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Depiction of the Physical Warehouse in WMS
The warehouse structure in Warehouse Management is hierarchical and consists of the following elements:
You can define an entire physical warehouse complex in WM using a single warehouse number.
Each of the warehouse facilities or areas that make up the warehouse complex can be defined as a type of storage area or "storage type" on the basis of its spatial, technical, and organizational characteristics.
Each storage type is divided into storage sections. A storage section generally includes all bins that have certain characteristics in common, such as bins for "fast-moving items" near a goods issue area.
Each storage type and storage section consists of a row of storage spaces that are referred to in WMS as storage bins. The coordinates of the bins indicate the exact position in the warehouse where goods can be stored.
The quant serves to perform inventory management of a material at the storage bin.
To depict the setup of your physical warehouse in the system, first define the warehouse structures in WMS in the Customizing application. We recommend that you adhere to the following sequence when setting up your warehouse structure in the system.
The evolution of warehouse management systems (WMS) is very similar to that of many other software solutions. Initially a system to control movement and storage of materials within a warehouse, the role of WMS is expanding to including light manufacturing, transportation management, order management, and complete accounting systems. To use the grandfather of operations-related software, MRP, as a comparison, material requirements planning (MRP) started as a system for planning raw material requirements in a manufacturing environment. Soon MRP evolved into manufacturing resource planning (MRPII), which took the basic MRP system and added scheduling and capacity planning logic. Eventually MRPII evolved into enterprise resource planning (ERP), incorporating all the MRPII functionality with full financials and customer and vendor management functionality. Now, whether WMS evolving into a warehouse-focused ERP system is a good thing or not is up to debate. What is clear is that the expansion of the overlap in functionality between Warehouse Management Systems, Enterprise Resource Planning, Distribution Requirements Planning, Transportation Management Systems, Supply Chain Planning, Advanced Planning and Scheduling, and Manufacturing Execution Systems will only increase the level of confusion among companies looking for software solutions for their operations.
Even though WMS continues to gain added functionality, the initial core functionality of a WMS has not really changed. The primary purpose of a WMS is to control the movement and storage of materials within an operation and process the associated transactions. Directed picking, directed replenishment, and directed putaway are the key to WMS. The detailed setup and processing within a WMS can vary significantly from one software vendor to another, however the basic logic will use a combination of item, location, quantity, unit of measure, and order information to determine where to stock, where to pick, and in what sequence to perform these operations.
At a bare minimum, a WMS should:
Not every warehouse needs a WMS. Certainly any warehouse could benefit from some of the functionality but is the benefit great enough to justify the initial and ongoing costs associated with WMS? Warehouse Management Systems are big, complex, data intensive, applications. They tend to require a lot of initial setup, a lot of system resources to run, and a lot of ongoing data management to continue to run. That’s right, you need to "manage" your warehouse "management" system. Often times, large operations will end up creating a new IS department with the sole responsibility of managing the WMS.
The implementation of a WMS along with automated data collection will likely give you increases in accuracy, reduction in labor costs (provided the labor required to maintain the system is less than the labor saved on the warehouse floor), and a greater ability to service the customer by reducing cycle times. Expectations of inventory reduction and increased storage capacity are less likely. While increased accuracy and efficiencies in the receiving process may reduce the level of safety stock required, the impact of this reduction will likely be negligible in comparison to overall inventory levels.The predominant factors that control inventory levels are lot sizing, lead times, and demand variability. It is unlikely that a WMS will have a significant impact on any of these factors. And while a WMS certainly provides the tools for more organized storage which may result in increased storage capacity, this improvement will be relative to just how sloppy your pre-WMS processes were.
Beyond labor efficiencies, the determining factors in deciding to implement a WMS tend to be more often associated with the need to do something to service your customers that your current system does not support (or does not support well) such as first-in-first-out, cross-docking, automated pick replenishment, wave picking, lot tracking, yard management, automated data collection, automated material handling equipment, etc.
WMS SetupThe setup requirements of WMS can be extensive. The characteristics of each item and location must be maintained either at the detail level or by grouping similar items and locations into categories. An example of item characteristics at the detail level would include exact dimensions and weight of each item in each unit of measure the item is stocked (eaches, cases, pallets, etc) as well as information such as whether it can be mixed with other items in a location, whether it is rackable, max stack height, max quantity per location, hazard classifications, finished goods or raw material, fast versus slow mover, etc. Although some operations will need to set up each item this way, most operations will benefit by creating groups of similar products. For example, if you are a distributor of music CDs you would create groups for single CDs, and double CDs, maintaining the detailed dimension and weight information at the group level and only needing to attach the group code to each item. You would likely need to maintain detailed information on special items such as boxed sets or CDs in special packaging. You would also create groups for the different types of locations within your warehouse. An example would be to create three different groups (P1, P2, P3) for the three different sized forward picking locations you use for your CD picking. You then set up the quantity of single CDs that will fit in a P1, P2, and P3 location, quantity of double CDs that fit in a P1, P2, P3 location etc. You would likely also be setting up case quantities, and pallet quantities of each CD group and quantities of cases and pallets per each reserve storage location group.
If this sounds simple, it is…well… sort of. In reality most operations have a much more diverse product mix and will require much more system setup. And setting up the physical characteristics of the product and locations is only part of the picture. You have set up enough so that the system knows where a product can fit and how many will fit in that location. You now need to set up the information needed to let the system decide exactly which location to pick from, replenish from/to, and putaway to, and in what sequence these events should occur (remember WMS is all about “directed” movement). You do this by assigning specific logic to the various combinations of item/order/quantity/location information that will occur.
Below I have listed some of the logic used in determining actual locations and sequences.
It’s very common to combine multiple logic methods to determine the best location. For example you may chose to use pick-to-clear logic within first-in-first-out logic when there are multiple locations with the same receipt date. You also may change the logic based upon current workload. During busy periods you may chose logic that optimizes productivity while during slower periods you switch to logic that optimizes space utilization.
Other Functionality/Considerations
Support for various picking methods varies from one system to another. In high-volume fulfillment operations, picking logic can be a critical factor in WMS selection. See my article on Order Picking for more info on these methods.
Task interleaving describes functionality that mixes dissimilar tasks such as picking and putaway to obtain maximum productivity. Used primarily in full-pallet-load operations, task interleaving will direct a lift truck operator to put away a pallet on his/her way to the next pick. In large warehouses this can greatly reduce travel time, not only increasing productivity, but also reducing wear on the lift trucks and saving on energy costs by reducing lift truck fuel consumption. Task interleaving is also used with cycle counting programs to coordinate a cycle count with a picking or putaway task.
It is generally assumed when you implement WMS that you will also be implementing automatic data collection, usually in the form of radio-frequency (RF) portable terminals with bar code scanners. I recommend incorporating your ADC hardware selection and your software selection into a single process. This is especially true if you are planning on incorporating alternate technologies such as voice systems, RFID, or light-directed systems. You may find that a higher priced WMS package will actually be less expensive in the end since it has a greater level of support for the types of ADC hardware you will be using. In researching WMS packages you may see references like “supports”, “easily integrates with”, “works with”, “seamlessly interfaces with” in describing the software’s functionality related to ADC. Since these statements can mean just about anything, you’ll find it important to ask specific questions related to exactly how the WMS system has been programmed to accommodate ADC equipment. Some WMS products have created specific versions of programs designed to interface with specific ADC devices from specific manufacturers. If this WMS/ADC device combination works for your operation you can save yourself some programming/setup time. If the WMS system does not have this specific functionality, it does not mean that you should not buy the system, it just means that you will have to do some programming either on the WMS system or on the ADC devices. Since programming costs can easily put you over budget you’ll want to have an estimate of these costs up front. As long as you are working closely with the WMS vendor and the ADC hardware supplier at an early stage in the process you should be able to avoid any major surprises here. Read my article on ADC.
If you are planning on using automated material handling equipment such as carousels, ASRS units, AGVs, pick-to-light systems, or sortation systems, you’ll want to consider this during the software selection process. Since these types of automation are very expensive and are usually a core component of your warehouse, you may find that the equipment will drive the selection of the WMS. As with automated data collection, you should be working closely with the equipment manufacturers during the software selection process.
If your vendors are capable of sending advanced shipment notifications (preferably electronically) and attaching compliance labels to the shipments you will want to make sure that the WMS can use this to automate your receiving process. In addition, if you have requirements to provide ASNs for customers, you will also want to verify this functionality.
Most WMS will have some cycle counting functionality. Modifications to cycle counting systems are common to meet specific operational needs. Read my article on Cycle Counting and check out my book on Inventory Accuracy and Cycle Counting.
In its purest form cross-docking is the action of unloading materials from an incoming trailer or rail car and immediately loading these materials in outbound trailers or rail cars thus eliminating the need for warehousing (storage). In reality pure cross-docking is less common; most "cross-docking" operations require large staging areas where inbound materials are sorted, consolidated, and stored until the outbound shipment is complete and ready to ship. If cross docking is part of your operation you will need to verify the logic the WMS uses to facilitate this.
For parcel shippers pick-to-carton logic uses item dimensions/weights to select the shipping carton prior to the order picking process. Items are then picked directly into the shipping carton. When picking is complete, dunnage is added and the carton sealed eliminating a formal packing operation. This logic works best when picking/packing products with similar size/weight characteristics. In operations with a very diverse product mix it's much more difficult to get this type of logic to work effectively.
Slotting describes the activities associated with optimizing product placement in pick locations in a warehouse. There are software packages designed just for slotting, and many WMS packages will also have slotting functionality. Slotting software will generally use item velocity (times picked), cube usage, and minimum pick face dimensions to determine best location. Read my article on Slotting.
Yard management describes the function of managing the contents (inventory) of trailers parked outside the warehouse, or the empty trailers themselves. Yard management is generally associated with cross docking operations and may include the management of both inbound and outbound trailers.
Some WMS systems provide functionality related to labor reporting and capacity planning. Anyone that has worked in manufacturing should be familiar with this type of logic. Basically, you set up standard labor hours and machine (usually lift trucks) hours per task and set the available labor and machine hours per shift. The WMS system will use this info to determine capacity and load. Manufacturing has been using capacity planning for decades with mixed results. The need to factor in efficiency and utilization to determine rated capacity is an example of the shortcomings of this process. Not that I’m necessarily against capacity planning in warehousing, I just think most operations don’t really need it and can avoid the disappointment of trying to make it work. I am, however, a big advocate of labor tracking for individual productivity measurement. Most WMS maintain enough data to create productivity reporting. Since productivity is measured differently from one operation to another you can assume you will have to do some minor modifications here (usually in the form ofcustom reporting).
This functionality is primarily designed for third-party logistics operators. Activity-based billing allows them to calculate billable fees based upon specific activities. For example, a 3PL can assign transaction fees for each receipt, and shipment transaction, as well as fees for storage and other value-added activities.
Unless the WMS vendor has already created a specific interface with your accounting/ERP system (such as those provided by an approved business partner) you can expect to spend some significant programming dollars here. While we are all hoping that integration issues will be magically resolved someday by a standardized interface, we ain’t there yet. Ideally you’ll want an integrator that has already integrated the WMS you chose with the business software you are using. Since this is not always possible you at least want an integrator that is very familiar with one of the systems.
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Before you implement the application component Warehouse Management (Warehouse Management System) you must first define the structure, that is, the physical structure, of your warehouse or warehouse complex and depict it in the system.
Warehouse Structure Without WMS
If you are not using the Warehouse Management system the storage location is the lowest level of inventory management in the system. In the Inventory Management (MM-IM) component, the storage location is defined as the location of physical stock in a plant. In this case, storage locations make up the various warehouse facilities (or areas) of a warehousing complex (for example, high rack storage, picking area or bulk storage). However, you can only manage material stock in a fixed bin warehouse. Random storage is not possible. This type of fixed bin is different from a WMS storage bin in that it is entered into the material master record at the storage location level.
If you are using Inventory Management without WMS, you can assign one or several physical storage locations to each plant.
In this example, storage locations are assigned to two plants. The first plant has two storage locations: storage location 0001 (for example, high-rack storage) and storage location 0002 (for example, bulk storage). The second plant has three storage locations: storage location 0001 (for example, high-rack storage), storage location 0002 (for example, bulk storage), and storage location 0003 (for example, picking area).
In this case, Inventory Management supplies information on the stock quantities at storage location level in the form of quantity totals.
In addition to having a warehouse structure without the Warehouse Management System (WMS), you also have the option in fixed bin warehouses to process warehouse activities using Lean WM. Here you can use the advantages of transfer order processing without having to manage stock quantities at storage bin level.
Recommendation
We recommend that you implement Lean WM in fixed bin warehouses for the purpose of picking deliveries.
Warehouse Structure With WMS
When you implement the Warehouse Management System (WMS) in a plant, you define the individual warehouses (high-rack storage, block storage, picking area, and so on) as storage types within a warehouse complex and group them together under a warehouse number. As a rule, it is not necessary to define several storage locations for a plant since you assign the WMS warehouse number to a storage location from Inventory Management (IM).
It is appropriate to define further storage locations for a plant if other warehouses (storage types) exist within a plant that is not managed using WMS but with Lean WM, for example.
In WMS you define storage bins for each of the storage types. In this way, WMS manages stock information on all materials in the warehouse at storage bin level. In addition, the stock quantities of the material are managed in Inventory Management (MM-IM) at storage location level. In order to link the information at storage location level with the information from the storage bin, assign a warehouse number to the storage location.
This figure depicts two plants that each manage a storage location using WMS.
You can also manage stock for several plants in the same warehouse at the same time. In this case, the same warehouse number is assigned to the storage locations for these plants.
As a rule, it is a good idea to manage only the stocks of one storage location and the same plant within a warehouse number. However, you can also manage several storage locations of one and the same plant within a warehouse number. For scenarios associated with this structural configuration, see Storage Locations in TRs, Tos and Posting Changes.
For information on how to link a plant storage location in IM with a warehouse number in WMS, refer to the Implementation Guide under the path Enterprise Structure Assignment Logistics Execution Assign warehouse number to plant / storage location .
The system uses the links that you create to Inventory Management (IM) to ensure that certain processes in Quality Management (QM), Product Planning(PP), and Sales and Distribution (SD) are carried out in the Warehouse Management System(WMS) for the appropriate warehouse number.
Depiction of the Physical Warehouse in WMS
The warehouse structure in Warehouse Management is hierarchical and consists of the following elements:
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