In Inventory Management, physical inventory is carried out at storage location level, whereas in Warehouse Management, it is carried out at storage bin level. You can inventory your company’s own stocks and special stocks. You can choose from the following four types of physical inventory :

• Key date
  All stocks are counted physically before the balance sheet is prepared.
• Inspection sample
  The materials to be counted are chosen at random. If the variance between the count result and the book inventory balance is small enough, you assume that the book inventory balance is also correct for the materials that have not been counted.
• Permanent
  Each material must be counted at least once per year.
• Cycle Counting
  Performing an ABC analysis of material movements determines how often materials should be inventoried. Fast-moving materials are inventoried most often.

1. Physical inventory preparation
   The physical inventory documents are either created manually (if few materials) or using a batch input session. They specify which materials (IM) or which storage bins (WM) are to be inventoried. During the physical inventory, you have to block the materials or storage bins for material movements to prevent discrepancies between the actual physical stocks in the warehouse and the book inventory balance, or you have to freeze the book inventory balance. If you freeze the book inventory balance, you can continue to carry out goods movements.
   You print and distribute the physical inventory documents.
2. Physical inventory count
   You physically count the stocks and write the count results on the physical inventory documents.
3. Physical inventory analysis
   You enter the results of the stock count in the system. Once the difference list has been analyzed, you can authorize a recount if you think that errors have been made in the stock count. New physical inventory documents are created. Once the new results have been entered, the physical inventory is closed. Physical inventory differences that still exist are posted out.