This Blog post is basically for Consultants and Business teams to understand SAP’s Inventory methods along with functionality of Dynamic Cycle Counting. When it comes to physical inventory functionality in SAP, Dynamic Cycle Counting gives you very efficient method and accuracy through RF devices. Before talking about DCC, i would like to brief about the Inventory methods and functionality in SAP WM module.

In general Physical Inventory can be conducted annually or continuously and for legal reasons, for balance sheet purposes, or for internal controlling. The process of taking a physical inventory involves planning, execution, and review. Consultants need to talk to the Business Teams. Based on the business audit requirements you need to configure the inventory method for a storage type in SAP WMS.

There will be some theory we need to talk before we can go to Cycle count with RF or with out RF, because this will give us some understanding about the SAP standard physical inventory processes, intern this will help us to understand cycle counts.

The WM supports the following inventory procedures:
Annual inventory(ST) :
Counting the material quantity in the bins at a fixed inventory date. Continuous inventory (PZ): Counting a certain number of bins on any day in the fiscal year. Continuous inventory based on stock placement : When a bin is occupied for the first time in the fiscal year, the system notes that inventory has been taken for that bin.  You can only use this inventory procedure under certain conditions and must always check with the company auditor first. Continuous inventory based on zero stock check : can be activated by the SAP system if a storage bin is empty. Inventory through cycle counting : Counting of materials according to a pre-classification at different times during the fiscal year.

Cycle Counting


A process of continually validating the accuracy of the inventory in the warehouse by regularly counting a portion of the inventory, on a daily or weekly basis. To recap i can bring you the flow chat from

MM configuration steps with Cycle counting:
The cycle counting indicators, A,B,C etc.. are configured using Tcode OMCO IMG>Materials management>Inventory management and Physical Inventory> Physical Inventory>coucle counting. The fields are No of Phy.inv: if material assigned 12 means 12 times in a year that A indicator material counts. Interval: max number of work days. Float days: number of days after the planned count date. Percentage: A,B,C,D etc.. total percentage must be 100%

Using ABC analysis:
You need to execute the ABC analysis to determine indicators for the materials in the plant by Tcode MIBC which can found via Easy access>Logistics>Materials management>Physical Inventory> Special procedures> Cycle counting> Set Cycle counting Indicator. After ABC analysis has been performed and the ABC indicator has been assigned to the material, the indicator is written into the material master record. In Plant data indicator seen as ” CC Phys.inv.ind. If you want to make this Fixed with out running the analysis can be made by selecting “CC fixed”.

Cycle counting Configuration for Storage Type
IMG> Logistics Execution>Warehouse Management>Activities>Physical Inventory> Define Types per Storage types. Cycle count active will use the cycle count indicators set in the Material master records to define how the material is counted.

Some process steps in CC
LX26 Creating a Cycle count Document
LI04 Printing the Cycle count document
LI11 entering the Cycle count

Dynamic Cycle counting
New Dynamic Cycle Counting (DCC) functionality provides a number of features that facilitate cycle counts in the warehouse, including:Physical inventory counting against inactive inventory documents (i.e. while open transfer orders exist for a bin), Inventory counting at quant level, Creation of inventory documents by RF users, Automatic clearing of active and inactive documents.

In this method, the bins are not necessarily blocked. Thus a bin can be counted whether or not there is open activity against it. DCC allowing the creation of inventory documents when open transfer orders (unconfirmed picks and putaways) exist for a bin. This ensures continued warehouse operations and facilitates cycle counts during peak activity periods. DCC configuration (i.e counting against inactive inventory documents) in a specific storage type, you must create at least one record in this activity.

For each storage type for which you want to implement dynamic cycle counting, do the following:
1. Warehouse number filed,
2. Storage Type filed,
3. If you want the system to block the creation of further transfer orders for a bin after it has found differences during a   dynamic cycle count, select BlockTO.
4. If you want the system to activate inventory documents immediately at confirmation of the last transfer order of a bin (i.e when there are no more open TOs for the bin), after it has found differences during a dynamic cycle count, select Immed.
5. From the AutoCl drop-down list, choose an option for automatic clearing of inventory documents in WM
6. If you want to cause inventory documents created for counting by material to be inactive, select ByQuant.

Some process steps in DCC
LX26 Initiate Cycle Counting in WM
LX22 View and Clear Inventory Cycle Counted
LM58 RF menu option to begin counting
LI20 Clear Inventory Differences for WM
LI21 Clear Inventory Differences for MM-IM
LI14 Initiate Inventory Recount
LI02N Change System Inventory Record
LI11N Enter Inventory Count Data not with RF

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