1. Map Your IM Storage Locations and WM Warehouses the Right Way
Isaac Mazliach
S.D.M. Israel

2. This Session Will Cover the Mapping of Warehouses and Storage Locations
Deciding whether a specific storage place will be handled as a warehouse [Warehouse Management (WM)] or as a storage location [Inventory Management (IM)] is not enough!
After the completion of that decision, optimize the relationships at all of the plant’s storage places
This session will talk about the main differences between a warehouse and a storage location – and then recommend the best “mapping” of combined storage places – WM and IM together to optimize the SAP system

3. What We’ll Cover …
The storage location as a storage facility
The warehouse as a storage facility
Combining storage locations and warehouses
What is storage location and warehouse mapping?
Wrap-up

4. Defining “Storage Location”
Inventory Management is an essential component of Materials Management and is embedded in the whole logistics process
By managing your warehouse stock using Inventory Management, you will be able to manage your material stocks in several storage locations in terms of quantity and value
Warehouse Management also enables you to display your entire warehouse complex in the system in detail, including storage levels. This will be discussed later in this session.

5. Defining “Storage Location” (cont.)
Material
Requirement
Planning
External Procurement
Purchasing
Internal Procurement
Production
Inventory
Management
Goods Receipt
Transfer Posting
Goods Issue
Logistics
Execution
Warehouse
Management
Shipping
Transfer
Invoice Verification
Sales & Distribution
Internal and External
Accounting

6. Defining “Storage Location” (cont.)
Storage location is part of SAP’s enterprise structure that holds the stock quantity
Option: To maintain a single storage bin for every material in every storage location
To simplify: To utilize a storage location as the “storage facility” means that the material’s actual bin location is not important, or that the material is located in a single bin throughout the storage

7. Defining “Storage Location” – Customizing
IMG > Enterprise structure > Definition > Materials Management > Maintain storage location
First, define to which plant the storage location is created
Second, maintain the storage locations and their addresses

8. What is a Storage Location?
Company
Code
Plant
2000
Plant
1000
Storage
Location
0001
Storage
Location
0001
Storage
Location
0002

9. Decision Criteria to Determine the “Storage Facility”
The storage location should be utilized as the storage facility if one or more of the following are met:
The storage place is relatively small
There are low levels of inventory on hand
The material handling processes are simple (Goods Received, Goods Issue, Transfer Posting)
Picking and packing processes should not be managed by SAP
There is a lower volume of activity
Outsourced warehouse operations

10. What We’ll Cover …
The storage location as a storage facility
The warehouse as a storage facility
Combining storage locations and warehouses
What is storage location and warehouse mapping?
Wrap-up

11. What is a Warehouse?
As of SAP R/3 4.5, Warehouse Management is part of Logistics Execution
Warehouse Management allows you to implement all of the processes in Logistics Execution, whether sales orders have to be fulfilled or production needs to be supplied with components. Whether goods delivered from a vendor or finished products from in-house production have to be put away, Warehouse Management provides the necessary tools.

12. What is a Warehouse? (cont.)
Warehouse is part of SAP’s enterprise structure that holds the stock bin location
To simplify: When a warehouse (Warehouse Management) is utilized as a storage facility, a material’s actual bin location is of great importance
Advantage: Track a material’s changing bin location
Warehouse Management has greater applications for use in a storage facility
Disadvantage: More complexity and usually requires more data entry

13. Defining a Warehouse – Customizing
IMG > Enterprise structure > Definition > Logistics Execution > Define … Warehouse number
Copy from standard Warehouse number 001

14. Defining a Warehouse – Customizing (cont.)
IMG > Enterprise structure > Assignment > Logistics Execution > Assign Warehouse number to plant/ storage location
It is possible to assign more than one storage location from different plants

15. Defining a Warehouse – Customizing (cont.)
IMG > Logistics Execution > Warehouse Management > …
When you copy Warehouse 001, most of the activities will have default data
Now it is time to design your specific warehouse

16. What is a Warehouse? Company Code Plant 2000 Plant 1000
Storage Location 0001
Storage Location 0001
Storage Location 0002
Warehouse 100
Storage Type 001
Storage Type 002

17. Basic Functions of Warehouse Management
Warehouse Management in SAP ECC contains the following five basic functions:
Inventory Management exact to storage bin level
Implementation and control of all goods movements
Monitoring of the processing of these goods movements
Connection to mobile data entry as part of the integrated Radio Frequency (RF) solution
Connection to specialized external systems using an interface

18. Basic Functions of Warehouse Management (cont.)
While Inventory Management, as part of Materials Management, can only provide information on the total quantity of material in stock, Warehouse Management enables a precise specification of the exact location of a particular quantity of material and informs you whether this quantity is currently in a storage bin or on the move

19. Using the Warehouse as a Storage Facility
Use the warehouse as the storage place if one or more of the following are met:
The storage place is relatively large
Large number of materials on hand (e.g., a storage facility that holds 100,000 materials would mostly be handled as a warehouse)
Number of transactions (movements) is high
Traceability and visibility is critical
Complex processes

20. What We’ll Cover …
The storage location as a storage facility
The warehouse as a storage facility
Combining storage locations and warehouses
What is storage location and warehouse mapping?
Wrap-up

21. Recommendations
Companies often select only one option: Inventory Management or Warehouse Management
If a company is very small, Inventory Management is often the ideal choice
In general, if you do not HAVE to implement Warehouse Management, stick to Inventory Management. Keep it simple!
When Warehouse Management is implemented, it is recommended that storage locations be used according to processes

22. Recommendations (cont.)
Goods Receipt from production (Goods Receipt to storage location, then Transfer Posting to Warehouse Management)
Warehouse
PP Order
915
Transfer Posting
to warehouse
100
902
Storage Location 0001
Goods Receipt
from production

23. Material Master MRP-2 Enter the Production storage location
Here, enter a storage location NOT managed by warehouse
After Goods Receipt from Production into this storage location, perform Transfer Posting (Txn MIGO) to the warehouse (Movement Type 311)

24. Goods Issue Using Backflushing
Goods Issue using Backflushing (Transfer Posting from Warehouse Management to storage location, then auto Goods Issue to order)
Storage Location 0001
Warehouse
912
Transfer Posting
from warehouse
100
Goods Issue
backflushed
material
902
PP Order

25. Automatic Issue to Production Order
This field defines the storage location from which the component will be automatically issued to the production order
This parameter defines that this component is not issued manually to the production order, but rather backflushed automatically

26. Dispersed Warehouse Locations
Small locations that reside in different physical location(s) than the warehouse
Storage Location 0001
Warehouse
912
Storage Location 0002
Storage Location 0003
100
Storage Location 0004
902

27. Transfer Posting + BAPI (Interface)
QM Integration
If decentralized Warehouse Management is used with Quality Management (QM) integration, then QM stock must reside in a storage location different than the warehouse
Purchase
Order
Decentralized Warehouse
912
Goods Receipt
100
Transfer
Posting QM
Stock
902
Unrestricted-Use
Stock
Transfer Posting + BAPI (Interface)

28. Special Circumstances
Some special stocks cannot be implemented in Warehouse Management (e.g., customer stock as in Industry Solution – Aerospace & Defense)
In that case – a storage location should be used
Warehouse
912
Transfer
Posting
100
Customer
Stock
902
Customer
Stock

29. What We’ll Cover …
The storage location as a storage facility
The warehouse as a storage facility
Combining storage locations and warehouses
What is storage location and warehouse mapping?
Wrap-up

30. Everything You Need to Know About Mapping
Mapping means the complete landscape of the combined warehouses and storage locations
Mapping may change as an enterprise evolves
Mapping may be created by adding all storage facilities as boxes on a paper with connecting lines between all facilities
The complete mapping should include production facilities as well as vendors, customers, and other related systems

31. Goods Receipt (GR) from Purchase Order (PO)
The connecting lines should introduce a specific business scenario and its implications, such as GR to PO
Purchase
Order
Goods Receipt for materials with Quality Management
Transaction MIGO
Movement Type 101
Goods Receipt for materials without Quality Management
Transaction MIGO
Movement Type 101
Transfer Posting
Transaction QA11
Movement Type 321 QM
Stock
Unrestricted-Use
Stock
Purchase
Order

32. Typical Mapping Warehouse Warehouse Storage Location Storage Location
Purchase
Order
Storage
Location
Purchase
Order
Storage
Location
Storage
Location
Storage
Location
Warehouse
Sales
Order
Storage
Location
Storage
Location
Storage
Location
Storage
Location

33. The Purposes of Mapping
High-level definition of business processes
Basis for authorizations
Better understanding of “who does what” at a glance
Minimizing material movement requirements
Optimizing supply chain processes

34. Examples of Correct Mapping
Try to have as many materials as possible reside in a single storage location (if that is not possible – design an easy process to move the materials from one storage location to another)
Design material movements according to SAP’s available functionality
Think of information transfer – not only of transactions, i.e., how would the warehouse know a material should be transferred from one location to another
The information might transfer by creating a reservation, , fax, phone, etc. The transaction would be MIGO Transfer Posting 311, for instance.

35. Examples of Correct Mapping – Crate Parts
Different materials (crate parts, pick parts, etc.) behave differently – design the processes accordingly
Crate Parts: The materials are stored in crates or other standard containers
These parts are independent of PO and are issued as a full crate. In the standard system, you order crate parts manually.
Goods Issue
Transaction MIGO
Movement Type 201
Goods Issue
Transaction MIGO
Movement Type 261
Unrestricted-Use
Stock
Cost
Center
Production
Order  

36. Implementing Crate Parts in Warehouse Management
Create a Control Cycle: SAP Menu > Logistics > Logistics Execution > Master Data > Warehouse > Control Cycle Production Supply > Create
On the left, there are the Staging Indicator Values, for example, crate part
NOTE: A Control Cycle without material means all materials EXCEPT those materials with specific Control Cycle

37. Examples of Correct Mapping – Bulk Material
Bulk material: An item in a Bill of Material (BOM) that is stored loosely at the work center, ready for use
Bulk materials are used in small quantities of low value and are not taken into account when costing an order
Goods Issue
Transaction MIGO
Movement Type 201
Unrestricted-Use
Stock 
Cost
Center
Production
Order X

38. Implementing Bulk Materials – Material Master/BOM
Bulk material is defined in the Material Master
NOTE: You may fine-tune and define the bulk materials in the Bill of Materials (BOM)
Bulk material definition

39. Examples of Correct Mapping – Pick Parts
Pick Parts: The pick parts are materials that are provided in the required quantities as specified in a production order
These parts can be provided in a physical storage bin or in a dynamic storage bin, for example, with the name “Production Order”
Goods Issue
Transaction MIGO
Movement Type 261
Unrestricted-Use
Stock X
Cost
Center
Production
Order 

40. Examples of Incorrect Mapping
Backflushed material is a material that is issued automatically to an order after the complete order or order step is approved (e.g., specific electronic parts assembled in an SMT machine)
These parts should be issued from a storage location
Warehouse
912
100
Backflushed material
PP Order
902

41. What We’ll Cover …
The storage location as a storage facility
The warehouse as a storage facility
Combining storage locations and warehouses
What is storage location and warehouse mapping?
Wrap-up

42. Product documentation: For customers and partners:
Resources
Product information:
Product documentation:
For customers and partners: *
Information about courses:
* Requires login credentials to the SAP Service Marketplace

43. Do not forget to think of your parts categories
7 Key Points to Take Home
Correctly choose which storage facilities would be handled by Inventory Management and which by Warehouse Management
Do not forget to think of your parts categories
Create Master Data accordingly
Map your entire organization landscape – this will help you find your wrong decisions
Avoid incorrect mapping

44. 7 Key Points to Take Home (cont.)
SAP functionality may change your Inventory Management/Warehouse Management decisions
Change the mapping as your organization changes
Consult all modules (not only Materials Management) when designing the mapping

45. Your Turn!
How to contact me:
Isaac Mazliach