New -- now shipping! Learn how to streamline your essential warehouse processes to improve cost control and productivity. With this book, discover how to examine all of your warehouse processes from incoming products to shipment completion, and review the challenges and opportunities at each key processing point from both technical and operational perspectives. Loaded with success stories, best practices, and explanations of the tools offered in the warehouse management functionality of SAP ERP, this comprehensive reference provides you with the knowledge you need to achieve results with minimal time and expense.

Basic Warehouse Management Concepts
Discover the various components of warehouse operations and how they can be used to help your business run smoothly.

SAP Functionality for Warehouse Management
Learn about the tools and functions that can help you optimize your warehouse processes.

Warehouse Processes with SAP
Find out how to use SAP ERP effectively to manage your warehouse operations, and lead your company to tangible benefits.

Warehouse Data and Reporting
Explore the warehouse activity monitor and other key reports to help you identify and correct problems in the warehouse efficiently.

Real-World Examples and Tips
Use the expert advice and insight provided throughout to help you with your own warehouse operations.

Highlights

• Inbound Execution
• Managed Putaway & Quality Inspection
• Internal Warehousing
• Effective Picking
• Storage Unit Management
• Shipment Completion
• Returns Processing
• Physical Inventory
• Cross Docking
• Hazardous Materials
• Radio Frequency & RFID
• Warehouse Data & Reporting

About the Author(s)

Martin Murray has worked with SAP since 1991. In addition to the best-selling SAP MM — Functionality and Technical Configuration, he is the author of SAP Warehouse Management: Functionality and Technical Configuration and Discover Logistics with SAP ERP, also from SAP PRESS.

Table of Contents

... Acknowledgments ... 15

... Preface ... 17

1 ... Introduction ... 21
1.1 ... The Importance of Warehouse Operations ... 21
1.1.1 ... Transport Consolidation ... 22
1.1.2 ... Product Mixing ... 22
1.1.3 ... Process Improvements ... 24
1.2 ... Understanding Warehouse Management in SAP ERP ... 24
1.2.1 ... Company Code ... 25
1.2.2 ... Plant ... 27
1.2.3 ... Storage Location ... 29
1.2.4 ... Warehouse ... 30
1.2.5 ... Storage Type ... 32
1.2.6 ... Storage Section ... 33
1.2.7 ... Storage Bin ... 34
1.3 ... Understanding the Physical Warehouse ... 35
1.3.1 ... Receiving, Shipping, and Storage ... 35
1.3.2 ... Inventory Accuracy ... 36
1.3.3 ... Value-Added Processes ... 36
1.3.4 ... Warehouse Safety ... 36
1.3.5 ... Delivery Process ... 36
1.3.6 ... Inspection and Quality Process ... 37
1.4 ... Defining the Warehouse Layout ... 37
1.4.1 ... Design Principles for Warehouse Layout ... 37
1.4.2 ... Warehouse Layout Objectives ... 39
1.5 ... How This Book Is Organized ... 40
1.6 ... Summary ... 40

2 ... Effective Inbound Execution ... 41
2.1 ... Inbound Delivery Process ... 41
2.1.1 ... Create a Purchase Order or Scheduling Agreement ... 42
2.1.2 ... Determine the Goods Receiving Point ... 42
2.1.3 ... Create a Manual Inbound Delivery for a Purchase Order ... 43
2.1.4 ... Create an Inbound Delivery for a Purchase Order Using EDI ... 45
2.1.5 ... Repacking the Inbound Delivery ... 51
2.1.6 ... Automatic Putaway for Inbound Deliveries ... 51
2.2 ... Packing Items for Inbound Deliveries ... 57
2.2.1 ... Using Handling Units ... 57
2.2.2 ... Creating a Handling Unit ... 58
2.2.3 ... Packing Materials in a Handling Unit ... 59
2.2.4 ... Nesting Handling Units ... 60
2.2.5 ... Unpacking a Handling Unit ... 62
2.3 ... Inbound Delivery Monitor ... 63
2.3.1 ... Basic Functionality of the Inbound Delivery Monitor ... 63
2.3.2 ... List Inbound Deliveries ... 65
2.4 ... Business Examples – Efficient Inbound Deliveries ... 66
2.4.1 ... Purchasing Process ... 67
2.4.2 ... Inbound Deliveries ... 67
2.4.3 ... Automatic Putaway ... 68
2.4.4 ... Use of Handling Units ... 68
2.5 ... Summary ... 69

3 ... Enhancing Your Managed Putaway and Quality Inspection Processes ... 71
3.1 ... Managing the Putaway Process ... 71
3.1.1 ... Putaway Strategies ... 72
3.1.2 ... Fixed Bin Storage Strategy ... 72
3.1.3 ... Open Storage Strategy ... 74
3.1.4 ... Next Empty Storage Bin Strategy ... 76
3.1.5 ... Addition to Existing Stock Strategy ... 77
3.1.6 ... Using the Storage Type Search ... 81
3.1.7 ... Storage Section Search ... 85
3.2 ... Quality Inspection in the Warehouse ... 87
3.2.1 ... Interface Warehouse Management to Quality Management ... 87
3.2.2 ... Inspection Lots ... 89
3.2.3 ... Usage Decision ... 90
3.2.4 ... Finding Inspection Lots in the Warehouse ... 91
3.3 ... Business Example – Effective Putaway Strategies ... 93
3.3.1 ... Fixed Bin Storage ... 93
3.3.2 ... Open Storage ... 94
3.3.3 ... Next Empty Storage Bin ... 94
3.3.4 ... Addition to Existing Stock ... 95
3.4 ... Summary ... 95

4 ... Improving Internal Warehouse Operations ... 97
4.1 ... Materials Movement Concepts ... 98
4.1.1 ... Integration Between Inventory Management and Warehouse Management in SAP ERP ... 98
4.1.2 ... Interim Storage Types ... 99
4.1.3 ... Interim Storage Bins ... 100
4.1.4 ... Stock Comparison ... 105
4.2 ... Goods Movements in the Warehouse ... 107
4.2.1 ... Transfer Requirement ... 107
4.2.2 ... Transfer Order ... 111
4.3 ... Posting Changes in the Warehouse ... 117
4.3.1 ... Reviewing Posting Changes ... 118
4.3.2 ... Automatic Processing of Posting Change Notices ... 119
4.4 ... Business Examples – Efficient Internal Movements ... 120
4.4.1 ... Materials Movement Concepts ... 120
4.4.2 ... Goods Movements ... 122
4.4.3 ... Posting Changes ... 123
4.5 ... Summary ... 123

5 ... Effective Picking Operations and Storage Unit Management ... 125
5.1 ... Defining Picking Operations ... 126
5.1.1 ... First In, First Out (FIFO) ... 126
5.1.2 ... Picking Using Stringent FIFO ... 127
5.1.3 ... Last In, First Out (LIFO) ... 129
5.1.4 ... Partial Quantity Picking ... 130
5.1.5 ... Picking According to Quantity ... 132
5.1.6 ... Picking by Shelf Life Expiration Date ... 134
5.1.7 ... Fixed Bin Picking Strategy ... 136
5.2 ... Business Example – Effective Picking Strategies ... 137
5.2.1 ... FIFO ... 138
5.2.2 ... Partial Quantity Picking ... 138
5.2.3 ... Picking According to Quantity ... 139
5.2.4 ... Picking by Shelf Life Expiration Date ... 139
5.3 ... Using Storage Unit Management ... 140
5.3.1 ... Activate Storage Unit Management ... 140
5.3.2 ... Activate Storage Unit Management for a Storage Type ... 141
5.3.3 ... Storage Unit Type ... 142
5.3.4 ... Storage Unit Record ... 143
5.4 ... Business Examples – Benefits of Storage Unit Management ... 146
5.5 ... Summary ... 147

6 ... Efficient Shipment Completion ... 149
6.1 ... Defining Your Shipment Completion Process ... 149
6.1.1 ... Creating an Outbound Delivery ... 149
6.1.2 ... Review an Outbound Delivery ... 152
6.1.3 ... Outbound Delivery Monitor ... 155
6.1.4 ... Grouping Outbound Deliveries ... 158
6.2 ... Adding Value to Shipment Completion ... 160
6.2.1 ... Creation of Transfer Orders for Outbound Deliveries ... 160
6.2.2 ... Wave Picking ... 161
6.3 ... Auditing, Reporting, and Clean-Up Activities ... 168
6.3.1 ... Incompletion Log ... 169
6.3.2 ... Shipping Output ... 170
6.3.3 ... Creating a Transfer Order for a Cancelled Delivery ... 171
6.4 ... Business Example – Efficient Shipment Procedures ... 172
6.4.1 ... Outbound Delivery Monitor ... 173
6.4.2 ... Wave Picking ... 173
6.4.3 ... Wave Pick Monitor ... 175
6.5 ... Summary ... 175

7 ... Maximizing Returns Processing ... 177
7.1 ... Introduction to Returns Processing ... 177
7.1.1 ... Notification of a Return ... 178
7.1.2 ... Receipt of Return at the Warehouse ... 179
7.1.3 ... Placing Returns in the Warehouse ... 180
7.2 ... Successful Returns Processing ... 180
7.2.1 ... Return Order ... 181
7.2.2 ... Return Delivery ... 182
7.2.3 ... Outbound Delivery Monitor ... 183
7.2.4 ... Post Goods Issue ... 185
7.2.5 ... Return Materials in the Warehouse ... 185
7.2.6 ... Transfer Requirement for Returned Materials ... 186
7.2.7 ... Transfer Order for Returned Material ... 187
7.2.8 ... Review of Warehouse Inventory ... 189
7.2.9 ... Transfer Materials from Returns to Own Stock ... 189
7.3 ... Business Example – Benefits of Returns Processing ... 191
7.4 ... Summary ... 194

8 ... Efficient Physical Inventory ... 195
8.1 ... Cycle Counting ... 195
8.1.1 ... Benefits of Cycle Counting ... 196
8.1.2 ... ABC Method of Cycle Counting ... 196
8.1.3 ... Configuration for ABC Cycle Counting ... 196
8.1.4 ... Cycle Counting Documents ... 201
8.1.5 ... Printing the Count Document ... 202
8.1.6 ... Enter the Cycle Count ... 203
8.1.7 ... Recounts and Clearing Differences ... 203
8.1.8 ... Understanding the Error ... 205
8.2 ... Continuous Inventory ... 205
8.2.1 ... Configuration for Continuous Inventory ... 205
8.2.2 ... Creating a Continuous Inventory Count Document ... 206
8.2.3 ... Entering a Count for Continuous Inventory ... 208
8.3 ... Business Example – Benefits of Physical Inventory ... 209
8.3.1 ... Cycle Counting ... 209
8.3.2 ... Continuous Inventory ... 210
8.4 ... Summary ... 211

9 ... Successful Cross-Docking ... 213
9.1 ... Defining the Cross-Docking Process ... 214
9.1.1 ... Types of Cross Docking ... 214
9.1.2 ... Materials Suitable for Successful Cross-Docking ... 215
9.1.3 ... Planned Cross Docking ... 215
9.1.4 ... Cross-Docking Configuration ... 216
9.1.5 ... Cross-Docking Decisions ... 217
9.1.6 ... Cross-Docking Monitor ... 217
9.2 ... Cross-Docking Movements ... 220
9.2.1 ... One-Step Cross-Docking ... 221
9.2.2 ... Two-Step Cross-Docking ... 223
9.3 ... Business Example – Effective Cross-Docking ... 227
9.3.1 ... One-Step Cross-Docking ... 227
9.3.2 ... Two-Step Cross-Docking ... 228
9.4 ... Summary ... 230

10 ... Working with Hazardous Materials ... 231
10.1 ... Introduction to Hazardous Materials ... 232
10.1.1 ... Configuration for Hazardous Materials ... 232
10.2 ... Hazardous Materials in the Warehouse ... 235
10.2.1 ... Activating the Functionality for Hazardous Materials ... 235
10.2.2 ... Hazardous Material Record ... 239
10.2.3 ... Assigning the Hazardous Material to a Material Master Record ... 240
10.2.4 ... List of Hazardous Materials ... 241
10.2.5 ... Fire Department Inventory List ... 241
10.2.6 ... Check Goods Storage ... 242
10.2.7 ... Hazardous Substance List ... 243
10.3 ... Business Example – Successful Handling of Hazardous Materials ... 244
10.3.1 ... Hazardous Material Records ... 244
10.3.2 ... Hazardous Material Reporting ... 245
10.4 ... Summary ... 246

11 ... Using Radio Frequency Identification Effectively ... 247
11.1 ... Introduction to RF and RFID ... 247
11.1.1 ... RF Devices ... 248
11.1.2 ... Bar Code Functionality ... 248
11.1.3 ... RFID ... 250
11.1.4 ... Differences Between RF and RFID ... 251
11.2 ... How You Can Use RF in Your Warehouse ... 251
11.2.1 ... GUI Devices ... 252
11.2.2 ... Character-Based Devices ... 252
11.2.3 ... SAPConsole ... 252
11.2.4 ... RF Monitor ... 253
11.3 ... How You Can Use RFID in Your Warehouse ... 254
11.3.1 ... Supported Functions in SAP AII ... 255
11.3.2 ... Outbound Processing (Slap and Ship) ... 256
11.3.3 ... Flexible Delivery Processing ... 256
11.3.4 ... Returnable Transport Items (RTI) Processing ... 256
11.4 ... Business Example – Successful RFID Processes ... 257
11.5 ... Summary ... 259

12 ... Effective Use of Warehouse Data and Reporting ... 261
12.1 ... Warehouse Activity Monitor ... 261
12.1.1 ... Configuration for the Warehouse Activity Monitor ... 262
12.1.2 ... Using the Warehouse Activity Monitor ... 266
12.2 ... Key Warehouse Reports ... 270
12.2.1 ... List of Empty Storage Bins ... 270
12.2.2 ... Bin Status Report ... 271
12.2.3 ... Capacity Load Utilization ... 273
12.2.4 ... Inventory Status ... 274
12.3 ... Business Examples – Using Warehouse Reports Effectively ... 276
12.4 ... Summary ... 277

13 ... Conclusion ... 279
13.1 ... Lessons Learned from This Book ... 279
13.2 ... Applying What You’ve Learned ... 282

A ... Glossary of Terms ... 285

B ... Bibliography ... 291

C ... The Author ... 293

... Index ... 295