SAP IMWM Presentation

Main Topics
 Understanding SAP IM & WM
 Challenges I have faced during implementation of SAP Warehouse Management

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SAP IM Structure

Company Code 1000

Plant 1000 10xx

1000 4000
Storage Locations
0000 2000 3000
Production Hall Consignment
Main Storage Project Storage Pipes & Bars
(Raw Materials) Stocks

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SAP WM Structure

Company Code 1000

Plant 1000 10xx

Storage Locations
2000 4000
0000 1000 3000
Production Hall Consignment
Main Storage Project Storage Pipes & Bars
(Raw Materials) Stocks

100

Warehouse Number Warehouse

Storage Types 010 020 030 040 902 916 999

Storage Bins AA-BB-01 AA-BB-01 AA-BB-01 AA-BB-01 AA-BB-01

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Warehouse Structure Key Terms
 Warehouse Number
 Defines the Physical Complex, normally one warehouse per physical complex or city
 Consolidating warehouse numbers improves visibility while splitting allows for flexibility.
 Storage Type
 Portions of warehouse related by technical or organizational characteristics
 Section of the warehouse that contains similar product handling characteristics
 Storage Section
 All storage bins with specific common attributes belong to one storage section
 Examples: Separate sections for fast moving vs slow-moving materials
 Storage Bin
 Lowest unit of the warehouse map that typically matches a physical location of a material
 The coordinates of the storage bin tell you the exact position in the warehouse where you can store
the material

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SAP Inventory Management
 Inventory Management by quantity
 Visibility of on-hand quantity by storage location
 Management of special stocks

 Entry and Documentation of all material movements

 Documentation of all receipts, issues and transfers

 Physical Inventory
 Carry out physical inventory at material level
 Perform inventory adjustments

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SAP Inventory
Management……..continued
 Inventory Management by value
 Postings update account assignments for cost accounting
 Updates G/L account for financial accounting

 Key Integration Points

 Integrates directly with MRP, ATP check, Purchasing and Invoice Verification
 Updates PO history upon goods receipts, used to check conformity during invoice verification

 Real-time updates
 When transactions are entered, there is a real-time stock update

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Limitations of SAP Inventory
Management
 Lack of detailed visibility to material flow
 Discrepancies in picking quantities must be manually updated in deliveries

 Limited visibility to bin location of materials

 Per storage location, maximum one fixed bin can be assigned (hard-linked) to a material

 Limited possibility for put-away and picking strategy

 Put away and picking strategy is limited to the hard-linked fixed bin in the material master

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SAP Warehouse Management
 Enables granular traceability and control
 Stock movement can be controlled at the storage bin level, and therefore system offers traceability at
bin level.

 Supports simple to complex put-away and picking strategies

 FIFO, Fixed bin, Next empty bin, Addition to existing stock
 Options for defining custom strategies

 Physical Inventory
 Physical inventory possible at bin level
 Inventory history maintained for each bin

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SAP Warehouse
Management…..continued
 Powerful picking options
 Two-step picking
 Wave picking (combined picking)
 Deliveries can be split based on different warehouse numbers

 Advanced functions
 Storage Unit Management
 Cross docking
 Warehouse Activity Monitor
 Integrated mobile solution (Standard SAP offers mobile solutions based on RF devices)
 RF Monitor

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SAP Warehouse Management
Integration
 IM-WM
 Processing of all material movements

 PP-WM
 Supply of materials to production shop-floor
 Internal and external automatic replenishment

 QM-WM
 Inspection Lot information maintained in transfer requirements
 Transfer Postings (Posting Change Notices)

 SD-WM

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Benefits of SAP Warehouse
Management
 More accurate inventory
 Optimum Inventory levels can be achieved

 Optimized Inventory Flow

 Optimized inventory flow – Goods Receipt, Put away and picking
 Effective space utilization
 Reduction in scrap and carrying costs

 Increase in picking & shipping accuracy

 Accurate picklists – picking productivity improvement

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When is IM a better choice?
 Small Facility
 Lower Levels of Inventory on hand
 Simple material handling processes
 Lower activity volume
 Outsourced warehouse operations
 Training related issues

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When is WM solution a BETTER choice?
 Large Facilities (sometimes spread across multiple locations)
 Managing a higher Levels of Inventory on hand
 Traceability and Visibility of materials is critical for business
 Complex material handling processes
 Handling material movements via mobile devices

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Challenges I have faced during WM
Implementation
 Lack of true “Standardization”
 Generally, internal distribution processes & storage strategies tend to differ from one warehouse to
another. As a result, an “off-the-shelf” solution often needs to be customized to meet local
requirements of the business. If not tested extensively by IT and business together, such custom
solutions are more prone to failure during go-live.

 Exceptions to the rule

 Undocumented & non-regulated practices in the warehouse
 Tendency to bypass the system and therefore not registering goods movements in the system.

 Less business & technical savvy users

 Warehouse users are typically not used to ongoing business transformation processes and they prefer
bare minimum interactions with computers and IT systems. The idea of switching to a new system
seems a bit intimidating.

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Why is WMS Implementation so
Challenging?
 Language barriers
 Not the whole world speaks English. Unlike the Sales and Finance team, the warehouse users in non-
English speaking countries are not proficient in English. They find it difficult to express themselves in
English. In some cases, they don’t speak English at all.

 Such communication barriers result in gap in understanding of business requirements. And, therefore
mutual expectations (Business vs IT Consultants) are not aligned properly. This can have serious
repercussions, to the extent of a delayed or even failed implementation.

 Lack of proper documentation of old WMS systems

 The existing documentation may not be up-to-date and may not be available in English.

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Typical Issues after WM go-live
 Training Challenges
 Language barriers
 Gross Inventory inaccuracies
 Piling up of GR inventory
 Inability to ship products in time
 Errors in Master Data Maintenance
 Configuration errors
 Interface errors
 Hardware issues (Printer installations, for example)

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How do we avoid Implementation
Failures?
 Ensure Functional Alignment
 Test, Test Again, and Again, and Again…….
 Identify the right process owners and train them properly
 Evaluate readiness
 Ensure enough Go-Live support, and be prepared for quick bug-fixes
 Expect loss of productivity in the beginning

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Ensure Functional Alignment
 Thorough review of existing business processes – standard as well as exception scenarios

 Review and Approval/Rejection of the Implementation/Roll Out Business process documents

by business process owners

 All workarounds and shortcuts should be documented properly

 Setting up right expectations in the earlier phases of implementation is highly critical. The aim is
to capture desired functionalities and avoid costly rework during later phases of
implementation.

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Test Thoroughly
 Be thorough
 Run several rounds of unit testing
 Develop a large number of test scripts to possibly cover every possible business scenario
 Scripts must address normal functionalities, exceptions and likely mistakes users could make.

 Expect some failures during initial phases of testing

 Document and verify all test scripts

 Integration Testing
 One or more rounds of User Acceptance Testing

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Identify the right process owners and
train them properly
 Plan for a paradigm shift, so that the new system is not always judged and weighed with
reference to the old system. In the beginning, users may not be able to understand and
appreciate the benefits, the new system has to offer.

 Have we identified the right users, and assigned appropriate job roles to them?

 Train the end users enough so that they are no longer motivated to bypass the system. No
WMS will support manual short-cuts or workarounds. Any such attempts will only add to the
chaos.

 The key users must be able to identify and trouble shoot basic operational failures. They should
be able to teach others how to use the system effectively to handle standard as well as
exceptional business cases.

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Evaluate Readiness
 System & Interface readiness
 Have all of the functionality been tested and accepted by users?
 Have all the interfaces (with Procurement, Production, Sales, QM, Projects) been tested properly?

 Data Migration
 Has all the of required data been tested for completeness and approved by business before being
migrated to SAP?

 Inventory
 How accurate is the current inventory being migrated?

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Ensure enough Go-Live support, and
be prepared for quick bug-fixes
 Ongoing Key user trainings to overcome operational issues
 Help key users develop clear understanding of issues being faced by the operators.
 Help key users trouble shoot operational issues.
 Help key users understand limitations of the system.

 Review the status of bugs and system failures and ensure that these are being resolved in a
timely manner.

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Expect loss of productivity in the
beginning
 A general lack of familiarity with the new system impacts productivity negatively

 In the beginning, they need to process the orders and projects migrated from the old system.
There is a natural backlog

 Operator errors and unknown software bugs will slow down productivity

 Proper use of WMS involves use of additional transactions, which users are not sure about. At
the IM level, stock situation may be proper, but at WM-level there may be pending activities to
take care of.
 For example, after goods receipt, if the put-away transfer order is not confirmed, during goods issue,
system will not be able to find the right bin to pick from. In the beginning, this may appear very
complex to the users.

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Summary
 Don’t over-complicate the way warehouse does their business
 Set RIGHT expectations in the initial phases of the project
 Help business understand the pros and cons of each solution

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