SAP Inventory Management Tutorial for First-Timers

Inventories are the blood life of production. Without them, there is nothing to produce, sell, and earn. Their amount relative to the total assets varies with the nature of the business. And without proper management, efficiency, profitability, and sustainability will suffer. 

Inventory management is a common challenge that many startups and SMEs face daily. Perhaps it is the lack of technology and resources that are slowing them down. Now, there are handy and inexpensive tools they can access. From the receipt and movement of goods, these tools can help them oversee the process. 

The Systems Applications and Products or SAP software is a favorite tool for financial planning, risk analysis, and inventory management. Even so, it appears to be pretty complex at times. This is most visible in those without much experience in software development. With that, this article will guide you in navigating SAP for inventory management. 

Inventory Management in a Nutshell

Inventory management is a system enabling businesses to track all business aspects. These include inventory, finance, operations, budgeting and planning, and logistics. With SAP, many companies will have real-time data on inventories. This is a vital capacity for the expansion and management of more complex supply chains. 

Many prefer SAP compared to other software. Due to increased demand for products and services, even smaller businesses use them. From the warehouse to customers, companies are using different CRM software for different tasks. Here are some benefits of SAP for inventory management. 

  • Accuracy and timeliness
  • Realistic production schedule 
  • Quality checking
  • Inventory analysis
  • Correct reporting 

SAP for Inventory Management 

SAP helps oversee the flow of materials and products in the warehouse. The process starts with managing the receipt of supplies to prevent overstocking. With that, SAP focuses on the movement of inventories and their count. Here are the primary movements of goods you will encounter in SAP. 

Goods Receipt 

Goods receipt can either come from suppliers or the company’s own process. The company can either approve inventories for immediate use or check them first. For inventories outside, the company can block them if they have not been ordered. In that way, it will not incur unnecessary expenses. 

Goods Issue 

The company may choose to process inventories for production or sell to customers. These apply mainly to intermediate goods. In either scenario, the stock level at the plant decreases. But, materials can go to scrap once they are considered unusable, damaged, or past their shelf life. 

Internal Movements

Internal movement is when materials are transferred from one storage location to another. In essence, it appears to be a plant-to-plant movement. It happens before materials are used for production or sold to customers. For instance, materials are transferred to quality inspection and sent back for production. 

How to Start Doing Inventory Management

Doing inventory management is pretty lengthy and complex. But, we will guide you through the process – from account creation and SAP navigation to data importation. Here is how to do things. 

  • Get an SAP Software Universal ID.

Again, this is for the newbies. If you already have an ID or know what to do, you may go to number two. 

As a first-timer, you have to have your own SAP Universal ID. At the lower right, click Get SAP Universal ID. Input all the details needed on the next page.

Once submitted, open your email to get the six-digit code for verification. Once received, input it. And you now have an SAP Universal ID. 

Now, upgrade your new account to a trial account in SAP BTP Cockpit. Before proceeding, know that you cannot employ many apps and tools with only a trial account. Hence, you will have to apply for a paid version. Anyway, here is how to upgrade your account. Enter your location and mobile number to receive the notification code from SAP.

Once verified, SAP will set up your account. It will only take about a couple of minutes. 

2. Navigate SAP 

At this point, you are now free to check and familiarize yourself with its features. 

For the newbies, I suggest you check the available tutorials first. In that way, it will be easier for you to do the basic steps as you start. Once you are done, you may now check your trial account. 

This is how it looks the first time you navigate it. 

3. Create Your Sub Account 

Aside from your trial subaccount, it is better to make another one. It is easy to do it anyway. Here are the basic steps. 

  1. Click Create. 
  2. After clicking it, an instance will appear and ask you to fill it out. Once created, click Go to Overview. 
  3. From there, click Enable Cloud Foundry. Another instance will appear, so input the necessary details. 
  4. Afterward, click Create Spaces. That is where you can see the apps and tools to which you subscribe and create. An instance will appear. Input your space name, tick all boxes beside the role and click Create.

4. Create and Subscribe to SAP Apps and Tools. 

  1. Once you have created your subaccount, check the left side of the page. On the list, click the dropdown arrow beside Services. From there, click Service Marketplace.

  1. Choose those you think you need most in your business, and click create afterward. For example, I chose Workflow and Auditlog Management.

5. Create Destination and Setup Cloud Connection

You already have the apps you need for your business. But, they are only part of the onboarding. You cannot use them without going through this step. You will need to set up a cloud connector. More so, you can’t access some of these when you only use a trial account. As mentioned, I suggest you pay since SAP is worth the price. 

  1. To navigate and check Destinations and Cloud Connector, click them on the list. And as you can see, no Destination and Cloud Connector are available yet. 
  2. Create New Destination and Click Service Instance. Choose among the instances you created or apps to which you subscribed. And, you already have your first destination. 
  3. Now, it is time to use the Cloud Platform. To proceed, click this link to download the Cloud Connector.  Choose the one that is compatible with your equipment. 
  4. Once installed, log in to Cloud Connector. 
  5. The succeeding parts will still be lengthy. I suggest you click here or this link to read the full instructions. You will learn how to set up and configure the Cloud Connector with Destinations. This will complete the migration and integration of SAP HANA. You may now connect to SAP ERP to do inventory management.
  1. Inventory Management

At this point, you have already set up and configured your Cloud Connector and Destinations. You may now connect to SAP ERP and start with inventory management.

  1. Be familiar with the transaction codes or T-Codes. They control the movement of inventories within the SAP system. In that way, you can track how, how much, and how long inventories are moved. Note that T-Codes is a four-character combination of numbers and letters. These are some T-codes. 
  • MIGO- Goods Movement
  • MB1A- Goods Withdrawal
  • MB1C- Goods Receipt 
  • MBST- Cancel Material Document
  • MB02- Change Material Document
  1. With a fully configured SAP cloud, you will have access to more tools and functionality. That is why you have to purchase access to SAP systems. You must have an S-User ID to download and set up SAP GUI 7.50. If you do not have an S-User ID yet, you can request yours at SAP Service Marketplace.

Once everything is done, you may download it here. Afterward, include it in your SAP GUI servers list. You may now log in to the server.

7. Navigating SAP MM for Inventory Management – Goods Receipt

In this part, we will focus on the two primary inventory movements, Goods Receipt and Goods issue. Here is how to create the path to Goods Receipt. 

  1. After logging in, check the toolbar. Then, click the Logistics folder. 

It will expand to more dropdown arrows. Click Goods Movement, then Goods Receipt.

From there, it will open a spreadsheet-like page. Choose the document you want to check from the dropdown list. For example, choose Purchase Order.

It will generate all data from the Purchase Order, like the quantity. Tick the boxes beside each item under the column OK and save. As such, these will be posted on the purchase order with the actual document number.

8. Oversee the Movements through Tables and Charts- Optional

You can just go to SE16 and table TSTC. But with SAP HANA, you can import data to the table. For e-commerce platforms, you can integrate it with SAP Business ByDesign. You manage every detail of your inventories with SAP Business ByDesign. It is easy to do since you have already set up and configured the Destination and Cloud Connector. For a step-by-step process, click this link

9. Regular Practice

For the first-timers, it can be challenging to navigate different SAP systems. Fortunately, various tutorials available in the community and regular practice can help you do it. 

Conclusion

Inventories are a fundamental part of your business. That is why you need to have a keen eye on every detail. With SAP, you can manage them from their quantity to their movements. It can help businesses avoid unnecessary costs and improve profitability.