SAP Extended Warehouse Management (SAP EWM) offers significant advantages when compared with SAP Warehouse Management (SAP WM), particularly for customers with large-volume warehouses and complex automated warehouse sub-processes (e.g., pallets and pallet stretchers). SAP EWM offers numerous new features and provides tools that allow warehouses to take on strategic significance in the supply chain.
With SAP EWM, even more complex warehouse structures and processes can be mapped in a standard solution, allowing customers to control material flow, manage resources, operate a wide range of picking systems (including voice picking), and support the use of mobile data-entry devices. And, for the first time, they can now manage an entire warehouse conveyor system, end to end, from within an SAP system.
There are three possible scenarios for implementing SAP EWM:
- as an integrated add-on to a central SAP ERP 6.0 system
- as part of a decentralized SCM module, with a direct connection to the ERP system
- as a decentralized, stand-alone solution
ROI depends on many factors
Aside from independence from the central ERP system, the advantages of a decentralized SAP EWM solution include better scalability, the option of linking to several ERP systems, improved performance, and simpler outsourcing. But, this scenario makes the IT landscape significantly more complex and requires users to work in two different systems.
A central warehouse management system, on the other hand, requires fewer system interfaces and generally incurs lower administrative and hardware costs.
Once installed, the benefits of an SAP EWM solution quickly become evident. Equipped with improved warehouse control functionality, companies can experience reductions in picking errors and inventory costs. They also report higher customer satisfaction levels due to more accurate and punctual deliveries.
Companies considering an SAP EWM implementation should keep in mind that the results of a cost/benefit analysis and ROI calculation will depend on their specific business situation. However, the cost of licenses, new hardware, user training, and software implementation will likely be offset by increased efficiency and transparency, savings that result from replacing legacy systems, and lower maintenance costs achieved by working with a uniform software release.
Because machines lose their “black box” character by being connected up to the warehouse management system (in a technically fairly straightforward process), transparency levels rise and automated processes become easier to monitor and control. The number of error-prone interfaces decreases and, potentially, fewer external service providers are required.
“Hundreds of factors influence the result of a cost/benefit analysis and they need to be investigated in each specific case. But, on average, our experience shows that it is possible to cut previous warehouse costs by about one third,” says Armin Reiss, a senior IT consultant for SCM and logistics solutions at BASF.
Templates cover 10 typical warehouse processes
Depending on its complexity and the framework conditions, an SAP EWM project can take more than a year to complete, according to logistics expert Reiss. To reduce the duration and cost of such a project, BASF IT Services developed a template approach and a functional prototype, which currently maps 10 typical warehouse processes that cover about 90 percent of all requirements.
These include put-away, internal transfer, and stock removal processes as well as processes that meet the special requirements of bulk and pallet storage, such as mobile data entry and connections to conveyor systems.
By using the prototype and templates and the detailed customizing guidelines provided, companies can keep their adjustment effort at manageable levels during the implementation project itself. The prototype came into being as a result of a feasibility study on the use of SAP EWM for automated warehouse control. Reiss explains: “Our consultants put about a year’s worth of work into the prototype.”
The result is a set of predefined templates that make it possible to reduce the time effort for a project by between 30 and 50 percent. Even the job of entering the process details and scope in the prototype IT landscape, which, among other things, includes integrated barcode entry, is faster and more accurate than before.
While developing their prototype, the BASF consultants visited various SAP EWM pilot users in a wide range of industries, conducted specialist discussions with them, and evaluated their feedback. Expertise that relates to SAP EWM is entered into a knowledge database that all the consultants can access. “We learn from the mistakes of others to minimize the risk for our own customers,” says Reiss.
BASF team focuses on supply chain and SAP CRM
“Our particular area of expertise is obviously the process industry; batch management, dangerous goods handling, and so on,” says Reiss. But BASF’s seven-strong SAP EWM specialist team has also acquired knowledge of other industries as well.
It is part of a large SCM team that operates three competence centers in Europe and numbers more than 100 IT consultants for the supply chain management environment. About a quarter of these specialize in SAP SCM.
The implementation and operation of SAP systems are two of the core competencies of BASF IT Services. Worldwide, the company has successfully implemented several hundred SAP projects, both within and outside of the BASF group, and it operates more than 500 SAP systems for the parent company alone – including several in the SCM area and in warehouse management. These systems run in a wide variety of storage locations, ranging from small specialized warehouses to one of Europe’s largest high-rack storage areas.