SAP Extended Warehouse Management and the warehouse functionality for manufacturing companies are constantly evolving. Read the new article to learn new growth points.

How SAP EWM Improves Warehouse Management in the Manufacturing Industry

In the dynamic landscape of the modern manufacturing industry, where precision and efficiency reign supreme, the role of effective warehouse management as a linchpin for success. Imagine a symphony of processes seamlessly orchestrated, from raw materials to finished products, all harmoniously synchronized to meet market demands. This is where the convergence of technology, particularly Enterprise Resource Planning (ERP) and advanced warehouse management systems, takes center stage. 
In this article, we explore ERP-driven warehouse management, uncovering how implementing automated systems is revolutionizing manufacturing logistics.

Warehouse Management in Manufacturing

Warehousing is at the heart of manufacturing and supply chain operations. From raw materials to finished goods, warehouses contain all the materials needed to complete required processes.

Warehouse management encompasses various tasks, serving as a crucial link across various internal company domains. Fundamentally, warehouse management addresses three pivotal inquiries within goods storage:

What? Streamlining storage processes encompassing allocation, relocation, and retrieval.

Where? Efficiently locating items within the warehouse.

How much? Instantly accessing vital warehouse metrics, including minimum, reorder, and maximum stock levels.

These facets underpin vital company processes like order picking and inventory management, laying the foundation for seamless operations.

The features that characterize modern warehouse management systems include:

• Control of all intralogistics processes from goods receipt to shipping
• Documentation and optimization of these processes to store as few goods as possible, use fewer resources and staff for warehousing, and always ensure on-time delivery to the end customer

Key Warehouse Management Processes in Manufacturing Companies

A warehouse management system includes additional functions for controlling and optimizing system statuses. In contrast to pure inventory management, an intelligent warehouse management system extends to mapping the complete internal material flow using state-of-the-art technologies. Let’s review the critical processes within warehouse operations.

1. Receiving and inspection

The initial step ensures the quality and accuracy of incoming materials, laying the foundation for seamless production and preventing potential disruptions. It involves receiving incoming goods, inspecting them, and confirming quantities against purchase orders.

How it works: Upon delivery of raw materials, a manufacturing company examines the quality and quantity of each item before updating the inventory system. The company can autonomously use automated guided vehicles (AGVs) to unload incoming shipments from trucks or containers during this process. Equipped with sensors and navigation systems, AGVs can navigate through tight spaces and transport goods to the designated inspection area, reducing manual labor and expediting the unloading process.

2. Putaway and storage

Within this process, the company optimizes inventory organization, maximizing accessibility and minimizing retrieval times, thus enhancing overall operational efficiency. Goods are allocated to specific storage locations based on predetermined criteria, optimizing space and accessibility.

How it works: Newly received components are placed in designated bins within the warehouse based on their characteristics and frequency of use. Using robotic arms equipped with advanced sensors and algorithms, manufacturers analyze available storage space and determine the optimal placement of items. This ensures that items are stored to maximize space utilization, reducing wasted space and the need for excessive storage areas.

3. Order picking and packing

The order fulfillment team selects products from storage locations, assembles them into orders, and then packs them for shipping. Warehouse supervisors collaborate to ensure that the items picked match the order specifications and that accurate inventory records are maintained.

How it works: When fulfilling customer orders, items are picked from the shelves, grouped, and packed into boxes before shipping.

4. Inventory control

Maintaining accurate stock levels, thus preventing stockouts or overstock situations, facilitates efficient inventory tracking and cost management for any manufacturing company. Inventory managers and procurement teams utilize historical data and market trends to predict future demand and categorize items based on their value and significance, enabling better allocation of resources.

How it works: Through cycle counting, a manufacturing company counts a subset of items each day to maintain accurate inventory records.

5. Order shipping and documentation

A proper shipping process ensures accurate order fulfillment, correct documentation for regulatory compliance, and a positive customer experience. Manufacturers prepare shipment orders, ensure the right items are included, and supplement them with the necessary documentation.

How it works: Before dispatching products to customers, the shipping team verifies the order contents, generates shipping labels, and creates packing slips. Today’s cloud-based platforms allow stakeholders, including customers and logistics partners, to access order and shipping information from anywhere. This promotes transparency and collaboration in the shipping process.

6. Returns management

The company determines appropriate actions (rework, disposal, restocking), minimizes waste and maintains accurate inventory records.

How it works: When customers return defective products, the manufacturing company inspects the items, determines if they can be repaired, and updates inventory accordingly.

How SAP Transforms Warehouse Management

The implementation of automated systems entails a substantial endeavor, demanding meticulous attention. The warehouse management system's functionality should seamlessly align with unique warehouse prerequisites, underscoring the pivotal role of methodical scrutiny and judicious software selection.

SAP, a global frontrunner in business process control software, is at the forefront of this technological landscape. With a commitment to enhancing information flow within enterprises, SAP crafts solutions that transcend industry norms. Among these, the SAP Extended Warehouse Management System (SAP EWM) emerges as an industry standard, wielding unparalleled prowess to govern automated and manual warehouse operations within the SAP framework.

SAP EWM Adoption in Manufacturing Companies 

With SAP EWM, businesses can centrally control all goods movements and provide users with tools to monitor warehouse activities. This capability is especially crucial for discrete manufacturers. Here are the main benefits of adopting SAP EWM that are particularly advantageous for the manufacturing industry:

• Streamlined production integration

SAP EWM seamlessly integrates with manufacturing processes, ensuring that raw materials, components, and finished goods are available for production. Real-time visibility into inventory levels reduces downtime and delays.

• Enhanced supply chain logistics visibility

SAP EWM provides a comprehensive view of inventory across multiple locations, both within and beyond the manufacturing facility. Thorough transparency allows manufacturers to optimize supply chain decisions, ensuring that the right materials are available on time.

• Efficient resource allocation

With SAP EWM's advanced optimization algorithms, manufacturers can intelligently allocate storage space, considering factors like item characteristics, turnover rates, and space availability. This leads to efficient space utilization and improved warehouse layouts.

• Quality control and traceability

SAP EWM offers robust quality control features, enabling manufacturers to enforce inspection processes. Integrated traceability helps to ensure compliance with regulations and standards.

• Order fulfillment excellence

SAP EWM optimizes order picking and packing processes through advanced algorithms, resulting in more accurate order fulfillment. This translates to customer satisfaction and, ultimately, enhanced brand reputation.

SAP EWM: A Real-Life Implementation Example

LeverX has an example that demonstrates why it is essential to carefully analyze and select a suitable software system.

SAP EWM Greenfield Implementation for a Pharmaceutical Company

The core objective of the software implementation was to streamline manufacturing and logistics operations by deploying the cutting-edge SAP S/4HANA solution.

How did SAP help?

The project encompassed various adaptations and integrations extended to the SAP EWM Warehouse Management monitor and the utilization of radio-frequency technology for loading and unloading processes. This enabled route determination based on specified condition techniques, facilitating the creation of tours for different operational scenarios.

Results:

• 100% compliance with GMP and FDA pharmaceutical standards
• Automation of manual material distribution and accounting processes
• Increase in warehouse staff productivity by up to 35%
• Reduced time spent on material transfer order processing by up to 15%

Following the successful implementation of the SAP EWM project, the pharmaceutical company realized a comprehensive attainment of its core business objectives.

Furthermore, an exceptional milestone was reached with an impeccable adherence rate of 100% to the stringent GMP and FDA pharmaceutical standards, underscoring the system's robust regulatory compliance capabilities. A pivotal transformation was also witnessed by automating the manual material distribution and accounting processes, ushering in a new era of streamlined operations, reduced errors, and increased productivity.

Conclusion

Manufacturing entities can achieve a harmonious blend of flexibility and control by strategically harnessing the benefits of SAP EWM. The symbiotic approach empowers companies to cut costs and optimize resource allocation while improving sustainability practices. With accelerated warehouse processes at the core, the industry can look forward to a future of streamlined operations, bolstered efficiency, and a greener footprint.