This article gives a brief overview of the functionalities available in IM, WM and EWM and then a comparitive ananlysis of these three to select the suitable solution.
SAP has provided three solutions for the management and optimization of inventory. They are Inventory Management (IM), Warehouse management (WM) and Extended Warehouse management (EWM). This document describes each of these three processes which can then be used to arrive at the best possible solution for an organization.
Inventory Management (IM):
Inventory Management is the basic feature available in ERP to manage the stock. The stock is managed at the storage location level in IM.
This is mainly applicable where the exact location of a material is not critical and the inventory is not huge. The limitations of using the IM is as below
1. Storage location is the lowest level at which the stock is managed and hence there is no clarity about the exact location as the storage location can be a single/multiple room or even a building. Hence the stock is randomly arranged.
2. Not possible to use Mobile devices/RF application
3. As replenishment cannot happen at the bin/picking area level, stock optimization is limited
4. Cycle counting can only happen at storage location level
5. No specific features are available for optimizing the space in a storage location
Having mentioned the above limitations, it is important to note that IM being a part of ERP MM module has close integration with other modules like PP/SD/FICO. Any stock received to a storage location will have a quantity and value update. The quantity update has a direct link to Materials requirement planning (MRP) and the value update creates relevant accounting entries. Hence where all the modules are closely integrated, IM forms the foundation for any further stock management modules like Warehouse management (WM) and Extended Warehouse management (EWM). If the requirement is to manage the stocks at a more micro level than the storage location then we need to look into the below mentioned options.
Warehouse Management (WM):
Warehouse management is an extension of IM and an integral part of ECC. Many limitations observed in IM regarding the micro level stock management, space optimization, strategy for movement etc can be overcome by using the Warehouse management. WM has the functionalities of storage, shipping of goods and internal warehouse tasks. Some of the key features of WM are as below
1. Stock management: Stock is stored at bin level which is the lowest level in WM and below the storage location level. Hence at any point of time, one can see where a stock is lying thus avoiding any requirement of unnecessary searching which also avoids any inventory mismanagement.
2. Hanling/Storage unit Management: The HU/SU management allows bundling of goods to pallets/cartons/boxes etc. Thus it allows tracking a material through HU/SU number dynamically in a warehouse but at the same time the stock can be managed at HU/SU level. Also there are many reports available to check the occupancy of the bin which helps in better inventory management.
3. Stock Placements: This is a feature which can be configured in the system so that the materials can be placed in bins automatically as per the placement strategy maintained in the system. Many placement strategies are available in the system like addition to stock etc which can be used based on the business requirement.
4. Stock removals: Stock removal strategy allows adapting a strategy for removing the stock based on the business requirement which helps in optimizing the picking process along with the replenishment process and internal movements in the warehouse. Some of the most widely used strategies are LIFO, FIFO etc
5. Physical inventory: The accuracy of inventory count is increased substantially in WM compared to IM as the count happens at bin level and improved features like zero bin count etc are available in WM
6. RF Technology: RF technology allows the usage of all the standard transactions on mobile devices. This greatly reduces the error as the data entry happens at real time and hence improves the picking process
7. Labor management: Labor management helps measuring the performance of the warehouse workers which results in better planning and improved productivity of the warehouse processes.
Extended Warehouse Management (EWM):
EWM is the extended version of WM with enhanced WM features. EWM is mainly used for large distribution centers with high volumes and complex processes
Some of the functionalities of EWM include the following
· Task and resource management (TRM)
· Yard management
· Expected goods receipt (EGR)
· Transport unit management
Let us look into each of the above functionalities in some detail.
Task and resource management (TRM):
This feature allows the execution of an executable work package (Warehouse order) through Queues. This requires the use of mobile technology. TRM maximizes the efficiency of warehouse processes by distributing warehouse orders via queues. Queues can be monitored through warehouse monitor. Assignment of work can be automatic or manual depending on the system configuration. This also facilitates directing or re-directing tasks between different warehouse workers.
From the TRM monitor, warehouse managers can check who is doing what and the status of task completion apart from the prioritization of tasks to individuals and equipment.
This feature allows optimizing the storage of materials according to the frequency of movement and also the size/shape of the material. Slotting is performed first to identify the suitability of bins for each material then the re-arrangement will happen. After the record is saved, the system automatically updates the material’s product master data for the following values: putaway strategy, maximum quantity in storage type, section indicator, and bin type.
Yard Management allows trucks and trailers to be managed in an open yard. A vehicle’s movements can be mapped based on warehouse tasks, and its movements can be monitored through the warehouse monitor. Through warehouse confi guration, the yard can be defined as part of the main warehouse or it can be set up to be utilized for multiple warehouses.
Expected Goods receipt (EGR):
Expected Goods Receipt is new functionality that gives visibility to future receipts that will be shipped to the warehouse based on purchase orders. In WM, inbound deliveries are created in the ERP system, which then starts the goods receipt process in the Warehouse. Conversely, the Purchase order can be created in EWM which represents an expected goods receipt. With reference to this PO, inbound deliveries can be created whenever the goods arrive. Thus it gives flexibility for managing the workload in an optimum manner for the Warehouse managers.
These expected goods receipts can be from internal production orders, stock transports, or external suppliers.
Process and layout oriented storage control: This feature gives the flexibility to store a material after a sequence of processes performed on the material and go through a sequence of locations before reaching the final bin. This is particularly important where the warehouses are big and material traverses through different places with multiple processes being performed to reach the final bin. Eg: Goods received in a carton is deconsolidated and then labeled before it is finally placed in the bin
This feature allows a handling unit consisting of different materials to be directed to a deconsolidation zone where different materials are deconsolidated based on the configuration settings and placed in the final bin
Functionality Comparison of Inventory Management, Warehouse Management, and Extended Warehouse Management
From the above table it can be concluded that EWM offers wide range of functionalities and is best suited for high volume distribution centers with complex processes.