How to Accelerate Your Inventory Sorting Using Batch Search Strategy

  • by Patrick Imhen, Business Analyst and Senior SAP MM/SD/PM Functional Consultant, ZOCODE Limited
  • October 25, 2017
Discover how to set up and use a batch search strategy to accelerate inventory sorting with business scenarios. Learn certain precautions to take while implementing the use of batch search strategy functionality.
Learning Objectives
By reading this article, you will learn:

•    Relevant business scenarios for using batch search strategy in inventory management
•    Configuration settings for selection criteria and sort rules
•    How to set up a batch search strategy for different business requirements with the application of batch split, selection criteria, and sort rules
•    How to apply batch search strategy functionality in business transactions
Key Concept
The SAP system has provided a system strategy to efficiently sort materials or product batches in inventory using batch search strategy functionality. Using this functionality helps organizations speed up the time taken in inventory sorting of batch items. Batch search strategy is a functionality within Batch Management in SAP Logistics (Logistics General).

Some organizations have business requirements to use batch management within their SAP systems for effective tracking of their inventory. They use it to ensure proper visibility of goods movements for several purposes, including the need to differentiate products based on their production or manufacturing dates and monitor their expiration dates. Batch Management could also be used based on a legal requirement, such as recalling of a product, tracing a defect, monitoring material shelf life, or identifying a customized product based on customers’ specifications. For these organizations, batch management is a vital part of their inventory management, sales and distribution, production, and warehouse management. My focus is on batch search strategy in inventory management business transactions.

It is a cumbersome task for organizations to search for material or product batches in inventory under any required circumstance. SAP has provided a way to accelerate the search for batch items in inventory using the batch search strategy.

I show you how I set up and used batch search strategy for different business requirements in SAP Inventory Management. I include step-by-step configuration instructions and explain how to use selection criteria and sort rules. Note that knowledge of batch management and determination is a prerequisite to effectively implementing a batch search strategy.

Relevant Business Scenarios for Batch Search Strategy in Inventory Management

Batch search strategy is part of the batch determination process used to define how the SAP system can best search and identify a batch or batches of material or product given defined criteria. The strategy is used to define parameters that give better control to the criteria to search for material batch or batches in inventory management.

Imagine that you have to deal with hundreds of material batches daily in your inventory and that you are trying to identify and appropriately apportion them to the right business transaction. It will be a time-consuming task with several mistakes. Facilitating this business challenge with a batch search strategy saves more time for identifying material batches and saves the cost incurred for misappropriating material batches to business transactions. This is very important for organizations that manage sensitive material in their inventory. Batch search strategy is applied for different business requirements based on the business scenario and probably the industry type. I now walk you through some business scenarios and explain how batch search strategy applies to them.

First in, first out (FIFO): An organization desires that certain consumable batch materials used for their internal operations should be issued from the store to cost centers based on the date of goods receipt. They require that batches received first are issued first to avoid spoilage due to the short shelf life. In this case the sorting parameter to be used in the search strategy is goods receipt or delivery date in a FIFO sort rule.

Grade classification: In this scenario, an organization usually procures a raw material that is used internally for servicing its customers. The organization uses a central purchasing department and so procurement is done centrally in the central plant. Although some of the batches of the material of higher grade are used within the central plant, batches with a slightly lesser grade are sent to other plants in other regions due to the purchasing power of their clients in the regions. This organization had a requirement to easily identify and appropriate the different batch grades of the material. In this case, the sorting strategy should be set up to sort the relevant batch based on color classification.

Last in, first out (LIFO): The LIFO method of inventory management is no longer a popular practice because of its controversial impact in accounting. In the regions dominated by International Financial Reporting Standards (IFRS), such as Canada, India, and the member states of the European Union, there is a restriction on the use of LIFO. Nevertheless, companies in the US and regions using the Generally Accepted Accounting Principles (GAAP) accounting principle still use this inventory method. LIFO means the last received materials are issued from inventory first. This happens when an organization tends to take advantage of an unstable price situation. To achieve a LIFO scenario, the sort rule has to be set as descending while using a date of goods receipt or delivery as a selection criterion.

These scenarios can go on and on depending on the business requirement.

Patrick Imhen

Patrick Imhen is a business analyst and a certified SAP ERP consultant with proficient knowledge, skills, and experience in Materials Management (MM), Sales and Distribution (SD) and Plant Maintenance (PM) gathered from successful SAP implementations projects, support, training, business process analysis, modeling, unit testing, and integration testing. He has profound understanding of the supply chain process across industries and helps organizations cut the cost of operation and improve process optimization. He has more than 10 years’ experience in the business environment and six years’ experience in the SAP domain.

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