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SAPIMvs.WM:HowtoChoose,Use,andOptimize

GavinKlausCatalystInternational,Inc.WhatWe’llCover…UnderstandingthedifferencebetweenWMandIMChoosingbetweenWMandIMOptimizingandovercominglimitationswithIMandWMInventoryManagement(IM)Keyfeatures/strengthsInventorymanagementbyquantityVisibilityofon-handquantitybystoragelocationManagementofspecialstocksEntryanddocumentationofallmaterialmovementsReal-timeupdatesofinventoryDocumentationofallreceipts,issuesandtransfersPhysicalinventoryCarryoutphysicalinventoryatthemateriallevelPerforminventoryadjustmentsSAPOrganizationalStructureCompanySLocCompanyCompanyClientSLocSLocPlantOrganizationalStructureattheIMLevelChallengeswithInventoryManagementLackofdetailedvisibilitytomaterialflowe.g.Whenthedeliverypicklistisgenerated,thedelivery’s“actualpickquantity”isupdatedpriortoactualpickingRequiresmanualupdateswhenquantitiesdifferInabilitytoassignincomingmaterialstooutbounddemandtoavoidmultiplematerialhandling continued...ChallengeswithInventoryManagement(cont.)ImmediateupdateofinventoryreceiptsandissuesSysteminventoryandstatusNOTrepresentativeofthe physicalprocessLimitedvisibilitytolocationsofmaterialsOnlypossibletoassignasinglefixedbinlocationper storagelocationBinlocationis“text”only;nostrategiesareavailableSolution:R/3WarehouseManagement(cont.)InfancytomaturityFunctionalityconsiderablyexpandedwith4.6xandhigherTwo-steppicking,two-stepconfirmation,managingmultiple storagelocationswithasinglewarehouseExtensionset2.0forEnterprisetoincludeCrossDocking, YardManagement,ValueAddedServicesWMPicksUpWhereIMLeavesOffTypicalassignmentisonestoragelocationtoonewarehouseItispossibletohavemultiplestoragelocationsmanagedbyasinglewarehouseQuantBin1QuantQuantQuantBin2Stor.Type2Stor.Type3Warehouse1Stor.Location1Stor.Type1Warehouse2Stor.Location2Plant1Location1Plant2CompanyIMLevelWMLevelStor.Type1KeyWMFeaturesManagementofmaterialsProvidesbin-leveltrackingInventorymanagementfunctionsVariousplacementandremovalstrategiesValue-addedservicese.g.Specialhandlingrequirements(labeling,packaging)PowerfulpickingcontrolTwo-steppicking,wavepickingFIFO,LIFO,large/smallquantitypickingstrategiesFullyIntegratedwiththeotherSAPApplicationsFeatures:FlexibleWarehouseStructuresGoodsMovementsControlInventoryWMIntegrationWithOtherKeyR/3Modules(cont.)Source:SAPWM[LO530]WMIntegrationWithOtherKeyR/3Modules(cont.)IM-WMProcessingofallmaterialmovementsAutomatedcommunicationwithconfigurableprocessingSD-WMTwo-steppickingwithSD-WMintegrationWavepickingopportunitiesProcessingindividualdeliveriesPP-WMProductionsupportwithPP-WMintegrationSupplyingmaterialstotheshopfloorInternalandexternalautomatedreplenishmentoptionsWMIntegrationWithOtherKeyR/3Modules(cont.)QM-WMHandlingofinventorysamplesInspectionlotismaintainedwiththematerialdataHand-heldterminals-WMProcessingoftransferrequirementsProcessingoftransferordersBinandmaterialinquiriesBenefitsofWM(cont.)Measurablebenefits16-25%PickingProductivityImprovement11-25%ReductioninCustomerReturns10-25%SavingsinMaterialHandlingLabor10-40%SpaceUtilizationImprovement13-30%ReductioninScrap8-15%ReductioninCarryingCosts Source:GartnerReportWhatWe’llCover…UnderstandingthedifferencebetweenWMandIMChoosingbetweenWMandIMOptimizingandovercominglimitationswithIMandWMWhenIsInventoryManagementtheAnswer?IMisgreatwhen...SmallfacilityLowerlevelsofinventoryonhandSimplisticmaterialhandlingprocessesLowervolumeofactivityOutsourcedwarehouseoperationsOnlyneedstoragelocationorbucketofinventoryvisibilityWhenisWarehouseManagementtheAnswer?WMisgreatwhenLargerfacilitiesLargenumberofmaterialsonhandHighervolumeorflowthroughTraceabilityandvisibilityiscriticalTrackmaterialflow,status,inventorylevelsComplexprocessesAutomatedsystems,widespreadsiteKeyElementsWithWMExtendmaterialmasterWarehousemanagementviewNorequireddataDefinewarehousestructureMinimizethenumberofstoragetypes

DefinebasedonsimilaranddifferentrulesforstoringmaterialsMixedstock,StorageorHandlingUnitManagementDefinetheWMProcessesAutomatic,semi-automaticandmanualprocessingTransferordercreation,confirmation,postingchangesEvaluatingIMvs.WM1–Definebusinessprocesses2–EvaluateROIofaWMSsolution3–ConsiderRFfunctionality4–Trainingresourcesandschedule5–Focusonoptimizationopportunities1-DefineBusinessProcesses(cont.)“TheleveloffunctionalitythatcustomersneedinaWMSiscompletelydependentupontheirenvironment.CustomershavetodefinetheirneedsbeforetheycanrealisticallylookforaWMS.” Source:IntegratedSolutionsStep2-EvaluateROIofaWMSSolutionMeasureproductivityandaccuracybeforeandaftertheWMSinstallationReviewandanalyzepickingoperationsKeyareaofimprovementReviewandanalyzeinventoryaccuracyWhensupportedwithRF,accuracycanreach>98%3-ConsiderRFFunctionality:ExampleAs-is1,000palletsatfiveminutes/pallet=5,000minutesWithtwominutessavedperpallet2minutes*1,000pallets=2,000minutes2,000/480minutesworkedbyeachreceiverperday=4.16receiverssavedfromthepalletreceivingprocessStep4-TrainingResourcesandScheduleResourcestoevaluate,guideandsupportaWMsolutionAfull-time,dedicatedWMresourceiscriticalThismayormaynotbethesameIMresourceTrainingscheduleAWMsolutionwillrequireacertainlevelofIMtrainingWMtrainingwillvarybasedonthedegreeoffunctionalitySupportresourcesConsiderasingleresourceforIMandWMifpossible5-OptimizationOpportunitiesPickingoperationsandinventoryaccuracyWhatareyourbaselinerequirementsWhatisthevolumeofactivityEvaluatepickingpathsanddemandLookatyouraccuracynumbersoveraperiodoftimePerhapsmonthly,quarterly,annuallyMaterialhandlinglaborcostsSpaceutilizationimprovementsPackingtasksCanyoubenefitfrompackingwhilepickingWhatistheBESTStockManagementSolution?1-InventoryManagement2-LeanWarehouseManagement3-FullWarehouseManagement4-DecentralizedWarehouseManagementOption#1-InventoryManagementPro’sSimplisticKeyreceipt,issueortransferinasinglesteptransactionImmediateupdateofinventoryRequireslesstrainingcommitmentFewertransactionstodocumentandpresentTrace-abilityofallmaterialpostingsintoSAPR/3Date,user,material,quantity,storagelocationReal-timeupdateofaccountinginformation1-InventoryManagement(cont.)Con’sDoesnothandlecomplexwarehousesoperationswellUnabletomonitoractivitiesLackstoolstomanageresourcesandtasksLacksfunctionalitytooptimizekeyprocesses(picking)InaccuratesysteminventoryInventoryupdatedbeforethephysicalmovementRequiresadditionalworkiftherearediscrepanciesLimitedtrace-abilityOnlyvisibilityiswhenthesystempostingtookplaceNovisibilitytothefollowonphysicalactivitiesOption#2-“Lean”WarehouseManagementUseofverysmallportionofWMcapabilitiesYoudonotprocessgoodsreceiptsorissuesasa subsequentprocessinWM,NostoragebinsaremanagedintheWMapplicationEvolvedfromSDpicklistPut-awayandpickfrom1ormorefixedbinsBinishardassignedonmaterialmasterTO’sarecreatedforpicksandputaway,andpicklistis createdfromTO’s2-“Lean”WarehouseManagement(cont.)Pro’sRequireslessconfigurationthanfullWMReducednumberofstepsintheprocessUseoftransferordersaspicklistsConfirmationisnotrequiredAdditionalprocessingoptionsConfirmput-away,picking,over-deliveries,shortages, batchesPrinttransferordersIntegrationtoHRAdditionalpickingfunctionalityWavepickingispossiblewithLeanWM2-“Lean”WarehouseManagement(cont.)Con’sMusthaveafixedbinassignedforallmaterialsRandomstorageisnotpossibleInventoryisstillunderIMfunctionalityonlyInventoryoptionsareatthestoragelocationStockdifferencescanonlybeprocessedinMM-IMLacksadditionaloptimizationopportunitiesPicking,packing,binaccuracyNostrategiesareusedLackofpickingandputawaystrategiesOption#3-FullWarehouseManagementPro’sOptimizationopportunitiesPicking-TwosteppickingPacking-PickandpackinasinglestepCross-docking-Inbound,outbound,prod.materialsMonitoringandrealtimevisibilitytoprocessstatusVisualqueuesatthedetailedstepsOpentasks,completedtasksAdditionalinventorymethods(annual,zerostock)ThemoduleisFREEwiththepurchaseofSAP3-FullWarehouseManagement(cont.)Con’sInventorycountinginterfereswithoperationswithoutRFPriorto4.7extensionset2.0InitialoverheadtosetupdependingondesignMasterdataCapacitychecking,controlcyclesConfigurationrequirementsDesigningthewarehouselayoutandsetupPotentialforadditionalstepstosupportprocessingConfirmationsClearingdifferencesProcessingpostingchangesOption#4-DecentralizedWarehouseManagementUseofSAPasastandaloneWMSWithSAPorotherERP/hostasthecoresystemCoresystemanddecentralizedWMrunonseparatemachinesCommunicationisthroughBAPI’sfortransactionsand IDOC’sformasterdataGoodsmovementsdonethroughdeliverynotestothe stand-aloneSAPWMsystem4-DecentralizedWarehouseManagement(cont.)Pro’sOnaseparatemachineDecreasescriticalityofdowntime24x7operationCanleveragenewerSAPR/3releasesEvenifcoresystemisonanolderreleaseCanaddadditionalwarehouseswithoutimpacttothe coresystemCancommunicatetomultiplecoreERPsystems4-DecentralizedWarehouseManagement(cont.)Con’sCoresystemisnot24x7operationIDOCand/orBAPIerrorsIDOCfailuresHumaninterventionisrequiredtoworktheerrorqueueIDOCoverheadIDOC’sdonotofferalloftheavailablefieldoptionsthata usermayormaynotusewiththePCtransactionMustmodifytheIDOCSAPConsolehastobesetupinthedecentralizedsystem andinthecoresystemScalingtheSolutionOperationalComplexityTransactionVolumeIMOnlyLeanWMWMDecentralizedWMTRMWhatWe’llCover…UnderstandingthedifferencebetweenWMandIMChoosingbetweenWMandIMOptimizingandovercominglimitationswithIMandWMOptimizingandOvercomingLimitationsWithIMandWM1-PhysicalInventorytips2-Enhancevisibilityofmaterialflowandlocations3-Automatepickingandput-away4-Automaticallyreplenishfixedbins5-Consolidateyourpickingactivities6-OvercomebottleneckswithRF1-PhysicalInventoryTips(IM)Onlypossibleifthestoragelocationdatahasbeen maintainedSolution:Activateautomaticstoragelocationfor movementtypesthatreceivematerialintotheplantAvoidstheneedtocreatestoragedatamanuallyFormaterialswithmultiplestoragelocationreqmts.Usethemasscreationoptionforenteringallvalidstorage locationsatonetimeintoasingleentryscreenTransactioncode=MMSC2-EnhanceVisibilityofMaterialFlowandLocations(IM)UsefixedbinassignmenttogainadditionalvisibilityMaterialmasterstoragelocationviewTwo-steptransfersvs.one-stepmovementsStoragelocation-to-storagelocation(movements313,315)Plant-to-plant(movements303,305,351,352)OutbounddeliverymonitorUsetoviewoutbounddeliveries,shipmentsandloading activities3-AutomatePickingandPut-away(WM)DefineapickingstrategyperstoragetypeA-PartialquantitymanagementIfpickingresultsinpartialquantities,pickfromherefirstto avoidbreakingnewpalletsM-Large/smallquantitiesincludedUsetofacilitatelargerquantitypicksfrombulkareasand smallerquantitypicksfromrackareasP -FixedbinfrommaterialmasterForfastmovingitems,assignadedicationlocationtoward thefrontofthewarehouseUsereplenishmenttoenoughmaintainstockfordemand3-AutomatePickingandPut-away(WM)(cont.)DefineaputawaystrategyperstoragetypeAVOIDmanualputawaypracticesC-OpenstorageUseforlargeitemsthatdon’trequireaspecificbin assignmentI-AdditiontoexistingstockUsefulforconsolidatingreceiptsofthesamematerialupon put-awayCaution:Sinceonlyonequantresidesinabin,allmaterialsinthebinadoptthesamereceiptdate(unlessbatchorstorageunitmanaged)3-AutomatePickingandPut-away(WM)(cont.)Defineapickingstrategyperstoragetype(cont.)L -NextemptybinGreatfitforhighrackstorage;wherebyastandardrack sectioncanhold2-3unitsofstorageUsefulforstoringpalletsofmaterial;onepalletperbin location4-AutomaticallyReplenishFwd.PickingLocations(WM)BatchprogramAscheduledjobtoreadfixedbindataandgenerate replenishmenttransferorders2requiredprogramsRLLNACH1RLAUTA10“Upontransferorderconfirmation”optionCreatesanautomaticreplenishmentTOwhenapick confirmationdrivesthefixedbinlocationbelowthemin. stocklevel5-ConsolidateYourPickingActivities(WM)Two-steppickingBasedonselectioncriteria,relevantdeliveriesareread andlikematerialrequestsarecollectedThiscollectionresultsinasingleaggregatedpicking orderandtaskforeachlikematerial(firststep)TOsplittingcanbeleveragedtodistributelargepicksThesecondstepisthere-allocationprocedureThisistheprocessof“re-assigning”thespecificmaterials andquantitiesbacktotheoriginalrequirementReducesduplicatepickingeffortsCutsorderfulfillmentcycles6-OvercomingWMPerformanceBottleneckswithRFPotentialbottlenecksandsolutionsMoredetailedoperationsrequiremoretransactionalstepsLeverageRFtoreducethedataentryrequirementsLeverageRFtoconsolidate/combinetransactionsPhysicalinventoryblockingLeverageRFtoreducethetimeabinisblockedInR/3Enterprise,inventorycanbeprocessedifanopen transferorderexistsPickandpackinasinglestepwithRFIncorporateRFtopickintoahandlingunittoavoidtheneed toperformpackingasaseparatetaskResources“HowtoSelectaWMS”ByChristopherTrunk,TotalSupplyC,“WarehouseManagementSystems,DefiningYour BusinessNeeds”byDougCampbell,IntegratedSolutions,January2000GartnerReportTU-09-0762SupplyChainForumWhitePaperByJohnHill,ESYNC,LogisticsExecutionSystemPerspective7KeyPointstoTakeHomeEvaluateyourbusinessprocessestodeterminethe BESTinventorymanagementtoolInventorymanagementstrengthsfocusesonmanaging stockatthequantityandvaluelevelsInventorymanagementoffersasinglebinassignment permaterialperstoragelocation;nostrategiesLeanWMofferstransferorderfunctionalitytosupport receiving/putawayandpickingfordeliveries continued…7KeyPointstoTakeHome(cont.)Warehousemanagementoffersadditionalareasof functionalitynotavailablewithIMCrossdocking,Inventorymethodsandmore!DecentralizedWMoffersfunctionalitythatwillworkwith SAPandotherERPsolutionsImplementRFtoincreaseaccuracy,speed,realtime inventoryandstatusupdateswithanysolution

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