702701MMMI01MI04intermediate

Physical Inventory in Inventory Management: MI01, MI04, MI07 and Differences (701/702)

The classic stocktake without EWM: a physical inventory document records the book quantity — and, if the document is created with a posting block, freezes it and blocks goods movements for the item — the count is entered, and posting the difference adjusts stock with 702 (shortage) or 701 (surplus) and writes the value off.

Educational content. SAP behaviour varies by configuration and release. Spotted something off? Report it.

Docs

Demo data

01Create the PI document (MI01)

PI document 100000123 for RM-1000 in SLoc 0001. The book quantity of 500 EA is frozen and postings are blocked.

Business scenario

At year end, storage location 0001 is counted. The book says 500 EA of RM-1000; the counters find 497 EA.

All companies, numbers and documents are fictional demo data.

Step-by-step flow

01
Create the PI document (MI01) open in twin
PI document 100000123 for RM-1000 in SLoc 0001. The book quantity of 500 EA is frozen and postings are blocked.
Without a stable reference, a goods movement during the count would make the difference meaningless.
02
Count and enter (MI04) open in twin
Counters find 497 EA. The count is entered with MI04: a difference of −3 EA.
Entering a count does not change stock yet — differences are reviewed first.
03
Review the difference (MI20) open in twin
MI20 shows −3 EA (₹3,000). Recount or post?
Large differences are typically recounted before posting; small ones are posted.
04
Recount open in twin
MI11 creates a recount document. The same item is counted again; the difference is only posted once the result is confirmed.
Recounting avoids writing off stock that was merely mis-counted.
05
Post the difference (702) open in twin
Stock 500 → 497 EA. ₹3,000 is written off to inventory differences. The posting block (set in this demo) is lifted.
Book stock now matches physical stock, and the loss is visible in the P&L.
06
Stocktake complete open in twin
Book and physical stock agree at 497 EA. The PI document is fully posted.
Compare with EWM, where counts correct bins first and a difference analyzer posts to inventory management later.

SAP documents

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Stock impact

Step	Plant / SLoc	Stock type	MvT	Change
Post the difference (702)	1000 / 0001	Unrestricted use	702	−3 EA

Accounting impact

Physical inventory shortage

Typical

Post the difference (702)

Dr Expense — inventory differences (GBB/INV)₹3,000
Cr Inventory — raw materials (BSX)₹3,000

The missing quantity's value is expensed through automatic account determination (transaction key GBB, modification INV, typical).

Typical conceptual flow. Actual G/L accounts and posting behaviour depend on material valuation, automatic account determination and system configuration.

Movement type

701GR physical inventory difference (surplus)
702GI physical inventory difference (shortage)

Confirms that book stock matches physical stock at storage-location level and posts accepted differences to stock and the P&L, as required for year-end inventory.

Transactions & Fiori apps

MI01 — Create Physical Inventory Document
MI04 — Enter Count
MI20 — Difference List
MI07 — Post Difference
MI11 — Recount

Physical inventory apps (create, count, post)Names and availability depend on release and scope

Differences by SAP version

MI transactions as described; MI09/MI10 for counts without a document.

Configuration

Inventory procedure
Configuration dependent
Periodic, continuous, cycle counting or sampling.
Tolerance groups (OMJ2)
Configuration dependent
Limit the value of differences a user may post.
Account determination GBB/INV
Configuration dependent
Expense account for differences.

Prerequisites

Stock at storage-location level
Tolerance groups for posting differences

Master data

Material master: Cycle-counting indicator and valuation price used for the difference value.

Organizational structure

Plant 1000
Storage location 0001

Tables

Table	Description
IKPF / ISEG	Physical inventory document header / items
MATDOC	701/702 postings

Integration

FIDifferences are expensed or credited at the material's price.

Common errors

“Goods movements fail with a posting block”
Likely causes: Open PI document with posting block for the material
Where to look: MI01 documents (MI22/MIDO overviews)
“Difference cannot be posted”
Likely causes: Tolerance group exceeded; Count not entered for all items
Where to look: Tolerance group · PI document status

Troubleshooting

Something went wrong? Work through these checks in order. They are diagnostic questions, not configuration instructions — confirm changes with your system owner.

CHECK 1
Posting differences
- Are all items counted?
- Is the tolerance group sufficient?
- Is the posting period open?

Interview questions

Walk through a physical inventory in MM.
MI01 creates the PI document (optionally with a posting block, which freezes the book quantity); MI04 enters the count; MI20 lists differences; MI11 recounts if needed; MI07 posts differences with 701 (surplus) or 702 (shortage), which adjusts stock and posts the value to an inventory-difference account.
Which movement types post physical inventory differences?
701 for a surplus (goods receipt) and 702 for a shortage (goods issue). In warehouse-managed stock, 711/712 are typically used instead.

Quiz

Q1 · Identify the movement type

A count finds fewer units than the book. Which movement type posts the difference?

702701711

Q2 · Put in order

Put the steps in order.

1MI01
2MI04
3MI20
4MI07

References

SAP SE — SAP Help Portal: Physical Inventory (MM-IM-PI) (source)
SAP SE — SAP Help Portal: Posting Inventory Differences (source)

Explanations are original. They summarize standard behaviour; always validate against your system's release and configuration.

Version history

Version	Change
1.1.0	SME correction (summary): the posting block and frozen book quantity depend on the physical inventory document settings.
1.0.0	Initial version.

Digital twin