Inventory Sampling o Randomly selected stocks of the company are physically counted on the

balance sheet key date. o If found not much variance between the counted stock and the book
book stock, it is presumed that the book inventory balances for the other stocks are correct.
Physical Inventory Process Cycle Flow 1. Creation of physical inventory document - Physical
inventory document(s) is created individually or using the batch program, click for more
information - The transaction codes for creation physical inventory are as follow Individual
Inventory documetion creation MI01 - Individual physical inventory creation MIS1 - Inventory
Sampling document creation MICN - Cycle count inventory document creation Collective
Inventory document creation MI31 - Own stock without spcial stock MIK1 - Vendor consignment
MIQ1 - Project stock MIM1 - Returnable Transporation material MIW1 - Customer Consignment
stock MIV1 - Returnable material with customer MIO1 - Material provided to Vendor
(Subcontracting material) 2. Print physical inventory document - Physical Inventory document can
be printed based on the physical inventory document status and or item status - Transaction code
MI21 is used to print the inventory document where print default value can be populated 3. Count
the physical stock - Based on the inventory doucmen printout, the warehouse person will check
the stock of material physically and note that on print out. This is completely physical process. 4.
Enter count in system - On completion of physical count, the count result is needs to be entered
in the system. This can be with reference (using Tcode MI04) or without reference (using Tcode
MI04) to the physical inventory document. - If count quantity for that material is ZERO then select
ZC (zero count) column instead of putting 0 in qty field. If 0 is used for zero count then systm will
consider that as "not counted" 5. Analyze difference - Once count is posted in the sytem,
difference analysis can be carried out using trasnaction MI20 - The output gives information
based on the input criteria i.e. physical inventory document, plant, material etc. - The output gives
information about the book quantity, Counted quantity, difference in quantity and value. - From
this output list, you can carry out further process ie initiate recount, change count quantity, post
difference 6. Initiate recount and follow the steps 3,4,5 - If found unacceptable difference, recount
is initiated using directly from difference analysis list (transaction code MI20) or using transaction
code MI11. - New inventory document will be created for selected items or for entire document -
The original document items will be deactivated once recount is initiated so original document will
not be available for further process. - On initiating recount, you need to process same as for new
count document. 7. Post the difference - Several options are available for posting difference -
Post difference after count is posted using transaction code MI07 - Posting the count and
inventory differences using transaction code MI08, here you have created physical inventory but
not counted so with this you can count and post difference in sinle step. - Entering the count
without a document reference using trasnaction code MI10, with this you can create inventory
document, enter the count and post difference in single step. some more points for posting
difference - Posting period must be open to post inventory difference. - The fiscal year is set by
specifying a planned count date when creating a physical inventory document. - Tolerence to
crear difference per user group can be set in customization. - The system will generate material
document for the difference qty and post the value to appropriate account (for valuated stock) -
The movement type in material document will be 701 or 702 based on gain or loss of material