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Many SAP customers utilize the inventory management (IM) module that is part of their SAP ERP or SAP R/3 system, while others have chosen to migrate to the warehouse management (WM) module or most recent extended warehouse management (EWM) solution.

If you’re still heavily dependent on IM, why would you consider a move to WM or EWM? What particular pain points or challenges could you resolve? And what are the opportunities of such a move? After all, IM allows you to:

 

  • Manage stock on a quantity and/or value basis
    • Visibility of on-hand quantity or value by storage location
    • Manage special stocks, such as sales order or consignment stock
    • Update the G/L for financial accounting and update account assignments for cost accounting
    • Stocks updates are made in real time as transactions are entered
  • Enter and document stock movements such as
    • Goods receipt, goods issues, physical stock transfers, and transfer postings
    • Take physical stock inventory

IM is also fairly simple:

  • Key receipts, issues, and transfers can be performed in a single-step transaction
  • Immediately update inventory
  • Less training required for users
  • Traces all material postings (date, user, material, quantity, storage location) into SAP ERP
  • Update accounting information in real time
  • Works with custom radio frequency (RF) transactions

Because of its simplicity, IM is a great option for small facilities with 10 employees or fewer, lower level of materials, simple handling procedures, lower volumes of activity, or for outsourced warehouse operations that only require visibility into storage locations or buckets.

However, IM comes with some limitations, and despite a few “WM-like” features, such as the use of fixed bin assignments to gain visibility, 2-step transfers versus 1-step movements, outbound delivery monitoring, handling unit management, delivery pick quantities, it is no substitute for a robust warehouse management solution that supports a full range of complex warehouse activities. 

           

IM cannot handle:

  • Complex warehouse operations such as monitoring, putaway strategy and control, or picking optimization
  • Discrepancies when inventory is updated in the system before the physical movement occurs
  • Traceability–visibility is only available when system posting takes place, not as actual physical activities are performed
  • Cycle counts at the material level versus the bin level

In contrast, WM supports:

  • A variety of placement strategies
    • Fixed bin, near-fixed bin, addition to stock with capacity checks
    • Bulk, storage unit type strategy with position codes (/)
    • Identification points (storage unit management/pallet IDs)
  • Powerful control over picking
    • Wave picking, group picking, 2-step picking
    • 2-step confirmation
    • FIFO, LIFO, large/small quantity strategies for forward picking
  • Greater visibility through monitoring
    • Warehouse Activity Monitor (WAM), outbound/inbound delivery monitor, wave picking monitor
  • Decentralized warehouse management
  • A variety of stock replenishment options
    • Random or fixed storage bin replenishment
    • Automatic transfer orders to replenish fixed bins that fall below safety stock levels

Additionally, EWM offers:

  • Cross-docking (planned and opportunistic)
  • Yard management with LES and RF integration
  • Dynamic cycle counting
  • Easy Graphics Framework for better reports and dashboards
  • Labor management including integration with SAP HCM
  • Graphical warehouse layouts
  • Task interleaving
  • Batch and serial number management
  • Slotting, rearrangement, and kitting

The graphic below provides a detailed comparison of WM versus EWM capabilities:

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In summary, IM is still viable option for small warehouses with limited complexity. More complex scenarios require WM, which comes standard with SAP ERP and is still widely used and supported.  For more granular control with the flexibility to scale to any size environment, EWM is an excellent choice.

Source:  Warehouse Management Primer: Leveraging the Latest Functionality from SAP, to be presented by Kyle Sorensen at Logistics & Supply Chain Management a collaboration of SAP and SAPinsider, March 4-8, 2013 in Las Vegas.  Visit http://scm2013.wispubs.com/ for more information.

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