Koen Labie is one of our principal consultants with expertise in the S/4HANA platform of SAP. He has worked on numerous projects with multiple customers and has expanded his knowledge into the Warehouse management package of S/4HANA. We sat together with him to gather the ins and outs of extended warehouse management.
How was Extended Warehouse Management introduced in the SAP landscape?
SAP started its journey with Warehouse Management in the R/3 era. Like all other modules, it grew tightly integrated with the rest of the ERP system. Within ECC it evolved into the LE-WM module it is now. Warehouse Management (LE-WM) allows you to keep track of the products stored in your warehouse, locate them, and increase or remove quantities based on documents coming from the sales, purchasing or production modules. Roughly like you would do in your backyard shed, keeping track of the quantities of screws, planks, and nails you have and where they are located, with a simple overview and basic process to handle the fluctuations in your stock.
More complex environments like distribution centers, large warehouses with fast moving stock etc., more structure and processes are needed, which results in additional complexity to manage the warehouse. Recently, it has been incorporated into the S/4HANA suite of SAP and no additional integrations are needed.
Is the extended warehouse management a standard product in the S/4 Hana?
Yes, the S/4HANA system can now leverage a much stronger architecture based on the HANA database. That allows us to run EWM in the same environment, therefore it is referred to as ‘embedded EWM‘. Since LE-EWM has an expiry date (currently end of 2025), this product is strategically and most interesting on the long-term for any business that wants to invest in Warehouse Management. Based on the functionalities that are used, embedded EWM comes in two flavors: Basic Warehouse Management and Advanced Warehouse Management.
Basic Warehouse management is part of the S/4HANA license and can support all your inbound and outbound processes, internal stock movements and integration with your production environment.
Advanced Warehouse Management requires an additional license but it also has more advantages for organizing your warehouse processes. It supports all your needs to optimize your processes, such as a appointment system for your loading docks, order picking in waves, cartonization and integrations with other SAP products such as Transportation Management or Global Trade Services.
Sounds like something every warehouse needs, what are other advantages of this advanced eWM?
The complexity and processes are unique for each business as it is dependent on, for example, the size of your warehouse. However, what all warehouses (or stock rooms) do have in common, is the basic process: products enter the warehouse (packaged or not), receive a number and are placed in a ‘storage location’. With eWM, you can add more steps to this process that are relevant to your specific business.
For example, a truck is provided with a ‘loading bay number’ upfront. The unloaded products will receive an intermediary staging location because you need to decide if the items need to be repacked. With eWM you can add a quality check in between to reject items if they are not compliant with your quality standards. Afterwards the items are assigned a storage location and are placed there by an operator.
The eWM functionalities have been enhanced in the last couple of years (graph below) which allows for additional complexity as stated in the example.
So, this would give the warehouse an efficiency gain?
The efficiency increases, because the distance an operator must ride to place all the items in a single run is done in less time. The items are not grouped per type, which is their primary attribute, but placed on locations that are more logical, for a more efficient process.
For example, when a truck needs to be loaded, all the items will be transported with a minimum amount of movement. If this process is done regularly, these items will be grouped together on the same location. Same principle applies for a production that always needs the same amount of screws, bolts and/or raw materials, as it is more efficient to place the items together. The extended warehouse management helps with these insights and rapidly increases your warehouse efficiency.
The single-run fetching is like shopping in an Ikea warehouse in fact?
Yes, exactly! In an Ikea warehouse at the end of the showroom there is a large warehouse. There you will take all necessary components of your PAX-cabinet. Most of the times these locations, of the shelves, handles and frame, are scattered throughout the warehouse. Lucky for you, a kiosk is available and will help you by telling you the exact row and shelve number of each of the cabinet parts. The locations usually don’t make sense for you as a end-customer but these are determined by the warehouse management system based on the offloading of the truck. To do this efficiently, all content goes into the same row, no matter if these parts are related or not.
Which companies benefit from the eWM?
All companies with a warehouse and operators who take out items piece per piece. A small growing business will come to a point where their warehouse is managed on the gut feeling of the employees. They will place items on free locations or wherever it makes sense to them. This will continue until the warehouse is a mess and the warehouse responsible cleans the warehouse and moves everything around, again according to their personal ‘logical’ system. The businesses without any agreed warehouse logic but also large production, logistics and retail corporations can benefit from this solution. Again, benefiting means everything is maintained and monitored in one system.
Stay tuned for our second part of the blogpost where Koen will explain how to set up your Extended Warehouse Management (eWM) and what the challenges are.