Posted by: ahmedashfaque | August 24, 2014

What is SAP – inventory management 3

In the previous post, we had seen how valuation is done for material stocks in SAP. In this post we will see how material planning can be done in advance of any goods movements in SAP.

Suppose the procurement department has placed a PO with your vendor. The vendor has confirmed the PO either via a shipping note or through order confirmation. Now you know how much quantity of a material is coming at what time and where this material will be stored in your inventory through your SAP system. Whenever a shipping note or an order confirmation is received in a SAP system, the system can automatically plan for stocking of the incoming material. You can even do planning for goods issue or goods transfer knowing this information. This is very important because you as an inventory planner or inventory manager need to plan in future so that the production or the sales departments can do their work smoothly. If you are not able to plan in future and make advance procurement plan then due to shortage of procured material or in-housed produced material, other departments get affected. This in turn affects your entire company.

Similar to advance planning for procurement and receiving of procured materials, you can also make advance planning for goods issue. Various departments need materials for production (production department), building assets (plant maintenance department), etc. A facility called reservation is available in SAP. Based on requirements you have received from various departments, you can make reservation for goods issue from your stocks. Reservation of stocks makes sure that you can plan for issue of goods in advance. Sometimes when there is shortage of materials is expected then you can allocate only a portion of the total required amount of materials to a department so that any department does not face complete black out due to unavailability of a material.

When the actual goods issue is to be done, then you issue goods from these reservations.




  1. […] the previous post, we have seen how inventory planning can be done if we can get future information about goods […]

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