How to book Scrap in Inventory Management

How to book Scrap in Inventory Management 

Business  Example:

In any manufacturing industry, lot of materials are getting rejected for various reason. Out of such rejected materials, Some materials can not be reworked/reprocessed. Such materials , need to be declared as scrap and move out from inventory management. Some times,machines are also getting scrapped.

Scrap can get generated while processing some mechanical jobs on mechanical ,automobile industries. e.g. Threading operation on nut and bolt.

In chemical industry,e.g. soap manufacturing industry, some part of soap is getting scrapped while cutting or molding.

In furniture manufacturing industry, while processing wooden block, carving out wooden block, extra materials is getting scrapped.

During Quality testing , some materials are subjected to destructive testing, Such materials can be moved as scrap.

Some materials having shelf life in pharmaceutical industry, chemical industry. Expired shelf life materials need to processed as scrap. 


How to map business process in SAP ?

This we can do mapping in SAP inventory management by using T code MIGO.

We can carry out scrap in various different way as per stock types.

Movement Type ‘551’: Scrapping from stock in quality inspection
Movement Type ‘553’: Scrapping from unrestricted-use stock
Movement Type ‘555’: Scrapping from blocked stock

In MIGO transaction, you need to select following options :
Goods Issue against others ( No document reference )

Input following :

• Date of Posting
• Document date.
• Material Number
• Quantity
• Plant Code
• Storage location
• Movement type
• Check -OK square Box

Choose Save button or post button.

System will generate the material document number along with an accounting document number. You can check from header of material document number.

Following accounting entries will be posted

Credit ( - ) to Stock account
Debit ( + ) to Inventory loss account.

From inventory i.e. stock account account material quantity will be reduced and it will get write off.