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28 Points You Need to Know About SAP WM Implementation
Companies sometimes fail to integrate R/3 Warehouse Management with other R/3 logistics modules as well as they could. This results in inefficiencies and perhaps an expensive fix on a live system. We show you the points you need to consider to make WM work well with the rest of your R/3 logistics system and avoid potential problems.
With greater emphasis on shipping efficiently and cost-effectively, it is important to have a successful and easy-to-work warehouse. This is why more companies are implementing the SAP R/3 Warehouse Management (WM) module. In my experience, however, some companies are not achieving all the possible benefits that WM can provide. The problem is that companies often do not integrate WM well with other R/3 logistics modules — Inventory Management (IM), Production Planning (PP), Sales and Distribution (SD), Quality Management (QM), and Plant Maintenance (PM). Consequently, the functions that WM was designed to perform are executed inefficiently. Achieving those benefits requires that business managers, SAP project managers, WM design and implementation teams, and logistics module teams understand the touch-points and other factors that affect the interaction among various modules and provide integration tips. I will describe those factors and also provide a list of common implementation mistakes and tell you how to avoid them. If you've already implemented WM, then the information presented here might give you ideas for improving its operation.
WM vs. IM
You might be wondering what WM can do that IM can't. IM, which resides within the Materials Management (MM) module, lets you manage your inventories at the plant and storage location level. The materials may be batch-managed. All transactions such as goods receipts, goods issues, and stock transfers/transfer postings involve creation of material documents with accounting documents. Accounting documents have all the General Ledger items and further actions such as accounts receivable or accounts payable. WM functions take place a level below IM. The significance here is that WM has nothing to do with accounting documents. WM allows you to manage stocks of materials at the bin level, which is below the plant and storage location level. If you are able to manage material stocks at the plant and storage location level, you do not need WM; IM does the job. With the huge monolithic warehouse structures in most large businesses, however, managing materials at the bin level — and consequently WM — is a necessity. The sidebar, “7 Most Important Features of WM,” provides more details on the module's capabilities, and the sidebar, “9 Questions to Ask Before Implementing WM,” helps you decide if WM is right for your organization. The WM implementation process presents four distinct key areas: Warehouse design Warehouse operations WM master data Interfaces with other R/3 modules I will list the most common pitfalls and considerations for each of these areas and provide advice on how to avoid them.
1. Incorrect number of storage types. The storage types must reflect the areas where the materials are actually stocked. You must have a judicious number, neither too many nor too few. Divide the whole warehouse into clearly distinguished storage types such as finished goods, raw materials, solvents, chemicals, or south room. Understand that major configuration works at the storage type level, — e.g., capacity checks, confirmation requirements, and so on. 2. Design complexity in storage types. Each storage type design should be based on considerations of confirmation requirements for putaway and picking, and on automatic confirmation of transfer orders (TOs) on creation itself or in a separate step (Figure 1). Important features are placement and removal strategies, need for change of destination bin at confirmation, negative stock allowed in bins, and mixed stock. Too many WM implementations fail due to lack of clear understanding in this area.
Storage type design defines important features such as placement and removal strategies, inventory methods and hazardous material
The TO can never be confirmed. You need to be careful when allowing negative stocks for any storage type. IM process automation. each containing three cartons with four pieces each. and process/production orders.” “first in. For example. Warehouse units of measure (UOM).003003003003. sales unit = carton (four pieces). quantity. drum). In Figure 2. This considerably simplifies the number of TO items and subsequent handling of these units in the warehouse. pallet.g. Is this justified? Discuss and question each requirement. goods receipt for purchase and production orders or stock transport orders — so that the system selects bins for putaway based on putaway strategies. Mixed storage/addition to stock. 14. and WM UOM: base unit = piece. Warehouse Operational Considerations 8. Likewise. Palletization data. http://www. Inaccurate conversion factors. implementations. Who performs the transactions. This is another area of neglect. Figure 2 Base. Strict rules need to be observed for WM UOM. Inevitably. 6. Select a limited number of types for only required TOs — e. warehouse operators/users will need to do 10. Standard strategies meet most of the common requirements and work efficiently. Stock putaway and picking strategies. Demonstrate the complexities involved in each of the above design factors to everyone involved during the design phase and get acceptance for the design at the highest level. This is another area where WM's rules are strict. This is another problem that companies spend a lot of money on to fix after going live. it might be more beneficial to work through transaction COGI (Failed Goods Movements) than to allow negative stocks in production bins. Understand that if you have 5. as the system is looking for exactly three decimal places. Note that custom strategies require a strict definition of rules and are difficult to implement.2008 .000 goods receipts from purchase orders in a months and you make TO creation and confirmation separate steps. for example. Simplify the conversion formula to 33. The warehouse operations should be done in WM UOM. It might look like an attractive option. Different pallet types can be used for different types of materials handled in warehouses. WM Interface with IM 15. Within WM. inefficient. 11. or 48 pieces.000 kg. and require more warehouse personnel. but it causes serious interference in warehouse operations. Users forget to move stocks to balance negative stocks. Unacceptable number of transactions/steps in WM operations. which affects almost all U. alternative. where the base UOM = PC and WM UOM = pallet. The importance of WM UOM is often underestimated. For example.. Take into account whether different materials and batches will be allowed and whether stock will be added to the same material batch present in bins.. Can the material be palletized for putaway? One pallet might have four boxes. 08. Identify the operators/users who will be carrying out WM transactions.333 PCs = 999. You may define by weight. Stock transfers between plant and storage locations within the supply chain can also be automated — a significant benefit where large quantities of materials move between plants. Follow the SAP recommendations on selection and use of the various UOM shown in Figure 2 — base UOM and WM UOM. 4. confirm it immediately.. A lot of manual intervention will be required to add decimal fractions in bins to enable picking. 5. first out. SAP provides standard strategies such as “next available bin. Capacity checks make the system slow and operations restrictive.” Look and cash in on all opportunities of automatic TO confirmation — PCNs. Negative stocks. Manual processes are time-consuming. and you have a perfect answer. movements are done in palletized units. Capacity checks in bins. which interferes with picking and putaways.28 Points You Need to Know About SAP WM Implementation (SCM Expert. putaways for goods receipts from purchase orders.. The rule should be: “If you provide the bin information at TO creation.000 transactions. Another problematic conversion is pounds to kilograms. Bin capacities need to be defined at storage type to automate putaway. Page 2 of 5 3. Tip! Use the simplest possible configuration design that will meet the business requirements. WM unit = three cartons (12 pieces). as it is a drain on scarce user resources. Volume.. particularly if you use capacity checks. Types of TOs to be confirmed by separate transactions. I've seen this factor ignored too often. 9. it is one pallet of four boxes.scmexpertonline. This factor is usually ignored until after go-live. and palletization = four boxes (48 pieces) 13. picklists. Type of TOs to print. Will they have enough time to do these transactions in addition to their other warehouse responsibilities? Estimate the total transactions and anticipate growth of warehouse operations. goods issued to process/production orders and PM orders should be automated so that the system selects bins according to picking strategies. you will end up with “decimal dust” in bins. palletization data needs to be well defined and implemented to conserve on warehouse effort both physically and transaction-wise.S. someone is unhappy with the result.com/archive/Volume_01_(2003)/Issue_02_(October)/V1.999 kg.” If you are convinced that standard strategies do not meet your requirements. since it is a larger unit (case. 10. WM Master Data 12. if the base UOM is kilograms and the sales and WM UOM is PC with a conversion of 333 PCs = 10.g.. You can simplify the steps involved in warehouse operations by allowing automatic confirmations of TOs. if a pallet is stocked in the warehouse. it will result in an unfavorable conversion factor within SAP leading to a recurring value of 3.” and “partial pallets. Inaccurate UOM conversions between the base and alternate UOM lead to interruptions in warehouse operations as the quantities within the TO have to match to three decimal places. Many companies that choose custom strategies later switch to standard ones. Palletization. If you don't address these UOM conversion issues. and the company spends thousands of dollars to fix a live system.08. 7. then resort to custom strategies only through user exits. or palletization. You can automate IM processes — e.
Staging of materials to production supply areas (PSAs) and methods of staging. Movement types in IM involve accounting documents. QM.scmexpertonline.2008 . There could be any number of bins with any names you want. WM movement types link with IM movement types. Clear consumed materials from PSAs by backflushing to simplify the interface.28 Points You Need to Know About SAP WM Implementation (SCM Expert. materials are backflushed from IM and WM storage locations 7 Most Important Features of WM 1.” “raw materials. Also. http://www. storage sections. but not exactly the same. TR. Examples are “fast-moving” or “south racks. however. For instance. Figure 3 Material staging and consumption process in the process industry.” or “building 51. Warehouse structure as represented in WM 4. Remember that it is much easier to copy WM movement types than to create new ones. design multiple WM movement types to link with one IM movement type using special movement indicators. Volume. TO. telling the warehouse to place the received material in a bin. No affect on the general ledger. 2. 18. Figure 3 shows the typical material staging and consumption process in process industry. as a storage section allows grouping of storage bins in sections. TOs can be automatically confirmed when created. but this adds a level of complexity. but those in WM do not. For instance. The automation of various WM movements is achieved through the IM-WM Interface.. You need at least one. designing these movement types is much simpler than designing IM movement types within MM. which links the actions under the different processes. Remember that items within bills of material (BOMs) can have different methods of staging. Page 3 of 5 16. transfer order (TO). If need be. 08. The process orders for bulk and finished goods materials are staged to the “Bulk” and “Finish” PSAs from where the backflushing takes place at time of process-order confirmation. WM uses movement types similar to those in the IM module. Backflushing. Management of stocks at bin level. The movement in WM is usually initiated in IM. Each bin has a key “storage type/storage section/storage bin. and WM manages actions downstream of placement/removal of materials from bins. TRs are usually created automatically as a result of actions within IM. Downstream management of material movement.” A storage section is a necessary evil. Automation of confirmation processes. WM uses a mechanism of transfer requirement (TR) or posting change notice (PCN). Examples are “high racks.. This improves bin management..08. This provides a capability to put away and pick materials from specific bins. It is possible to manage material movement at a level below the bin level by using storage unit (SU) management. a goods receipt from a purchase order creates a TR. etc. This makes the consumption of materials transparent to users and saves considerable time and effort. Simple names help with manual data entry.” A storage type divides the entire warehouse by organizational. PM. and storage bins. and are used within other modules: SD. WM Interface with PP 17. and TO confirmation for actual movement of materials. 3.. Depending on the business process requirements. The Figure shows a typical warehouse structure in WM. storage technique. Pick-order parts: materials staged per production/process order Release-order parts: materials staged for multiple process/production orders depending on material stocks in production bins Crate parts: common-use materials staged independent of process/production orders Do not default to using only one method. Select different staging methods carefully. or even geographical considerations. and TO confirmation processes can be automated. 5.com/archive/Volume_01_(2003)/Issue_02_(October)/V1. but naming does not matter if you use mobile data entry with RF or bar-code scanners. Represent multiple plants or storage locations within one warehouse. The WM structure consists of multiple storage types. WM movement types and links with IM movement types.” A storage bin is the smallest addressable location within a warehouse. Integrate this step during production order/process order confirmations along with automatic goods receipts from orders.
but these tend to be restrictive. as any material may be placed in any available location. 9 Questions to Ask Before Implementing WM If you are considering whether to implement WM. 9. and different batches could be in different bins in the warehouse. neutral number (say. then WM needs to be implemented. or a customer or production needs a specific pallet reserved. Does your warehouse handle a large number of materials? The greater the number of materials. Specific rules or practices should be important considerations. Automation of bin selection. goods issues. If you have multiple batches for each material. each representing a number 25 against a bin capacity of 100. You should certainly consider WM if your warehouse manages 2. 8.. as the design will revolve around the rules. 7. 7. 1. Figure 4 shows the process for single and collective processing of pick lists (TOs) for deliveries. If materials in your warehouse are managed by a fixed bin for each material. the more likely it is that you need WM.08. Do you have clearly defined rules or warehouse practices? This is extremely important. say 10 batches for a material. you might restrict each bin to four pallets. This rule is often violated. Are you typically hunting for materials to be issued to customer orders/production in your warehouse? You need the specific material batch. WM's rules are unforgiving. you can restrict placement/removal in/from storage types in the warehouse. Collective processing of sales order/stock transport order deliveries with automated printing of pick lists must be encouraged.000 different materials or more.com/archive/Volume_01_(2003)/Issue_02_(October)/V1. Once set. It improves data integrity and efficiency. 20. This is important in some business situations. For instance. and so on. 3. The capacity may be in terms of weight (say. Do you wish to use RF or bar-code scanners to automate putaway or picking from bins? RF and bar-code scanning eliminates manual data entry..scmexpertonline. Once bin capacity is defined. Do you need to identify specific pallets or containers? For example. 2. WM can be a big asset here. Page 4 of 5 6. which is error-prone. The Delivery Monitor acts as a delivery cockpit from which you can monitor the sales and stock transport orders to be picked. Encourage use of this functionality to monitor the outbound delivery processing.. It is possible to specify that different materials be placed in or removed from specified storage types in a particular sequence. WM provides automation in bin selection using various SAP-standard and custom putaway and picking strategies. Also.. 08.2008 . Are the materials in your warehouse randomly placed in bins? The ability to place material randomly helps you use the available warehouse more efficiently. Do you find it difficult to locate material batches in your warehouse? Since batch numbers allow management of the same material with different characteristics under one material number. Volume. 5. Pick lists for sales orders/stock transport orders. it will be more difficult to manage materials without WM. Master-data sensitive. 6. For example. Are your materials already managed in bins by a legacy system? This could be an important overriding factor in favor of WM. 2. 4. http://www. you should not expect to place six pallets in a bin as this would require a change in the master data (for bin capacity). and invoicing. Each SU has a unique ID. packaging materials. You may assign different weights to various factors according to your specific requirements. such as when only four pallets can be placed in a bin. tank farm materials. You can easily manage just finished goods in WM and have raw materials. Do you wish to eliminate manual processes and automatically select bins for putaway (goods receipts) and pick (goods issues) materials from bins? WM is your only option to achieve this within SAP. Are your materials batch-managed? Each batch of a material adds complexity to material management in a warehouse. Tip! Do not use such restrictions unless they are absolutely necessary for your warehouse process.000 pounds). you can manage materials within IM and may not need WM. the following factors will help you in your decision making. you might have large bin sizes. bin capacities can be defined. picking confirmation. 25 against a bin capacity of 100). or works-in-progress managed within IM. WM Interface with Shipping 19. If materials are already managed using some warehouse procedures and techniques in a legacy system. This is only feasible using the storage unit (SU) management functionality within WM.28 Points You Need to Know About SAP WM Implementation (SCM Expert. because running single pick lists is time-consuming. rules can be changed only with a lot of effort through design reconfiguration and possibly master data. Delivery Monitor.
The pick lists supply materials for both order types from the warehouse. WM Interface with QM 24. Material movements through QM use PCNs. PM orders must be automated to ensure timely goods issues. This makes the process transparent to users. Wave picks.28 Points You Need to Know About SAP WM Implementation (SCM Expert. 23. 28. a PCN is generated. Rework. The picking is created in the same manner as it is with production order issues. the material may move back into the warehouse if it is declared as unrestricted stock. 22. the movement is only allowed through QM usage decisions to maintain integrity. Suite 308S. The PS orders are created as a result of a project's work breakdown structure (WBS) elements. high-tech. 08. On completion of rework. WM Interface with PM and PS 27. To make picking processes more efficient. Making this visible through your customer interface requires programming. There is no substitute for demos or walk-throughs with different options that simulate how the system works in a live warehouse environment. He has over eight years of SAP implementation experience with Fortune 100 companies in the chemicals.. Volume.781.com. After the picking is confirmed. pharmaceutical. The materials may need to be reworked due to quantity problems.2008 . Email: customer.08.751.8799 SAP and the SAP logo are trademarks or registered trademarks of SAP AG in Germany and several other countries. and electronics industries.. shipping charges.service@scmexpertonline. Wherever batch numbers or material numbers are changed in logistic processes. http://www.” and it is particularly attractive in big. mechanized warehouses. Many shippers and carriers allow customers to track orders through the Web. The movement invokes a PCN and the usual processing. Customer manifesting. USA.com/archive/Volume_01_(2003)/Issue_02_(October)/V1. every hour — it will conserve shipping effort. which are often misunderstood. It should be largely automated through the process of TO creation in the background and during confirmation. As you can see. The usage decision functionality allows you to set stock movements to unrestricted stock. order tracking/express ship. PM orders/PS orders. but it is highly rewarding in terms of customer satisfaction. 25. He also has vast experience in the engineering industry as well as software development and applications. They will help provide an acceptable warehouse design that is efficient and effective... as all picking for a bin for different deliveries can be combined. or scrap. It uses IM movement types. blocked stock.scmexpertonline. and this can be done through the QM interface by placing the material in the quality stock through the process of manual inspection lot creation. Think of them as an equivalent of a transfer requirement. Page 5 of 5 Figure 4 Delivery monitor with single and multiple processing of deliveries 21. and handling costs. This is called “wave picking. 990 Washington St. the information can be directly passed to an order-tracking system for your customers. All rights reserved. Copyright © 2008 Wellesley Information Services. it is feasible to have an easy-to-use WM implementation designed to meet conflicting business requirements using SAP standard functionality. The processing of PCNs into a TO is slightly different. The PM orders are created within PM as a result of planned preventive maintenance schedules. Posting change notices (PCNs). This saves material-handling effort within the warehouse. working with various R/3 logistics modules in addition to APO. warehouses must be encouraged to run deliveries at set intervals by combining multiple sales orders in a single delivery. 26. Sales and Customer Service: 1. Remember that with the QM interface. Dedham. Usage decisions. SCM Expert. If it is feasible to run deliveries at set times during the day — say. Pick lists for PM orders. Avoid pitfalls in the early design stages and keep up on maintenance during the project design and implementation phases. Vijay Garg is a senior SAP Supply Chain Management (SCM) consultant for ICM America. Delivery processing for shipping (full/partial). MA 02026.
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