced in-house, the goods receipt is generated
as a production order. A goods receipt is important to a company because using a goods
receipt moves material into stock, updates the stock levels, and thereby indirectly enables
the production process.
How is a goods receipt performed?
The steps to perform a goods receipt are as follows:
- Enter the header data.
- Select the movement type and the purchase order number.
How do you post the goods if the PO number is not known?
If the purchase order number is not known, you must enter the search criteria for the
purchase order in the initial screen. As a result, the list of purchase orders is displayed. The
desired purchase order items can then be copied.
How is the vendor returned processed without a purchase order reference?
You first need to observe the return column and then select Item Detail > MIGO_GR > Goods
Receipt for Purchase Order. If the intention is to deduct the stock, then movement type 161
is used; otherwise, 162 is used to undo the changes. Lastly, you must ensure that the
document is a return purchase order. The document is then saved.
Alternatively, you can use the M21N transaction code for this purpose.
What happens when a goods receipt is posted?
While posting a goods receipt, the following events occur:
- The material document is created.
- The accounting document is created.
- Three printed versions of goods receipt notes are modified.
- The stock level changes.
What is the result of goods movement?
The following events are initiated when goods movements take place:
- First, a materials document is generated, which is proof of the goods movements.
- Accounting documents are generated if the movement of goods requires a change in the financial accounts.
- The stocks of the materials quantities are updated.
- The stock values in the material master are updated.
- Financial and material documents are updated.
What is the document management system (DMS) in SAP?
The DMS in SAP helps you store external documents, such as pictures of the goods or
material. By using the DMS, you can set the maximum size of the picture that can be
uploaded in a document. The DMS helps to link these external documents with the
appropriate SAP objects.
What are purchasing information records?
Purchasing information records, also known as info records, contain information related
to the material and the vendor who is supplying the material. They also contain details
about the material, such as the current price.
What are the categories of purchasing information records?
Purchasing information records, also known as info records, contain information related
to the material and the vendor who is supplying the material. They also contain details
about the material, such as the current price.
What are the categories of purchasing information records?
The categories of purchasing information records are as follows:
Standard – Contains information for the standard purchase order. In this type of
purchasing info record, you can create info records for materials and services that do
not have master records.
Subcontracting – Contains ordering information for subcontract orders.
Pipeline – Contains information on commodities that are sent through a pipeline, such as
oil or water.
Consignment – Contains information on materials that are in the vendor’s possession
and are kept by the vendor at some other premises at his own cost.