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SAPtips.com SAPtips © 2004 Klee Associates, Inc.

Editor’s Note: RFID gets all the press these days, but the truth is that for most companies, the costs (and risks) of being an “early adopter” of RFID are not viable. But there’s good news: Virtually all R/3 users running 4.6C or higher can take immediate advan-tage of SAP®’s existing RF barcoding functionality. In this enlightening cover story, SAP Warehouse Manage-ment and RF expert John Lenhardt explains how his team installed RF and achieved a measurable return on investment - and he has the numbers to prove it. The good news continues: John reports that companies already running SAP’s Warehouse Man-agement (WM) module have done most of the heavy lifting already. The configuration needed for RF is simple by comparison. However, as always with SAP, this comes with a disclaimer: the more your devi-ate from SAP’s standard fields and functionality, the more complex the implementation becomes. Using anecdotes from his own project expe-rience, John illustrates the basics of RF configuration and the pitfalls to avoid. He tells about when his com-pany decided to use non-standard fields and what the tradeoffs were. John wraps up this cover story with a run-down of the actual ROI num-bers and benefits of the RF install. Given John’s ability to tie Warehouse Management issues into the “big picture,” we’re glad to announce that John will be writing regularly on RF, WM, and RFID for SAPtips.

IntroductionYou have the SAP warehouse mod-

ule up and running—that’s great. How about squeezing some more

productivity out of your operation by implementing Radio Frequency (RF) functionality within your ware-house?

This document will show the steps taken, improvements gained, prob-lems encountered and the ROI for an RF project recently completed on SAP 4.6c. With an outlay of hard costs of approximately $140,000 for an RF implementation over a 6-week period, a distribution company gained an estimated annual sav-ings of $146,000. Rollouts to other warehouses had an estimated cost of $53,000 and an annual cost savings of about $75,000.

Using Radio Frequency (RF) and SAPConsole within the SAP Ware-house context gives you the ability to process business transactions with mobile devices by scanning barcodes that represent data such as material numbers, quantities, and bins. The RF benefits include real-time pro-cessing by the clerks, more accurate data input through scanning, and a more productive labor force.

Got RF?How to Add Value to Your Warehouse Management System

with RF and SAPConsoleBy John Lenhardt, Tranzation

So how does this differ from RFID (Radio Frequency Identification)? The primary difference is that the RFID concept includes a barcode tag that stores code on a small micro-chip and this information can be transmitted wirelessly to a reader. This barcode tag provides companies the ability to scan items much more quickly while providing a unique identifier for each product which can detail specific information about the product, such as where it has been and when it was produced.

RFID benefits include further gains in reducing costs in the supply chain, more accurate inventory manage-ment, and reduction in theft. For now, however, RFID is in the early adoption stage and has several hur-dles to overcome such as cost of tags and privacy concerns. Unless you are being mandated by a customer to use RFID or you like to be on the leading edge of business concepts, it is prob-ably best to wait a few years until all the early problems get worked out before considering RFID. Until that time, you can still gain great improve-ments using RF with SAPConsole. This article serves as a “primer” on how to best utilize the RF function-ality. At the end, we’ll take a look at some real ROI numbers from one of my recent RF projects to see just what RF can do for the bottom line.

BackgroundThe information and numbers for

this document come from a mid-size company that has been running SAP for 3 years and decided to implement RF functionality using the SAPCon-sole solution. This distribution com-pany first decided to implement RF

With an outlay of

hard costs of

approximately

$140,000, a

distribution company

gained an annual

savings of $146,000.

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in one 150,000 square foot ware-house with the idea of rolling out the RF solution to its four other distribu-tion centers across the Unites States over the next 9 months. The initial warehouse being implemented with RF has 30,100 bins, does about 500 pick orders a day with an average of 2.3 lines per order, and receives a daily average of 23 inbound deliv-eries with about 8.6 lines items per receipt. The project team consisted of a project manager and two subject matter experts from the company, one functional WM consultant, and one ABAP programmer.

Getting StartedOnce you have the SAP Warehouse

Management module in production and stable, adding the RF functional-ity is a snap in comparison to the ini-tial implementation of the warehouse functionality. By this point, you have already completed the hard part for the warehouse implementation, which probably included integrating to other SAP modules, defining new business processes, converting data, and developing labels.

Just like your original SAP imple-mentation, you can make your RF implementation as simple or as com-plex as you choose to inflict upon yourself. We chose the simple route. This primarily consisted of using the SAPConsole solution with as many standard SAP RF transactions as pos-sible. We did not have batch man-agement, serial numbers, or handling unit management functionality in this implementation, which allowed for a less complex project. Another item we benefited from was that most products were already bar-coded by vendors, so labeling products with barcode labels was not an issue.

There are several infrastructure pieces that you will need to plan for in order to automate your warehouse with RF. Here is a list of items that you will have to address:

SAPConsole software – You most likely already own this SAP soft-ware. The SAPConsole software is included in the standard distribution of SAPGUI version 4.6b and higher, and can be installed via the standard install application. This SAPConsole software converts standard SAPGUI screens to character-based screens that can be displayed on an RF unit. In other words, it connects SAP to the barcode readers. The SAPCon-sole software will need to be installed at each warehouse that uses RF.

There is a Web-enabled SAPCon-sole solution now too. This can be installed from the front-end R/3 Enterprise installation CD. We did not use the Web-enabled solution in the production environment since it was in beta, but we did load the soft-ware in a development environment to review the functionality. We found that our guns stopped scanning and some fields were not showing in the transactions when we used the Web version of SAPConsole. Since the Web version was not available for production usage, we expected some bugs and did not pursue resolving the issues.

Telnet software – This software allows you to connect scanned data from the scanners to the SAPConsole software. We used telnet software from Georgia SoftWorks. For 40 users and 3-year maintenance sup-port, the costs ran about $1,100.

SAPConsole/Telnet server – You will need to load the SAPConsole and Telnet software on its own server. For the volume in this implementa-tion, we purchased a server for about $4,000. It was a NT machine with a P3 processor and 512 MB of RAM.Wireless Local Area Network (WLAN) – You will need to install scanner access points throughout the warehouse. When doing this, you will need to consider issues such as security, roaming, standards, interoperability, cost, speed, and cov-erage. The company that does the cabling for you will most likely have the expertise to work through these issues. Each warehouse is different, but you can expect to spend about $8,000 per 50,000 square feet.

RF scanners – These are the devices that the warehouse clerks will use to scan the barcodes. There are sev-eral different vendors and models to choose from when selecting scanners. Scanners seem to be the most expen-sive part of the implementation. RF scanners units average around $3,000 per unit. We used scanners with Windows CE operating systems which are nice to work with.

Label Printers – We already had label printers from the original implemen-tation. However you can get label printers for about $2,500 each.

Figure 1 illustrates how all the pieces of the SAPConsole setup fit together.

Now that we have the RF infra-structure defined, let’s move on to the business process part of the imple-

Adding the RF

functionality is a

snap in comparison

to the initial

implementation of

the warehouse

functionality.

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mentation. As mentioned earlier, it is best to keep a simple plan and use the stan-dard delivered RF transac-tions. You will probably see other software companies at SAPPHIRE or ASUG that have prettier RF transac-tions than SAP, but they all get to the same destination. Our distribution company did an analysis and decided they were financially better off sticking to the standard SAP RF transactions with the less pretty screens. After see-ing the Web version of SAP-Console though, we felt that the look and feel of the SAP transactions was on par with some of the RF-centric soft-ware packages.

Most of the problems expe-rienced during RF implemen-tations center around custom RF transactions. So the tip here is to use the standard delivered RF trans-actions whenever possible, and care-fully evaluate the need for any custom RF transactions before proceeding. Sometimes, it just is not possible to use the standard transactions, and you will need to create a custom one. In the long run though, you will save time, money, and heartache by stick-ing to the standard delivered solu-tion even if you have to modify your process a bit. Sometimes the problem with the standard SAP transactions is less of a functional issue and more of a screen layout issue. In this case, you can use screen variants to move around and delete fields to be more customized to your business pro-cesses. At the distribution company, we changed the picking and putaway screen to better accommodate the clerks performing the activities.

Here is something you will find odd though. SAP does not deliver an RF bin-to-bin transaction. You will have

to program your own RF bin-to-bin transaction, which should take a day or two. You would think SAP would deliver a bin-to-bin transaction, but they do not deliver this RF function due to the fact that so many people use this transaction so differently.

The great thing about already hav-ing your warehouse up and running on SAP is that your processes have already been defined. So now you just need to decide if you are going to RF-enable all the business processes in the warehouse or just a specific function. For example, you may find you will save a huge amount of time using RF in the shipping area, but for the receiving function, it may be more effort than it is worth. When you implement RF, you decide which processes to automate and which to leave alone to continue processing as you currently do on your computer desktop. It is not an all-of-the-ware-house or none-of-the-warehouse decision when implementing RF.

Once you decide which processes you will use with the RF, you will need to determine what products and documents need to have barcodes. You should check your printers early during the implementation process too, in order to make sure they print barcodes. Several companies use laser printers that do not produce a barcode. There are a few options for solving this problem, such as pur-chasing SIM chips for each printer. In our case, we were lucky enough to have printers that produced bar-codes.

One task that is tedious is the label-

ing of bins and materials. The prob-lem gets compounded if you use the batch management or handling units within your operations. It should be noted that you do not have to have everything barcoded to go-live with RF. Although not optimal, you could type in the material part number in the RF device instead of scanning a barcode. I am highlighting this issue

Figure 1: A Typical Network Setup for SAPConsole

SAP Console and Telnet Server

SAP Console and Telnet Server

ApplicationServer

ApplicationServer

ApplicationServer

DatabaseServer

The SAP Network located atthe Corporate Data Center

The SAPConsole servers are deployed

at the warehouse or plant level

RFDevices

WANOR

LOCALWhat is a typical network setup for SAPConsole?

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because you may find that every-thing you primarily use is barcoded, and you may want to go-live with RF to start realizing some benefits while labeling the balance of the products and bins in parallel.

SAP RF ConfirgurationFrom a configuration standpoint,

there are just a few items that need to be completed to start using the RF functionality. For this implementa-tion, we had 14 items that needed to be changed in configuration, with about half of the items being new configuration items and the rest being reconfiguring existing functionality.

Figure 2 shows the items we con-figured to light up the SAPConsole functionality. All of these items are located in the implementation guide under Logistics Execution/Mobile Data Entry.

The following bullet points note the key factors to consider during the RF configuration process:

• Defining RF queues to feed clerk work RF queues allow you to send trans-fer orders to the RF units. Upon completing a transfer order, the clerk would have another transfer order show up on the RF device to continue working and would not have to walk back to a basket to get the transfer order to work on. In theory, this is a great idea. In practice, not too many compa-nies have implemented this fea-ture. Reasons vary, but the com-mon thread seemed to be that the logic on how SAP distributes the transfer orders was not sufficient, or the company preferred to have the transfer order assigned in a manual fashion for various busi-ness reasons. The 4.7 functionality of Task and Resource Management (TMW) may be a possible solution for this problem of dividing the work. Examples of queues could be “picking2” and “putaway 4”. You can send transfer orders based on the movement type and storage

type to a specific queue, and have a specific clerk responsible for the work in the queue. For this distri-bution company, we decided to just have one queue and not feed the transfer orders automatically.

• Identify which warehouse users will be able to log on to a RF unit. Even though each clerk may have an SAP user name already, there is a specific table that needs to be populated in order for users to use the SAPConsole functionality. This table also assigns the user to a work queue, defines the screen size of the RF unit, and the initial transaction they will arrive at once logged in. This is a pretty straightforward task of gathering names and enter-ing in a table. However, it becomes a bit of a repetitive overhead activ-ity if you have new clerks arriving frequently in the warehouse that need to use the RF devices. The owner of this table in your orga-nization will tell you it is not hard work but more of a hassle to set up

the data, create a transport, and move it through to your production environment.

On top of that, you may have to coordinate with the security team in order to get a new SAP user name added first. I have seen this issue handled differ-ently on the RF projects I have been on. There was one high volume company that created a custom program that would just add a new name directly in their production environment so they could bypass the usual configuration path. Anoth-er company decided to user generic names, so if one person left and another was added, they could keep using the same name such as PICK03.

Figure 2: Mobile Data Configuration

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need to process an RF transaction on the desktop. For example, if all the RF devices are in use and you need to process a document, the user could go to the desktop to continue with the work.

• Verification fields to scan within the RF transactions Verification fields are fields in the RF transaction that the clerk needs to scan to complete the transaction. For example, when picking the material, you may want the clerk to actually scan the material on the product to ensure that the product she is pulling is indeed what the transfer order defines. If she does not scan the material or scans the wrong material, the transaction will not process and will alert the clerk to complete this verification process correctly. The verification fields are another feature to help keep your inventory accurate, by placing product into the correct bin and lowering deliveries of the wrong product.

You can configure different veri-fication fields for different transac-tions. The verification fields could be a bin, quantity, material, or stor-age unit on either the source bin or the destination bin. You create a verification profile for what you want to check in the RF transaction and assign the verification profile to goods movements.

One large company that I imple-mented RF for wanted to make sure their clerks were pulling product from the right bin instead of pulling the product from a more convenient bin. So they made the bin field a verification field on the picking pro-cess. However, that would not nec-essarily stop the clerk from entering the intended bin manually in the gun to complete the transaction. So to further ensure the correct bin was visited, the bin verification field in the bin master was set to a unique

check digit number that was barcod-ed on the bin label. As a result, the clerk would have to enter this unique number in order to complete the bin verification. The check digit number was only in barcode format and not human readable making a tight veri-fication process.

The distribution company we were working with made both the put-away and picking processes have a bin verification and material veri-fication. We let the bin verification value be equal to the bin number for two reasons. First, we already had labels with the bin number barcoded on them, and we would have had to relabel all the items in the warehouse. Second, most items only existed in one or two bins, which made the like-lihood of pulling stock from another bin very small.

• Application Identifier functionality

Most companies do not use the Application Identifier functionality, but it was used at the distribution company. This also caused more

• Define the layout of the menus on the RF devices When clerks log on to the RF device, they will encounter a menu of transactions to choose from. This menu is fully configurable and can be grouped in terms of how you see it being used most logically for your company. Typically, there are menu categories of the inbound process, the outbound process, cycle counting, and internal ware-house activities such as bin-to-bin and stock look-up transactions. Most companies make one menu for all warehouse clerks to use, but you could make a specific menu for warehouse functions. This may useful in the instance a clerk only does three transactions of pick-ing, stock look-up, and bin-to-bin. Instead of making the clerk navi-gate through menus and submenus to get to his transactions, you may just want his RF menus to pop-up only with his heavily used transac-tion on the first screen to facilitate more productivity. Again, you can assign different menus to different users. For this implementation, we chose one RF menu due to the fact that the warehouse clerks were crossed-trained to do other roles and we wanted one consistent look for everyone.

Figure 3 shows what an RF menu could look like. This figure shows both the menu from the RF device and from the SAPGUI. It is important to note that the transaction you use on the RF device can also be used on the SAP desktop you are used to now. To access the RF logon from the SAP desktop, use transaction LM00. It is convenient to use this transaction when you are developing and testing. You could even use the RF transac-tion on the desktop in the ware-house in a production environment. Of course, you would not want to model your process around using the RF transaction on the SAP desktop, but there are occasions when you do

Figure 3: SAP Menu on Desktop

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confusion than any other issue. Application identifiers define the type and structure of the barcode value you are reading. The best way to explain is to give an exam-ple. You may scan a barcode and get a return of the value of M4353. The prefix M may represent that the item is a material. The actual materials number is 4353. This ensures that the item you are scan-ning is the correct object.

The distribution company I worked with used Application Identifier func-tionality for material, quantities, and the batch number.

When it’s fully operational, this concept is pretty neat, but it takes some coordination. First, you have to get the vendors to label the bar-code with the prefix. Most likely, they are barcoding your product, but they are not putting on prefixes for materials, quantities, and batches. Also, your customers may not want those prefixes on the barcodes, so you may have to relabel the barcodes when shipping out.

There is a universal standard for the Application Identifier function-ality, but it was not followed in this scenario, since the concept was put into practice at the distribution com-pany a few years ago.

Another problem was that we had to integrate the Application Identi-fier functionality to the custom RF transactions we did. There were some function modules we had to insert into our library bin-to-bin and warehouse bin look-up transactions. This was not a huge undertaking, but again, it highlights what was men-tioned earlier about customer trans-actions. This may seem like it is just a simple customer program, but there always seems to be new requirements that have to be integrated into the custom code.

following issues on this distribution company’s project.

• Usage of application identifiers – This is standard functionality within SAP, but we had to integrate the functionality into some of the custom transactions we created. Also, the vendors sending material with barcodes didn’t always com-ply with the nomenclature defined (e.g., a prefix in front of the mate-rial number). The standard func-tionality in the RF transactions only allows for one character length for the verification. The users did not like the small amount of allo-cated space and wanted the field to be expanded. We had to create a screen variant to solve this prob-lem.

SAPtip: Unless there is some com-pelling reason to use Application Identifiers (e.g., your largest cus-tomer requires it), do not use the functionality.

• Usage of fields for unintended purpose – The distribution com-pany used a field on the transfer order to represent a batch number, although they did not really use SAP batch management. This caused a problem in automating the con-version of transfer requirements to transfer orders, since we needed to update this field, but the field they were populating was not included on the transfer requirement, and it was being entered manually on the transfer order. As a result, we took the standard transfer requirement to transfer order conversion pro-gram RLAUTA10, copied it, and modified some logic to populate a few fields that were not being used for their intended purpose.

SAPtip: Do a cost/benefit analysis of correcting the process to use the proper fields. Sometimes it is better to continue with the non-standard usage of the field and work around

ImprovementsAs a result of the RF implementa-

tion in the warehouse, the distribu-tion company gained the following improvements:

• No more faxing of inbound deliv-eries from purchasing to ware-house, since information will be available on the RF gun.

• Real-time receiving; no double-handling of receiving paperwork; streamlined process to remove one person from process.

• Directed putaway instead of clerk searching for bin in warehouse; directed putaway strategy facili-tates faster picking cycles.

• Optimized picking strategy to minimize clerk travel time to bins.

• Real-time picking TO confir-mation; scanning verification of correct product against order; no double handling of pick-ing paperwork; streamlined to remove one person from process; increased inventory accuracy leading to less research time to fix problems; no printing of TOs.

• Streamlined PGI process with background job to remove 50% of one person from process.

• Real-time bin-to-bin moves; no manual moves on the computer; streamlined process.

• Cycle counts data entry can be completed real-time, and we were able to removing a data entry person from the process.

Problems and “SAPtips” on How to Avoid Them

Each implementation is different, and as a result, each has its own set of problems. We encountered the

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any downstream problems. You will have to decide for each case. In this case, it did not make sense for us to turn on batch management and increase the complexity of inven-tory and warehouse moves.

• Relabel warehouse bins – New labels were being applied to the bins since some of the old labels were damaged or too small. This problem fit more into the “took more time than we estimated” cat-egory. This was just a tedious pro-cess. Some bins were bulk location where we wanted to hang a bin number from the warehouse ceil-ing, so this took effort to hang the bin labels.

SAPtip: Be cognizant that labeling bins and products is not a trivial task. Do a quick time study of how long it takes to do a row and then allocated the proper time for this activity.

• Update of material master and bin data – The actual conversion effort in itself was straightforward. However, team members debating on what constitutes a fast-mov-ing material, and the best way to segregate the bins into 7 different sections proved to be a time-con-suming task.

SAPtip: Set up a work session with the appropriate team members (e.g., warehouse clerks, warehouse manager, inventory manager) that can access SAP data such as inven-tory turns during the meeting. Make quick but educated decisions and update the data. You can and will tweak the master data as your business evolves.

ROI DetailsA key consideration in any SAP

install is the all-important “return on investment.”

Following are the basic cost and improvements numbers:

Crunching the numbers, you can see it will take about 12 months to get our ROI for this project. Now, you can argue several factors on both cost and benefits were not included to arrive at this ROI number, but at a high level, you can see the payback comes sooner than later. One of the better benefits not calculated here is for the organization to focus more on the value-added tasks instead of double-handling paperwork or try-ing to find where a data entry error occurred.

These ROI numbers are a great story to support the implementation of RF in a warehouse. Needless to say, each warehouse is different and the benefits will vary. One thing, however, is certain: RF has real and immediate benefits that are easier to validate than other logistic initiatives such as APO.

ConclusionImplementing RF after you have

been live and are stable with the SAP Warehouse Module is pretty straight-forward, with a nice upside finan-cially and operationally. Companies always talk about getting the stan-dard SAP functionality running and then automating the processes. RF is one of those bells and whistles of functionality that you can now take advantage of. The trick is to keep it simple by using SAPConsole and use as many standard RF transactions as possible. If you stay on the straight and narrow path and avoid biting off more than you can handle, your com-pany can leverage SAP to streamline your warehouse operations and get a nice return on your investment with minimal effort and little risk.

John Lenhardt, Tranzation. John specializes in warehousing, logistics, and supply chain consulting to clients in consumer products, retail, distribu-tion, and manufacturing industries. He has 11 years SAP implementation experience and has served in various positions onprojects, from consultant to project manger. He has worked with over 50 SAP companies on their implementations. John spent 4 years at SAP America as a Platinum consul-tant before branching off and found-ing Tranzation. Tranzation provides personalized SAP solutions for com-panies committed to improving their business. John can be reached at [email protected] ≈

Cost:

SAPConsole 0

SAPConsole servers (2) $8,000

Georgia software $1,100

Access points $22,000

Guns (15) $54,000

Label printers (2) $5,000

Labels $1,000

SAP RF Consulting $40,000

SAP Development $15,000

Total Cost $146,000

Daily Savings: $585

per day (39 hours * $15)

Annual Savings $ 146,250

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