Production Integration with Warehouse Management in SAP S/4HANA Cloud
The integration of warehouse management with production enables to manage your stock, goods movements to be tracked, material to be staged and consumed. At the end of production, finished material can be stored in IM-managed or WM-managed storage location. The integration helps to make the processes with manufacturing more flexible and more transparent.
In this blog, I will provide a comprehensive overview of Production Integration with Warehouse Management in SAP S/4HANA Cloud.
- First, we will have a introduction of Production Integration with Warehouse Management in SAP S/4HANA Cloud, with the associated scope items.
- Second, we will discuss the objects for Production Integration and related objects for Warehouse Management.
- Next, we will see the difference between IM-managed and WM-managed Production Supply Area process flow.
- At the end, there is a conclusion regarding Production Integration with Warehouse Management.
The integration of manufacturing processes into the logistical flow gets more and more important. As soon as Warehouse Management is in use and material needs to be staged to production supply area or finished material needs to be received in an WM-managed storage location, you will need to understand the integration of production and warehouse management. So, what are the solutions for an integrated material flow?
The following scope items belong to Production Integration with Warehouse Management and are not active by default
- 3DV – Warehouse Production Integration
- 5HO – Warehouse Production Integration with Synchronous Goods Receipt
- 3VT – Warehouse Kanban Supply into Production (no part of this blog)
- 41U – Warehouse Goods Receipt from Repetitive Manufacturing (no part of this blog)
Secondly, we handle the objects. What kind of objects for production integration exists? And for what are they used?
Note: Only necessary master data will be discussed, in order to be able to run production integration with Warehouse Management.
- Objects for Manufacturing
- Product Master Data: The product master data is used to support planning, logistics, modeling, forecasting, and reporting. For our case, In “MRP 2” tab, maintain the production storage location for the product
- Work Center: A Work Center can be a place or a machine or a labor where production operations/activities are performed. For e.g. Assembly, Quality check, Pack activities etc.
- Bill of Material (BOM): A bill of material is a complete, formally structured list of the components that make up a product or assembly
- Routing: A routing is a description of which operations or list of activities must be carried out during the production and planning process
- Production Version: The production version is the link between a product BOM (Bill of Material) and the process Routing. It determines which alternative BOM is used together with which routing to produce a material or plan a material
- Objects for Warehouse Management:
- Production Supply Area: An area in production or in the warehouse where products are staged or withdrawn
- Storage Bin: The storage bin represents the exact position of your material in your warehouse
- Control Cycle for Warehouse Management: The control cycle is used to define which material needs to be staged for production with certain staging type, within a production supply area
- Assign Bin to PSA: Storage bin assignment to a production supply area
How to set up master data?
- Configure Product Master Data
- Maintain the production storage location for your material. If the material is a component, it is the issuing storage location to which a backflush is posted. If the material is produced, it is the receiving storage location for goods receipt posting.
- Configure Work Center
- Operations are carried out at a work center. Maintain a supply area for your work center.
- Configure Bill of Material (BOM) – Example: Production Version 3
- Bill of Material is a structured list of the components that make up a product or assembly. In tab “Status/Long Text” you can maintain a production storage location and production supply area.
- Configure Routing
- Routings enable you to plan the production of materials. Routing are usually used as a template for production orders and run schedules as well as a basis for product costing.
- Configure Production Version
- Production Version 1
- In Production Version 1, the production storage location and production supply area are empty.
- Production Version 2
- In Production Version 2, the production storage location “101B” and production supply area “PSA_01” are entered.
- Production Version 3
- In Production Version 3, the production storage location “105W” and production supply area “PSA_02” are entered.
- Overview Bills of Material
- A material can have various production versions. It basically defines the production process.
- Configure Production Supply Area
- The production supply area defines an area in production or in the warehouse where products are staged or withdrawn. In this example, the supply area “PSA_01” is assigned to storage location “101B”.
- In this example, the supply area “PSA_02” is assigned to storage location “105W”.
- Configure Storage Bin
- A production supply area can have one or more storage bins.
- Configure Control Cycle for Warehouse Management
- With a key Plant – Production Supply Area, you can define a control cycle for your material. A control cycle specifies from which WM-managed storage location a material needs to be withdrawn and to which production supply area the material needs to be staged. Furthermore, you need to define a staging indicator. The staging indicator “Pick Part” means, material request is considered only for one specific production order.
- In this case, material for production will be withdrawn from an WM-managed storage location and transferred to an IM-managed storage location through the production supply area PSA_01. The staging indicator “Release Order Part” means, material request is considered for multiple production orders.
- Assign Bin to PSA
- As mentioned, a production supply area can contain multiple storage bins.
Differences between IM-managed and WM-managed Production Storage Location
- Creation of Outbound Delivery – Outbound Delivery Order
- In order to stage the materials for production, an Outbound Delivery is created and distributed to Warehouse Management.
- Post Goods Issue for Stock Transfer to Production Storage Location
- The Outbound Delivery Order has to be processed in Warehouse Management and goods issue needs to be posted.
- Creation of Inbound Delivery – Inbound Delivery Order
- In order to post the goods receipt for finished materials after production, an Inbound Delivery is created and distributed to Warehouse Management.
- IM-managed Production Storage Location
- The production storage location is IM-managed, therefore it is not possible to have a stock overview of production supply areas in Warehouse Monitor.
- Creation of Outbound Delivery – Posting Change Delivery
- Instead of creating an Outbound Delivery Order, a Posting Change Delivery will be created.
- No Goods Issue posting
- Since the production storage location is WM-managed, after confirmation of warehouse task, there is no post goods issue posting needed.
- No creation of Inbound Delivery – Inbound Delivery Order
- In order to post goods receipt for finished materials after production, there is no inbound delivery and inbound delivery order creation. A warehouse task will be created and needs to be confirmed.
The production integration with SAP S/4HANA Cloud Warehouse Management needs to be well thought out in how you want to set it up. The scope item 5HO brings some advantages. Such as:
- Utilize the production supply areas better, by optimizing the staging of components
- Post Goods Consumption in real-time, providing better inventory and cost visibility
- Receive Products directly from production to your warehouse, for better inventory visibility
At the end of the day, the Scope Item 5HO can be considered as the leaner solution, but both ways are possible and which way you go depends entirely on how you want to manage your production process.