Issue

Syensqo currently operates on the SAP ECC platform, utilizing the SAP Warehouse Management (WM) solution for its logistics and inventory management processes.
SAP WM is serving as the backbone of their warehouse operations for packed items.
This includes handling tasks such as goods receipt, putaway, picking, and inventory tracking.

However, looking at the future (transition to SAP S/4HANA), SAP WM becomes obsolete and new possibilities emerge.

Recommendation

With implementing basic SAP Extended Warehouse Management (Option B), Syensqo will have a future proof warehouse management solution in place. 

Background & Context

Below an overview of the SAP Warehouse Management Systems (WMS) are displayed: 

Not all warehouses at Syensqo are required to use a Warehouse Management System. Warehouses which are not using a Warehouse Management Solution will manage stock at Inventory Management level:

A additional comparison between Warehouse Management Systems and Inventory Management is displayed: 

Assumptions

• The SAP S/4 HANA implementation is a green field implementation. Therefore the deployment approach of warehouse management system in an S/4 HANA migration is not considered. 
  
  
• To be in line with the standardization goals of Syensqo, only one of the options outlined in this document will be selected for implementation. 

• Not every warehouse will required a Warehouse Management System. These decisions on warehouse level will be taken during detailed design based on the business rules described in this document.

Note: This also includes the warehouses which are currently using Lean Warehouse Management in WP1.
This is a simplified approach for Warehouse Management which won't be used anymore in the future. 

• 3PL warehouses won't always required a warehouse management solution in the Syensqo system.
  These decisions will be taken during detailed design based on the business rules described in this document.

• SAP EWM offers different deployment options. Based on below explanation, decentral EWM is not further considered in this document.

  • Embedded EWM: EWM is embedded within the SAP S/4HANA system. Embedded EWM is suitable for simpler warehouse processes and organizations looking for tighter integration between logistics and other business processes.
    
  • Decentral EWM: EWM is deployed as a standalone system separate from the core SAP S/4HANA system. It provides advanced warehouse management capabilities. Decentralized EWM is advised for companies offering 3PL functionalities, integrated warehouse automations and/or high volumes. It is assumed that these functionalities are currently not required for Syensqo, nor will they be needed in the future.

Constraints

• Refer to impact: There is no integration between advanced TM and basic EWM.

Impacts

• The implementation of Basic EWM will impact the integration of EWM and TM (See Reference 1):
  • Basic EWM can integrate with basic TM.
    The benefit is that the information of the freight order -this is similar to shipment - is visible during monitoring and execution of warehouse activities. This functionality is called Advanced Shipping and Receiving. Some of the advantage are:
    • The freight order is visible in warehouse reporting.
    • Loading can be done on the level of freight order instead of outbound delivery. 
  • There is no integration between advanced TM and basic EWM.
    This means that all warehouse activities will be executed on the level of deliveries since freight orders are not visible. 

Business Rules

As mentioned before, a Warehouse Management System is not required in all warehouses. 

• These 5 criteria will be used during detailed design to determine if a warehouse* requires a warehouse management system.
  *Note: These criteria will also be used for spare parts warehouses and R&I centers. These criteria are not relevant for all 3PL warehouses. 

1. Stock accuracy: Real time visibility on the physical locations of goods in the warehouse is required.
   Knowing the exact location of materials is critical.
   
   
2. Warehouse execution: The warehouse operator requires guidance from the system during execution of the warehouse processes.
   E.g. The system will guide the operator to the area/ location in the warehouse where the goods need to be picked or putaway.
   
   
3. Volume: More than X storage bins are required. The specific number of storage bins will be determined during detailed design.
   This can deviate between manufacturing warehouses and spare parts or R&I centers.
   
   
4. Volume: More than X warehouse operators are working in the warehouse.
   The specific number of warehouse operators will be determined during detailed design.
   This can deviate between manufacturing warehouses and spare parts or R&I centers.
   
   
5. Type of products: Packaged products are stored in the warehouse. Not relevant for stock in bulk and silo's.

• There are guidelines on how to manage 3PL warehouses.
  
  For 3PL warehouses handling the execution of the warehouse processes and having their own WMS,
  stock can be handled on higher level in the Syenqo system using Inventory Mangement.
  This means no setup of Warehouse Management is required.
  To optimize efficiency and stock accuracy, updates of stock levels and other registrations are posted automatically using an interface. 
  
  However, reasons can be identified to manage stock in 3PL warehouses on Warehouse Management level.
  Some valid reasons are: 
  
  • Syensqo is handling the execution of the processes internally in the 3PL warehouses. 
  • Syensqo requires more detailed visibility of 3PL stock in the Syensqo system. 
  • There is no interface created with the 3PL warehouses.
    The 3PL is expected to do double registration; registration in their own WMS and directly in the Syensqo system.
    
    These are some of the reasons no interface is created with 3PL warehouses:
    • Limited maturity/ capabilities of 3PL sites. 
    • Limited term of agreement with 3PL. 
    • Limited volume processed by 3PL. 
    • Type of activities performed by 3PL.

Options considered

Option A: Stock Room Management

A basic version of the current SAP WM solution used at Syensqo.
 This means that the terminology and processes would be similar for the users.

 Functionalities in Stock Room Management are more limited compared to SAP WM functionalities.
By going from SAP WM to Stock Room Management, these are some of the functionalities that will be lost:

• Value Added Services
• Yard Management
• Cross-Docking
• Wave Management

  This solution is no longer on the roadmap of SAP.
This means that SAP won't further invest in this solutions and no more improvements are expected.
Note that serial number management is not available (See Reference 2).

Option B: Basic Extended Warehouse Management 

The new Warehouse Management Solution in S/4 HANA to support basic warehouse processes.
No extra licenses are required. There is the option to use extra functionalities and go to advanced EWM if required (Option C).
Note that serial number management is available (See Reference 2).

More extended monitoring functionalities compared to Stock Room Management.

The terminology and processes are different for the users compared to SAP WM in ECC.
Sufficient training is required. Complexity can be limited by keeping it light during the design.

Option C: Advanced Extended Warehouse Management

 This advanced option is adding advanced Warehouse Management functionalities on top of the basic ones of option B.
Some of the functionalities: 

• Value Added Services, e.g. Kit to order 
• Yard Management
• Cross-Docking
• Wave Management

Extra licenses required.

Option D: Non-SAP Warehouse Management System

Non-SAP Warehouse Management Systems like Körber (See Reference 3).

Working with a non-SAP solution require extra interfaces to SAP S/4 HANA.

The terminology and processes are different for the users compared to SAP WM in ECC.
Sufficient training is required. 

Advanced functionalities required.

Evaluation

Implementing SAP EWM provides a future-proof solution to support Syensqo’s warehouse management processes.

Given the fact that Syensqo's strategic priorities do not center around warehouse management,
the suggested approach is to support all basic warehouse processes and to limit the scope in the initial implementation (Option B).

Additional functionalities and complexity can be added where needed in later phases (Option C). 

	Option A: SRM	Option B: Basic EWM	Option C: Advanced EWM	Option D: Non-SAP WMS
Functionalities	Less functionalities compared to the old SAP WM solution in ECC.	Better monitoring capabilities. Only supports basic warehouse management processes.	Supports more advanced warehouse management processes.	Supports more advanced warehouse management processes.
Integration	Embedded in S/4 HANA	Embedded in S/4 HANA	Embedded in S/4 HANA	Extra interface with S/4 HANA is required.
Scalability and future growth	Not on the future roadmap of SAP, so no more improvements.	Future proof SAP solution.	Future proof SAP solution.	TBD
Implementing effort and Change Management	Terminology and processes would be similar for the users. Less implementation effort e.g. less training required.	Sufficient training required for the users.  Limited scope of EWM implementation will limit complexity.	More implementation effort because of extensive scope. Limit increased complexity of advanced functionalities by using a phased approach; first Option B, Option C in a later phase if required.	TBD

See also

1. Reference to KDD Transportation Management: 
   TM KDD 19 Basic Shipping vs Advanced TM - ERP Rebuild - Syensqo - Wiki knowledge base
2. Reference to KDD Logistics: 
   Logistics - Global Track & Trace Options: Batch vs Serial Number - ERP Rebuild - Syensqo - Wiki knowledge base 
3. Reference to Körber website:
   WMS for SMB Businesses (koerber-supplychain-software.com)
   

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