SAP Warehouse Management Implementation Approach

Decision to use SAP WM is one of the major decisions that a company has to make while
implementing SAP. There are pros and cons to go with either option; a company needs to perform a
detailed analysis on logistics/storage requirement to arrive at the decision. Some of the influencing
factors that can help companies arrive at the decision are mentioned below :

1. Volume of Materials: If the company deals with a large number of materials during each stage of
production and have a large number of end items, implementing SAP WM can help track the
materials at each stage. If the volume of materials handled are low, WM need not be implemented.

2. Storage Space: If the Storage space is very large and goods are stored all over the place, SAP WM
can keep track of materials stored accurately. On the other hand, a small storage space with a
relatively low volume need not have tracking at such a detailed level.

3. Material Movements: If the facility is required to handle a lot of material movements due to
different production activities on the shop floor or it requires an elaborate packaging/shipping
systems for end items in a specified time frame, SAP WM can be used effectively in these
scenarios. On the other hand a low number of movements in the facility doesn`t warrant a SAP WM
solution.

4. Traceability and Visibility:  Use of SAP WM is recommended if the company wants the full
traceability of materials during production and delivery pick up process.

5. Special Requirements: If there is a requirement to store certain materials at certain temperatures

only due to safety or shelf life concerns, SAP WM can help making storage, retrieval and tracking
these materials easier and faster.

6. Integration with External Third Party Applications:  If any third party application is used for
performing or aiding the plant processes, a thorough analysis on its integration with SAP WM or SAP
in general, becomes necessary. Another analysis also needs to be done to replace the third party
system with SAP offering if required. A thorough cost benefit analysis will help in making an
informed decision.

7. Integration with RFID devices: If the facility uses RFID devices for functions like picking, storing
and verifying the materials, it would be a good idea to implement SAP WM. This can help in
streamlining the warehouse processes.
8. Training / Opportunity Costs: If the cost of training the warehouse or plant operators exceed the
potential benefit of implementing SAP WM in terms of reduced costs on account of lack of pilferage ,
materials lost  , streamlined processes , accurate monitoring of the stocks etc. , then implementing
WM should be preferred. The direct benefits coming out of the implementation should be
quantifiable.

9. Change Management: Implementing SAP WM will also increase the administrative effort

associated with Plant/Facility/Warehouse Admins and Shop Floor personnel. This also needs to be
taken into consideration while making a decision on implementing it.

Requirement Gathering:

Once the decision is made to implement SAP WM, next step is to determine how the client or
company plans to use it. To facilitate the requirement gathering, workshops should be conducted to
gather the business processes and all functional requirements (including special business needs).
These requirements are thoroughly analyzed and documented.

Consultants can make use of workshops to understand the client processes thoroughly. They can
also use other techniques like one on one interviews or group interviews to understand the business
process. SAP also provides questionnaire database in ASAP methodology that can be used to gather
the requirements.While conducting the workshops or interviews for implementing SAP WM,
following should be discussed to have a full idea of client organization structure and business
processes:

 Warehouse Facility Locations : These details help the consultants to understand where the
facility is located, what manufacturing and distribution centers it caters to, physical layout of
its premises etc. These details help SAP Consultants to answer questions on the organization
structures in SAP, how many storage locations will be Warehouse Managed, how many
storage types will it have etc.

 Business Processes: These details help the consultant to understand the functions carried
out in the warehouse. It will provide details like the use of premises to store and supply
goods only for production only or also to sale for end items. It will also provide details on
whether quality function is carried out in the premises or not; whether or not the facility
also helps in prepack the goods to be sent to other distribution centers. This will also list out
any other specialized business process that the facility is used for
  Storage Requirement: These requirements will provide an idea about how the client goes
about placement of goods in the warehouse facility. It also brings out the details of any
hazardous materials that are stored in the facility. Endeavor is to capture the specific
requirement for a group of materials to be stored at a particular place due to shelf life, size,
ease of movement, specific temperature requirements etc. These details helps consultants
to define stock placement strategies in SAP to facilitate correct placement of materials.

 Removal Requirements: These requirements will provide an idea about how the client goes
about removal of goods from the warehouse facility for fulfilling’s shop floor or sales orders.
Whether the shelf life expiry date is the deciding factor or they are removed based on the
goods placement date or they consider any other factors while removing the goods. These
details helps consultants to define stock removal strategies in SAP to facilitate correct
placement of materials.

 Inventory Count: These details will provide an idea about how client carries out its inventory
counting. These details help consultant to decide on the use of inventory counting methods
like Annual Inventory, Cycle Count, ABC system of inventory etc.

 RFID Requirements: These requirements will provide details about the integration

requirements of handheld or RFID devices with SAP. This will provide information about the
usage of RFID devices in the facility, what functions they carry out etc. This will help
consultant to analyze the requirement about developing new custom made enhancement
that can be used with SAP WM. These requirements will also help consultant to reach a
decision to use SAP Console or ITS Mobile.

Generally, while gathering the business requirements, a mix & method of well-defined
questionnaires, workshops and interviews gives the desired result. Output of this phase should be a
Blueprint document that covers all the functional requirements and business processes.

This Blueprint document should be signed off by the clients Business Process Specialists as well the
Logistics Lead to confirm that all the requirements have been captured in the document.

The Blueprint document forms the basis of the To-Be document or the Final Design Document that
the Consultant draws up to replicate the enterprise structure and business processes in SAP WM.

Final Design / To- Be Document: 

Once all the business requirements are captured, a detailed design document addressing the
requirements needs to be drawn up. This document should be able to address at least 70-80 percent
of the client business processes that can be replicated across geographies with minimal or no
changes. This design document would be used as core/kernel for handling change management in
future. The remaining 20-30 percent of the design should be flexible enough to accommodate for
changes due to specific process, legal, regulatory & language requirement for different regions.

The Final Design / To – Be document should contain:

 Final Organization Structure: The document should contain To Be Org structure in SAP

based on the blue print document. It should have a clearly defined warehouse structure
definition like the proposed warehouse , the storage locations and plants it caters to ,
number of storage types , storage sections etc.

 Stock Placement and Removal Strategies: The document should also capture the placement
or removal strategies to be used in the warehouse. If there are multiple strategies to be used
in the same warehouse, the same should be documented as well. If due to special
requirements, custom enhanced removal or placement strategy is required that would
require a user exit to be triggered, the same should be documented as well.

 Physical Inventory Method: Final design document should also contain the details about the
physical inventory method that is going to be used using SAP.

 Transfer Order / Transfer requirement Creation: The document should contain the details
about the trigger points for Transfer requirements / Transfer Order creation. It should also
point out the details like automatic/manual creation of TO and their confirmation. For
Example, after production order release, a Transfer requirement would be created
automatically for components issue. This Transfer requirement needs to be converted into
Transfer Order manually and will be confirmed automatically.

 RFID Developments: The activities to be performed using the handheld devices in the

applicable warehouses need to be captured in the document. Typical activities that can be
done using RFID devices include stock picking, stock placement, inventory count, material
handling verification etc. New customized enhancements or developments that are required
to be done need to be documented as well.

 Reports & Forms: The design document should also capture the various reports that will be
used. If there is a specific requirement that is not met by standard set of reports provided by
SAP, the need for creating a custom report(s) should be documented. The document should
also capture the requirements for transfer order / transfer requirement form, sticker, labels
printing requirements etc. It should clearly highlight at what step the forms should be
printed.
  Interfaces: If any third party interfaces are used to capture any real time information in the
warehouse, perform any functions or to send the data to an external party, its integration
with SAP WM should be captured. If the proposal is to replace the third party interfaces with
standard SAP or SAP Add ons, then those details should also be captured.

 Miscellaneous Requirement: This may cover any specific activities or functions that the
warehouse facility performs. An example of it can be to store the material or batch samples
separately due to legal requirements while doing a goods receipt for an incoming batch of
material. There could also be a requirement to add a new movement type to perform any
special functions.

The output of this phase should be a Final Design document that should be signed off by clients
Business Process Specialists as well the Logistics Lead to confirm that all the business requirements
have been met in the Design/To Be document and configuration and development as per the
document could begin.