INVENTORY PROCESS

ITEMS AND WAREHOUSES

SAP Business One enables you to manage all the items that you purchase, manufacture, sell, or keep in
stock. Services, such as labor, can also be defined as items. This can be useful for defined services you sell
on a regular basis. Items can also be used to describe fixed assets that are tracked for accounting purposes.

For each item, enter the data relevant for a particular area in the system. This data is used automatically
by the system for purchasing, sales, production, managing your warehouse, and accounting. SAP Business
One, therefore, provides optimum support for your business processes.

Using the item data in the system, you can optimize your stock. You have complete control over stock
quantities at all times and can also analyze the financial aspects of stockholding at the same time. In SAP
Business One, there is a direct relationship between warehouses and items.

BATCH AND SERIAL NUMBERS

Batches are used to track groups of items with characteristics in common. These characteristics might be
attributes you define such as a shade of color, granularity or PH balance. The characteristics could be
dates, such as expiration dates, manufacturing date, or the date the items were received into inventory.

Serial numbers can help you track items down to the level of each individual object in your warehouse, so
you know exactly which one was sold to a customer. The typical criteria for determining if an item needs
a serial number are:

o Is the item a high value item?

o Should the item be tracked for security or repair reasons?

Serial numbers are also important in Service. A serialized item can be set up to automatically create a
customer equipment card and a service contract when the item is delivered to a customer. The customer
equipment card is used to store service information, such as valid service contracts, any service calls, and
inventory transactions for the item.
PRACTICE YOUR SKILLS
Requirements:

1. In this exercise, you create items managed by both batches and serial numbers. Create a master
data with the following information:
A. DPC44 -managed by batches

B. K2000 -managed by serial

2. Record a Goods Receipts PO to document receipt the following items into inventory.

3. Sell both items and deliver them to the customer.

4. Run the serial number transaction report to see transactions for your newly created serial numbered
items.
Solutions:

1. Create an item master data for DPC44 (managed by batch) and K2000 (managed by serial
numbers).

Choose Inventory  Item Master Data

Choose the Add icon from the tool bar.

Choose Add.

Do not close the Item Master Data window, proceed in adding K2000.

Enter the following information for the new item.

Choose Add.
 2. Receive the vendor's delivery of the batch-managed and serialized items into the inventory.

Choose Purchasing - A/P  Goods Receipt PO

Right Click on Quantity 5. Choose Batch/Serial Numbers.

The Serial Number – Setup window opens.
Choose Automatic Creation.

Choose the Browse Button <…> for the Serial Number field.

Choose OK.
Enter the additional information as follow:

Click then Create.

Choose Update, then OK.

You have returned to the Goods Receipt PO main window. Now it is time to enter the batch information
for the second row.

Right Click on Quantity 150. Choose Batch/Serial Numbers.

The Batches – Setup window opens. Enter the following details:

Choose Update and OK.

Save the goods receipt PO by choosing Add, then Yes on the system message.
Goods Receipt PO number: ________________________

3. Sell both items and deliver them to the customer.

Choose Sales – A/R  Sales Order

Choose Add. Sales Order Number: _____________________________

Create a delivery for your sales order.

Open Sales A/R > Sales Order. Choose the Last Data Record.
Choose Copy To.  Delivery
Right Click on Quantity 1 and choose Batch/Serial Numbers.
Choose one of the serial numbers shown by highlighting a row in the Available Serial
Numbers section and use the arrow to the right button (in the middle) to move the selected item to the
Selected Serial Numbers section.

Choose Update, then OK.

Choose a batch for your second item.
Right Click on Quantity 10 and choose Batch/Serial Numbers.
Choose Auto Select for the system to choose the first batch.

Choose Update, then OK.

Add the delivery document.
Choose Yes to confirm the system message.
Delivery Number: _______________________________

4. Run the serial number transaction report.

Choose Inventory .Inventory Reports .

Serial Number Transactions Report.
Item Number from: K2000 To: K20000
Choose OK.
The Serial Number Transaction Reports window opens.
Click on the row where serial number of the item delivered is found.
Which transactions are listed?
Goods Receipts PO (In) and Deliver (Out)
DEFINING A WAREHOUSE
Choose Administration  Setup  Inventory Warehouses to define new warehouses.

Here, you can enter a Warehouse code and a Warehouse name.

Address Fields: Specifies address details for the warehouse. This address defaults into the
purchasing document for the ship-to address for the warehouse.

Location: Specifies the warehouse location. Use this field to classify warehouses according to their
physical location.

Drop Ship: Defines the warehouse as a drop-ship warehouse. Use this option when the company
does not manage inventory for specific items, but receives commission for every order. SAP
Business One will not calculate stock postings for this warehouse.

In the Accounting tab, you define various default accounts used for inventory management per
warehouse. To define a warehouse as a default in the MRP wizard, select the Nettable checkbox. If
unchecked, the warehouse can still be chosen in MRP, but does not appear as default.

Note: If you encounter the error "One of the Inventory Account is Missing" when adding a new
warehouse, this indicates that the Posting Period is not Updated. Update the Posting Period before
creating a new warehouse.
INVENTORY TRANSACTIONS

When an item is purchased or sold, warehouse inventory is automatically reduced or increased when the
transactions are entered in purchasing and sales. For example, if a delivery note is created based on a
sales order for a customer, the warehouse stock is reduced by the delivery quantity when the delivery
note is added. If an incoming invoice is entered in purchasing, the warehouse stock increases by the
delivery quantity when the incoming invoice is added.

The purchase or sale of an item is, however, not the only transactions that result in a goods receipt or
goods issue. For example, if five pieces of an item are found damaged in the warehouse as a result of
water damage, rendering them useless, they are removed from the warehouse. These items cannot,
however, be sold because they are now useless. In this case, you have to post a separate goods issue with
the function described here.

A goods receipt may be necessary, for example, if, after carrying out a physical inventory, you establish
that you have not considered part of the quantity stored. You enter the forgotten quantity by means of a
goods receipt in the system.
GOODS RECEIPT AND GOODS ISSUE

For goods receipts and goods issues that do not refer to a sales process or purchasing process, you must
specify the warehouse to which or from which you want to post the goods. The system always uses the
default warehouse from the item master record if you do not specify otherwise.

To post a goods receipt, choose Inventory Inventory Transactions Goods Receipt.

To post a goods issue, choose Inventory Inventory Transactions Goods Issue.

A goods receipt creates a journal entry that posts the value of the received goods on the debit side of the
stock account and the credit side of the inventory offset – increase account. A goods issue creates a journal
entry that posts the value of the issued goods on the debit side of the inventory offset – decrease account
and the credit side of the stock account. The stock accounts are retrieved from the Inventory Account
fields on the Inventory Data tab of the item master record.

INVENTORY TRANSFER
When you post an inventory transfer from warehouse 02 to warehouse 01, the system creates an
inventory transfer document and a journal entry. The journal entry posts the value of the transferred
goods on the debit side of the stock account of warehouse 01 and on the credit side of the inventory
account of warehouse 02.

To post a stock transfer, choose Inventory.Inventory Transactions Inventory Transfer.

PRACTICE YOUR SKILLS
REQUIREMENTS:
1. Create a new warehouse with the following information:
Field Name or Data Type Values
Warehouse Code 06
Warehouse Name Regional
Location <any>
Street/City <any>
Country <Domestic>
2. Receive 10 units of C00008 into the new warehouse.
3. Send 5 units of C00010 from warehouse 01 to warehouse 06.
4. After a flood, 2 units of C00010 were damaged. Scrap the damaged goods from the warehouse.

SOLUTIONS:
1. Create a new warehouse
Choose Administration  Setup  Inventory  Warehouses.
Enter the following information on the General tab page:
Field Name or Data Type Values
Warehouse Code 06
Warehouse Name Regional
Location <any>
Street/City <any>
Country <Domestic>
Choose the accounting tab to view the default G/L accounts assigned to the warehouse.
Choose Add then Cancel to close the window.
 2. You have 10 units of item C00008 that have been refurbished. Create a goods receipt to receive
them into the new warehouse. Choose Inventory .Inventory Transactions  Goods Receipt

Field Name or Data Type Values

Item No. C00008
Quantity 10
Warehouse Code 06
Goods Receipt number: ______________
Choose Add, then Yes to confirm the system message.

Note: If the warehouse field does not appear, use Form Settings to add it to the document. A default
warehouse may be set in Form Settings, so the other option is to restore the default settings.
3. Send 5 units of C00010 from warehouse 01 to warehouse 06.
Choose Inventory  Inventory Transactions  Inventory Transfer

Field Name or Data Type Values

From warehouse 01
Item No. C00010
To warehouse 06
Quantity 5
To check the quantity available in Warehouse 01 put the cursor in the To Warehouse field and
choose Ctrl+Tab.
Inventory Transfer Number: ____________
Choose Add then Yes.

4. After a flood, 2 units of C00010 was damaged. Scrap the damaged goods from the warehouse.
Send 5 units of C00010 from warehouse 01 to warehouse 06. Enter this delivery in SAP Business
One by using the Inventory Transfer transaction. Check the stock currently stored in the new
warehouse.
Choose Inventory  Inventory Reports  Inventory in Warehouse Report.
Choose the By Warehouse tab.
Enter Warehouse 06.
Choose OK.
 5. There is a flood in the warehouse and 2 units of C00010 are so damaged that you will scrap these
units. Post a goods issue from the warehouse for this item.
Choose Inventory  Inventory Transactions  Goods Issue.

Field Name or Data Type Values

Item No. C00010
Quantity 2
Whse (Use the Form Settings to make this Column visible) 06
Remarks Scrapped Damaged Units
Goods Issue number: ___________
Choose Add. Confirm the system message to save the goods issue.

Check the current stock situation for item C00010 in warehouses 01 and 06.

Choose Inventory  Inventory Reports  Inventory in Warehouse Report.

Deselect all warehouses except01 and 06.
PICK AND PACK
The pick and pack process is an optional step in the sales cycle. If a company manages a large warehouse,
and has dedicated personnel to collect the items, pack and ship them, then the pick and pack manager
can be helpful.

The pick and pack manager scans open sales orders and reserve invoices by requested delivery date and
priority. It also presents the available quantities ready to be picked and shipped.

Once you have created a new sales order with an approved status, you may use the pick and pack
manager, accessed through the inventory module, to handle your picking activities. The process starts
with the creation of a pick list, moves to the reporting of picked quantities, and terminates with packaging
and delivery.

The pick and pack manager allows you to release some or all items to a pick list, perform a partial pick for
the items, or pick all items. You can also create a delivery note at any stage of the picking process.

The Pick and Pack Manager: creates a pick list, reports on picked quantities, allows you to specify packages
types for picked items and creates a delivery for picked items.

Packing can be done inside the Pick and Pack Manager or directly in the delivery document. Pick and pack
manager displays items in status drawers:

Open – for open sales orders or reserve invoice rows

Released – for items ready to be picked

Picked – for quantities already picked

In SAP Business One, the delivery or A/R invoice may serve as the pack document. In the delivery choose
Go to  Packaging or right mouse click to get to the Packages -Setup window.

Existing Packages:
Enter the packages that you want to use for packing the items of the delivery.
You can define Package Types in Administration  Setup  Inventory  Package Types.
Available Items:
Lists items and quantities that you can pack into the packages. Select the items and enter the
quantities that you want to assign to the package selected in the Existing Packages list above.
Package Contents:
Shows the content of the package that is selected in the Existing Packages list above. The package
list is also printed when a delivery note is printed.
PRACTICE YOUR SKILLS
REQUIREMENTS

I. Create a sales order and enter the following information:

Field Name or Data Type Values

Customer C20000
Delivery Date <Today’s date>
Item A00003
Quantity 10
Item A00004
Quantity 15
Record the Sales Order number _______________________

II. Release these items to the pick list.

III. Select the pick list you created and enter the picked quantities.
IV. Enter the picked quantities in the column Picked.

Field Name or Data Type Values

for Item A00003: Qty:10
for Item A00004: Qty:15
V. Create manual delivery for your sales order directly from the pick and pack manager.
Before adding the deliveries make your packaging.
VI. Record the Delivery Number: _________________
Solution:

1. Go to Sales - A/R  Sales Order

2. Enter the following information

3. Add the Sales Order

4. Go to Inventory > Pick and Pack > Pick and Pack Manager
5. In the Pick and Pack Manager – Selection Criteria window, select Posting date From <today’s
date> To <today’s date> then click OK

6. Tick the box of Open documents for picking then select the Release to Pick List
7. Update the Pick List Details by entering your name in the Picker field and click Add. Notice that
items were transferred to Released drawer

Close the Pick List Details window.

8. For picking of items in the warehouse, Go to Inventory > Pick and Pack > Pick List
9. Enter the Pick Number and click Find
10. In the Picked column, enter the Quantity 10 and 15 respectively. These are the quantities picked
from the warehouse. Click Update then OK

If you do not see the "Picked" column, scroll the Pick List window to the right.
11. Go back to the Pick and Pack Manager and notice the items were transferred to Picked drawer.
Go to Inventory  Pick and Pack  Pick and Pack Manager
In the Pick and Pack Manager – Selection Criteria window, select Posting date From <today’s
date> To <today’s date> then click OK
Click the "Picked" button
12. Put check marks on the boxes and select Create  Manual Delivery

13. In the Delivery window, right-click and select Packaging

14. Select the package type, put the selected quantities and click the arrow to the right
15. Click Update, then OK
16. Add the Delivery Document.
PRICELIST AND DISCOUNTS

You can define multiple price list for your items. A price list contains items. Price lists can be based on
other prices lists by using a percentage mark-up. Every item is linked to every price list.

You can assign a price list to the customer master record on the Payment Terms tab. When you enter the
customer in a sales document, the assigned price list defaults to the document. The system will then use
hat price list to price the items in the order.

Of course, more complex pricing can be used such as special prices, discount groups, and pricing
hierarchies. Prices can also be changed in the sales order by authorized users. For example, a salesperson
might give a 5% discount to a particular item or to a whole sales order.

Using the different pricing options in SAP Business One, you can set predefined prices for selling and
buying items. Typically, a business will choose only those options that make sense for how they price
items. For example: If a company sells smaller items to other businesses, they are more likely to use
volume discounts. A company selling higher priced items may focus on special prices created for particular
business partners. Prices are assigned to price lists and to specific business partners.

For price lists, you define discounts based on percentages or quantities. For example, if all your large
accounts have discounted prices since they purchase in larger volumes, you can create a relationship
between pricing levels that updates automatically.

On top of the basic price list functionality, you can add discounts based on item group, properties, and
manufacturer. You can use special prices to define detailed pricing and discount structures for a business
partner. You can base your discounts on any price list, or simply enter them manually. Special prices
override all other prices.
When the system searches for a price, it first looks at special prices. If no special price, it looks for discount
groups. If no discount group, it looks for period and volume discounts. If no period and volume discount,
it uses the basic price list assigned to the business partner.

PERIOD AND VOLUME DISCOUNTS

You can use this function to define special prices for price lists. A special price can apply to a defined
period or to a quantity scale.

In SAP Business One, time-based discounts are defined in the window “price list item details by period”
and volume discounts are defined in hierarchies for those validity periods. Add new items to the list by
choosing Inventory  Price Lists  Period and Volume Discounts
DISCOUNT GROUPS

You can define discount groups for a business partner. These discounts are defined by an item group, a
combination of item group properties or an item manufacturer.

When you use discount groups at the item properties level, SAP Business One allows you to define a
discount for several properties. You can use a rule to decide which discount is used by the system for the
calculation:

The highest discount -The property with the highest discount will determine the overall discount
calculated for the item.

The lowest discount -The property with the lowest discount will determine the overall discount
calculated for the item.

The average discount -The system calculates the average of all the discounts for the properties.
The average is used as the discount.

Discount totals -The system adds together all discounts of the properties that apply to the item.
The total (up to 100%) is used as the discount.

To define discount groups you choose Inventory  Price Lists  Special Prices  Discount Groups
SPECIAL PRICES

Special prices enable you to give a discount or surcharge for a specific business partner. Choose
Inventory  Price Lists  Special Prices  Special Prices for Business Partners.

With special prices you also have the possibility to assign a different pricelist for selected items to a
business partner. You can copy special prices to other business partners using Inventory  Price Lists 
Special Prices  Copy Special Prices to Selection Criteria.

For copying special prices from one business partner to other ones the following copy rules exist:

 Replace All Items:

The system copies all the special prices and possibly overwrites existing ones.
 Replace Only Existing Items:
The system overwrites all the special prices that exist in the source business partner (BP) and
target BP records. It does not add any new special prices.
 Do Not Replace Items:
The system adds new special prices, but does not change existing ones.
PRACTICE YOUR SKILLS:
REQUIREMENTS:

1. Add a new item in the system and maintain prices manually.

Field Name or Data Type Values
Item T2002
Description Ergo Screen Monitor
Price List Base Price
150
Price List Regular Sales Price
400
Price List Small Account Sales Price
500
2. Create a new customer, TC200, Smith Inc. Since this customer initially only orders small quantities,
assign him your store terms. You can assign the Small Accounts price list in the payment terms.
Field Name or Data Type Values
Code TC200
Name Smith Inc.
Group Small Accounts
3. Create a new pricelist called TEST PRICE.
4. Create item T2003 and calculate the price automatically using LAST PURCHASE PRICE.
5. Provide a special discount of 10% of the store price (Small Account Sales Price List) for the item
C00008 with customer C23900.
6. Grant 10% discount for HP Printers item group for C40000 to C42000.

SOLUTIONS:
1. Add a new item in the system and maintain prices manually.
Choose Inventory  Item Master Data
Change to Add mode.
Add the item.
Business Partners  Business Partner Master Data
Choose Data  Add
Choose the price list Small Account Sales Price on the Payment Terms tab page.
Choose Add.

Create a sales order for customer TC200 and item T2002. Make sure that the system chooses the right
price.
Choose Sales-A/R  Sales Order

Field Name or Data Type Values

Customer TC200
Delivery Date Today’s date
Item T2002
Quantity 1
Check the price by displaying the item master record and comparing the price in the document with the
price in the Small Account Sales Price price list.
Sales Order Number: ______________
Save the order. Acknowledge any messages about lack of stock and choose Add.
2. Create a new pricelist called TEST PRICE.
Inventory  Price Lists  Price Lists.
Right mouse click  Add Row.

The base price list is the Base Price and the factor is 2
Save the price list by choosing Update.
Close the confirmation window.
Choose OK.

3. Create a new item T2004 (Easy Pixel Monitor) and assign it a unit price (Base Price) of 300.00.
Inventory  Item Master Data
Choose the Add icon.

Field Name or Data Type Values

Item T2004
Description Easy Pixel Monitor
Price List Base Price
Unit Price 300
Add the item.
 Call up the Price List screen and go to your Test price list.
Check the price of your item.
Choose Inventory  Price Lists  Price Lists
Double click the Number next to the Test price list.
The price of the new item is 600.00.

Create a sales order for 5 units of C00008 and check that the prices are correct.
Choose Sales-A/R  Sales Order

Field Name or Data Type Values

Customer C23900
Delivery Date Today’s date
Item C00008
Quantity 5
Item C00005
Quantity 6
Add the sales order. Sales Order number: ___________________
4. Grant 10% discount for HP Printers item group for C40000 to C42000.
Inventory  Price Lists  Special Prices  Discount Groups.
Choose customer C40000
For the item group HP Printers, Enter 10%.
Choose the button Copy to Selection Criteria to copy the discount information to C42000.
In the selection field, enter the following:
From: C40000 To: C42000
Click OK, then Add.
 Create a sales order and check the prices. Choose Sales-A/R  Sales Order

Field Name or Data Type Values

Customer C42000
Delivery Date Today’s date
Item A00004
Item Group HP Printers
Check the prices to ensure the customer receives the appropriate discount. Since this is only a check,
choose Cancel to close the sales order.