ISA 303 Chapter 7: Inventory & Warehouse Management Processes

inventory and warehouse management WM processes concerned w/ the
storage and movement of materials w/in an org.
underlying activity in inventory management
goods movement
four goods movements
1. goods receipt
2. goods issue
3. stock transfer
4. transfer posting
key organizational level associated w/ inventory management
storage location
goods receipt
movement of materials into inventory
-> inc. in inventory
-results in financial accounting documents
goods receipt can be recorded w/out reference to an order when
1. initial receipt of inventory
2. an unplanned receipt from vendors or an unplanned return from customers
initial receipt of inventory
movement type an org. uses when SAP ERP system is first installed
unplanned receipts occur when a
reference document, such as a purchase order or production order, does not exist
-material and financial docuemnts
goods issue
-dec. in inventory
-fulfillment: shipment of finished goods
-production: issuing of materials to a production order
-FI and CO documents and material documents
unplanned goods issue when
issuing materials to scrap, sampling, and using materials for internal consumption
when materials are no longer usable due to age or obsolescence they are discarded
testing the quality of the materials
transfer postings
change the status or type of materials in stock
4 common stock statuses that determine the usability of materials
1. unrestricted use
2. in quality inspection
3. blocked
4. in transit
transfer posting doesnt need to involve
physical movement of materials
-material to material posting
-consignment to warehouse stock posting
-vendor owned inventory
material to material posting
changes the material number of a material
-common in pharmaceutical and chemical industries where characteristics of a material change over time
vendor-owned inventory
materials that are stored in the customer’s facilities although the vendor retains ownership
-large companies like Walmart
for vendor owned inventory when GBI uses the raw materials in the production process it will change the status from
consignment to warehouse stock
now there is a financial impact*
stock transfer
used to physically move materials w/in the enterprise from one org. level or location to another
stock transfer can involve movements under 3 scenarios:
1. between storage locations in 1 plant
2. between plants in 1 company code
3. between plants in diff company codes
3 options are available for moving materials
1. one step procedure
2. two step procedure
3. stock transport order
2 step procedure used when
geographically separated or person does not have authorization to make changes at both locations
split valuation
materials are valued differently; company maintains different material accounts for each valuation type
only materials ____ can be moved between plants
unrestricted use status
plant to plant transfers like storage location to storage location transfers result in the creation of
material documents
plant to plant transfers has an
FI impact
for company code to company code transfers ___ are created
two FI documents
limitations of the movements above
-cant take into account the cost of transporting materials between plants
-can’t track the progress of the transfer
-valuation can only be based on the book value of the materials at the sending plant and not a negotiated value or price between plants
when moving materials from one plant to another requires one of these capabilities^ one plant essentially “purchases” the materials and another plant “sells” them using a…
stock transport order STO
stock transport order STO
used for plant to plant movements
-sto without delivery
-sto w/ delivery
-sto w/ delivery & billing
using stock transport orders STO to move materials compared to using stock transfers has numerous advantages
-availability check
-delivery costs and selected carrier can be added to the STO
-quantities in the STO and planned deliveries and receipts can be included in material planning in both plants
-purchase requisitions can be converted to STOs rather than POs
-history can be monitored
-goods can be received into different stock statuses
-goods received can be posted to consumption rather than material accounts
associated w/ one or more combinations of plant and storage location
when linking warehouses to storage locations these rules apply
-warehouse must be linked to at least 1 storage location
-warehouse can be linked to storage locations across multiple plants
-storage location can only be linked to one warehouse
-not all storage locations must be linked to a warehouse
warehouse hierarchy
warehouse-> storage types-> storage sections/picking area-> storage bins (master data)
storage type
division of a warehouse based on the characteristics of the space, materials, or activity
[shelf storage, pallet storage, rack storage]
interim storage areas
until WM steps are completed the materials are stored in specially designated storage types
-physical links between IM and WM
storage sections
group bins w/ similar characteristics
-based on storing or putting away materials
EX: fast moving, slow moving, heavy, light, large, small
picking area
division of a storage area based on removing or picking materials
key master data in warehouse management
material master and storage bins
organization levels relevant to the warehouse management view of master data are
warehouse, plant, and storage type
org. levels: ____ is required, __ are options
warehouse is required, plant and storage type are optional
3 types of data relevant to the warehouse management view
1. basic data
2. data used in defining stock placement and removal strategies
3. data regarding the storage bins where the materials will be stored
warehouse management unit of measure
(basic data)
placement and removal strategies
indicate priorities and sequences in which storage types, storage sections, and picking areas are to be searched
bin-related data
which bins should store materials and min and max quantities in them
storage bins
smallest unit of space in a warehouse
-where materials are physically stored
-have unique addresses based on a coordinate system
specific quantity of materials that have similar characteristics and are stored in a single bin
-when quantity reduced to 0 system automatically deletes quant
quants are generated ____ and categorized as ____
generated as needed & categorized as transaction data
IM goods movement automatically generates a ____
transfer requirement
transfer requirements
used to plan the movement of materials in and out of bins in a warehouse
transfer order
actual execution of the movement
warehouse management process steps
1. plan movement
2. execute movement
3. move materials
4. confirm movement
warehouse management process triggers
-inventory management
plan movement- triggers
-IM activity
-internal need
plan movement- data
-org data
-master data
-user input
plan movement- tasks
-create transfer requirement
-create posting change notice
plan movement- outcomes
-transfer requirement
-posting change notice
data in a transfer requirement
-master data: material storage bin
-org. data: client company code etc
-transaction data: material #, quantity, transfer date
posting change notice
request to change the status of the material, for example, from in quality inspection to unrestricted use
reference documents for a transfer requirement
-material document
-production order
-no source document
in IM the FI impact occurs when
a goods movement takes place
execute movement- triggers
-transfer requirement
-internal warehouse transfer need
-delivery document
execute movement-data
-org data
-master data
-user input
execute movement- tasks
create transfer order
execute movement- outcomes
-transfer order
-update transfer requirement
data in a transfer order
-master data: material master, storage bin
-org data: client etc
-transaction data: source document, source storage bin, destination storage bin
-user input: source document #, destination bin #
reference documents for a transfer order
-transfer requirement
-posting change notice
-material document
-delivery document
-no source document
confirm movement-triggers
completed transfer of materials
confirm movement- data
-org data
-master data
-user input
confirm movement- tasks
update transfer order
confirm movement- outcomes
-updated transfer order
-updated source documents
inventory is tracked at the ___ level and ____ level
storage location level and warehouse level
warehouse inventory is ____ to storage location inventory
always equal
in procurement the transfer requirement served as the ___ between procurement process IM and WM process
information link
FI impact and the recording of the material movement occur in ____ not ____
occur in IM, not WM
IM processes are responsible for managing inventory at the ___ level
storage location level
IM inventory management involves
movement of goods in and out of plants
warehouse management WM involves
processes that permit sophisticated management of materials within and in-between plants
WM is used by organizations that
have large quantities of expensive inventory that must be managed closely
___ and ___ are the key links between IM and WM
transfer requirements and interim storage areas
stock transport orders STOs used in situations
more complex situations and simulate one plant “purchasing” materials from another plant that “sells” materials
a warehouse must be associated w/
at least one storage location