Martin Murray

Discover Logistics with SAP®

SAP ERP and SAP SCM

Bonn � Boston

Contents at a Glance

PART I: Procurement and Logistics Execution

1 Introduction to Logistics with SAP ....................................... 27

2 Procurement ........................................................................ 41

3 Inventory Management ........................................................ 79

4 Warehouse Management ..................................................... 99

5 Inbound and Outbound Logistics ......................................... 123

PART II: Product Development and Manufacturing

6 Product Planning ................................................................. 141

7 Manufacturing Operations ................................................... 183

8 Plant Maintenance ............................................................... 209

9 Quality Management ........................................................... 235

PART III: Sales and Service

10 Sales Order Management ..................................................... 261

11 Customer Service ................................................................. 291

12 Transportation Management ................................................ 319

PART IV: Implementation and New Technologies

13 Implementation ................................................................... 343

14 New Technologies and Conclusion ....................................... 367

Appendices

A Bibliography ........................................................................ 391

B Glossary ............................................................................... 393

C The Author .......................................................................... 403

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Contents

Preface ......................................................................................... 17Acknowledgments ....................................................................... 23

PART I: Procurement and Logistics Execution

1 Introduction to Logistics with SAP ......................... 27

Origins of SAP ...................................................................... 27SAP and Logistics .................................................................. 30Logistics Functionality ........................................................... 34

Procurement and Logistics Execution .............................. 34Product Development and Manufacturing ...................... 35Sales and Service ............................................................ 37

Conclusion ............................................................................ 39

2 Procurement ............................................................ 41

SAP Organization Structure ................................................... 41Creating the Client Landscape ........................................ 42Company Code ............................................................... 43Plant .............................................................................. 44Storage Location ............................................................ 45Warehouse ..................................................................... 46Storage Type .................................................................. 47Storage Section .............................................................. 48Storage Bin ..................................................................... 48

Purchasing Organization Structure ........................................ 48Purchasing Organization ................................................. 49Purchasing Group ........................................................... 52

Purchasing Process ............................................................... 53Purchasing Best Practices ................................................ 53Purchase Requisition ...................................................... 55Request for Quotation (RFQ) .......................................... 57Quotation ...................................................................... 58Purchase Order .............................................................. 58

Accounts Payable and Invoice Verification ............................ 61

Contents

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Three-way Match ........................................................... 62Evaluated Receipt Settlement ......................................... 63

SAP Supply Network Collaboration ....................................... 65Master Data ................................................................... 65Demand ......................................................................... 66Purchase Order Collaboration ......................................... 70Supply Network Inventory (SNI) ..................................... 71Demand Collaboration ................................................... 72Invoice Collaboration ..................................................... 72

Ariba .................................................................................... 73Buyer Solutions .............................................................. 74Seller Solutions ............................................................... 75Financial Supply Chain Management .............................. 76

Summary .............................................................................. 76

3 Inventory Management ............................................ 79

Plant Structure ...................................................................... 80Plant .............................................................................. 80Storage Location ............................................................ 82

Goods Movements ............................................................... 83Goods Receipt ................................................................ 84Goods Issue .................................................................... 84Returns .......................................................................... 85Reservations ................................................................... 86Stock Transfers and Transfer Postings ............................. 87

Physical Inventory ................................................................. 93Physical Inventory Procedures ........................................ 93Preparing for the Physical Count ..................................... 94Performing the Physical Count ........................................ 95Count Discrepancies ....................................................... 95Completing the Physical Inventory .................................. 96

Summary .............................................................................. 97

4 Warehouse Management ......................................... 99

Warehouse Structure ............................................................ 100Warehouse ..................................................................... 101Storage Types ................................................................. 102

Contents

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Storage Section .............................................................. 103Storage Bin ..................................................................... 104Quant ............................................................................. 105

Warehouse Movements ........................................................ 107Movements Triggered by SAP Inventory Management .... 108Transfer Requirement ..................................................... 108Transfer Order ................................................................ 110Printing Transfer Orders ................................................. 113

SAP Extended Warehouse Management ............................... 115Organizational Structure ................................................. 116Documents ..................................................................... 119Warehouse Processes ..................................................... 119

Summary .............................................................................. 121

5 Inbound and Outbound Logistics ............................ 123

Inbound Logistics ................................................................. 124Shipping Notification ...................................................... 124Manually Created Inbound Deliveries ............................. 125Delivery Monitor ............................................................ 126Goods Receipt ................................................................ 127

Outbound Logistics ............................................................... 131Outbound Delivery ......................................................... 131Picking ........................................................................... 132Packing Using Handling Units ......................................... 134Goods Issue .................................................................... 134Proof of Delivery ............................................................ 136

Summary .............................................................................. 136

PART II: Product Development and Manufacturing

6 Product Planning ..................................................... 141

Sales and Operations Planning .............................................. 142Standard Sales and Operations Planning ......................... 142Flexible Sales and Operations Planning ........................... 144Master Data in Sales and Operations Planning ................ 144Reporting ....................................................................... 145

Contents

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Forecasting and Replenishment ............................................ 149Integration with SAP Retail ............................................ 149Demand Influencing Factors ........................................... 149Forecasting and Replenishment Processor ...................... 151Order Proposal Management .......................................... 151

Demand Management in SAP ERP ........................................ 152Make-to-stock Strategy .................................................. 153Make-to-order Strategy .................................................. 154Strategy for Configurable Materials ................................. 155Planned Independent Requirements ............................... 156Customer Requirements ................................................. 157

SAP Advanced Planning and Optimization ............................ 159Supply Chain Model ....................................................... 159Supply Chain Cockpit ..................................................... 160Supply Chain Collaboration ............................................ 162Service Parts Planning ..................................................... 163Transportation Management .......................................... 164

Supply Network Planning ..................................................... 165Supply Network Planning Process ................................... 165Safety Stock Planning ..................................................... 167Source Determination .................................................... 168

Demand Planning in APO ..................................................... 169Demand Planning Process .............................................. 169Characteristics-based Forecasting ................................... 172Characteristics-dependent Planning ................................ 173Customer Forecast Management .................................... 173

Materials Requirements Planning .......................................... 173Planning with MRP ......................................................... 174Executing the Planning Run ............................................ 174

Global Available-to-Promise ................................................. 177Product Availability Check .............................................. 177Product Allocation ......................................................... 178Forecast ......................................................................... 179Rules-based ATP Check .................................................. 179Multi-item Single Delivery .............................................. 179Production Capable-to-Promise ...................................... 179Production Multi-level ATP Check .................................. 180

Summary .............................................................................. 180

Contents

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7 Manufacturing Operations ...................................... 183

Manufacturing Structure ....................................................... 184Work Centers ................................................................. 184Bill of Materials .............................................................. 188Routings ......................................................................... 190Routings for Configurable Materials ................................ 191Production Resources and Tools ..................................... 192

Shop Floor Control ............................................................... 193Production Order ........................................................... 193Confirming a Production Order ....................................... 198Production Order Settlement ......................................... 200Printing Shop Papers ...................................................... 201Order Information System .............................................. 202

Product Costing .................................................................... 203Cost Estimate with a Quantity Structure ......................... 204Cost Estimate without a Quantity Structure .................... 205

Summary .............................................................................. 206

8 Plant Maintenance ................................................... 209

Maintenance Organization Structure ..................................... 210Functional Location ........................................................ 210Equipment ..................................................................... 213

Preventive Maintenance ....................................................... 218Maintenance Task List .................................................... 218Maintenance Plans ......................................................... 221Maintenance Scheduling ................................................ 223

Maintenance Processing ....................................................... 226Maintenance Notifications .............................................. 226Converting Notifications to Maintenance Orders ............ 229Maintenance Orders ....................................................... 229

Summary .............................................................................. 233

9 Quality Management ............................................... 235

Quality Management Structure ............................................. 237Catalog ........................................................................... 237Code Groups .................................................................. 237

Contents

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Code .............................................................................. 237Selected Set ................................................................... 238Inspection Characteristic ................................................ 239

Quality Planning ................................................................... 239Material Specification ..................................................... 240Inspection Plan ............................................................... 241

Quality Notifications ............................................................. 243Customer Complaint ....................................................... 243Complaint against a Vendor ............................................ 244Internal Problem Report ................................................. 245Notification Monitoring .................................................. 246

Quality Inspections ............................................................... 247Inspection Lot ................................................................ 248Recording Results ........................................................... 250Defects Recording .......................................................... 252Usage Decision ............................................................... 252Quality Certificates ......................................................... 254Reporting ....................................................................... 255

Summary .............................................................................. 258

PART III: Sales and Service

10 Sales Order Management ........................................ 261

Sales Structure ...................................................................... 262Sales Organization .......................................................... 263Distribution Channel ...................................................... 264Sales Division ................................................................. 265Sales Office .................................................................... 266Sales Group .................................................................... 267

Sales Ordering ...................................................................... 268Customer ....................................................................... 268Customer Inquiry ............................................................ 271Customer Quotation ....................................................... 272Sales Order ..................................................................... 273Scheduling Agreement ................................................... 274Contract ......................................................................... 275Credit Memo .................................................................. 279

Contents

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Shipping Processes ............................................................... 280Packing .......................................................................... 280Outbound Delivery ......................................................... 281Goods Issue .................................................................... 282

Billing Function .................................................................... 282Billing Process ................................................................ 282Creating Billing Documents ............................................ 284Reporting ....................................................................... 285

Summary .............................................................................. 288

11 Customer Service ..................................................... 291

Service Structure ................................................................... 293Material ......................................................................... 293Equipment ..................................................................... 294Functional Location ........................................................ 295Installed Base ................................................................. 296

Service Agreement ................................................................ 297Service Contract ............................................................. 298Warranty ........................................................................ 302

Service Processing ................................................................. 304Service Notification ........................................................ 305Activity Report ............................................................... 306Service Order ................................................................. 307Repair Order .................................................................. 308Confirmation .................................................................. 311Billing ............................................................................. 312

Customer Relationship Management .................................... 313Installation Management ................................................ 313Service Contract ............................................................. 314Service Plan .................................................................... 314Service Order Management ............................................ 315Complaints and Returns Management ............................ 316

Summary .............................................................................. 317

12 Transportation Management ................................... 319

Transportation Planning ........................................................ 320Transportation Planning Point ........................................ 321Shipping Type ................................................................ 321

Contents

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Routes and Stages .......................................................... 322Forwarding Agent ........................................................... 324Shipment ........................................................................ 325Transportation Planning List ........................................... 328Shipment Status Monitor ................................................ 329

Freight Costs ......................................................................... 330Modes of Transportation ................................................ 330Shipping Rates ............................................................... 333Shipping Costs ................................................................ 335

Transportation Execution ...................................................... 336Check-in List .................................................................. 336Shipment Completion List .............................................. 337Posting Goods Issue ....................................................... 338

Summary .............................................................................. 339

PART IV: Implementation and New Technologies

13 Implementation ........................................................ 343

SAP ERP Implementation ...................................................... 343Why Implement SAP? ..................................................... 344Implementation Methodologies ..................................... 345ASAP Methodology ........................................................ 346Project Preparation ......................................................... 348Business Blueprint .......................................................... 350Realization ..................................................................... 352Final Preparation ............................................................ 353Go-live and Support ....................................................... 354Operate .......................................................................... 356

Logistics Rapid Deployment Solutions (RDS) ......................... 356Benefits of RDS .............................................................. 357Implementing an RDS ..................................................... 357

Total Cost of Ownership ....................................................... 359History of Total Cost of Ownership ................................. 359Direct and Indirect Costs ................................................ 359Calculating the Total Cost of Ownership ......................... 361

Return on Investment ........................................................... 362Objective Measurements ................................................ 363

Contents

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Subjective Measurements ............................................... 364Summary .............................................................................. 366

14 New Technologies and Conclusion .......................... 367

SAP NetWeaver .................................................................... 367Integration ..................................................................... 368Key Benefits ................................................................... 368

Service-Oriented Architecture ............................................... 369Services and SOA ........................................................... 369SOA with Enterprises ...................................................... 370Enterprise Services Bundles ............................................ 371

SAP Supplier Relationship Management ............................... 372Core SRM Functionality .................................................. 373Supplier Collaboration .................................................... 374Supplier Base Management ............................................ 374

SAP Product Lifecycle Management ...................................... 374History of PLM ............................................................... 374Benefits of SAP PLM ....................................................... 375PLM Integration ............................................................. 375SAP PLM Functionality ................................................... 375

Mobility and Logistics ........................................................... 377SAP Mobile Platform ...................................................... 377Mobile Platform Solution ............................................... 378

SAP HANA ............................................................................ 379Real-Time Analytics ........................................................ 379Real-Time Applications ................................................... 380Advantages of SAP HANA .............................................. 381

Conclusion ............................................................................ 382Lessons Learned ............................................................. 382Future Direction ............................................................. 386

Appendices .................................................................... 389

A Bibliography ......................................................................... 391B Glossary ................................................................................ 393C The Author ........................................................................... 403

Index ................................................................................... 405

Preface

Welcome to the second edition of Discover Logistics with SAP: SAPERP and SAP SCM. The first edition was published in January 2009.The book was specifically aimed at SAP ERP and was favorablyreceived. This second edition expands the range of the book toinclude the logistics functions of SAP SCM.

In writing this book, we addressed the needs of logistics and supplychain professionals who require an easy-to-understand overview ofthe logistics functionality available in SAP.

We have explained the logistics functionality in SAP in understand-able language that isn’t technical jargon or sales terminology. You willnot find menu paths or SAP transaction codes in this book. This booksimply describes the benefits of using SAP using examples and casestudies to help you understand what the logistics functionality in SAPcan do for the success of your company.

Who This Book Is For

If you’re a supply chain or logistics manager or analyst whose com-pany is implementing or thinking of implementing SAP, then thisbook will help you become familiar with the logistics functionality inSAP. The book describes the different logistical areas of SAP ERP andSAP SCM. It examines these areas in full, highlighting aspects that areimportant in achieving measureable benefits for your company.

This book is also helpful for IT professionals who have focused on thelogistics or supply chain but may have never worked with SAP before.This book gives you the basic knowledge from which you can hit theground running and be a productive member of any implementationteam.

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Lastly, if you are a supply chain or logistics consultant considering aposition with a company that has implemented SAP, this book willhelp you see where the different logistics functions fit into the overallSAP landscape.

Navigational Tools for This Book

Throughout the book, we will provide several elements that will helpyou access useful information:

› Tips call out useful information about related ideas and providepractical suggestions for how to use a particular function.

› Notes provide other resources to explore or special tools or ser-vices from SAP that will help you with the topic under discussion.

› Examples provide real-world scenarios and illustrations of howthe tools are used.

This is amarginal note

› Marginal text provides a useful way to scan the book to locate top-ics of interest to you. Each marginal note appears to the side of aparagraph or section with related information.

Organization of This Book

When you examine the functionality of the SAP ERP business suite,you’ll find three distinct elements:

› SAP ERP Financials

› SAP ERP Human Capital Management (HCM)

› SAP ERP Operations

Although SAP ERP Financials and SAP ERP HCM are important toyour company’s success, they don’t contain any of the logistics func-tions we’ll discuss in this book.

The SAP ERP Operations functionality contains the elements that arefamiliar to logistics users. The SAP ERP Operations functionality ischaracterized by these three areas:

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Preface

› Procurement and logistics execution

› Product development and manufacturing

› Sales and service

This book takes these areas and delves into their distinct functional-ity. In addition, we will examine other logistics functions that are partof the SAP SCM product, such as SAP Extended Warehouse Manage-ment (SAP EWM). So let’s take a look at how the book is organized.

Part I—Procurement and Logistics ExecutionThis section of the book initially introduces you to the SAP ERP envi-ronment. It then goes on to examine the procurement, inventorymanagement, and warehouse management functionalities. Finally,this section ends with an examination of the inbound and outboundlogistics functions.

Chapter 1—Introduction to SAP LogisticsThis is an introduction for the reader to gain understanding of theSAP software environment and get a review of how the logistics func-tion is an integral part of the SAP ERP and SAP SCM applications. Thischapter gives a comprehensive overview of the SAP functionality thatis relevant to logistics.

Chapter 2—ProcurementThis chapter gives readers an overview of the organizational structurethat is used by SAP ERP for the purchasing function. It then intro-duces the reader to the purchasing functions in SAP ERP, such as pur-chase requisition, request for quotation (RFQ), purchase orders (POs),and accounts payable. This chapter also looks at the SAP Supply Net-work Collaboration (SAP SNC) and Ariba, which was purchased bySAP in 2012.

Chapter 3—Inventory ManagementThis chapter describes the SAP functions used in inventory manage-ment. The logical structure of the plant is introduced as well as thegoods movements within the plant, and physical inventory of mate-rial.

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Chapter 4—Warehouse ManagementIn this chapter, we fully examine the structure of the warehouse andhow it integrates with the SAP Inventory Management (SAP IM) func-tionality. This chapter also details the movements of material withinthe warehouse. The SAP Extended Warehouse Management (EWM)functionality that is part of the SAP Supply Chain Management prod-uct is also reviewed in this chapter.

Chapter 5—Inbound and Outbound LogisticsThis chapter explains the logistical movements of material in and outof the plant by detailing the goods receipt and goods issue functions.

Part II—Product Development and ManufacturingThe second section of SAP ERP Operations looks at the manufacturingfunctionality. The section begins with a discussion of the planningfunctions in SAP followed by an examination of the manufacturingoperations. The two remaining chapters in this section discuss thetwo important functions that support successful manufacturing: plantmaintenance (PM) and quality management (QM).

Chapter 6—Product PlanningThis chapter introduces the product planning functions in SAP. Thechapter will detail the functionality of Forecasting and Replenish-ment, Demand Planning, SAP Advanced Planner and Optimizer (SAPAPO), SAP Sales and Operations Planning (SAP SOP), and materialsresource planning (MRP).

Chapter 7—Manufacturing OperationsThis chapter reviews the structure of the manufacturing function,including master data such as equipment, bills of material (BOM), androutings. The chapter continues with an examination of the function-ality of production orders and product costing.

Chapter 8—Plant MaintenancePlant maintenance is important to a successful manufacturing pro-cess, and this chapter begins with an examination of the organiza-tional structure of the plant maintenance (PM) function. The chapter

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also describes the preventative maintenance and maintenance pro-cessing functions.

Chapter 9—Quality ManagementLike PM, quality management (QM) is an important part of successfulmanufacturing. This chapter details QM functions, concentrating onquality planning, notifications, and inspections.

Part III—Sales and ServiceThe third section of this book looks at the sales and service function-ality. This section covers sales order management, Customer Service(CS), and SAP Transportation Management (SAP TM).

Chapter 10—Sales Order ManagementThis chapter introduces the SAP sales functionality. The chapter ini-tially examines the organizational structure of the sales function andthen details the sales ordering, shipping, and billing processes.

Chapter 11—Customer ServiceFollowing the examination of the sales function, this chapter reviewsthe Customer Service (CS) functions in SAP. The topics include themaster data, service agreements, warranties, and processing of serviceorders. In addition, the chapter will examine the SAP Customer Rela-tionship Management (SAP CRM) application.

Chapter 12—Transportation ManagementThis chapter examines the transportation functions found in SAP. Thechapter examines the planning of transporting materials, determiningfreight costs, and the user functionality for transporting materials.

Part IV—Implementation and New TechnologiesThis section looks at successfully implementing SAP ERP using triedand tested implementation methodologies. It also examines new SAPtechnology your company can use, including SAP NetWeaver andother business suites, such as SAP HANA.

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Chapter 13—ImplementationThis chapter covers the best approach to implementing logistics—notthe “how,” but the “how to plan for and approach.” It also reviewshow much the total cost of ownership (TCO) might be, and when andhow much of a return on investment (ROI) to expect.

Chapter 14—New Technologies and ConclusionThis chapter reviews the new technologies developed by SAP that willbe important to logistics, including SOA and SAP NetWeaver. It alsotouches on other SAP software, such as SAP HANA. This chaptercloses with a review of the concepts that were discussed throughoutthe book

This book gives you the information you need to understand thelogistics functionality available in SAP ERP and SAP SCM. Learninghow the functionality in both applications can be used either sepa-rately or together will provide your organization logistics best prac-tices and their benefits. This, in turn, can increase revenue, improveprofitability, and enhance customer satisfaction as it relates to yourorganization's logistics business processes.

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Warehouse Management

Warehouse Management (WM) defines the SAP structure and func-tionality within the warehouse. In Chapter 2, we examined the inven-tory management structure, which included the plant and storagelocations. Your logistics management must determine whether thefunctionality within the SAP Inventory Management (SAP IM) func-tion is sufficient for your business or whether the added functionalityof WM would reduce costs and improve efficiency. This chapter helpsyou understand the structure and functionality of the WM compo-nent.

The WM component is part of the logistics execution functionality.It’s a vital part of the SAP ERP functionality for companies that man-age thousands of items in their warehouses. Some companies thatimplement SAP with the SAP IM functionality find that it isn’t suffi-cient to efficiently manage their inventory. Depending on the numberof items that they manage and the complexity of their operation, com-panies may decide that they need the added functionality of WM.

The WM component gives companies a total picture of the warehouseinventory down to the bin level. WM is fully integrated with theinventory management, finance, and sales functionality.

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Warehouse Management4

For companies that implement the SAP Supply Chain Management(SAP SCM) business suite there is added warehouse managementfunctionality called SAP Extended Warehouse Management (SAPEWM). Figure 4.1 shows how WM integrates with the SAP ERP andSAP SCM business suites.

In the first section of this chapter, we’ll review the structure withinthe WM component.

Warehouse Structure

Structure of thewarehouse

This section examines the warehouse structure and helps you under-stand how the WM component may be more suitable to your logisticsfunction than just the SAP IM functionality.

The lowest level in the SAP IM component is the storage location.

Who needs WM? If your company uses and stores a small number of materials, WMmay be more than you need to run your business efficiently. How-ever, if your plant has a large number of locations where material isstored or placement and removal of materials needs to be efficientlymanaged, then WM may be more appropriate. There are no set rulesfor when to use WM rather than SAP IM. The decision should bemade by your logistics management with advice from SAP and yourSAP consultants.

Figure 4.1 Integration Points of Warehouse Management

SAP SCM

SAP EWM

SAP ERP

SAP WM

PP

SD

MM

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Tip

Before deciding to implement WM, calculate the total expenses andexpected benefits so you arrive at an objective decision.

Let’s take a look at the structure within the WM component.

WarehouseA warehouse is a physically defined area in your plant. It can be anarea that encompasses the whole plant, a racking section, a separatecarousel system, or any area your company defines.

Example

A company that manufactures electronic components uses 4,000 rawmaterials and sells 6,000 finished products. The raw materials and fin-ished goods are stored in three automated horizontal carousels and anarea of racking. The company decided to use WM and define each car-ousel as an individual warehouse, but it defined the racking as a numberof separate storage locations that are not assigned to a warehouse.

Storage locationsThe warehouse can be assigned to one or more storage locations thatare defined in the SAP IM component. This assignment links the WMcomponent to the SAP IM component. By implementing WM, yourcompany can define as many individual locations as required in astructured environment. This is important if your company has thou-sands of items in a single storage location that need to be moved effi-ciently.

Storage types, sections, and bins

The warehouse structure is further divided into smaller locationscalled storage types, sections, and bins. Figure 4.2 shows the ware-houses that have been created in SAP. Warehouses 700 through 710have been created to represent the different storage carousels thathave been installed at the company’s facility.

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Storage TypesThe warehouse can be divided into specifically defined areas, calledstorage types.

Storage type Search strategies can be configured at the storage-type level. Thesesearches can be used by your staff for the variety of different types ofstock placement and stock removal that occur. Common storage typesin a warehouse can be areas such as cold room, bulk storage, and highracking area.

Example

A company’s automated horizontal carousel consists of a series of shelv-ing sections mounted on a horizontal, closed-loop oval track. The com-pany is using WM and has defined the carousel as a warehouse. Thecompany has further divided the carousel’s shelves and defined them asstorage types.

Figure 4.3 shows storage types created for a warehouse. The figuresshow the storage types that describe a part of the warehouse. Thesestorage types were created to define the structure of the warehouse.This was carried out in the configuration area of WM as part of theinitial implementation. If your warehouse adds additional racking,then you may need to add more storage types to the configuration.

Figure 4.2 Warehouse Entries in SAP

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Warehouse Structure4

Tip

Evaluate the addition of each storage type to the SAP system. Some-times unnecessary configuration can lead to additional workload foryour staff. Try to keep the warehouse layout as accurate and straightfor-ward as possible.

Storage SectionOne or more storage sections

The storage type of a warehouse can be even further divided intoareas called storage sections. This is particularly useful if your com-pany has defined storage types that are large. By dividing the storagetype into a number of storage sections, stock placement and removalsearches can be more efficient.

Example

A company with a number of horizontal carousels has defined each car-ousel as separate warehouses in WM. Although the company saw noreason to physically divide each storage type, the company logicallydivided some of the storage types into fast-moving and slow-movingstorage sections. The decision was made to logically store slow-movingstock in the same storage section.

Figure 4.3 Storage Types Defined for a Warehouse

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Warehouse Management4

Tip

At least one storage section has to be defined for each storage type.

Figure 4.4 shows a variety of storage sections that have been definedfor a number of storage types. Each storage type has to have at leastone storage section but can have more than one. The figure showsthat storage type 001 has two storage sections defined—001 and 002.The storage sections in this case are divided between slow-movingand fast-moving items.

Storage BinOne or morestorage bins

Within a warehouse, the material is physically stored in a storage bin.The WM component is very flexible, and the structure can be changedimmediately as your company’s storage needs fluctuate. A storage bindoesn’t always have to be a physical storage container. It can be aphysical location in a shelving system or a part of a hanging storagesystem, which is often used to save space in the warehouse.

Figure 4.4 Storage Section Defined for Storage Types

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Warehouse Structure4

Example

A company has a warehouse with a variety of shelving systems. Eachshelving unit has been designated as a storage type, and each shelf des-ignated as a storage section. The company has hundreds of items storedin the warehouse, which vary in size from less than an inch in length toseveral feet. The company has designated each plastic container on eachshelf as a separate storage bin. However, on some shelves, the items aretoo large for the physical containers. In these cases, the company hasmarked areas on the shelves with tape and designated each taped areaas a storage bin.

Figure 4.5 shows a number of storage bins for storage type 001 inwarehouse 700.

Tip

Storage bins can be created automatically based on a template. If yourcompany has one structured format for storage bins, this can be set upand used to automatically create bins when they are needed.

QuantQuants stored in a storage bin

Although the storage bin is the smallest container for your material inthe warehouse, you need to identify each unit of material in that bin.The unique items that are placed in the bin are called quants. Your

Figure 4.5 Bin Status Report Showing a Number of Storage Bins

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Warehouse Management4

company may decide that it doesn’t need to distinguish between dif-ferent quants in the warehouse, but the ability to do so is part of thestandard WM functionality.

Figure 4.6 shows the details that define an individual quant. Thequant information shows where it is stored—storage location 900B—the quantity of the items that comprise the quant, the document thatmoved the quant into the bin, and the goods receipt date.

Example

Your plant maintenance department orders adjustable wrenches from avendor each month. When the wrenches arrive at the warehouse, theyare stored in the same storage bin. Each delivery of wrenches movedinto the storage bin is identified as a separate quant. The storage binmay then contain several quants of the same wrenches.

Now that we’ve examined the various elements that make up thewarehouse structure, let’s take a look at the movements of materialwithin the warehouse.

Figure 4.6 Details Relating to a Quant

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Warehouse Movements4

Warehouse Movements

Automatic or manual movements

Movements of stock within the WM functionality are triggered byeither an event that occurred in the SAP IM component, such as agoods receipt, or an event created within the WM module itself. Thissection examines the different events that can occur in the WM com-ponent.

When items are received at your plant, the SAP software uses the SAPIM component to move material to the correct storage location. Ifyour company has adopted the WM component in addition to theSAP IM component, this functionality can be used to move the mate-rial to the correct area for that item within the warehouse.

Are materials relevant to WM?

However, this is only the case if the item to be moved is flagged asbeing stored in the warehouse. If the item isn’t flagged as such, thenonly the SAP IM component is used to move the item.

Example

An item that is stored in warehouse number 006 and requires refrigera-tion needs to be placed in a storage bin designated for cold storage inwarehouse 006.

Items that are stored in a particular warehouse can also be movedamong storage types, storage sections, and storage bins. For example,to fulfill a sales order, items may need to be moved from storage binsin the racking storage type to storage bins in the storage type desig-nated for picking.

Two different types of movements are found in WM.

Movements triggered by other SAP components

› Movements that are triggered by other SAP functionality, such asSAP IM and shipping that result in picking, packing, and transfers.

› Movements that are internal to the warehouse, such as bin-to-bintransfers or posting changes. The movements inside the ware-house don’t affect stock levels, and no information is passed toSAP IM.

Let’s review the warehouse movements that occur in WM.

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Warehouse Management4

Movements Triggered by SAP Inventory ManagementSAP IM movements In Chapter 3, we examined the different movements that occur in the

SAP IM component, including goods receipts, goods issues, returns,and stock transfers. If your company implements WM, each of theSAP IM goods movements will trigger a WM movement when thematerial is stored in the warehouse.

Material is moved in the warehouse by the use of a two-step process:the transfer requirement and the transfer order. The next sectiondescribes the functionality that moves materials within the ware-house.

Transfer RequirementTransfer

requirementsA movement of material in the warehouse, triggered by either aninventory movement or a manual warehouse movement, starts witha transfer requirement. The transfer requirement is the planningphase where material is planned to be moved from one warehouselocation to another. After a transfer requirement is processed, a trans-fer order is then used to perform and confirm the move when it’scompleted.

Figure 4.7 shows a transfer requirement that has been created tomove an item into the warehouse. The transfer requirement has beencreated by the inventory management movement for a goods receipt.

Figure 4.7 Automatically Generated Transfer Requirement

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Warehouse Movements4

Transfer require-ments not always needed

The transfer requirement includes the following information, whichwill help your warehouse staff as the material is moved in the ware-house:

› The material that should be moved within the warehouse

› The quantity of the material to be moved

› The date of when the material should it be moved

› A reason why the material has to be moved

In addition to transfer requirements created by inventory move-ments, transfer requirements may also be created manually. Materialthat is stored in the warehouse is sometimes moved between storagetypes and storage bins. For example, material may have been storedin a temporary location and then needs to be moved to its normalstorage bin.

Example

At an electrical motor manufacturer, a purchase order (PO) was made forthe weekly supply of bearings. The order was received at the plant early,and the bearings couldn’t be placed in their normal storage type due tospace limitations. The bearings were stored in temporary storage binsuntil there was enough space. When the bearings could be moved totheir normal location, a manual transfer requirement was created to planthe movement.

Figure 4.8 shows a transfer requirement that has been created manu-ally to move items between areas in the warehouse. The transferrequirement shows the material number and the quantity to move.The destination storage bin for removal or placement has not beendetermined at the time of creation.

When the transfer requirement has been created, the next step is tocreate the transfer order.

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Transfer OrderTransfer orders

perform and confirmwarehouse

movements

A transfer order is used by your warehouse staff to perform the move-ment of material from one location to another and confirm thatmovement of material when it’s completed. The transfer order can becreated from a transfer requirement. The previous section talkedabout how a transfer requirement can be created automaticallybecause of an inventory movement, or that it can be created manu-ally.

Manual transferorders

In addition to being created from a transfer requirement, a transferorder can also be created manually or directly from an inventorymovement, such as a delivery.

The transfer order contains the information required to perform themovement of materials into the warehouse, out of the warehouse, orfrom one storage bin to another storage bin within the warehouse.

Figure 4.9 shows a transfer order that is being created from a transferrequirement. The details from the transfer requirement are assignedto the newly created transfer order.

Along with creating a transfer order from a transfer requirement, youcan also create one manually.

Figure 4.8 Manually Created Transfer Requirement

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Example

After completing a transfer order movement, a warehouse operatorfinds that the destination bin has material stored in it that should be inthe storage bin on the shelf below. The operator informs the warehousesupervisor, who creates a manual transfer order to move the items intothe correct storage bin.

Figure 4.10 shows a transfer order that has been created manually.

Figure 4.9 Creating a Transfer Order from a Transfer Requirement

Figure 4.10 Manually Created Transfer Order

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Confirming thetransfer order

A transfer order is confirmed after the items have been moved. Inmany warehouses, the warehouse staff members are given the trans-fer order document, and they select the items from the source storagebin and take them to the destination bin indicated on the document.When the movement of items is complete, a warehouse supervisorreceives the document. The supervisor confirms in WM that themovement has occurred and if any variances were noted.

Figure 4.11 shows a transfer order that is ready to be confirmed. Theconfirmation screen shows the source and destination storage bins.The warehouse supervisor can change the quantity that has beenmoved if the warehouse operator indicated that the amount hadchanged.

Example

A warehouse supervisor receives a transfer order from a warehouseoperator. The operator indicated on the document that although theywere supposed to move ten items from the source storage bin to thedestination storage bin, the destination bin could not accommodate allthe items. The operator placed only four items in the storage bin andreturned the remaining six to the source bin. The supervisor confirms thetransfer order with an actual quantity moved as four and not ten, as thedocument originally stated.

If items are unableto be stored

In some instances, it isn’t possible to return the items to the sourcestorage bin. This may be due to regulatory issues, company policies,or the fact that the source bin has already been replenished. The transfer

Figure 4.11 Confirmation of Transfer Order

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order does contain information for the warehouse operator aboutwhere to place any remaining items, if it’s necessary to do so.

On the transfer order, there is a line that can be entered to show theoperator where to store surplus items. Figure 4.12 shows a transferorder with the source and destination information and also a remain-der location, which can be used to store the surplus items. In thisexample, any surplus items will not be returned to storage bin900030 in storage type 001, but to storage bin 420301 in storage type420.

Printing Transfer OrdersTransfer orders go to operators to move the items in the warehouse

Transfer orders can be printed individually or in bulk depending onhow your warehouse operates. In a warehouse that does not processmany sales orders, movements in the warehouse may be ad hoc, andthe printing of transfer orders may be processed when needed.

Figure 4.13 shows an example of a printed transfer order. The printeddocument can be used by the warehouse staff to perform the move-ment of the material, or as a label that can be adhered to the items

Figure 4.12 Transfer Order Showing Storage Information for Surplus Items

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after the move has taken place. In either case, the document showsthe transfer order number, the line item, material number, descrip-tion, quantity to be moved, and the source and destination storagebins.

Wave picking In warehouses that fulfill a large number of sales orders, wave pickingmay be implemented, and the transfer orders are printed in bulk.

Tip

In warehouse operations where there are hundreds of picks to performper hour, the SAP wave picking functionality can save time and re-sources.

Wave picking is a warehouse method where multiple customer ordersare picked simultaneously. This method is used to improve the effi-ciency of the overall picking operation because it reduces the timebetween each warehouse movement. Many warehouses operatewave picking that bulk prints transfer orders for the next hour’s pick-ing requirements. The printed transfer orders are given to the ware-house staff members, who then perform the movements described oneach transfer order.

Figure 4.13 Example of a Printed Transfer Order

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Case Study

A Mexican automotive parts distributor implemented SAP softwarewhen they were purchased by a German automotive company. Until theimplementation of the SAP system, the company had used a best-of-breed solution that included a standalone warehouse management solu-tion. As part of the SAP implementation, the company decided not toactivate the WM component but to integrate the SAP application withits existing warehouse solution.

After implementation, the warehouse staff found that the information intheir warehouse solution was inconsistent and untrustworthy. The com-pany had underestimated the inaccuracies in their legacy system, anddue to the accuracy of SAP software, the problems caused by their leg-acy system had now been exposed. The weeks following the implemen-tation of SAP software saw on-time shipping of customer orders to fallto less than 20 percent. After a number of attempts to improve data con-sistency in the existing warehouse solution, the company decided toimplement the WM component to fully integrate its warehouse functionwith the rest of the company.

A two-month project was launched to move the warehouse function toWM. The project was completed on time, and after one month of work-ing on the WM system, the on-time shipping percentage had risen to 78percent. Six months later, the percentage had reached over 95 percent.

Now that we’ve examined the various warehouse movements, let’stake a look at the SAP Extended Warehouse Management functional-ity of the SAP SCM application.

SAP Extended Warehouse Management

SAP Extended Warehouse Management (SAP EWM) is part of the SAPSCM product and extends the functionality of the basic WM applica-tion. SAP EWM can use the organizational structure from WM andoffers additional functionality to businesses with more complex ware-house situations. SAP EWM can integrate with standard WM so thatdocuments created in the SAP ERP system trigger events in the SAPEWM system.

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SAP EWM is particularly useful for companies that have large andcomplex warehouses with high volume and velocity. These compa-nies can benefit from functionality such as yard management andcross-docking.

Organizational StructureOrganizational

structure inSAP EWM

The organizational structure of a company can be set up in WM andlinked to SAP EWM. There are some additional elements to the orga-nizational structure that companies may want to use to help withtheir complex warehouse situations.

Activity AreasThe activity area is a structure in SAP EWM that is a group of storagebins. The bins are grouped together for a reason such as stock removalor stock placement. A storage bin can be assigned to more than oneactivity area. Figure 4.14 shows an activity area, 0001, created forwarehouse J001.

Product MasterProduct master

recordThe product master is the SAP EWM version of the material masterfrom SAP ERP. The product master is derived from the material mas-ter but has additional information relevant to SAP EWM. There is anadditional view called warehouse management execution. Some ofthe additional fields include the handling indicator—which is useddescribe how a material is moved from one location to another—thewarehouse material group, the warehouse storage condition, an indi-cator that notes whether an item is likely to be pilfered, a quarantineperiod, and a catch weight—which identifies whether a material is

Figure 4.14 Activity Area Created for Warehouse

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managed using catch weight. Figure 4.15 shows the product masterfor item 100-110, which has a material master record in SAP ERP.

Transportation ZoneFor creating routes, first a transportation lane is required. It is definedas a link between two locations—a start and destination—which canbe plants, customers, or vendors. The transportation lane defineswhich products can be shipped between two locations and whichmethod of transport can be used.

Transportation zoneA transportation zone is comprised of a number of locations. Thezone can determine which locations are included, and once data isassigned to the transportation zone it is transferred to all of the loca-tions in the zone. This reduces the amount of data that needs to beentered for each zone. Figure 4.16 shows a transportation zone cre-ated for locations in the state of Pennsylvania.

Figure 4.15 Product Master Record for Material

Figure 4.16 Transportation Zone for Pennsylvania

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Transportation RouteThe route describes the characteristics of a physical route betweentwo locations. The transportation route is used in determining themost relevant route during route determination. It has several charac-teristics such as legs, lead times, and shipping conditions.

Resource TypeA resource is an object that performs tasks in the warehouse. It can bea piece of equipment, such as a forklift, or a warehouse employee.You can group similar resources together as resource types in SAPEWM. They can be assigned to bin types, so that a resource type, suchas a certain type of forklift, can only have access to certain types ofbin, based on aisle width. Figure 4.17 shows a Toyota forklift definedas a resource type.

QueuesThe queue is used in the assignment of warehouse orders. A ware-house order is assigned to a queue, and the resource group is assignedto a sequence of queues. The order can then be assigned to a particu-lar resource, such as a forklift or an employee. Figure 4.18 shows aqueue defined for warehouse J001.

Figure 4.17 Resource Type for Toyota Forklift Trucks

Figure 4.18 Queue Defined for Warehouse J001

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DocumentsSAP EWM documents for deliveries and warehouse

There are a number of important documents in SAP EWM that can befound in the outbound delivery process, inbound delivery process,and internal warehouse tasks.

Outbound Delivery RequestWhen an SAP EWM-relevant outbound delivery document is pro-cessed in SAP ERP, a document is created in SAP EWM called an out-bound delivery request (ODR). The ODR creates an outbounddelivery order in SAP EWM. A goods issue can be performed on theoutbound delivery order, and this creates the SAP EWM outbounddelivery, which is also called the final delivery.

Inbound Delivery NotificationWhen an inbound delivery is processed in the SAP ERP system, thedelivery is checked to see if it is relevant for an SAP EWM warehouse.If it is, then an inbound delivery notification (IDN) is created usuallyin the background. This document then creates an inbound deliverydocument in SAP EWM.

Warehouse TasksThere are two types of tasks in the warehouse: product warehousetasks and handling unit (HU) warehouse tasks. A product warehousetask performs a movement of stock in the warehouse. These tasks areused for picking, putaway, and internal warehouse movements. Ahandling unit warehouse task is used to move an entire handling unitwithin the warehouse.

Warehouse OrdersA warehouse order is a combination of several warehouse tasks thatare given to a warehouse resource to perform in a specific period oftime. A warehouse task is assigned to a warehouse order based on aset of rules.

Warehouse ProcessesWarehouse processes such as inbound and outbound

The SAP EWM application provides functionality for inbound andoutbound deliveries that help reduce the effort involved in complexwarehouse processes for high-volume and high-velocity warehouses.

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Inbound ProcessesThe inbound process in a warehouse commences when the SAP ERPsystem receives an advance shipping notice (ASN). It can be trans-ferred to SAP EWM, and an inbound delivery notification (IDN) iscreated. An inbound delivery in SAP EWM can be created once theIDN is activated. The inbound delivery includes data such as the prod-uct data, quantity to be delivered, movement data, and status. Whenthe vehicle that contains the items arrives at the warehouse, the trans-portation unit (TU) is registered in the yard management function. Ifthe information about the TU was sent in the original ASN, then theTU can be produced automatically when the inbound delivery istransferred from SAP ERP to SAP EWM.

When scheduled, the vehicle can be unloaded, and the status of theTU can be changed manually when the unloading is complete. Aninspection of the products can be made and, if necessary, adjustmentscan be made or the delivery can be rejected. The inbound delivery canbe goods receipted manually or automatically when the putawaywarehouse task has been completed. The goods receipt in SAP EWMis then transferred to the SAP ERP system.

Outbound ProcessesThe outbound process can begin with a sales order creation in SAPERP or the SAP CRM system. An outbound delivery is generated, andthe process is activated in the warehouse. The outbound delivery isforwarded to the SAP EWM system, and an outbound deliveryrequest (ODR) is generated. The ODR can be activated, and an out-bound delivery order (ODO) is created. After the creation of theODO, you can manually create warehouse tasks and the warehouseorder can also be created. The physical tasks of picking the product,packing, kitting, staging, and loading can start.

After the products have been loaded onto a vehicle, the ODO can begoods issued. The final outbound delivery document is generated andtransferred to the SAP ERP system.

ReplenishmentThe replenishment process takes in product from a reserve area andmoves it to a forward picking position in the warehouse. There are

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five types of replenishment: planned replenishment, order-relatedreplenishment, crate part replenishment, direct replenishment, andautomatic replenishment.

RearrangementsDuring the rearrangement process, the system compares how theproduct should be placed in the warehouse, with how the product isactually stored in the warehouse. For example, if a product was iden-tified as a slow-moving item but now is in demand, the system willrearrange the product so the bin locations are located in an area withfast-moving stock.

Ad Hoc MovementsSometimes product is in a bin location that is not close to other binlocations where the product is usually stored. In this instance, an adhoc movement may be instigated so that the warehouse staff canmove the product to a different bin location

Posting ChangesA posting change can be driven from the SAP ERP system or in theSAP EWM system. A posting change notice can be created in SAP ERPand transferred to the SAP EWM system as a posting change request.

Summary

This chapter discussed the structure of the warehouse in SAP softwareand how material is moved around the warehouse. Movements insidethe warehouse determine where that material goes, how it gets there,how it is stored, and how it gets retrieved. The transfer requirementand the transfer order are the two documents that move materialinside the warehouse, and it’s important to know how the processesof each work individually and in combination.

The SAP Warehouse Management component is important to yourlogistics operation because it provides the flexibility to adapt to rapidchanges in your storage facility. Storage bin creation can be per-formed in real time, allowing for the constant changes that occur inyour warehouse. The WM component gives companies of all sizes the

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material visibility that they require to efficiently operate the ware-house.

If your company operates complex or high velocity warehouses, theSAP Extended Warehouse Management functionality should be con-sidered to increase efficiency.

The key points identified in this chapter were the following:

› WM and SAP EWM offer a complete solution for companies withcomplex warehouse requirements.

› The structure is designed to be flexible, allowing for changes in thephysical warehouse.

› Warehouse placement and removal strategies offer highly simplis-tic or highly complex functionality.

› Seamless integration with inventory management is possible.

› The high degree of material visibility is helpful to warehouse staff.

The next chapter discusses inbound and outbound logistics in SAP,which will help you understand the goods receipt and goods issueprocesses.

122

Index

A

Account assignment, 393Account assignment category, 393Account balances report, 286Accounts, 43Accounts payable, 393Accounts receivable report, 286Activity area, 116Activity report, 306Adjustment, 96Administrative element, 184Advance shipping notice (ASN), 120Advanced shipping notification (ASN),

393Air transportation, 330Americas’ SAP Users’ Group (ASUG),

393APO, 159, 165, 169Ariba, 30, 73, 76, 393ASAP, 393ASAP implementation, 346ASAP methodology, 346Assembly, 393Asset-based carriers, 330ASUG, 28Authorizations, 393Automatic goods receipt, 198, 200Automatic reservation, 86Availability check, 230, 393

B

Backflushing, 198, 199, 393Balance sheet, 43Barcode, 393Base unit of measure, 393Baseline result, 355Batch, 393Batch determination, 393Batch management, 34Best-of-breed, 28

Bill of distribution, 163Bill of materials (BOM), 174, 184,

188, 190, 194, 384, 393Billing, 312

Automatic, 284Document, 393Documents, 284Function, 282Manual, 285Manual conversion, 285Process, 282

Bins, 101Blanket order, 393Blocked status, 93Book quantity, 96Budget, 350Business blueprint, 347, 350, 351,

386Business decision matrix, 310

C

Calibration order, 308Call horizon, 223, 224Call object, 224Capacity requirements, 194, 196Cash flow, 142Catalog, 237, 394

Pre-defined, 237Change management, 394Change management program, 348Characteristic, 394Characteristic value, 394Characteristics-based forecasting, 172Characteristics-dependent planning,

173Chart of accounts, 43, 394Check-in, 326

List, 336Class rate, 333Client, 42, 394Client/server enterprise, 27

405

Index

Code, 237Code group, 237, 239Collaborative demand planning, 162Collaborative supply planning, 162Collaborative transportation planning,

162Collective billing process, 283Commission, 324Company, 50, 51, 127, 128, 129Company code, 50, 394Condition, 394Configurable materials, 155Configuration, 394Confirmations, 198, 311

Collective, 311Consignment stock, 93Consumption-based planning, 394Continuous inventory, 93Contract, 394Contract rates, 334Contracts, 275

Master contract, 275Quantity contract, 276Release orders, 278Value contract, 277

Cost center, 394Cost estimate, 204, 205Cost of goods manufactured (COGM),

203, 394Cost of goods sold (COGS), 204, 394Cost receivers, 201Costing

Department, 201Information, 198

Count procedure, 93Counter, 215Credit memo, 279, 394

Financial aspects, 279Request, 280

Customer, 62, 83, 394Customer defect report, 257Customer forecast management, 173Customer inquiry, 271, 394Customer location, 93Customer quotation, 272, 274, 394

Customer record, 269Customer requirements, 157Customer satisfaction, 360Customer service, 38, 94, 142Customizing, 395Cycle counting, 93, 395

D

Defects recording, 252Delivery documentation, 136Delivery information, 38Delivery monitor, 395Delivery note, 62Demand management, 141, 152, 173,

383, 395Demand planning, 169Digital signature, 251Direct costs, 359, 361

Recurring, 360Distinct sales area, 266Distribution center, 89Distribution channel, 264, 395Distribution SIG, 28Document, 395

E

Electronic data interchange (EDI), 395End load, 327Engineering change management, 34Equipment, 213, 294, 395

Master record, 214Task list, 220

Equipment record, 213Equipment task list, 395E-sourcing, 373Evaluated receipt settlement (ERS),

34, 382, 395Evaluations, 158Exception message, 174Exception rate, 334External services, 395

406

Index

F

Factory calendar, 395Fast-moving stock, 93FIFO (first in, first out), 395Final preparation, 347, 353, 354, 386Financial Accounting (FI), 395Finished goods, 93, 94, 293Flexible sales and operations planning,

144Forecast, 179, 395Forecast accuracy, 142Forwarding agent, 324, 395Freight cost, 330, 395Freight forwarder, 324Freight forwarders, air, 331Full-truckload (FTL), 332, 395Functional location, 210, 213, 221,

295, 395Functional, 295Hierarchy, 211Process-related, 210, 295Spatial, 210, 295Task list, 220Work center, 210

G

General maintenance task list, 219GL (general ledger) account, 395Global available-to-promise, 177Go-live and support, 347, 354, 356,

386Good manufacturing practice (GMP),

37Goods issue, 84, 134, 136, 282, 338,

339, 382, 395Goods movement, 383Goods receipt, 62, 84, 127, 128, 382,

396Gross freight, rate, 335

H

Handling unit, 134, 281Handling unit (HU), 396

Handling unit management, 34Helpdesk, 356

I

Implementation guide (IMG), 396Implementation methodology, 345Implementation strategy, 343Inbound delivery notification (IDN),

119Inbound logistics, 35, 383Indirect costs, 360, 361Individual billing document, 283Industry solutions, 345Initial costs, 360Initial stock creation, 84Inspection, 197, 209

Characteristic, 237, 239, 241, 396Lot, 248, 250Method, 237Operations, 241Plan, 240, 241Process, 258Specification, 249

Inspection lot, 396Inspection plan, 396Instance, 42Internal problem report, 245Internal transfer, 83International shipment, 321Inventory, 94Inventory adjustment, 396Inventory differences, 96Inventory inaccuracies, 94Inventory management, 99, 108Inventory management SIG, 28Inventory sampling, 93Inventory stock, 135Inventory valuation, 396Inventory variance report, 93Invoice, 62, 396Invoice split, 284, 396Invoice verification, 396Item category, 396

407

Index

K

Kanban, 396

L

Labor, 184Legal entity, 42Less than truckload (LTL), 396Less-than-truckload (LTL), 332LIFO (last in, first out), 396Local rate, 334Logistics, 30, 34Logistics execution, 382Lot size, 396

M

Maintenance notification, 226, 228, 396

Maintenance order, 222, 228, 229, 231, 396

Maintenance plan, 222, 396Scheduling, 223, 224, 225

Maintenance processing, 226Maintenance schedule, 396Maintenance task list, 396Maintenance tasks

List, 218Operations, 219

Make to stock, 153Make-to-order strategy, 154Make-to-stock strategy, 153Manufacture, 41Manufacturing, 382, 384

Operations, 36Manufacturing operations, 183Manufacturing SIG, 28Manufacturing structure, 184Master contract, 275Master data, 144Master production scheduling (MPS),

36, 397Material, 56, 57, 84, 86, 88, 89, 94,

128, 129Counts, 95

Material (Cont.)Discrepancies, 96

Material defect report, 255Material group, 397Material master record, 153, 154Material price, 205Material requirements planning

(MRP), 36, 141, 173, 174, 397Material routings, 184Material specification, 240

Advantage, 240Inspection characteristics, 240

Material type, 397Material usage report, 147Materials production schedule (MPS),

147Materials requirements planning

(MRP), 383Measurement, 215Measurement document, 217Movement type, 397MRP controller, 397MRP list, 397MRP type, 397Multi-item single delivery, 179

N

National Motor Freight Classification (NMFC), 333

Negative inventory, 397Negotiated price, 58Nonasset-based companies, 330Notification, 227Notification monitoring, 246Notifications, 384

O

Objective measurement, 363Offsetting adjustment, 96One-step stock transfer, 397One-time vendor, 397Ongoing costs, 360Operation, 397Operations, 94

408

Index

Order fulfillment, 142Organizational structure, 41, 43Outbound delivery, 131, 281Outbound delivery document, 131,

134, 281Outbound delivery monitor, 132Outbound delivery request (ODR),

120Outbound logistics, 35, 131, 383Outline agreement, 397Output device, 397Overseas shipment, 325

P

Packing information, 134Partner functions, 270Periodic billing, 300Permit, 214, 215, 397Physical elements, 184Physical inventory, 93, 95, 96, 383,

397Count sheet, 95

Picking, 132, 397Picking status, 133Planned independent requirements,

156, 157Planning functionality, 156Planning hierarchy, 144Planning situation report, 147Planning strategy, 152Plant, 44, 45, 51, 83, 86, 88, 93, 107,

397Prevention, 209Preventive maintenance, 218

Plan, 222Single-cycle, 222

Pricing information, 38Process orders, 184Procurement, 382Procurement SIG, 28Product allocation, 178Product availability, 38Product availability check, 177Product costing, 184, 187, 203, 207,

384

Product development, 382, 383Product group, 144, 398

Breakdown, 145Usage, 146

Product Lifecycle Management (PLM), 397

Product master, 116Product planning, 36, 141Production, 94, 235Production capable-to-promise, 179Production component, 209Production line, 184Production multi-level ATP check, 180Production order, 193, 197, 201, 398

Confirmation, 198Settlement, 200

Production process, 84Production resources and tools (PRT),

192, 398Project, 86Project preparation, 347, 348, 349,

386Proof of delivery, 136, 398Purchase order, 58, 62

Number, 129Purchase order (PO), 127, 129, 398Purchase requisition, 55, 57, 194, 398Purchasing, 41Purchasing department, 55, 57, 58Purchasing group, 52, 398Purchasing information record, 398Purchasing organization, 49, 50, 51,

52, 398Purchasing proposals, 174Putaway, 398

Q

Quality certificate, 254Incoming, 254Outgoing, 254

Quality inspection, 93, 235, 247Quality management

Basic data elements, 239Structure, 237

409

Index

Quality notification, 235, 237, 243, 258, 398Customer complaint, 243Internal, 243Report, 246

Quality planning, 235, 239, 258Quant, 105, 398Quantity contract, 276, 398Quantity structure, 204Queue time, 186Quota arrangement, 398Quotation, 272, 398

R

R/2, 28Radio frequency, 35

Identification, 32Radio frequency identification (RFID),

398Rail transportation, 331Rapid Deployment Solutions (RDS),

356Raw material, 93Realization, 347, 352, 353, 386Real-time analytics, 379Real-time applications, 380Recording results, 250Recurring costs, 360Release, 398Released value rate, 334Repair, 209Repair order, 308, 398Repetitive manufacturing, 398Reporting, 145Reports, 285Request for information (RFI), 399Request for proposal (RFP), 399Request for quotation (RFQ), 57, 382,

399Request for tender (RFT), 399Research and development, 344Reservations, 86, 194, 399Resource, 118Resource use, 142Return delivery, 399

Return material authorization (RMA), 279, 399

Return on investment (ROI), 343, 349, 362, 386, 399

Returnable packaging, 399Returns, 382Route, 399Routings, 190, 194, 384, 399

Configurable materials, 191Rules-based ATP check, 179

S

Safety stock, 399Safety stock planning, 167Sales, 266Sales agreement, 304Sales and operations planning, 148Sales and service, 37, 382Sales area, 399Sales division, 265, 399Sales function, 266Sales group, 267Sales office, 266, 399Sales order, 131, 273, 399Sales order management, 38Sales ordering, 268Sales organization, 263, 399Sales structure, 262Sample size, 249SAP, 27SAP Advanced Planning and Optimiza-

tion (SAP APO), 159, 165, 169, 393SAP Contract Lifecycle Management

(SAP CLM), 373, 386SAP Cost and Quotation Management

(SAP CQM), 373, 386SAP Customer Relationship Manage-

ment (SAP CRM), 43, 344SAP Customer Service (CS), 33, 291SAP Environmental, Health & Safety

(SAP EH&S), 399SAP ERP, 28, 29SAP Extended Warehouse Manage-

ment (SAP EWM), 32, 115, 119, 122, 399

410

Index

SAP HANA, 379, 399SAP Inventory Management (SAP IM),

35, 100SAP Logistics Information System (SAP

LIS), 142SAP Materials Management (MM), 33,

209, 235, 261SAP NetWeaver, 367, 400

Components, 368SAP Order Information System, 202SAP Plant Maintenance (PM), 33, 37,

184, 192, 209, 235, 384SAP Product Lifecycle Management

(SAP PLM), 29SAP Production Planning (PP), 33, 261SAP Quality Management (QM), 33,

37, 384SAP Sales and Distribution (SD), 33,

261SAP Sales and Operations Planning

(SAP SOP), 36, 141, 383, 400Planning tools, 144

SAP Service-Orientated Architecture (SOA), 400

SAP Solution Manager, 346SAP SRM, core functionality, 373SAP Supply Chain Management (SAP

SCM), 29, 344SAP Supply Network Collaboration

(SAP SNC), 400SAP Transportation Management (SAP

TM), 319, 385SAP Warehouse Management (WM),

33, 99, 121, 383Schedule performance, 142Scheduling, 174, 195, 230Scheduling agreement, 274, 400Scheduling function, 225Sections, 101Selected set, 238Serial number, 293, 400Serialized material, 293Service agreement, 297

Long-term, 297Quotation, 299Short-term, 297

Service contract, 298, 299, 300, 400Inquiry, 298Quantity, 301

Service department, 304Service notification, 305, 400Service order, 302, 307, 400Service parts management (SPM), 372Service parts planning, 163Service processing, 304Service tasks, 306Serviceable object, 293Service-oriented architecture (SOA),

370, 379, 400Settlement rule, 201Shipment, 325, 400Shipment completion, 327

Checklist, 336List, 337

Shipment costs, 319Shipment start, 327Shipment status, 326Shipment type, 328Shipped quantity, 135Shipping, 107Shipping assets, 324Shipping costs, 335Shipping notice, 383Shipping point, 400Shipping process, 280Shipping rates, 333, 335Shipping route, 322Shipping stages, 322Shipping type, 321, 322, 323, 325,

400Shop floor control, 193Shop papers, 201Single-item MRP, 174Single-item planning, 175, 176Six Sigma, 400Slow-moving stock, 89Software services, 370Source determination, 168Special stock, 93Spend analytics, 373Standard price, 205Start load, 326

411

Index

Stock, 45Stock level, 83, 94, 127Stock transfer, 83, 382, 400Stock valuation, 142Stock/requirements list, 158Storage bin, 48, 109, 110, 112, 400Storage location, 45, 83, 88, 93, 99,

100, 107, 400Storage section, 103, 400Storage type, 47, 104, 107, 400Strategy for configurable materials,

155Strategy group, 154Subcontracting, 401Subjective measurement, 364Supply Chain Cockpit (SCC), 160Supply Chain Collaborative Planning

(CLP), 162Supply Chain Planning SIG, 28Supply Network Planning (SNP), 165

T

Technical object, 217Three-way match, 62Total cost of ownership (TCO), 343,

356, 359, 361, 386, 401Calculating, 361History, 359

Total planning, 175Transfer order, 108, 110, 401

Confirmation, 112Printing, 113

Transfer posting, 382, 401Transfer requirement, 121, 401Transit time, 322Transportation execution, 336Transportation lane, 117Transportation management, 38, 164,

319Transportation options, 330Transportation planning, 320

List, 328Point, 321, 325

Transportation planning point, 401

Transportation SIG, 28Transportation unit (TU), 120Truck transportation, 332Two-step stock transfer, 401

U

Unit of measure, 401Universal product code (UPC), 401Unrestricted, 93Usage counter, 198Usage decision, 252, 253

V

Valuation, 401Value contract, 277, 401Variance, 94Variance location, 96Variances, 93Variant configuration, 34, 401Vendor, 48, 51, 62, 83, 84, 129, 401Vendor defect report, 256Vendor evaluation, 401

W

Warehouse, 47, 93, 401Warehouse management, 35Warehouse movement, 107, 108Warehouse section, 94Warranty, 302, 303, 401Warranty counter, 303, 304, 401Wave picking, 401Work center, 183, 184, 198, 241, 384,

401Capacity, 185Costing, 187Record, 186Scheduling, 186

Y

Yearly inventory, 93

412