Exploring Bin Locations in SAP Business One

We start by going over the benefits of using bin locations and introducing a business example.

• You are working with George, the warehouse manager at OEC Computers, to analyze their logistics procedures and needs.
• He would like to improve the speed of the logistics process, like storing and picking goods.
• OEC Computers’ warehouse is very large and often workers cannot quickly locate specific items for picking.
• In addition, when receiving goods in the warehouse, another quantity of the same item may be stored in a different area of the warehouse. Because there is no record of where items should be stored, items are often stored in any empty location.
• You recommend using the bin location solution for his warehouses.

To set up bin locations at OEC Computers, we first need to examine the structure of the warehouse.

In the image, we can see the main warehouse of OEC Computers.

The warehouse is a big hangar divided into aisles. Each aisle has shelves stretching along the sides and each shelf is divided into levels, as shown in the image.

We will now discuss the structure of a bin location-managed warehouse.

We will view the bin location code formed according to this structure.

Lastly, we will see the bin location setup process.

Let us get to know the sublevel structure of a warehouse managed by bin locations, so we understand how to define bin locations in OEC Computers’ warehouse.

A warehouse structure often consists of a combination of different levels, such as an aisle, shelf, or floor.

One area type can be a sublevel area of another type.

At OEC Computers, for example, a shelf is a sublevel of an aisle.

This means an aisle contains several shelves.

SAP Business One supports up to 4 warehouse sublevels.

A combination of the warehouse code and warehouse sublevels codes defines the unique bin location code.

An example in the graphic can be the bin location code 05-A1-S2-L1.

The same warehouse sublevel code can be used in many bin location codes.

We can see that level L1 is connected to shelf S1 and shelf S2.

Now , let us see an example of a bin location code structure.

We can see that the bin location code is a combination of the warehouse and warehouse sublevel codes.

Each bin location has one Bin Location Master Data record.

As on any master data window, a bin location code can be created, updated, removed, or duplicated.

On the Bin Location Master Data window, you can create each bin location manually.

There is also a separate management window that allows the automatic creation of multiple bin location codes.

The Bin Location Master Data window can be divided into 4 logical parts: code structure, bin location properties, restrictions on bin locations, and bin location attributes.

The diagram describes the workflow of the bin location setup process.

This setup is done in three phases:

• In phase 1 we activate and set up a bin location-managed Warehouse.

  The bin location solution is enabled on a warehouse-specific basis on the Warehouse Setup screen.

  At this point, there is an option to define an automatic allocation strategy, which eliminates the need to allocate bins manually in documents.

• In phase 2 we set up Warehouse Sublevels and attributes.

  An attribute is a characteristic, defined by the user, that provides additional information or meaning for the bin location.

  After activating attribute fields, they are added as filtering and information fields in reports and other windows in the inventory module.

• In phase 3 we set up the bin location codes and bin location data.

In both phase 2 and phase 3, you have the option to create objects individually or in groups.

Important:

The bin location feature can be activated and set up in either a new or existing company without interfering with the regular course of work.

Next we will follow a simple business scenario, starting with receiving goods in the warehouse and finishing by selling the goods.

We will follow an example of a business process that includes purchasing, transferring, picking, and selling an item in a bin location-managed warehouse that can be implemented at OEC Computers.

We will start by adding a Goods Receipt PO to a special receiving area where inspections are made.

Then we will have a look at the Bin Location Content List report.

From this report, we will create an Inventory Transfer to move received goods to their storage bin location.

On the sales side, we will review the delivery process of the item and focus on the picking procedure.

The last step involves adding a Delivery document that creates an outgoing allocation from the item’s bin location.

While walking through this process, we will review manual and automatic allocations.

OEC Computers purchases USB mouse units directly from the manufacturer.

The purchasing manager issues a Purchase Order and when the goods arrive at the New York warehouse, the warehouse worker issues a Goods Receipt PO.

This Goods Receipt PO is the first time in the process where bin locations are used.

Every inventory receiving document that involves a bin location-managed warehouse requires allocation to specific bin locations.

This allocation can be manual or automatic. The allocation is made by document row.

To manually allocate the quantity in the row, choose the link arrow in the Bin location allocation field. The Bin Location Allocation – Receipt window opens for this row.

In the matrix at the bottom of the window, allocate the row quantity to the desired bin locations.

You may split the allocated quantity across multiple bin location codes.

For example when there is not enough room for all received units in one bin location, you can choose to allocate part of the quantity to another bin location.

The items were allocated manually in the Goods Receipt PO, but the system can allocate these items automatically according to the definitions made on the Warehouse Setup window.

OEC Computers has a special receiving area in the New York warehouse.

This area is defined as one or more bin locations defined as Receiving bin location.

The Receiving bin location is a transit bin location that is used as an inspection area for quality checks or any other receipt procedures.

When working with Receiving bin locations, all incoming transactions are placed in the Receiving bin locations unless alternative bin locations are chosen manually.

After completing the receipt, the items received can be transferred, using an Inventory Transfer document, to a storage bin locations.

When using Automatic allocation, items are allocated automatically to a storage bin location

Automatic allocation on receipt can be defined as:

• Default bin location
• Current bin location
• The last used bin location
• Any historic bin locations

The second type of automatic allocation used for incoming inventory transactions is automatic allocation strategies.

The bin locations set by these strategies, in contrast to those used by the Receiving bin location functionality, are typically the storage bin locations, not temporary bin locations.

One of the automatic allocation strategies is the Default bin location. You can define the Default bin location at the Warehouse, Item Group, and Item levels.

When you use the Default bin location strategy, the system will automatically assign the default bin location at the document row level. The system chooses the first default bin location it finds, starting with the Item level, then the Item Group, and lastly the Warehouse default.

In addition to the Default bin location, there are three other automatic allocation strategies. These strategies allow you to automatically allocate goods to the current, last, or any historic bin locations where the item has previously been stored.

George wants to see how many USB mouse items are left in the Receiving bin locations and then transfer them to their storage bin location.

He generates a Bin Location Content List report. This report displays the quantity balance for each bin location per item.

Directly from the report you can:

• Run other inventory reports, filtered by the selected bin locations.
• Create an Inventory Transfer involving the selected bin locations, by choosing the Inventory Transfer button.
• Set selected bin locations as defaults, directly from the report.

George selects the USB Mouse row in the report and chooses the Inventory Transfer button and then Clear Inventory to issue an inventory transfer for this item.

George wants to transfer the USB mouse items from the Receiving bin location to the storage bin location.

When George chooses the Clear Inventory option in the Bin Location Content List, an Inventory Transfer opens.

The warehouse, bin locations, and quantities are copied from the selected rows of the Bin Location Content List.

This transfer is also possible within a warehouse, from one bin location to another.

Look at the image, where you see two bin location columns in the Contents table: From Bin Location and To Bin Location.

The header contains fields with default values. You can overwrite these values in the rows.

This enables the Inventory Transfer document to be created from multiple originating warehouses simultaneously.

This functionality is available even if the bin location functionality is not activated for a warehouse.

Michael, the sales manager, issues a sales order for 25 USB Mouse items.

At this stage, no allocation is done.

George, the warehouse manager, begins the picking process by generating pick lists for his workers.

In the Open drawer, he selects items and releases them to the pick list.

The Pick List Generation Wizard opens. From here he can:

• Filter by warehouse sublevels and attributes of bin locations he wants to pick from
• Split pick lists by warehouse sublevel or attributes
• Choose automatic allocation

And, of course, issue a pick list.

George chooses Create to generate a delivery for the Mouse USB item

Every inventory-issuing document that involves a warehouse with managed bin locations requires an allocation of items to issue from specific bin locations.

In our example, we created a Delivery document during the picking process, containing the items and quantity picked.

Let us see how items are allocated when copying the Delivery from a Sales Order or when it is added directly.

The Bin Location Allocation – Issue window structure is similar to the Bin Location Allocation – Receipt window.

On this window we can see a list of bin location codes with quantities available to allocate from.

You may allocate from any row with available quantities to allocate.

The quantity can be entered manually from any available bin location, to combine the total.

In the displayed image, we can see the Delivery document George created from the Pick List.

George needs to issue a quantity of 25 from warehouse 05.

There are two bin locations with a positive quantity of the item in the row.

George wants to empty the first bin locations, to minimize the number of bin locations for this item.

He chooses 10 from the first bin location and 15 from the second.

An automatic allocation can be performed by choosing Automatic Allocation.

Note that the system can also perform automatic allocation when issuing goods.

Several automatic allocation methods are available. For example, the system can allocate the oldest entrance date of the item or according to a code sequence.

In this case, to allocate from the bin location with the least quantity first, an Ascending Quantity method should be defined.

Here are some key points to take away from this session:

• A warehouse structure is represented as a hierarchy in SAP Business One.
• The elements of the structure can be divided into area types, like aisle or shelf.
• Each area type can be defined as a warehouse sublevel.
• Sublevels are defined in a hierarchy where sublevel_A may contain several of sublevel_B.
• The bin location is always the bottom level of the hierarchy.
• The bin location code is a combination of the warehouse code and each of the sublevels in the hierarchy for a specific bin location.
• Every document that generates an inventory transaction and involves a managed bin location warehouse requires allocation of items to issue or receive from specific bin locations.
• Both incoming and outgoing allocation can be done manually or automatically according to a predefined set of rules.
• Manual allocation is done on the Bin Location Allocation window (Issue or Receive).
• A Receiving bin location is a transit bin location that is used as an inspection area for quality checks or any other receipt procedures.
• The Bin Location Content List displays quantity balance per bin location per item.

  From this report, you can perform different actions, such as:

  • Create an Inventory Transfer
  • Display an Inventory Posting List report for selected bin locations
• An Inventory Transfer moves items to a different bin location within the same warehouse or to another warehouse.