Overview
The Physical Inventory Process is used to count the actual stock in the warehouse and update the system stock (book inventory) based on the physical count. Any difference between book stock and counted stock is posted as a gain or loss.
Prerequisites
- Authorization for Physical Inventory transactions
- Materials exist in the plant and storage location
- Posting period is open
Step-by-Step Process
1
Create Physical Inventory Document (MI01)
- Go to transaction MI01
- Enter Plant and Storage Location
- Enter the Physical Inventory Number (optional – system can assign)
- Select the materials to be counted (or enter a material range / use selection criteria)
- You can select “Freeze Book Inventory” if required
- Save → System creates a Physical Inventory Document number
2
Print / Display Inventory Document (MI21 / MI02)
- Use MI21 to print the count sheets (warehouse staff uses these to count)
- Or display the document using MI02 / MI03
3
Enter Count Results (MI04)
- Go to transaction MI04
- Enter the Physical Inventory Document number
- Enter the counted quantity for each material
- You can enter zero if the material is not found
- Save the count
System now knows the difference between book quantity and counted quantity.
4
Post Inventory Differences (MI07)
- Go to transaction MI07
- Enter the Physical Inventory Document number
- System shows the difference quantities (gain or loss)
- Review the differences
- Post the differences
System updates the stock (book inventory) and posts the corresponding accounting entries (Inventory Gain / Loss).
Quick Process Flow
MI01 (Create PI Document) → MI04 (Enter Count) → MI07 (Post Differences)
Important Transactions
| T-Code | Description |
|---|---|
| MI01 | Create Physical Inventory Document |
| MI02 | Change Physical Inventory Document |
| MI03 | Display Physical Inventory Document |
| MI04 | Enter Inventory Count |
| MI05 | Change Inventory Count |
| MI06 | Display Inventory Count |
| MI07 | Post Inventory Differences |
| MI20 | List of Differences |
| MI21 | Print Physical Inventory Document |
| MI24 | Physical Inventory List |
| MI31 | Create PI Document (Batch Input / Collective) |
Important Notes:
- After posting differences with MI07, the book stock is updated to match the physical count.
- Inventory differences are posted to Inventory Adjustment accounts (configured in OBYC – usually AUM or GBB).
- You can perform cycle counting or annual physical inventory.
- For warehouse-managed storage locations (WM), the process is different (use LX16, LI11N, LI20, etc.).
Helpful Tips
- Freeze book inventory (in MI01) if you want to prevent goods movements during counting.
- Use MI31 for mass creation of Physical Inventory documents.
- Always verify large differences before posting in MI07.
- You can recount if needed using MI11 (Recount).
- After MI07, check stock in MMBE to confirm the updated quantity.
- Use MI20 to see the list of differences before posting.