What is Inventory Management?
Inventory management is primarily about specifying the size and placement of stocked goods. Inventory
management is required at different locations within a facility or within multiple locations of a supply network
to protect the regular and planned course of production against the random disturbance of running out of
materials or goods. The scope of inventory management also concerns the fine lines between replenishment
lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation,
inventory visibility, future inventory price forecasting, physical inventory, available physical space for
inventory, quality management, replenishment, returns and defective goods and demand forecasting.
The Inventory Management system provides information to efficiently manage the flow of materials,
effectively utilize people and equipment, coordinate internal activities, and communicate with customers.
Inventory Management and the activities of Inventory Control do not make decisions or manage operations;
they provide the information to Managers who make more accurate and timely decisions to manage their
operations.
Building blocks for the Inventory Management system:
Sales Forecasting or Demand Management
Sales and Operations Planning
Production Planning
Material Requirements Planning
Inventory Reduction
Inventory Management Process:
This process allows users to manage all the Materials/items purchased, manufactured, sold, or kept in stock.
For each Material/item, users enter the data relevant for a particular area in the system. This data is used
automatically by the system for purchasing, sales, production, inventory management, accounting and etc...
It provides optimum support for business. Helps create orders, delivery notes, and outgoing invoices,
automatically calculating prices, sales units, and gross profit. Enables complete control over stock quantities
at all times and lets users analyze the financial aspects of stockholding at the same time. Allows users to
control production on the basis of the items that are used for production and on the basis of the finished
product and any by-products created.
The Purpose of SAP - Inventory Management:
Today most of the industries/companies implemented SAP and also implementing SAP, because SAP is
giving the full-fledged solution for their Business Requirements and it is meeting Customer/Client
requirements without huge Customization.
For example, If you take FMCG industries, they want to know the status of their Inventory on
Daily/Weekly/Monthly/Yearly basis. Because at the end of the day, Management wants to know the
movements of the Goods/Products for their future planning and also to maintain the balance between
Demand and Supply.
The main components are:
Management of material stocks on a quantity and value basis.
Planning, Entry, and Documentation of all Goods Movements.
Carrying out the Physical Inventory.
Look into the following Business Process & Inventory Analyses diagram:
In the coming Articles we are going to discuss about the above Dataflow. I.e. configuring the DataSources in ECC, Mapping to InfoCube in BI/BW, Data Loads to InfoCube and Reports.
Some important Reports Details:
Few important reports names given below…
Stock Ledger Report
Stock Overview Report.
Demand Supply Match Report.
Valuated Stock Report.
Inventory Aging Report.
Inventory Turnover Report.
Stock in Transit Report.
Scrap Report.
Blocked Stock Report.
Days' Supply Report.
Receipt and Issue Consignment Stock at Customer Report.
Conclusion & Benefits:
For optimal inventory management processes, we need robust functionality for managing our logistics
facilities. Support for Inventory Management helps us record and track of each materials on the basis of both
Quantity and Value.
We can reduce the cost for warehousing, transportation, order fulfillment, and material handling – while
improving customer service. We can significantly improve inventory turns, optimize the flow of goods, and
shorten routes within our warehouse or HUB/distribution center. Additional benefits of inventory management
include improved cash flow, visibility, and fast and good decision making.
Inventory management offers one of the largest opportunities in supply chain management. End-to-end
inventory visibility increases buyer purchasing power, minimizes inventory levels, ensures product balance,
and ultimately reduces warehousing costs.
Inventory management is primarily about specifying the size and placement of stocked goods. Inventory
management is required at different locations within a facility or within multiple locations of a supply network
to protect the regular and planned course of production against the random disturbance of running out of
materials or goods. The scope of inventory management also concerns the fine lines between replenishment
lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation,
inventory visibility, future inventory price forecasting, physical inventory, available physical space for
inventory, quality management, replenishment, returns and defective goods and demand forecasting.
The Inventory Management system provides information to efficiently manage the flow of materials,
effectively utilize people and equipment, coordinate internal activities, and communicate with customers.
Inventory Management and the activities of Inventory Control do not make decisions or manage operations;
they provide the information to Managers who make more accurate and timely decisions to manage their
operations.
Building blocks for the Inventory Management system:
Sales Forecasting or Demand Management
Sales and Operations Planning
Production Planning
Material Requirements Planning
Inventory Reduction
Inventory Management Process:
This process allows users to manage all the Materials/items purchased, manufactured, sold, or kept in stock.
For each Material/item, users enter the data relevant for a particular area in the system. This data is used
automatically by the system for purchasing, sales, production, inventory management, accounting and etc...
It provides optimum support for business. Helps create orders, delivery notes, and outgoing invoices,
automatically calculating prices, sales units, and gross profit. Enables complete control over stock quantities
at all times and lets users analyze the financial aspects of stockholding at the same time. Allows users to
control production on the basis of the items that are used for production and on the basis of the finished
product and any by-products created.
The Purpose of SAP - Inventory Management:
Today most of the industries/companies implemented SAP and also implementing SAP, because SAP is
giving the full-fledged solution for their Business Requirements and it is meeting Customer/Client
requirements without huge Customization.
For example, If you take FMCG industries, they want to know the status of their Inventory on
Daily/Weekly/Monthly/Yearly basis. Because at the end of the day, Management wants to know the
movements of the Goods/Products for their future planning and also to maintain the balance between
Demand and Supply.
The main components are:
Management of material stocks on a quantity and value basis.
Planning, Entry, and Documentation of all Goods Movements.
Carrying out the Physical Inventory.
Look into the following Business Process & Inventory Analyses diagram:
Inventory Management System
Integration with other Modules:
Inventory Management is part of the Materials Management and it is fully integrated with the following other
modules in SAP. So with this we can easily track the whole information/transactions of the
Materials Management
Production Planning
Sales & Distribution
Quality Management
Plant Maintenance
Logistics Information System
How to Monitor?
In any organization to Monitor the all Inventory Management activities, from Shop Floor Executive’s to Top
Manager’s they need good reports, so it is highly difficult to take such kind of MM reports in ECC (OTLP
System), so for that we need to implement SAP-BI/BW and generate reports in SAP-BI/BW (OLAP System).
Especially, if you want to generate the reports for all Materials and Plant combinations which contain MTD
and YTD calculations, it is very difficult in ECC (OLTP Server).
Inventory Data Flow Diagram from ECC to BI/BW:
To take all kind of Inventory Management SAP given 0IC_C03 InfoCube, which will use three DataSources,
see the below figure.
In the coming Articles we are going to discuss about the above Dataflow. I.e. configuring the DataSources in ECC, Mapping to InfoCube in BI/BW, Data Loads to InfoCube and Reports.
Some important Reports Details:
Few important reports names given below…
Stock Ledger Report
Stock Overview Report.
Demand Supply Match Report.
Valuated Stock Report.
Inventory Aging Report.
Inventory Turnover Report.
Stock in Transit Report.
Scrap Report.
Blocked Stock Report.
Days' Supply Report.
Receipt and Issue Consignment Stock at Customer Report.
Conclusion & Benefits:
For optimal inventory management processes, we need robust functionality for managing our logistics
facilities. Support for Inventory Management helps us record and track of each materials on the basis of both
Quantity and Value.
We can reduce the cost for warehousing, transportation, order fulfillment, and material handling – while
improving customer service. We can significantly improve inventory turns, optimize the flow of goods, and
shorten routes within our warehouse or HUB/distribution center. Additional benefits of inventory management
include improved cash flow, visibility, and fast and good decision making.
Inventory management offers one of the largest opportunities in supply chain management. End-to-end
inventory visibility increases buyer purchasing power, minimizes inventory levels, ensures product balance,
and ultimately reduces warehousing costs.
No comments:
Post a Comment