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Map Your IM Storage Locations and WM Warehouses the Right Way

Isaac Mazliach S.D.M. Israel


2007 Wellesley Information Services. All rights reserved.

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 plants 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

What Well 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

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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Defining Storage Location (cont.)


Material Requirement Planning

External Procurement Purchasing

Internal Procurement Production

Inventory Management

Logistics Execution

Goods Receipt Transfer Posting Goods Issue

Warehouse Management Shipping Transfer

Invoice Verification

Sales & Distribution

Internal and External Accounting

Defining Storage Location (cont.)


Storage location is part of SAPs 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 materials actual bin location is not important, or that the material is located in a single bin throughout the storage

Defining Storage Location Customizing


IMG > Enterprise structure > Definition > Materials

Management > Maintain storage location

First, define to which plant the storage location is created

Second, maintain the storage locations and their addresses

What is a Storage Location?


Company Code

Plant 2000

Plant 1000

Storage Location 0001

Storage Location 0001

Storage Location 0002

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

What Well 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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What is a Warehouse?
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.

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What is a Warehouse? (cont.)


Warehouse is part of SAPs enterprise structure that

holds the stock bin location To simplify: When a warehouse (Warehouse Management) is utilized as a storage facility, a materials actual bin location is of great importance
Advantage: Track a materials changing bin location

Warehouse Management has greater applications for use

in a storage facility
Disadvantage: More complexity and usually requires more

data entry

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Defining a Warehouse Customizing


IMG > Enterprise structure > Definition > Logistics

Execution > Define Warehouse number

Copy from standard Warehouse number 001

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Defining a Warehouse Customizing (cont.)


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

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Defining a Warehouse Customizing (cont.)


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

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What is a Warehouse?
Company Code

Plant 2000

Plant 1000

Storage Location 0001 Warehouse 100 Storage Type 001 Storage Type 002

Storage Location 0001

Storage Location 0002

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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 Well 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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Recommendations
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

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Recommendations (cont.)
Goods Receipt from production (Goods Receipt to storage

location, then Transfer Posting to Warehouse Management)

Warehouse

915
100 902 Storage Location 0001
Transfer Posting to warehouse

PP Order

Goods Receipt from production

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Material Master MRP-2


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)

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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) Storage 912 Warehouse Location Transfer Posting 0001 from warehouse 100
Goods Issue backflushed material

902 PP Order
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Automatic Issue to Production Order


This field defines the storage location from which the component will be automatically issued to the production order

This parameter defines that this component is not issued manually to the production order, but rather backflushed automatically
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Dispersed Warehouse Locations


Small locations that reside in different physical

location(s) than the warehouse Warehouse 912 100 Storage Storage Location Storage Location 0001 Storage Location 0002 Location 0003 0004

902

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QM Integration
If decentralized Warehouse Management is used with

Quality Management (QM) integration, then QM stock must reside in a storage location different than the warehouse 912 100
Transfer Posting

Decentralized Warehouse

Goods Receipt

Purchase Order

QM Stock
Unrestricted-Use Stock
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902

Transfer Posting + BAPI (Interface)

Special Circumstances
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

912 100

Transfer Posting

Customer Stock

902

Customer Stock
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What Well 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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Everything You Need to Know About Mapping


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

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Goods Receipt (GR) from Purchase Order (PO)


The connecting lines should introduce a specific

business scenario and its implications, such as GR to PO


Goods Receipt for materials with Quality Management Transaction MIGO Movement Type 101
Purchase Order Goods Receipt for materials without Quality Management Transaction MIGO Movement Type 101

Transfer Posting Transaction QA11 Movement Type 321

QM Stock
Unrestricted-Use Stock
Purchase Order
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Typical Mapping
Storage Location
Purchase Order
Sales Order

Warehouse

Storage Location Storage Location

Purchase Order

Storage Location

Storage Location

Storage Location
Storage Location

Storage Location
Storage Location

Warehouse

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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 SAPs 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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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.
Goods Issue Transaction MIGO Movement Type 261

Goods Issue Transaction MIGO Movement Type 201

Unrestricted-Use Stock

Cost Center

Production Order
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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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Examples of Correct Mapping Bulk Material


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
Goods Issue Transaction MIGO Movement Type 201

Cost Center

Unrestricted-Use Stock

Production Order

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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

X
Cost Center

Production Order

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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 Warehouse 912 100
Backflushed material

902

PP Order
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What Well 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

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Your Turn!

How to contact me: Isaac Mazliach ISAAC@SDM-C.COM


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