A comparison of the SAP warehouse management and ... - EYFILE/EY-Comp… · warehouse management and extended warehouse management solutions. ... SAP warehouse management applications,

A comparison of the SAP WM and EWM solutions | Page 1

A comparison of the SAP® warehouse management and extended warehouse management solutions

Page 2 | A comparison of the SAP WM and EWM solutions

Executive summary

Introduction

A framework for decision-making

Today’s complex supply chain realities and diffi cult economic conditions are making it more important than ever for executives and managers to feel confi dent in their decisions regarding IT investments. Understanding the many options in selecting a suitable warehouse management system (WMS) is critical for meeting both present and future business requirements.

This white paper aims to provide a framework for understanding and assessing two of those options: SAP’s WM and EWM solutions.

SAP offers two different WMSs to its customers.

The SAP WM application was fi rst introduced as a sub-module of its materials management application within the R/3 enterprise software releases. Functionality enhancements were provided with each new release, up to and including the current release of the enterprise resource planning (ERP) software.

The SAP EWM was developed as a component of the Supply Chain Management (SCM) business suite. It is separate and distinct from the ERP WM system, in terms of its architecture and functionality.

The differences between these systems, and a rationale for assessing and choosing one or the other, is presented in the following sections.

A framework for gathering relevant information is depicted at right.

An initial assessment of the company’s business model, focusing on the supply chain, is a necessary fi rst step. While it is important to create metrics based on current volumes and the existing supply chain network, any future changes to the model must also be considered.

A high-level description of business requirements should follow the assessment. At this point, the company’s needs for system support in key warehouse process areas should become apparent. Weightings can be applied to various requirements to provide a more complete target vision. The documentation and approval of these requirements will speed up the decision-making process and will also increase the believability of the ensuing business case.


Understanding your supply chain business model

Any decision on a WMS must be preceded by a thorough analysis of your as-is and future business models. Here is a list of suggested business process attributes that should be measured and understood fi rst.

VolumesThe number of receipts, putaways, picks and transfers within a warehouse must be measured in terms of order lines per day or units per day. Are these volumes expected to increase over time? Does seasonality cause fl uctuations in the supply chain at different times of the year? The number of stock-keeping units (SKUs) is also a relevant indicator of volume.

FacilitiesThe number of facilities, and the types of activities carried out at each facility, needs to be considered.

The emphasis on pick-and-pack activity is typically much higher at distribution center facilities than at manufacturing sites, for example, while manufacturing

sites require support for the staging of materials to production areas. The supply chain network may also include one or more third-party logistics providers (3PLs). The number and type of facilities will give you a sense of the overall complexity of your supply chain and provide a starting point for developing your functional requirements for a WMS.

Warehouse process complexity Warehouse processes can vary from simple to highly complex. In goods receipt, for example, materials may simply need to be offl oaded from trailers or rail cars and forwarded directly to storage areas with no intermediate handling, while other inbound materials may require a sequence of process steps, such as quality inspection, deconsolidation, sorting, relabelling and putaway. Be sure to review all of the processes that are carried out at all the sites: inbound, outbound and internal processes, such as inventory counting and replenishment.


Understanding your supply chain business model (cont’d.)

Labor complexity Smaller warehouse facilities can be operated by a few skilled and knowledgeable employees while larger ones can require the efforts of dozens or hundreds of individuals. With higher numbers of workers, it is more important to understand the time and effort expected to be spent on specifi c warehouse tasks. In order to maximize employee productivity, you need to be able to gauge actual efforts against standard measurements, and to dynamically adjust the fl ow of the operation according to unique events. A robust labor management system, integrated within the WMS, is necessary to realize these benefi ts.

Automation and technologyMany modern warehouses feature automated storage and retrieval systems (ASRS), conveyor systems or other advanced material-handling technologies. Often, this type of system can be operated as a “black box,” utilizing interfaces that are designed to exchange master data and business transactions with a “host” system. But sometimes it’s preferable to connect these sub-systems to your WMS directly to provide the ability to manage the equipment as another type of warehouse resource. In

addition, most warehouses today require real-time data collection and entry using handheld or vehicle-mounted portable computing devices, such as radio frequency (RF) terminals. Radio frequency identifi cation (RFID) may also be part of your current or future plans; your decision on a warehouse system and platform will be infl uenced by this.

Understanding the capabilities of the different WMS options will allow you to quickly assess the suitability of these systems to the needs of your company’s supply chain and warehousing operations. The following section highlights and compares the functional abilities of the two SAP warehouse management applications, WM and EWM.

Functional capabilities: SAP WM and SAP EWM

The WM and EWM capabilities for key functional areas are reviewed and compared below.

WM EWMWarehouse structure and organizationBasic warehouse structure

Storage types, storage sections, storage bins are used to model the physical areas of the warehouse

Same structures as in WM

Storage type and section may be up to 4 characters in length, as opposed to 3 characters in WM

Storage bin numbers may be up to 18 characters in length, as opposed to 10 characters in WM

Each storage bin is unique at the warehouse level in EWM

Additional warehouse structures

Doors, material staging areas, pick areas

Structures related to yard management structures like yards, parking spaces and checkpoints are modeled outside of WM, in the LES change to yard management (YM) component

Doors, work centers, yards, parking spaces, staging areas are modeled using EWM storage types and storage bins

Activity areas are groupings of storage bins and allow optimal creation of warehouse orders and assignment to work queues


Functional capabilities: SAP WM and SAP EWM (cont’d.)

WM EWMWarehouse structure and organization (cont’d.)Organizational structure features

More than one inventory management (IM) storage location can be warehouse-managed under the same warehouse number

Similar to WM — multiple IM storage locations can be managed using one EWM warehouse number

Stock managementStock types Warehouse stocks, vendor consignment

stocks, project stocks and customer stocks are supported

Stock can be managed in various statuses (unrestricted use, blocked, quality inspection and returns)

Rules for mixed storage are applied at the storage-type level

Same stock categories as in WM

Additional stock types are used to distinguish between stocks that have been received and stocks that have been put away within the warehouse

Stock types in the EWM and ERP systems are synchronized using the logistics inventory management engine (LIME)

Units of measure Multiple units of measure are allowed per material, including preferred WM unit of measure

All units of measure are also supported in EWM. EWM also supports stock-specifi c unit of measure, which allows for multiple units of measures of the same material to be stored side by side, i.e., different case/pack size

Storage units and handling units

Storage units (intra-warehouse capability) and handling units (HU) are supported

Only handling units are used in EWM. HU tracking is activated at the storage-type level. Handling units are more fl exible and easier to use in EWM than in WM

It is not necessary to activate handling unit management (HUM) in the ERP system when using handling units in EWM

Batch management Batches and management on the basis of shelf life are supported

Batch and SLED management are also supported in EWM

Batch determination can be carried out in EWM if batches are not specifi ed in the source ERP documents

Serialized materials Limited functionality available for serial numbers. Requires the use of storage units

RF serial number capture possible in outbound delivery only

No direct bin-level visibility of serial numbers

Full support for serial numbers, including tracking to the storage bin level, with or without handling units

Hazardous materials Support of hazardous materials is provided Hazardous materials are also supported in EWM

Catch weight management

Catch weight materials are supported when using the IS-CW industry solution in the SAP ERP system

EWM supports catch weight materials in conjunction with an IS CW ERP system, as well as managing CW products directly in EWM without requiring IS-CW in ERP



WM EWMInbound processingPutaway strategies One putaway strategy available per storage

type:

• � Bulk storage

• � Open storage

• � Fixed bins

• � Addition to existing stock

• � Near picking bin

• � Next empty bin

• � Storage unit type (up to 99 bin positions)

• � Dynamic coordinate quant number

• � Dynamic coordinate reference number

• � Manual bin selection

Up to 30 storage types, sections, bin types and storage unit types can be defi ned in bin searches

Same strategies are supported

No limit on the number of storage types, sections and bin types in bin searches

Capacity checking Capacity checking possible, based on weight, volume and dimensionless capacity fi gures (material and storage unit type)

Capacity checking possible, based on weight, volume and dimensionless capacity fi gures (material and handling unit type), as well as maximum quantity capacity. This is new in EWM 9.1

Complex (multi-step) inbound processing

Not supported Supported with the use of process-oriented storage control

Quality inspection Inspection lot sample-handling during putaway (place into stock, leave at dock or send to inspection area)

Can execute warehouse inspection during putaway. Also possible to integrate sample-handling with QM system (inspection lots)

Exception handling in putaway

Possible to change destination bin during putaway confi rmation, as long as the new bin is within the same storage type as the original putaway bin

Possible to change the destination bin to any storage bin in the warehouse (including other storage types)

Deconsolidation of mixed pallets

Not supported Mixed pallets can be deconsolidated at a work center prior to putaway



WM EWMOutbound processingPicking strategies One picking strategy available per storage

type:

• � Partial quantity management

• � FIFO (fi rst-in, fi rst-out) or stringent FIFO

• � Shelf-life expiration date

• � LIFO (last-in, fi rst-out)

• � Large/small quantities included (with rounding)

• � Fixed bin from material master

• � Dynamic coordinate reference number

• � FIFO, GUID based

• � Manual selection of source bins

Up to 30 storage types can be searched in source bin selection

Same strategies are supported. EWM supports unit of measures specifi c picking strategies, as well as the ability to optimize picking of different size multi-pack combinations to meet customer order quantities while minimizing the need to break packaging stock specifi c unit of measure

No limit on the number of storage types in source bin searches

Complex (multi-step) outbound processing


2-step picking Possible to pick cumulative quantity for several orders in one step and distribute to individual orders in a second step

Same 2-step picking capability is available in EWM

Picking into shipping containers

Can pick into handling units, which become the shipping handling units. WM supports only a single packaging material to be used per storage type, which is well-suited for pick-to-pallet or pick-to-tote operations

Pick-HUs are supported in EWM. EWM also has built-in cartonization capability to enable optimized selection of packaging materials for pick and pack

Packing Packing of picked items at a packing station. Weigh-scale integration

Packing of picked items at a work center. Weigh scales can be integrated

Wave picking and multiple processing

Possible to group open deliveries into waves for mass processing

Can combine requirements for multiple deliveries into one picking transfer order

Advanced wave management capabilities, including automatic wave creation using wave templates

Possible to assign items from the same delivery into multiple waves

Proof of delivery Possible to implement proof-of-delivery (POD) integration with relation to customer billing

Possible with use of POD functionality within ERP

Kit-to-order Not supported Can perform kitting during the picking step, or at a kitting work center, with or without a value-added services step



WM EWMInternal processingWarehouse stock optimization

Optimizing is possible with offl ine analysis and manual stock transfers

Possible to perform slotting in order to determine optimal stock locations based on historical or forecast product movement. Can execute re-arrangement of existing stocks following the execution of slotting

Physical inventory Various inventory methods are possible:

• � Cycle-counting• � Continuous inventory• � Annual (wall-to-wall) inventory• � Zero stock check

Dynamic cycle-counting is available as of R/3 release 4.7 with Enterprise Extension Set 2.0

Same inventory methods are available in EWM

Also possible to perform low-stock checks during the picking process

Posting changes Can post stock to new material or new stock type from within WM

Can perform same posting changes from within the EWM system

EWM can automate posting changes during storage bin transfers to change stock type and/or storage location by storage type

Replenishment Can initiate fi xed bin replenishment based on material-specifi c min/max levels and bin assignments

Can also initiate replenishment based on picking requirements

Can initiate fi xed bin replenishments using scheduled jobs or based on picking requirements

Also possible to trigger (and execute) bin replenishment directly while picking stock from fi xed bins. Multiple fi xed bins per material are supported

Kit-to-stock Not supported Can execute kitting of components in stock to create stock in a new material

Complex (multi-step) internal processing


Production integrationMaterial staging to production areas

Various methods are supported:

• � Pick parts (pick list)

• � Release order parts

• � Crate parts

• � Manual staging

Possible to de-activate quantity reduction according to stocks already in production

Same staging methods are available in EWM

All provision is managed using outbound deliveries from the EWM warehouse

Kanban Possible to use Kanban technique to supply materials to production areas

Also possible to use Kanban in material staging

Receipts from production Back-fl ushing and receipt of produced materials are supported

Same capabilities as in WM

All receipts are managed using inbound deliveries into the EWM warehouse



WM EWMCross-process functionalityRadio frequency (RF) support

Native support for RF processing available as of R/3 release 4.6B

Approximately 50 RF transactions are provided, including goods receipt, goods issue, transfer order confi rmation, inventory counting and serial number capture

Possible to work with system-guided selection of open transfer orders

Over 100 RF transactions are provided in EWM for goods receipt, goods issue, task confi rmation, packing, deconsolidation, loading, inventory counting and others

Can use system-guided selection of open/assigned warehouse orders

RF Wizard available for quick and easy changes to transactions

Printing and outputs WM print control settings are used to trigger printing of warehouse documents such as pick lists

Output control is available to initiate processing of outputs from delivery documents

EWM uses the post-processing framework (PPF) to trigger all printing and outputs based upon the status of warehouse tasks

Standard outputs are delivered in both SmartForms and Adobe forms

Environment, health and safety (EH&S)

Supported Tight integration with the EH&S component in the ERP system

Labor management Not supported

(Possible to enter planned and actual transfer processing times for basic workload planning and evaluation)

Supported with implementation of engineered labor standards and distance calculations

Can record time against many different task types, both direct and indirect

Radio frequency identifi cation (RFID)

Supported Can be implemented with SAP Auto-ID Infrastructure (AII) and SCM event management systems

Yard management YM capabilities provided as a separate LES component with R/3 release 4.7 with EE 2.0

Fully integrated YM functionality within EWM

Transportation units (TUs) are used to represent trailers, rail cars, airline containers, etc., and function similarly to handling units

Transportation cross-docking (TCD)

Not supported TCD in EWM supports the transfer of HUs among various warehouses or distribution centers to a fi nal place of destination, which can be a DC or a customer’s site

Opportunistic cross-docking

Using this functionality, the warehouse can detect and execute opportunities to match inbound materials to outbound requirements dynamically

Available only in R/3 release 4.7 with Extension Set 2.0

Fully supported within EWM

Task and resource management

Introduced as a separate LES component with R/3 release 4.7 EE 1.1

Functionality is included within EWM and can be activated or deactivated by task type

Interleaving Basic interleaving is possible as of R/3 release 4.6C

Task interleaving is possible with the activation of resource management in EWM



WM EWMCross-process functionality (cont’d.)Task-splitting Possible to split a transfer order to re-

balance workload among usersWarehouse order creation rules enable automatic packaging of tasks into optimal work packages for users

Two-step confi rmation Possible to confi rm a single transfer with separate “pick” and “transfer” steps

All transfers can be processed as a removal followed by a placement. Processing times can be captured when processing with RF transactions

Quantity exceptions Possible to confi rm transfers with target/actual quantity differences

EWM exception codes are used within all RF transactions to facilitate exception reporting and to trigger follow-up activities

Integration to SAP ERP Transportation (LE-TRA)

Supported Supported

Reverse logistics Putaway of materials received on a return order is supported

Supported

Enhanced customer returns process can be activated via integration with SAP Customer Relationship Management (CRM)

Includes integration with advanced returns management

Direct Store Delivery Functionality available as of R/3 release 4.7 with Extension Set 2.0

Value-added services (VAS)

Repacking, tagging and other value-added steps can be performed at a work center or during transfer order confi rmation

Supported as of R/3 release 4.7 with Extension Set 2.0

VAS steps can be integrated seamlessly into inbound, internal and outbound processes

Reporting and graphical tools

Reporting capabilities Basic reporting of open/confi rmed transfers, stock overviews, bin lists, storage unit inquiries, etc.

Many reports available in ABAP List Viewer (ALV) format to allow advanced sorting and statistical functions

Logistics information system reports also available for summarized and detailed analysis of historical data

Warehouse activity monitor gives manager a view of open/overdue warehouse activities

RF monitor allows managers to view and reorganize activities and assignments to users

Warehouse management monitor provides reporting of all types of warehouse activities, as well as stock and storage bin lists

Advanced analytics, dashboards and reporting are possible using standard SAP Business Intelligence (BI) content



WM EWMReporting and graphical tools (cont’d.)Workload reporting and analysis

Rough workload estimator allows warehouse managers to perform labor planning for inbound and outbound processes

Labor planning and simulation cockpit permits estimation and reporting of labor time across all warehouse activity types

Graphical warehouse layout

Not supported EWM uses the easy graphics framework (EGF) to create visual representation of warehouse layouts

Shipping cockpit Not available in a single cockpit Ability to perform outbound delivery planning, monitoring and execution of all outbound processes in EWM, including trailer creation, check in/check out, wave management, task execution, print output and invoicing (prior to GI). Graphical sidebar analytics embedded into cockpit

General

Centralized/decentralized options

Can implement decentralized WM (dWM) as of R/3 release 4.5A

Several ERP systems can be linked to a single dWM instance

EWM can be run as a decentralized system on a SCM server or it can be centralized as an add-on within the ERP system (if using ERP ECC 6.0 and SCM 5.1 or higher)

Transportation planning Advanced transportation planning and vehicle scheduling can be implemented using SAP advanced planner and optimizer (APO), as of SAP ERP 2004 (ECC 5.0) or SAP ERP 2005 (ECC 6.0)

Can use freight documents and shipments in EWM

Transportation management module

Integration is available with SAP TM and EWM

Integration with external warehouse automation systems

“Black box” interfaces are possible using ALE/IDoc techniques

Optimized when used in conjunction with task and resource management (TRM) in the LES system

EWM includes material fl ow system (MFS) capability to connect directly to programmable logic controllers (PLCs) in external automation systems

ALE/IDoc integration is also possible to external WCS

Archiving Supported Supported

Authorizations Standard SAP authorizations are used to control access to data and transactions

Standard SAP authorizations are used to control access to data and transactions


Other factors to consider

ScalabilityThe EWM solution has several advantages over WM in terms of scalability. If your environment requires a single WMS instance to be linked to multiple ERP systems, it is only possible with a decentralized EWM implementation. If there are high-volume conveyor systems or automated storage and retrieval systems that process thousands of packages per day, these can be integrated with SAP using the EWM MFS (material fl ow system) technology.

CostsSCM EWM is a separately licensed product from SAP. This differs from SAP WM, where it is included in the cost of the ERP license. It is important to note, however, that the SCM EWM license cost will be charged for using the advanced functions of ERP WM, such as cross-docking, value-added services or yard management.

Future functional enhancements from SAPNo further SAP development will occur within WM. All future investment will be within the SCM EWM product.

Some common questions (and answers) about WM and EWM

Is SAP going to discontinue its support for ERP warehouse management?

SAP will continue to support the deployment of ERP WM. SAP considers WM to be an important WMS option for customers not requiring the advanced functionality and scalability of the EWM system.

We are using ERP WM today. Will we be required to “upgrade” to EWM some day?

No, you can continue to use the WM system until you decide that a migration to EWM is warranted.

Why did SAP decide to build extended warehouse management “from the ground up,” instead of building on the existing WM system?

SAP needed a more scalable solution that could more easily compete with the “best of breed” WMS applications. It needed a solution that out of the box would have more robust features and an architecture that could address high availability and fast transaction processing.

Does the term “EWM” always refer to the SCM extended warehouse management solution?

The terminology can be confusing, but there are really two different forms of EWM, depending on how they are being used. When SAP warehouse management is being used with SAP release 4.7 Extension Set 2.0 or higher releases, it is referred to as ERP EWM. When SAP WM is being used in conjunction with the SCM module, it is referred to as SCM EWM.

What types of organizations should be considering EWM as opposed to WM?

Typically, SCM EWM is tailored to organizations that have high SKU and line-item volumes, very fast-moving product, complex product movement, cross-docking requirements, detailed packaging and shipping processes, and third-party logistics services on either the inbound or outbound side, or both.


SAP designed SCM EWM so that it could provide the most benefi t to warehouses with high activity levels, high volume and complex operations. These and other factors should be considered when determining which application is a fi t for your facility.

High level of distribution activity and materials movementDesigned to benefi t warehouse operations that are more distribution-oriented as opposed to material storage-oriented (e.g., a production supply facility), SCM EWM supports organizations with core competencies and critical success factors that rely on effi cient management, movement and distribution of materials. For such organizations, EWM could potentially be a good fi t and could allow you to signifi cantly enhance your labor effi ciencies and minimize your labor costs.

High level of volumeFacilities with a high level of material fl ow velocity (typically characterized by the number of transfer orders or line items), high transaction volume, a high number

of warehouse associates per shift and multiple types of material-handling equipment, are able to benefi t from SCM EWM functionality. Typically, the higher the number, the better the fi t. For example, if you have 50 trailer loads a day, you will experience much higher benefi t from the system than if you only have fi ve.

Operational complexityComplex material fl ows, such as the use of special equipment that cannot physically make certain material moves effi ciently, but instead uses pick and drop locations or other operational complexities, such as pallet deconsolidation and other warehouse work center operations, such as packing and repacking, are handled much better in SCM EWM.

Value-added servicesStrong functionality for value-added services is offered within SCM EWM. This includes pricing, labeling, packaging and hazardous materials notes on shipping documents. The higher the level of services offered, the better the fi t with these solutions.

Which WM application is right for your warehouse?

Summary

When determining which option is the right fi t for your operations, it is important to consider that EWM is more likely to benefi t warehouse operations with high levels of distribution activity, volume and operation complexity. Companies that decide to implement EWM and its inherent capabilities in labor management and resource management could gain the benefi ts of an accelerated supply chain and improved customer service.

A key point to remember is that no new signifi cant functionality will be developed in WM. All future investment will be within the SCM EWM product. It is advisable to always strongly consider your current and future business requirements carefully when making a decision on which WM application to use. If you require a true labor management system or slotting, then EWM may be your answer. If you don’t need these technologies but still have complex warehouse movements, WM may work well.

For more information on how EY’s SAP Supply Chain services can help organizations gain improved operational effi ciencies and manage supply chain operations cost, visit EY’s IT advisory supply chain services on www.ey.com.


EY leads the way for supply chain execution and mobility solution services

Authors

Doug ScottSenior Consultant, Advisory Services, Ernst & Young LLP

Kyle SorensenExecutive Director, Advisory Services, Ernst & Young LLP

EY is an SAP global services partner that is fast becoming recognized as an industry leader in end-to-end supply chain SAP services. With focus on the logistics execution systems (LES) and the supply chain execution (SCE) components of the SAP application suite, coupled with EY’s already established SAP planning and procurement capabilities, EY offers our clients supply chain services that help organizations to gain operational effi ciencies and manage costs related to their supply chain operations. Our SAP and supply chain consultants share a wealth of experience and knowledge when it comes to designing and helping implement leading SAP logistics and supply chain services, with noted experience in SAP planning and optimization (APO and S&OP cloud solutions), LES, WM, EWM, transportation management (TM), procurement (including Ariba/SRM), and automatic data collection.

Our SAP consultants were, and continue to be, key players in SAP’s internal, pre-release testing stage for EWM in Walldorf, Germany. Our consultants also played an integral role with pre-release testing of SAP’s native radio frequency data collection product, SAP Console.

Our in-depth experience with SAP LES and EWM products and functionality — along with our close relationship with SAP — provides us with an intimate knowledge of the development vector SAP is applying to the LES and EWM product suite. This allows us to advise customers on strategic operational decisions, provide them with detailed information on key integration points, and quickly assist them in identifying fi t/gaps with current and future release levels.

EY can help you achieve:

• �Increased supply chain velocity and effi ciencies

• �Increased visibility into assets and data streams

• �Increased control over the entire mobility life cycle

• �Change management and business process optimization

EY has experienced SAP SCM consultants who can share insights and knowledge in order to assist clients with implementing leading approaches to meet client demands. With strong business-leading practices knowledge and acumen, our team can help to drive supply chain effi ciencies throughout your organization.


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About EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confi dence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

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Information in this publication is intended to provide only a general outline of the subjects covered. It should neither be regarded as comprehensive nor suffi cient for making decisions, nor should it be used in place of professional advice. Ernst & Young LLP accepts no responsibility for any loss arising from any action taken or not taken by anyone using this material.

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A comparison of the SAP warehouse management and ... - EYFILE/EY-Comp… · warehouse management and extended warehouse management solutions. ... SAP warehouse management applications,