Explaining Warehouse Structures and Usage


After completing this lesson, you will be able to:

  • Explain Warehouse structures and usage

Organizational Units

Because EWM is connected to an ERP system, there are organizational units, which we must consider to be in both (ERP and EWM). Inventory management takes place in the ERP system and stock is stored in a plant at storage location level.

A plant is a location where goods are produced (manufacturing plant) or stored (distribution center) and where services are provided. A plant is assigned to a company code based on a Financial Accounting organization unit. Storage locations are assigned to a plant and keep the stock in view of inventory management. Because of this, at least one storage location is necessary.

Storage Locations in a Plant

Various storage locations in a plant allow you to do the following:

  • Differentiate between the various stocks of material in a plant
  • Differentiate between the physical storage characteristics
  • Classify the quantities of material in a plant to indicate their use (for example, available for sale) or perhaps their logical location (for example, at a third-party logistics provider)

Although EWM has nothing to do with the SAP Warehouse Management application, both use a "warehouse number" to represent the physical warehouse where materials are stored and managed. This warehouse number must be created in ERP customizing.  A substructure does not need to be configured for this warehouse in ERP. It will be activated as an EWM warehouse. In the ERP system, the warehouse number is a three-character field but in EWM, it is a four-character field.

Organizational Units for EWM

To activate warehouse management in the ERP system, a plant and a storage location (for that plant) is linked with the respective warehouse number.

Storage Locations

In our training course the following two different storage locations are used:

  • 101D (Received on Dock)
  • 101S (Available for Sale)

101D is used to track stock that is in the process of putaway, for example, those quantities are not yet physically available. When the product is finally stored in its destination storage bin, a transfer posting changes the stock storage location from 101D to storage location 101S. In the following sections, we will cover the EWM-specific organizational units.

Organizational Units in SAP EWM

The warehouse number is the highest level of organizational unit in warehouse management. In practice, the warehouse number usually corresponds to a physical building or distribution center. Each warehouse number has a substructure that maps the spatial relationship in the warehouse complex in detail.

There are different forms where products are physically stored in a warehouse. These forms, called Storage Types include the following:

  • Various types of racks
  • Any open storage space
  • Goods receipt areas
  • Goods issue areas

Storage types are represented as a group of warehouse bins with similar characteristics. Storage types are defined on the basis of their spatial or organizational features.

Storage sections are subdivisions of a storage type. A storage section represents a group of bins that have a common attribute, for example bins that are used to store fast-moving items. Storage sections are used when determining the putaway storage bin.

Storage bins are the lowest level of organizational structure. They are assigned to a storage type and a storage section (if one exists). Storage bins represent the physical location where the goods are stored in the warehouse.

When you store a product in your warehouse, you will need to know exactly where it is stored i.e. the storage bin. The coordinates of the storage bin indicate the precise position in the warehouse. Storage bins are master data.

Storage bins, independent of their storage type, are logically grouped in activity areas. You define an activity area for each activity:

  • Picking
  • Putaway
  • Physical inventory

Activity areas are used do define bin sorting when warehouse orders are created. According to the activity, the same storage bin can be assigned to multiple activity areas.

If stock is kept in a storage bin, the quantity of stock in that bin is represented as a "quant". A quant is the content of a storage bin and it is used for inventory management of a product in a storage bin.

Warehouse Structure

Warehouse Structures and Usage

With the introduction of EWM as a new WM application, it is important to decide which warehouse management application is best for your business.

Today, SAP offers various warehouse management solutions that enable customers to select the solution they need for each of their warehouses.

The SAP Warehouse Management System remains a viable alternative for many warehouses. The introduction of the SAP EWM System did not replace the SAP WM system. Instead, it provided an alternative for warehouses that required the functionality available in EWM.

An SAP customer can implement SAP WM in some of its warehouses and SAP EWM in other warehouses in its enterprise.

One significant difference between the SAP WM system and the SAP EWM system is that the WM system concentrates on internal functions, for example there is little functionality that provides a link to external processes such as contract packaging or transportation.

SAP Warehouse Management Solutions

The main functions of SAP Extended Warehouse Management are as follows:

  • Managing inventory at the storage bin level
  • Mapping and control of all goods movements with warehouse tasks
  • Monitoring the processing of all goods movements (with the Warehouse Activity Monitor)
  • Connecting to mobile data entry as part of integrated radio frequency solution to enable mobile device use for the warehouse and the workforce
  • Connecting to specialized external systems (for example an automated warehouse system) using an interface

Storage Bins

A storage bin is the smallest addressable unit of space in a warehouse and it represents the exact position in the warehouse at which a product can be stored.

SAP Warehouse Management

Lean WM is a simplified version of WM. Both are based on the same principles but Lean WM does not manage the inventory at the storage bin level. Lean WM is a good solution for any customer using one of these:

  • A fixed bin strategy 
  • A warehouse management solution other than an SAP solution. In this case, the customer can use Lean WM to integrate both solutions.

Decentralized Warehouse Management

The Warehouse Management System must always ensure quick response times, especially in warehouses with a high throughput. If the Warehouse Management System runs on the same machine as the SAP S/4HANA system, performance problems may arise.

In addition, in some warehouses, the WMS must be available 24 hours a day, regardless of whether other systems are available or not.

24-hour availability must be combined with a low risk of downtime. This is to ensure that the WMS can perform all logistics processes, which are often closely integrated.

For these reasons, you can install an SAP system as an independent, decentralized Warehouse Management System in order to receive requests for goods movements from any Enterprise Resource Planning system.

Decentralized Warehouse Management (WM)

Warehouse Management Functions and Processes in SAP EWM

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

Today, 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 EWM, SAP has continuously enhanced the product.

From an ERP point of view, EWM is a decentralized WM solution. This means that inbound and outbound deliveries are mandatory.

The EWM primary functions are as follows:

  • Inventory management at storage bin level   
  • Storage bin determination for incoming goods 
  • Stock removal for outgoing goods 
  • Stock transfers
  • Physical inventory management

Additional Functions for Extended Warehouse Management

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

  • Slotting / Rearrangement
  • 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

The warehouse management monitor is another powerful tool.  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 (one of your resources) 
  • Check the warehouse workload 
  • Supervise the material flow system (MFS)

Log in to track your progress & complete quizzes