SAP main flows and modules

Sales and Distribution

The MM purchase order can be created as a result of the MRP procurement requirement
calculation in the PP module (1) or as a result of a requirement linked to an SD order (2). At
the end of the purchasing cycle, the invoices checked will go into FICO

For the stock management part, internal production from PP will generate stock entry
movements in MM (3), a shipment of SD goods will decrement the stock (4) as well as
generate entries in FICO (5) linked to stock movements or invoice controls.

Inventory management can also manage stocks of internal supplies, spare parts for PP
workstations (1 & 3).

Concrete example of the SAP MM flow

The purchasing department will reference suppliers and associated conditions in MM
Purchasing (A).

It will maintain master data such as :

 Supplier files
 Material master records
 Conditions

Purchase requisitions are entered in MM Purchasing (B) according to

 Requirements outside the sales and production process, e.g. an order for miscellaneous
supplies
 SD sales order requirements (2)
 Production-related requirements (1)

Once they have been released, a purchase order is created (6).

When the purchase order is delivered, the goods receipts are posted to MM stocks (7). The
delivery is then checked against the purchase order (quantities, deadlines, condition, etc.)

Inventory management will be able to monitor stock situations and movements

(receipts/issues) in quantity and value.

It will first have to manage the following basic data in MM (A) :

 Material master records (plant, storage location, size, weight, etc.)

 Customer master records (management of consignment stocks at the customer’s)
 Supplier master records (management of stocks at the supplier)
 The different divisions and storage locations of the company (a more detailed level of
storage will be done in the WM module)

Goods receipt and goods issue movements can be recorded manually but are often automated
via ABAP programs.
Receipts from purchase orders (7) will usually be recorded using a flash gun and the expected
quantities checked against the purchase order. Receipts from in-house production (3) are
automatically integrated via the PP-MM link. Sales-related releases are made automatically
via the SD-MM link (4).

Stock placement movements can also be entered manually (E) as well as stock removal
movements (D) using the transactions for real stock placements/removals or internal transfers
(moving goods from one location to another).

These stock movements are valuated and flow into FICO (5).

The stock manager will anticipate goods receipts by monitoring open purchase orders and
planning deliveries in order to prepare storage spaces.

The stock manager will also be able to carry out physical inventories at regular intervals and
keep inventory differences (G).

The stock can be within the company, with a supplier, on customer consignment or blocked
for projects (PS module) in different states (available, blocked, quality control, etc.)

Main transactions of the SAP MM module

This diagram also lists the main transactions for consulting stock positions and movements as
well as transactions for creating stock movements.

The stock is moved according to the entries, withdrawals and transfers of stocks.

On the diagram, there are entries linked to the internal production of finished or semi-finished
products (module PP), or entries linked to purchases (module MM Purchases detailed in this
document).

There are also outputs linked to sales and distribution (module SD)

All of this is reported in the accounts (FICO module).

 Each stage of the purchasing process corresponds to a transaction, the main ones of which are
listed below :

There are many other transactions, but this document provides an overview of the MM
Purchasing module.

 Expertises
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Presentation of the
Warehouse
Management
Module (WM)
The SAP Warehouse Management (WM) module is a solution integrated with
SAP ERP, designed to optimize warehouse management processes. By
automating and streamlining warehouse operations, this module enables efficient
stock management, from planning to execution and tracking of goods movements.

Thanks to its advanced algorithms, the WM module maximizes the use of

available storage space. It reduces human error by automating stock
management processes, ensuring reliable data and increased accuracy.
Automation also speeds up operations, reducing the time required to receive,
store, pick and ship goods. In addition, WM provides full traceability of products
from receipt to dispatch, improving transparency and control of logistics flows.

Finally, this module integrates seamlessly with other SAP modules, such as
Materials Management (MM), Production Management (PP) and Sales and
Distribution Management (SD), ensuring smooth and consistent management of
the company's operations.
WM benefits and features

Here are the main advantages of SAP's Warehouse Management (WM) module:

• Storage location management : Organize the warehouse by defining zones,

locations and sections, for precise and efficient management.
• Stock movements : Manage internal and external transfers, including receipts and
shipments, with the utmost fluidity.
• Receiving and warehousing : Optimize goods receipt for fast, accurate
warehousing.
• Order picking and preparation: Reduce travel and increase picking efficiency.
• Inventories : Simplify regular and rotating inventories with planning, execution
and analysis tools.
• Handling unit management : Organize inventory with efficient pallet and
container management.
• Interface with warehouse control systems (WCS) : Integrate automated systems
for advanced management of logistics operations.
Warehouse structure

The structure of a warehouse in SAP WM is based on several hierarchical levels,

enabling fine, detailed management of storage locations. Here are the main levels
:

• Warehouse Number : The main management unit, each warehouse is identified

by a unique number.
• Storage sections (Storage Type) : The warehouse is divided into physical or
logical areas, such as receiving, picking, bulk storage, etc.
• Storage Bin : Specific locations where goods are stored, each with a unique
address in the system.
• Storage unit : Pallets or containers containing goods in storage locations.
• Quants : Smallest identifiable storage unit, corresponding to a batch of goods
with the same characteristics (material, expiration date, etc.).

Inventory management: Inventory

Management (IM) vs Warehouse
Management (WM)

Inventory Management (IM) and Warehouse Management (WM) are two sub-
modules of SAP ERP that work together to ensure efficient inventory and
warehouse management.
Inventory Management (IM)

IM manages inventory at the global organizational level. Key features include :

• Stock level management : Monitoring of quantities available in the various storage

locations.
• Stock movements : Manage receipts, issues, transfers and stock adjustments.
• Inventory valuation : Calculation of inventory value using different methods
(weighted average price, FIFO, LIFO, etc.).
• Stock reporting : Generate reports on stock levels, movements and values.

Warehouse Management (WM)

WM focuses on detailed inventory management at warehouse level. Its main features

are :

• Detailed storage location management : Precise definition of zones, locations and

sections for optimum space utilization.
• Internal stock movements : Management of stock transfers between different
locations within the warehouse.
• Optimization of picking and storage processes : Use of algorithms to improve
operational efficiency.
• Handling unit tracking : Pallet and container management for efficient
organization.
• Traceability and inventory control : Granular tracking of stock movements for
complete traceability.

Integration between IM and WM

Integration between IM and WM ensures smooth, consistent inventory management:

• Goods receipts : IM records overall goods receipt, while WM manages detailed

putaway.
• Goods issues : IM records the overall issue, and WM handles the specific picking.
• Stock transfers : IM handles transfers between sites, while WM handles transfers
within the warehouse.
• Physical inventories : IM manages global inventories, while WM facilitates
detailed inventories by location.

SAP warehouse management system ensures that items move

smoothly through the downstream supply chain, which is critical
for assuring customer satisfaction and increasing profit margins.

If you are still considering whether to apply the SAP warehouse

management system to your warehouse, just read this article as it
will describe to you the most detailed SAP warehouse
management process flow and also the high functionality of
each process.

SAP
warehouse management system concept
 The Sap Warehouse Management Module Process
Flow Is Shown Below
o Define and manage complicated storage structures.
o Utilize innovative putaway and picking procedures to improve material flow.
o Quickly and simply process goods issues, goods receipts, and stock transfers.

Warehouse management is completely integrated with the SAP

R/3 system. Transactions initiated in other SAP components
activate WM tasks, which in turn cause physical transfers inside
the warehouse.

SAP Warehouse Management allows us to build and map the

physical warehousing structure in the System, handle goods
movements like stock transfer, receipts, and issues, and manage
stock inventory changes at the storage bin level in the warehouse
complex.

👉 Read More: Sap Extended Warehouse Management:

Overview And Benefit

👉 Read More: Sap Warehouse Management Organization

Structure

Warehouse
structure

Warehouse Management is integrated with the modules of Sales

and Distribution, Material Management, and Quality Management.
The basic material for the material movement will be created in
either the SD, QM, or MM modules.

The MM module generates the foundation document for goods

receipts from vendors as well as other plants. The MM module
also generates the foundation document for goods issuance for
production or other plants.

The QM module generates the basic document for returning the

item to the vendor during manufacturing, as well as during the GR
quality procedure and online inspection.

The delivery document is prepared in the SD module for the

material removal from the warehouse for the product delivery
against the sales order. The basic document is prepared in the SD
module to handle the content returned by the customer.

Inventory will be managed at both the storage site and bin levels
in inventory management and warehouse management. RFID
and barcode reading capabilities are also included in the WM
module. These may be investigated and implemented as a
separate project in the future.

A Summary Of The Warehouse Process

When you use SAP Inventory Management (MM-IM) to manage

your warehouse goods, you control the quantities and values of
stocks in several storage locations.

The activity or movement of the warehouse process in a

warehouse is defined by a warehouse process type. It is allocated
to each warehouse job document and deals with each warehouse
operation such as packing, good receipt, and good issues.

The WMS has been completely integrated into the SAP

environment. Physical product movements in your warehouse are
caused by business activities that you initiate in other application
components.

Outbound WM Picking Process (Issue FG/ SFG Materials To Customer)

If FG/SFG Materials are in stock in the warehouse, we can restock

the Customer Order. If not, we must go for in-house
manufacturing if it is available by issuing RM or SFG Material to be
transformed to FG Material and then placed within Warehouse
stock. Now, we can issue against a Customer Order.

SAP two-step
picking process

Even if RM or SFG material necessary for in-house production is

not accessible in the warehouse, we must outsource it, which
means we have to obtain RM or SFG Material from the vendor for
production.

The need is either manually or automatically triggered in this

case. It relies on the business process and the needs of the
customer. Or obtaining FG material from the vendor and issuing
against customer order. Here in-coming stock is not receipted or
PGRed, but rather placed at the cross-dock area and monitored
through the Cross Dock Monitor, and if an issue is required, it is
directly issued to the customer.

Unloading And Storage Of Inbound Stock (To Confirmation)

When a truck comes to the warehouse gate, the warehouse

employee will verify the delivery for PO/STO/Sub-con PO/Returns
PO according to the situation.

The delivery is accepted if all of the amounts are correct.

Otherwise, the package would be refused and returned to the
sellers. Once the warehouse employee has accepted the cargo,
he or she will direct the warehouse staff to unload the items off
the truck.
During unloading, the warehouse manager and crew will manually
examine the label- SSCC/Details, the amount delivered, defects,
and so on- in the stock material. If nothing is incorrect, the
manager will sign the transit acceptance paperwork. If there are
any issues, he or she can call them out in the document and also
notify the purchasing team in charge to further speak with the
vendor.

Inbound and
outbound process

Then he or she will send a node to a truck driver to move the

truck out of the warehouse, and the stock will be moved to the
unreceived dock area. At this point, we will need to build a GR
document using the PO as a reference. If necessary, the label will
be created and applied to the pallet. If not, we must scan the item
immediately to determine the quantity received.

After inputting the incoming quantity and delivery note number,

post the IBD. We must decide if a QI and QI label or a lot number
is necessary. Print the QI label and affix it to the pallet if
necessary. We now have TO confirmation for inbound stock put
away.

Following that, the system will scan every line item in the TO,
beginning with the top line 1 and progressing through the TO line
items to the conclusion. It will scan the barcode label attached to
the pallet and display the substance and amount. The machine
will also scan the bin and storage to check the TO. Finally, the
stock has been validated.

WM-PP Integration-GI Of RM Material To Production And GR Of FG Material

From Production

When an order is established, we may view its specifics in the

warehouse management picklist page in order display, including
the production bin, material staging type, and material amount
required. When we release the manufacturing order, the system
will undertake material staging.

Following that, the system decides the sort of material staging to

be employed depending on the control cycle as well as the
production storage bins where the material is staged. Because
the system selects auto staging, the auto TR is created by default.
We may also use manual material staging, which is determined
by BP.

SAP
Production Planning (PP) process

Generally, you will be asked a question at this point. How many

requirements will be produced? The quantity of production orders
for which TR is produced determines this. It is again dependent on
the quantity of allocated PSA for release order parts. You may
construct the TO for the staging materials in SAP warehouse
management after checking the TR creation with the TR display
functionality. Depending on BP, you will once again have the
opportunity to build TO auto in the backend.
You may now stage items depending on the TO and transport
them to the production storage bin or storage type-100. For
material consumption, you can submit GI. You will have two
options at this point: manual backflushing or automatic
backflushing.

We cannot tell whether the method is superior to the other, but if

the manual method is chosen, we must input the production order
number in GI and manually modify the stock in IM and WM based
on the current stock position to decrease material consumption
after the FG Assembly.

👉 Read More: All Cost To Rent A Warehouse In 2023

The auto backflush system, on the other hand, decreases the

material quantity in the production storage bin without the need
for TR or TO formation. Consumption is likewise not uploaded until
production is validated since the system will only react when the
quantity of consumption is known.

The benefit of using the WM-PP interface is that we can quickly

move products from manufacturing into the warehouse. On
confirmation of the production order, the system posts a good
receipt in IM for the FG material and creates a quant in the WM-in
the interim storage area for goods receipts from production.
When manually posting GR, you can utilize IM movement type
101 for goods receipts from manufacturing. This IM movement
type is given WM movement type 103.

With the GI posting, the FG content is stored in the WM's interim

storage type 901. A PCN is generated by the system. Based on
the TR, we establish a TO in the WM for the putaway. If QM is
enabled, it will undergo a quality check before being released in
QA32 for both auto and manual GR from the manufacturing
process. For each GR or partial GR, the system generates a new
inspection lot.

Wm- Flow Of Cross Docking

If the product is not PGRed and is at the unloading dock, the

system will scan the delivery and collect the PO number. If it is
handled by the HU/SN, the system looks for HU and SN
information.
If the HU label is necessary, the system will print the label and
affix it to the pallet or the material. If this is not the case, the
system will scan the material code.

Transportation
cross-docking example

The system then determines if this material is Cross Docking

linked or active by checking the material master data/indicator in
the PO. The system will now seek the quantity, and you must
input it exactly and upload it.

Then, automatically, TO’s are generated to transport the material

to the cross-dock region. Your next task is to transport the
merchandise and confirm the TO. The materials are now items
that have been issued to the client.

WM- Scrapping

Scrap in SAP refers to materials that have reached the end of

their useful life, have been damaged, cannot be used, or cannot
be remanufactured. Most firms generate trash throughout the
manufacturing or assembly process.

Movement Type 551 makes use of scrap material. For a variety of

reasons, you may come across things in your warehouse that are
damaged or unusable. This is a common occurrence during
picking or physical inventory. These items must be eliminated
since they are seldom resold.
 MM-WM
goods issue scrapping process

If Management needs to examine the quality of materials that are

already in unrestricted stock, use MB1B and Movement type 322
to shift the Material to QI stock type. We may do a QI inspection if
Quality Inspection is necessary. If all is well and no defects are
discovered, return to stock using the 321 movement type.
However, if a flaw is discovered or the quality is not up to
standard, we must transfer it to the maintenance center or
department for repair or return it to the vendor.

If a quality check is not necessary, we can use the 553 movement

type in MB1B to submit to junk.

Another reason for scrapping is material deterioration. When

there is material damage during the warehouse material handling
process, you must first examine the degree of damage in the
material. If it is repairable and reusable, we can give it to the
maintenance or fix department or the vendor to reprocess. If not,
we may remove it. With movement type 551, we may utilize
reason code in MIGO or MB1A.

Some customers establish a scrap or non-reusable limit for

specific materials that are not suitable for further use. You must
verify the status in MM-IM to see if it is outdated and unusable,
and you must also notify the material master team to keep the
reason for scrapping.
After learning about the SAP warehouse management
process flow above in a detailed way, we believe that you partly
understand the importance of warehouse management and the
reason why many firms have resorted to cutting-edge software
solutions such as the SAP warehouse management system (WMS)
to improve stock management, order fulfillment, warehouse
layout, planning, and monitoring operations