Inventory Sampling (MM-IM-PI) 

Purpose

This component reduces the time and cost of a physical inventory considerably by counting only the stock of individual materials and carrying out an extrapolation to arrive at an estimated count result for all units of stock managed in the system (stock management units).

The more materials a company has, the more costly it is to carry out a physical inventory by counting all stocks. The principle of extrapolation during sample taking is also used in quality inspection in the system: only one particular sample is inspected. The result is then applied to the entire quantity.

However, such conclusions (from several counts of all stock management units) are only allowed when certain criteria are fulfilled:

·         The scope of the stock management units involved in the physical inventory must be large enough.

·         The selection of stock management units to be counted must be “representative”.

Mathematical/statistical processes are used to perform the inventory sampling:

·         A sample to be counted is randomly selected from the stock management units subject to physical inventory. The size of the sample depends on the probable degree of confidence that is valid for the projection of individual count results on all the stock management units involved.

·         On the basis of the posted count results, the system carries out an extrapolation for all the stock management units included in the physical inventory.

·         The inventory sampling is considered successful, if there is only a small deviation between the extrapolated value and the book value and a high probability that the extrapolation result contains only a minor error.

In the case of a successful inventory sampling, it is assumed that the estimated variances from the book inventory are so small that they can be safely ignored. As in the case of a “standard” physical inventory, only the stock of the elements actually counted is adjusted. The stock of the remaining stock management units remains unchanged.

If an inventory sampling is not successful, a complete physical inventory must be carried out for the stock management units not counted.

Integration

Inventory sampling can be carried out in the areas of Inventory Management and Warehouse Management. The steps required to carry out an inventory sampling are the same in both areas. The only difference is the selection of the objects included in the physical inventory:

·        In Inventory Management:

The physical inventory is carried out through selection of the materials by plant, storage location, material type, and stock type.

·        In Warehouse Management:

The physical inventory is carried out through selection of the storage bins by warehouse number and storage type.

Scope of Functions

As with a “standard” physical inventory, there are two methods of carrying out an inventory sampling:

·        Periodic inventory sampling

In this procedure, the count is carried out on a key date. During the physical inventory, movements in the warehouse as well as changes to the book inventory balances are not allowed.

·        Continuous inventory sampling

In this procedure, stock is counted over an extended period of time. In this case, inventory sampling data is updated from time to time to correspond to the latest book inventory balances. Changes to the book inventory balances are thus reflected in the calculations performed in inventory sampling.

In the SAP System, there is no difference between the two methods of inventory sampling, neither in the steps used to carry out the inventory sampling nor in the calculations performed by the system. However, during periodic inventory sampling, you must ensure that the book values will not be changed during the process of inventory sampling.

Extrapolation Procedure

The extrapolation can be based on different mathematical procedures. The SAP System supports the procedure of mean-value estimation.