Introducing SAP S4/HANA Extended Warehouse Management

Objective

After completing this lesson, you will be able to examine warehouse management systems and SAP EWM deployment options

Warehouse Management

Introduction

Depending on the number, variety, and diversity of the products you purchase, sell, or produce, you have different requirements for storing these materials, as the following examples indicate:

  • A mining company that digs ore and sends it directly to a refining factory does not need to store the ore.  That company does not need a warehouse.
  • A factory that refines ore to produce steel needs a simple warehouse to hold the steel until that is sold to a customer.
  • A distributor receiving thousands of products from many manufacturers and distributing those products to hundreds of customers needs a complex warehouse. That warehouse needs to facilitate the following tasks, among others:
    • Track the product received.
    • Determine the storage bins to store the incoming product.
    • Track current stock levels for each product.
    • Determine the storage bins to pick the product from (before distributing that product).
    • Track the distributed product.

Why Use a Warehouse Management System?

Note

See the following video to learn more about the reasons why warehouse management systems are often required:

Customers use a Warehouse Management system to:

  • Control the putaway of goods and materials that come into the warehouse. The Warehouse Management system determines an available and suitable storage bin to store the goods or materials.
  • Control the picking of goods and materials to leave the warehouse, for example to fulfill an order. The Warehouse Management system determines a stocked and suitable storage bin to pick the material from.

Complex Warehouses

In more complex warehouses, additional functionality can be provided to manage other information or services related to goods and materials, for example:

  • Serial number
  • Batch number
  • Minimum shelf life
  • Vendor Managed Inventory (VMI)
  • Yard management
  • Value-added services (VAS)

Examples of warehouses with this level of complexity include distribution centers or logistics service providers. Warehouses become more complex as they become responsible for value-added services (VAS) tasks, for example, packaging.

When knowing the quantity of your stock (without knowing the location of that stock and other information) is insufficient, then you know that you need a warehouse management system.

SAP Warehouse Management Solutions

Business Solutions

With the availability of SAP Extended Warehouse Management (EWM) as strategic WM application, it is important to decide which warehouse management application is best for your business. Which of the available SAP solutions is the right one for your needs?

SAP Warehouse Management (WM), part of SAP R/3 (version 2.0), was released in 1993, and SAP has continuously improved SAP WM from release to release. The introduction of SAP EWM in 2005 did not directly replace the SAP WM system. Instead, it provided an alternative for warehouses that required the functionality available in SAP EWM.

However, the end of mainstream maintenance for SAP Business Suite 7 core releases also means that for SAP WM as part of SAP ERP 6.0, maintenance ends in 2027 (see SAP Note 1648480 – Maintenance for SAP Business Suite 7 Software).

SAP S/4HANA, the current ERP solution from SAP, includes SAP WM and since SAP S/4HANA 1610, it also includes embedded EWM (basic). SAP WM is part of a compatibility pack and can be used in its current version until the end of 2025. Beyond 2025, it is directly replaced by Stock Room Management in SAP S/4HANA. For details see SAP Note 2270211 - S4TWL - Warehouse Management (WM) and SAP Note 2881166 - FAQ: Stock Room Management.

Flow chart showing different warehouse management solutions, starting from 'No Warehouse Management', moving up to 'Lean WM', then 'Warehouse Management & Stock Room Management', followed by 'Decentralized Warehouse Management', and finally 'Extended Warehouse Management'.

Note

Of the above-mentioned solutions, Decentralized Warehouse Management is the one that will be discontinued first. Warehouse Management will be replaced by Stock Room Management (as described above). This does not include the option to run it as a decentralized solution. This means that it is only available as a Business Suite Solution, for which standard maintenance ends after 2027. The image above also lists as a first point "no warehouse management", which of course means that stock is only kept at Inventory Management (IM) level (plant and storage location).

Warehouse Management Functions and Processes in SAP EWM

Introduction

In 2005, SAP released its Service Parts Management (SPM) solution. SAP Extended Warehouse Management (EWM) was an integral component of this solution.

Today, SAP EWM is considered a standalone application that can be used in any warehousing environment. It does not require any connection to SPM. Since the introduction of SAP EWM, SAP has continuously enhanced the solution, and it is now the target architecture within SAP S/4HANA in terms of a warehouse management solution.

From an ERP point of view, SAP EWM is a decentralized WM solution. This means that inbound and outbound deliveries are mandatory (an exception is the synchronized goods movement process within embedded EWM).

The primary functions of SAP EWM are:

  • inventory management at storage bin level
  • storage bin determination for incoming goods
  • stock removal for outgoing goods
  • stock transfers
  • physical inventory management
The image illustrates the relationship between SAP ERP and SAP EWM. On the left side, under ERP, it mentions Inventory Management / Shipping with a green box labeled Inbound / Outbound delivery. An arrow points from this box to a similar section under EWM, labeled Extended Warehouse Management. Within EWM, there is a sequence that starts with a yellow box listing Storage bins for goods receipt / goods issue, followed by Putaway / Picking with Warehouse Tasks, and concluding with another yellow box Storage bins for Storage. The arrow in the center indicates the transition from ERP to EWM processes.

Note

The SAP ERP system in the picture above, could either be an SAP Business Suite ERP system, or an SAP S/4HANA system.

The embedded EWM in SAP S/4HANA is technically also a decentralized solution. So, even if there are no separate systems as in a decentralized setting, the inbound or outbound delivery is "distributed" from one part of the system to the other. But certain processes meanwhile allow you to work without deliveries, depending on the SAP S/4HANA release.

Additional Functions for Warehouse Management

Image showing a diagram related to processes supported by SAP EWM. At the top, three sections are connected by bidirectional arrows, indicating a continuous process: Inbound Processing on the left, Storage and Operations in the center, and Outbound Processing to the right. Below is a rectangular box with a list of components involved in the process: Analytics, Transit warehousing, Labor management (highlighted in orange), Cross-docking, Warehouse Billing, Value added services (highlighted in green), Native technologies, and Implementation tools (highlighted in yellow).

Next to the primary functions, various additional functions are provided to improve warehouse management:

  • slotting
  • consolidation and deconsolidation
  • cross-docking
  • yard management
  • complex internal routing
  • value-added services (VAS)
  • labor management
  • radio frequency identification
  • kit-to-stock/kit-to-order

A powerful tool that is provided is the warehouse management monitor. This tool allows you to do the following tasks:

  • Supervise and deal with your warehousing documents and processes.
  • Check your stock and storage bins.
  • Monitor your employees and resources.
  • Check the warehouse workload.
  • Supervise the material flow system (MFS)

SAP EWM is designed for the management of complex supply chain networks. It can be used for warehouses or distribution centers with:

  • A high throughput of various goods, that can all have different ...:
    • sizes
    • weights
    • serial numbers
    • countries of origin
    • batches
    • valuations
  • complex cross-docking and order-fulfillment requirements
  • detailed packaging and shipping logistics requirements

Although SAP EWM is designed to support very complex warehouse processes, it can also be used for small warehouses with very simple and basic processes.

How to Explore an Inbound Process in SAP EWM

This is part 1 of 2 of the demonstration:

DemoStart Demo

This is part 2 of 2 of the demonstration:

DemoStart Demo

EWM System Environment and Deployment Options

The Extended Warehouse Management system, as an application within the SAP SCM solution, is designed as a decentralized warehouse management system. Originally, it was built on the SAP SCM platform and could be deployed together with Advanced Planning and Optimization (APO) or Global Available-To-Promise (gATP) on one system. SAP EWM 9.5 was the last version that was based on the SCM platform. Its successor release is based on an SAP S/4HANA system, and can be used as an embedded or as a decentralized version.

The image is a comparison chart showing different deployment options for SAP S/4HANA Warehouse Management systems. The chart is divided into three sections. The first section on the left explains Decentralized EWM on SAP S/4HANA, indicating that it focuses on high-volume warehousing and allows connection to multiple ERP Systems. It mentions its dedicated performance for warehouse operations and independence from SAP S/4HANA ERP system downtime. The middle section is about EWM embedded in SAP S/4HANA Enterprise Management, which emphasizes using one system for direct master data usage, avoiding data redundancy. There is a basic and an advanced option available. The final section on the right, labeled Embedded Warehouse Management in SAP S/4HANA Cloud, public Edition, notes that a standalone deployment option is not available.

Which SAP ERP system can be connected depends on the SAP EWM version. When using a SAP Business Suite based decentralized EWM (which isn't pictured earlier), the EWM system can be connected to SAP systems from R/3 4.6C and higher (including SAP R/3 Enterprise and all subsequent SAP ERP releases) or any SAP S/4HANA system. A decentralized EWM based on SAP S/4HANA needs an SAP ERP 6.0 EhP 3 or higher, or SAP S/4HANA (on premise 1611 or higher). Depending on the release of the ERP system or any enhancement packages installed, certain functions or processes in SAP EWM might be unavailable. Details are described in the release notes, installation guides, and notes.

Since SAP S/4HANA 1610 EWM is technically included as embedded EWM, this means that no separate installation is necessary. That approach has certain advantages, but also restrictions that must be considered.

The options of a decentralized or an embedded deployment are also available for SAP S/4HANA Cloud Private Edition. There, the decentralized option is called extra-stack, the embedded option is called in-stack.

Warehouse Management in SAP S/4HANA Cloud Public Edition is based on EWM, but with a smaller functional scope.

Note

Warehouse Management in SAP S/4HANA Cloud Public Edition is not part of this course.

For details of the different deployment options, and the aspects to be considered, see SAP Note 1606493 - SAP EWM Deployment Options Best Practices. The major differences between embedded EWM in SAP S/4HANA 2020 and a decentralized EWM are described in SAP Note 3376453 - SAP S/4HANA 2023 FPS00, FPS01, FPS02 and FPS03: Release information and restrictions for EWM in SAP S/4HANA and SAP Note 3376455 - Release information and restrictions of decentralized EWM on SAP S/4HANA 2023 FPS00, FPS01, FPS02 and FPS03. Please check for further notes related to subsequent or previous releases.

SAP Warehouse Management Options (SAP S/4HANA Cloud Private Edition and SAP S/4HANA (On Premise))

It's possible to use different warehouse management solutions in parallel in your ERP system. There are three organizational units which together control how your stock is managed.

The plant is an operational facility within a company (e.g. a production facility, regional or branch office) and the highest organization unit in logistics. The plant subdivides an enterprise from the viewpoints of production, procurement, maintenance, and materials planning.

The storage location is an organizational unit allowing the differentiation of material stocks within a plant. Material always belongs to a combination of plant and storage location.

Note

This means that a storage location is not a physical structure (as the picture below or the name implies). It's a logical separation of stocks, but not necessarily a physical separation.

A physical warehouse is defined under a single warehouse number. Using the warehouse number, you can manage several individual warehouse buildings that, together, form a complete warehouse complex.

Through the assignment of a combination of plant and storage location to a warehouse number and the settings for this warehouse number, you define the type of warehouse management you use.

The image shows the basic organizational structures such as Plant, Storage Location and Warehouse that are used in SAP S/4HANA.

SAP S/4HANA Warehouse Management Options

The basic definitions for logistic organizational structures (plant, storage location, warehouse number) in SAP S/4HANA are the same as in SAP Business Suite ERP. Through the inclusion of embedded EWM in SAP S/4HANA, there are additional options for the warehouse management solution.

Flowchart image illustrating the SAP S/4 HANA Enterprise Management system with a focus on warehouse management (WM) integration across ten storage locations within Plant SPCW. Each storage location (SLOC#1 to SLOC#10) is linked to different management systems: SLOC#1 connects to Inventory Management (IM), SLOC#2 connects to Lean Warehouse Management (WM), SLOC#3 connects to WM, SLOC#4 connects to Stock Room Management, SLOC#5 connects to WM (LES), SLOC#6 connects to Extended Warehouse Management (EWM), SLOC#7 connects to S/4HANA EWM, SLOC#8 connects to non-SAP Warehouse Management System (WMS), SLOC#9 connects to Basic EWM, and SLOC#10 connects to Advanced EWM. The term “decentralized” is annotated below the flowchart indicating distributed or decentralized system architecture.
  • SLOC#1: Of course it is not required to use a warehouse management system, so you can continue to use only inventory management for a combination of plant and storage location. That means you have no warehouse number.
  • SLOC#2: Lean WM is possible as option in a warehouse number (stock is not recorded in a storage bin level).
  • SLOC#3: As part of the compatibility packs it is possible to use WM in SAP S/4HANA until the end of 2025.
  • SLOC#4: Stock Room Management reuses major parts of LE-WM and can be used beyond 2025.
  • SLOC#5: This option would mean that you use a decentralized WM, based on SAP Business Suite. The planned availability for this option is until the end of 2027, when the SAP Business Suite solution mainstream maintenance will end.
  • SLOC#6, #7, and #8: The warehouse number is set up as a decentralized warehouse, either with an EWM based on SCM or on SAP S/4HANA, or with a non-SAP warehouse management solution. Attention: mainstream maintenance for the SCM based EWM, is planned to end 2025 (EWM9.5).
  • SLOC#9 and #10: In SAP S/4HANA, you can use embedded EWM either as Basic Warehouse Management or Advanced Warehouse Management. The details are described in the feature scope description of your SAP S/4HANA release.

Note

The image above always show a combination of one plant and storage location with one warehouse number. But a warehouse number can be connected to several plant and storage location combinations, with the same plant or also with other plants.

Summary

  • SAp EWM can be deployed as decentralized system allowing multiple ERP systems to connect or as embedded scenario with SAP S/4 HANA.
  • SAP EWM supports many different warehouse processes to allow you manage your warehouse fitted to your individual needes.

Learning

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