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224 CHAPTER 7 Inventory and Warehouse Management Processes

company receives fi nished goods into inventory from the shop fl oor. Both of
these movements result in the creation of material and fi nancial accounting
documents. Also, in both processes, when materials are received into inventory,
they are placed in an appropriate storage location with an appropriate status,
such as unrestricted use or in quality inspection.
The procurement and production chapters focused on a goods receipt
that is generated against a purchase order and a production order, respectively.
It is not uncommon, however, to record a goods receipt without reference to
an order. Two scenarios in which this occurs are (1) the initial receipt of inven-
tory and (2) an unplanned receipt from vendors or an unplanned return from
customers. The initial receipt of inventory involves a movement type that an
organization uses when an SAP ERP system is fi rst installed. This movement
increases the quantity of materials in inventory and results in appropriate
postings to the general ledger accounts. Unplanned receipts occur when a ref-
erence document, such as a purchase order or a production order, does not
exist. For example, a vendor may deliver materials free of charge (perhaps
as samples), or a customer may return materials without prior arrangements.
In these cases, the company uses a goods receipt, along with an appropriate
movement type, to receive these materials into inventory.

GOODS ISSUE
In contrast to a goods receipt, a goods issue results in a decrease in inven-
tory. In the fulfi llment process, a goods issue indicates a shipment of fi nished
goods or trading goods to a customer against a sales order. In the produc-
tion process, a goods issue refl ects the issuing of raw materials or semifi nished
goods to a production order. These materials are then used in the production
process to create fi nished goods. Finally, a goods issue results in the creation of
appropriate material, FI, and CO documents.
As in the case of a goods receipt, a goods issue can be unplanned. That
is, a goods issue can occur without reference to a sales order or a produc-
tion order. Some common cases in which such a goods movement occurs are
issuing materials to scrap, sampling, and using the materials for internal con-
sumption. When materials are no longer usable due to age or obsolescence,
they are discarded or scrapped. Sampling involves testing the quality of the
materials. If the testing is destructive—that is, the testing procedure ren-
ders the materials unusable—or if the materials are expensive, then, rather
than examine all of the materials, the company tests only a small sample.
Finally, materials may be withdrawn for internal consumption, for example,
for research and development. In all these cases, an appropriate movement
type is required.

TRANSFER POSTINGS
Businesses use transfer postings to change the status or type of materials
in stock. Recall from Chapter 4 that there are four common stock statuses
that determine the usability of materials—unrestricted use, in quality inspec-
tion, blocked, and in transit. Recall further that a transfer posting need not
include a physical movement of materials. Figure 7-1 provides three examples
of transfer postings, indicated by the number “4.”

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