Explaining Warehouse Processing

After completing this lesson, you will be able to:

After completing this lesson, you will be able to:

  • Explain warehouse processing

Current Process Step

We will now continue with warehouse processing which is part of the business process step receiving.

Please take a look at the interaction below, to learn more about the scope items of warehouse processing:

Warehouse Management Overview

Who Needs a Warehouse Management System?

Now that we’ve had a look at the goods movement postings in inventory management we need to understand some basics about extended warehouse management and how it differs from inventory management.

Depending on the number, variety, and diversity of the products you purchase, sell, or produce, you may have different storage requirements.

For example:

  • 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 it 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 location to store the incoming product
    • Track current stock levels for each product
    • Before distributing that product, determine the location to retrieve the product from
    • Track distributed product

Warehouse Management System Functions

A Warehouse Management System enables you to achieve the following:

  • Track the amount of a particular good or material that is stored in a warehouse.
  • Track the location of every storage bin that holds a particular good or material.
  • Control and records all movements of goods and materials in the warehouse.

A Warehouse Management System can also increase warehouse efficiency. It can provide tools to monitor warehouse activities and to plan resource requirements, such as warehouse staff or equipment resources.

Large warehouses, with many storage bins and many different goods and materials, need a Warehouse Management System to be efficient and satisfy customers' needs. They use a Warehouse Management System to perform the following:

  • Control the put away of goods and materials that come into the warehouse. The Warehouse Management System determines an available and suitable storage bin in which 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 from which to pick the material.

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 service (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, such as packaging.

If you just need to know how much stock you have, you don’t need a Warehouse Management System. But if you need to track more information about the stock, for example, the location, than you need a Warehouse Management System.

Penelope has prepared an illustration for you, to get a better idea of the process flow in Extended Warehouse Management:

Organizational Units for Extended Warehouse Management

Penelope will now help you better understand EWM.

Please start with the interaction below, to learn more.

Because we need to differentiate between inbound processing and outbound processing, let’s briefly consider the possibility of using EWM in our environment.

While looking at inbound processing, we need to differentiate goods receipt for purchase orders or goods receipt for production orders. For both processes, we can include the integration to embedded EWM.

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