SAP EWM Physical Inventory

The SAP EWM physical inventory process is meant for counting the physical inventory of products in the warehouse at regular intervals to make sure that the stock in SAP is in sync with an actual stock on the floor. The physical inventory is required for stock control to ensure smooth shipping, procurement, and warehouse operations. Apart from stock control, it is also required from a financial accounting point-of-view so that the inventory value reported in the balance sheet is accurate.

SAP EWM Physical Inventory Process

The below steps outline the physical inventory process steps in SAP EWM:

1. Generation of physical inventory document that contains the bins/products to be counted.
2. Activation of physical inventory document.
3. Printing the physical inventory document sheet.
4. Counting of inventory on warehouse floor as per the above physical inventory document.
5. Recounting of inventory (optional).
6. Entering the count in SAP EWM.
7. Posting the difference in SAP EWM.
8. Posting the difference in SAP ERP through the differential analyzer.

SAP EWM Transactions for Physical Inventory

• Create PI document – /SCWM/PI_CREATE
• Process PI document – /SCWM/PI_PROCESS
• Enter count results – /SCWM/PI_COUNT
• Post the differences – /SCWM/DIFF_ANALYZER
• Assign user to tolerance group for the difference analyzer – /SCWM/PI_USER_DIFF
• Assign user to tolerance group for posting and recount – /SCWM/PI_USER

SAP EWM Tables for Physical Inventory

• Physical inventory document items – /LIME/PI_DOC_IT
• Quantities for physical inventory document items – /SCWM/PI_PROCESS
• Serial numbers for physical inventory document items- /LIME/PI_DOC_SER
• Header data of a physical inventory document – /LIME/PI_LOGHEAD
• Assignment of user to tolerance group – /LIME/PICUST_USE
• Tolerance values for each tolerance group and inventory area – /LIME/PICUST_TSP

Types of Physical Inventory Procedures in SAP EWM

The SAP EWM supports the two levels below at which physical inventory can be performed:

1. Storage-bin-specific physical inventory – the PI document is created, and inventory counting is done at the storage bin level. All the products and handling units stored in these bins are counted.
2. Product-specific physical inventory – the PI document is created, and inventory counting is done at the product level. All the storage bins and handling units in which these products are stored will be called in the PI document and counted accordingly.

The SAP EWM supports the following types of physical inventory processes:

Periodic Physical Inventory

In SAP EWM, we can set up the configuration to carry out the annual physical inventory process on a specific day as per the requirement. This is mostly done at the end or beginning of the year. All the stock movements are put on hold before counting.

Continuous Physical Inventory

Continuous physical inventory in EWM can be done through the below procedures:

• • Ad Hoc Physical Inventory – this is performed anytime during the fiscal year as and when required. For example, a product is damaged or stolen, etc.
  • Low Stock Physical Inventory – this procedure is performed only at the storage bin level, during stock removal warehouse task confirmation. The trigger point is the stock level in the bin if it goes down below a configurable threshold. During warehouse task confirmation, the system automatically creates the physical inventory document in the background based on information in the warehouse task.
  • Zero Stock Physical Inventory – this is equivalent to the low stock physical inventory procedure above, except that the configurable threshold value is zero.
  • Putaway Physical Inventory – this procedure is performed at the storage bin level only during the first putaway in the bin in the fiscal year. The warehouse operator confirms during the first putaway that the inventory in the storage bin is in sync with the confirmed quantity in the warehouse task.

Cycle Counting

The cycle counting method in EWM Physical Inventory is an ongoing inventory procedure in which we carry out a physical inventory of stock at regular intervals during a fiscal year. This is the most preferred method of physical inventory where the products are categorized into different classes based on the goods movement volume or turnover. Accordingly, all the products in a particular class are counted as per the requirement. This could be on a monthly, quarterly, or yearly basis. The cycle counting indicator is maintained in the EWM product master and accordingly so that the PI document gets generated automatically at the beginning of each month/quarter/year for the products to be counted every month/quarter/year and so on.

Physical Inventory Areas

For the physical inventory procedure, it is mandatory to create one or more physical inventory areas in the EWM and assign the physical inventory area to an activity area that is created specifically for physical inventory.

Difference Analyzer

The Difference Analyzer is a tool in EWM through which we can analyze the stock differences in EWM, post the stock differences and reconcile the stock in the ERP system. The differences in EWM Difference Analyzer are displayed in the tool at both cumulative and individual levels. The individual differences are linked to the document that resulted in this difference, while at a cumulative level, overall differences are displayed at the product level.

Inventory Comparison Reports in EWM (with ERP)

• Stock comparison with ERP /SCWM/ERP_STOCKCHECK – this report is used to identify and correct the inventory differences between EWM and the ERP system. When the physical inventory is performed in EWM, the system always considers EWM stock correct, and therefore, it might be required to correct the stock in the ERP system.
• Post differences to the ERP System /SCWM/WM_ADJUST – this report is used to schedule a background job to post the differences in the ERP system. The system checks the tolerance settings for the user who starts the report and accordingly posts the difference in the background.

Tolerance Group

In SAP EWM physical inventory process, we define a tolerance group and assign it to each user as per his/her role. The user will be able to enter counts or post differences based on the tolerance value assigned to him. If the count/posting difference is outside of the tolerance value, the user will get an error and will not be allowed to proceed.

The following three types of tolerance group are available in the SAP EWM PI process:

• Tolerance group for Difference Analyzer – for each warehouse number, we can assign a tolerance group and specify the allowed value-based tolerance.
• Defined tolerance group for Posting Differences – here we can define tolerance groups and assign values as well as quantity-based (percentage) tolerance values.
• Defined tolerance group for Recounting – here as well, we can define tolerance groups and assign values as well as quantity-based (percentage) tolerance values for each warehouse.

Final Notes

In every organization, it is an essential requirement to keep the stock ledger accurate and up-to-date which can be achieved by carrying out the physical inventory process of all the products. This is an important element to the success of a business. This blog helps to understand the physical inventory process steps in EWM along with different procedures and methods which can be used to perform the physical inventory process as per each business requirement. Without accurate inventory data in SAP, a business runs the risk of lost sales due to products showing up as out-of-stock when your customers need them.
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