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Today in order to achieve operational efficiency and to reduce the total cost of operation, Third party service providers (3PLs) are hired to manage the WH by the manufacturers.  As it is a non core activity this brings in value for the manufacturer, however in a business scenario where response to customer is critical which is the case for almost all the suppliers worldwide now this adds a huge responsibility for the service provider.

How this can be managed in SAP with ease & being effective at the same time is a challenge which demands for an innovative solution. There can be multiple options, ranging from mapping the WH as plant, using EWM, or making externl WH as an integral part of the SAP WH. Most of the 3PLs use their own home grown softwares for their warehouse management activities, namely putaway, internal transfers, picking and counting. It is importnat to note that 3PLs today are slowly feeling the need to move towards SAP for better service to their cleints to avoid double keying and managing data in two systems : own & in cases in SAP as well.

In order to track the activities at the 3PL warehouse an easy approach be to map the 3PL WH as an external Wh defined as a storage type. This allows tracking of the activities for the enterprise in terms of moving goods form the manufacturing site to the WH and further delivering from this 3PL WH to the end customers. The storage type mapping for the 3PL provides, however few additional activities for the service provider in terms of picking goods for delivery and confirming the shipment. But this again allows the enterprise to track in realtime the movement of goods across the physical boundaries.  The external WH of 3PL is mapped with minimum bins in a storage type to allow minimal operation for the 3PL in SAP. This is with an assumption of 3PL managing the entire WH activities in own system at the bin level, which is also correct as warehousing is a core activity for the 3PL. The activities for the 3PL have increased marginally, however this delivers the value of tracking goods in and out of the 3PL’s warehouse for the enterprise.

There could be a case of data inconsistency with the ongoing business activities in the 2 systems : SAP and 3PLs. However this can be mitigated by following a regular check say a weekly where in a comparison for the stocks can be made based on business parameters. This can also be automated using batch job options in SAP and than performing a comparison and addressing the errors, if any. 

With this approach a very high business value is delivered for the client in terms of tracking the activities at the 3PL right in their own system at all times, with just a click of a button. Remember any miss in fulfilling an order for a customer can cost alot to the business.

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