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© 2007 Wellesley Information Services. All rights reserved.
Map Your IM Storage Locations and WM Warehouses the Right Way
Isaac MazliachS.D.M. Israel
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This Session Will Cover the Mapping of Warehouses and Storage Locations
• Deciding whether a specific storage place will be handled as a warehouse [Warehouse Management (WM)] or as a storage location [Inventory Management (IM)] is not enough!
• After the completion of that decision, optimize the relationships at all of the plant’s storage places
• This session will talk about the main differences between a warehouse and a storage location – and then recommend the best “mapping” of combined storage places – WM and IM together to optimize the SAP system
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What We’ll Cover …
• The storage location as a storage facility• The warehouse as a storage facility• Combining storage locations and warehouses• What is storage location and warehouse mapping?• Wrap-up
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Defining “Storage Location”
• Inventory Management is an essential component of Materials Management and is embedded in the whole logistics process
• By managing your warehouse stock using Inventory Management, you will be able to manage your material stocks in several storage locations in terms of quantity and value
• Warehouse Management also enables you to display your entire warehouse complex in the system in detail, including storage levels. This will be discussed later in this session.
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MaterialRequirement
Planning
External Procurement
Purchasing
Internal Procurement
Production
Inventory
Management
Goods Receipt
Transfer Posting
Goods Issue
LogisticsExecution
WarehouseManagement
ShippingTransfer
Invoice Verification Sales & Distribution
Internal and External
Accounting
Defining “Storage Location” (cont.)
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• Storage location is part of SAP’s enterprise structure that holds the stock quantity
• Option: To maintain a single storage bin for every material in every storage location
• To simplify: To utilize a storage location as the “storage facility” means that the material’s actual bin location is not important, or that the material is located in a single bin throughout the storage
Defining “Storage Location” (cont.)
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First, define to which plant the storage location is created Second, maintain the
storage locations and their addresses
• IMG > Enterprise structure > Definition > Materials Management > Maintain storage location
Defining “Storage Location” – Customizing
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What is a Storage Location?
Plant
2000
Company
Code
Plant
1000
Storage
Location
0001
Storage
Location
0001
Storage
Location
0002
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Decision Criteria to Determine the “Storage Facility”
• The storage location should be utilized as the storage facility if one or more of the following are met: The storage place is relatively small There are low levels of inventory on hand The material handling processes are simple (Goods
Received, Goods Issue, Transfer Posting) Picking and packing processes should not be managed by SAP There is a lower volume of activity Outsourced warehouse operations
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What We’ll Cover …
• The storage location as a storage facility• The warehouse as a storage facility• Combining storage locations and warehouses• What is storage location and warehouse mapping?• Wrap-up
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• As of SAP R/3 4.5, Warehouse Management is part of Logistics Execution
• Warehouse Management allows you to implement all of the processes in Logistics Execution, whether sales orders have to be fulfilled or production needs to be supplied with components. Whether goods delivered from a vendor or finished products from in-house production have to be put away, Warehouse Management provides the necessary tools.
What is a Warehouse?
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• Warehouse is part of SAP’s enterprise structure that holds the stock bin location
• To simplify: When a warehouse (Warehouse Management) is utilized as a storage facility, a material’s actual bin location is of great importance Advantage: Track a material’s changing bin location
• Warehouse Management has greater applications for use in a storage facility Disadvantage: More complexity and usually requires more
data entry
What is a Warehouse? (cont.)
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• IMG > Enterprise structure > Definition > Logistics Execution > Define … Warehouse number
Copy from standard Warehouse number 001
Defining a Warehouse – Customizing
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• IMG > Enterprise structure > Assignment > Logistics Execution > Assign Warehouse number to plant/ storage location
It is possible to assign more than one storage location from different plants
Defining a Warehouse – Customizing (cont.)
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• IMG > Logistics Execution > Warehouse Management > …
• When you copy Warehouse 001, most of the activities will have default data
• Now it is time to design your specific warehouse
Defining a Warehouse – Customizing (cont.)
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What is a Warehouse?
Plant2000
Company
Code
Plant1000
StorageLocation
0001
StorageLocation
0001
StorageLocation
0002Warehouse 100
StorageType001
StorageType002
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Basic Functions of Warehouse Management
• Warehouse Management in SAP ECC contains the following five basic functions: Inventory Management exact to storage bin level Implementation and control of all goods movements Monitoring of the processing of these goods movements Connection to mobile data entry as part of the integrated
Radio Frequency (RF) solution Connection to specialized external systems using an interface
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Basic Functions of Warehouse Management (cont.)
• While Inventory Management, as part of Materials Management, can only provide information on the total quantity of material in stock, Warehouse Management enables a precise specification of the exact location of a particular quantity of material and informs you whether this quantity is currently in a storage bin or on the move
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Using the Warehouse as a Storage Facility
• Use the warehouse as the storage place if one or more of the following are met: The storage place is relatively large Large number of materials on hand (e.g., a storage facility
that holds 100,000 materials would mostly be handled as a warehouse)
Number of transactions (movements) is high Traceability and visibility is critical Complex processes
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What We’ll Cover …
• The storage location as a storage facility• The warehouse as a storage facility• Combining storage locations and warehouses• What is storage location and warehouse mapping?• Wrap-up
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• Companies often select only one option: Inventory Management or Warehouse Management
• If a company is very small, Inventory Management is often the ideal choice
• In general, if you do not HAVE to implement Warehouse Management, stick to Inventory Management. Keep it simple!
• When Warehouse Management is implemented, it is recommended that storage locations be used according to processes
Recommendations
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Recommendations (cont.)
• Goods Receipt from production (Goods Receipt to storage location, then Transfer Posting to Warehouse Management)
Warehouse
902
100
915 PP Order
Transfer Posting
to warehouse
StorageLocation
0001Goods Receipt
from production
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• Enter the Production storage location
• Here, enter a storage location NOT managed by warehouse
• After Goods Receipt from Production into this storage location, perform Transfer Posting (Txn MIGO) to the warehouse (Movement Type 311)
Material Master MRP-2
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Goods Issue Using Backflushing
• Goods Issue using Backflushing (Transfer Posting from Warehouse Management to storage location, then auto Goods Issue to order)
Warehouse
902
100
PP Order
Goods Issue
backflushed
material
912StorageLocation
0001Transfer Posting
from warehouse
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This parameter defines that this component is not issued manually to the production order, but rather backflushed automatically
This field defines the storage location from which the component will be automatically issued to the production order
Automatic Issue to Production Order
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Dispersed Warehouse Locations
• Small locations that reside in different physical location(s) than the warehouse
Warehouse
902
100
912 StorageLocation
0001
StorageLocation
0002StorageLocation
0003
StorageLocation
0004
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• If decentralized Warehouse Management is used with Quality Management (QM) integration, then QM stock must reside in a storage location different than the warehouse
Decentralized Warehouse
902
100
912Purchase
Order
QM
Stock
Unrestricted-Use
Stock
Goods Receipt
Transfer
Posting
Transfer Posting + BAPI (Interface)
QM Integration
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• Some special stocks cannot be implemented in Warehouse Management (e.g., customer stock as in Industry Solution – Aerospace & Defense) In that case – a storage location should be used
Warehouse
902
100
912
Customer
Stock
Transfer
Posting
Customer
Stock
Special Circumstances
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What We’ll Cover …
• The storage location as a storage facility• The warehouse as a storage facility• Combining storage locations and warehouses• What is storage location and warehouse mapping?• Wrap-up
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• Mapping means the complete landscape of the combined warehouses and storage locations
• Mapping may change as an enterprise evolves• Mapping may be created by adding all storage facilities
as boxes on a paper with connecting lines between all facilities
• The complete mapping should include production facilities as well as vendors, customers, and other related systems
Everything You Need to Know About Mapping
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Purchase
Order
QM
Stock
Unrestricted-Use
Stock
Goods Receipt for materials with Quality Management
Transaction MIGO
Movement Type 101
Transfer Posting
Transaction QA11
Movement Type 321
Purchase
Order
Goods Receipt for materials without Quality Management
Transaction MIGO
Movement Type 101
• The connecting lines should introduce a specific business scenario and its implications, such as GR to PO
Goods Receipt (GR) from Purchase Order (PO)
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Warehouse
Storage
Location
Warehouse
Storage
Location
Storage
Location
Storage
Location
Storage
Location
Storage
LocationStorage
Location
Storage
Location
Storage
Location
Pu
rchase
Ord
er
Sales
Order
Pu
rchase
Ord
er
Typical Mapping
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The Purposes of Mapping
• High-level definition of business processes• Basis for authorizations• Better understanding of “who does what” at a glance• Minimizing material movement requirements• Optimizing supply chain processes
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Examples of Correct Mapping
• Try to have as many materials as possible reside in a single storage location (if that is not possible – design an easy process to move the materials from one storage location to another)
• Design material movements according to SAP’s available functionality
• Think of information transfer – not only of transactions, i.e., how would the warehouse know a material should be transferred from one location to another The information might transfer by creating a reservation, email,
fax, phone, etc. The transaction would be MIGO Transfer Posting 311, for instance.
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Unrestricted-Use
Stock
Goods Issue
Transaction MIGO
Movement Type 201
Production
Order
Cost
Center
Goods Issue
Transaction MIGO
Movement Type 261
Examples of Correct Mapping – Crate Parts
• Different materials (crate parts, pick parts, etc.) behave differently – design the processes accordingly Crate Parts: The materials are stored in crates or other
standard containers These parts are independent of PO and are issued as a
full crate. In the standard system, you order crate parts manually.
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Implementing Crate Parts in Warehouse Management
• Create a Control Cycle: SAP Menu > Logistics > Logistics Execution > Master Data > Warehouse > Control Cycle Production Supply > Create
On the left, there are the Staging Indicator Values, for example, crate part
NOTE: A Control Cycle without material means all materials EXCEPT those materials with specific Control Cycle
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• Bulk material: An item in a Bill of Material (BOM) that is stored loosely at the work center, ready for use
• Bulk materials are used in small quantities of low value and are not taken into account when costing an order
Unrestricted-Use
Stock
Goods Issue
Transaction MIGO
Movement Type 201
Production
OrderCost
Center X
Examples of Correct Mapping – Bulk Material
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Implementing Bulk Materials – Material Master/BOM
• Bulk material is defined in the Material Master• NOTE: You may fine-tune and define the bulk materials in
the Bill of Materials (BOM)
Bulk material definition
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Examples of Correct Mapping – Pick Parts
• Pick Parts: The pick parts are materials that are provided in the required quantities as specified in a production order
• These parts can be provided in a physical storage bin or in a dynamic storage bin, for example, with the name “Production Order”
Unrestricted-Use
Stock
Goods Issue
Transaction MIGO
Movement Type 261
Production
Order
Cost
Center
X
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Warehouse
902
100
PP Order
Backflushed material
912
Examples of Incorrect Mapping
• Backflushed material is a material that is issued automatically to an order after the complete order or order step is approved (e.g., specific electronic parts assembled in an SMT machine)
• These parts should be issued from a storage location
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What We’ll Cover …
• The storage location as a storage facility• The warehouse as a storage facility• Combining storage locations and warehouses• What is storage location and warehouse mapping?• Wrap-up
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Resources
• Product information: www.sap.com/erp
• Product documentation: http://help.sap.com
• For customers and partners: http://service.sap.com/qm *
• Information about courses: www.sap.com/education
* Requires login credentials to the SAP Service Marketplace
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7 Key Points to Take Home
• Correctly choose which storage facilities would be handled by Inventory Management and which by Warehouse Management
• Do not forget to think of your parts categories Create Master Data accordingly
• Map your entire organization landscape – this will help you find your wrong decisions
• Avoid incorrect mapping
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7 Key Points to Take Home (cont.)
• SAP functionality may change your Inventory Management/Warehouse Management decisions
• Change the mapping as your organization changes• Consult all modules (not only Materials Management)
when designing the mapping
