Executive Summary

solutions
Executive summary
Introduction
A framework for decision-making
Todays complex supply chain realities and diffi cult
economic conditions are making it more important than
ever for executives and managers to feel confi dent in
their decisions regarding IT investments. Understanding
the many options in selecting a suitable warehouse
management system (WMS) is critical for meeting both
present and future business requirements.
This white paper aims to provide a framework for
understanding and assessing two of those options: SAPs
WM and EWM solutions.
SAP offers two different WMSs to its customers.
The SAP WM application was fi rst introduced as a submodule
of its materials management application within
the R/3 enterprise software releases. Functionality
enhancements were provided with each new release, up
to and including the current release of the enterprise
resource planning (ERP) software.
The SAP EWM was developed as a component of the
Supply Chain Management (SCM) business suite. It is
separate and distinct from the ERP WM system, in terms
of its architecture and functionality.
The differences between these systems, and a rationale
for assessing and choosing one or the other, is presented
in the following sections.
A framework for gathering relevant information
is depicted at right.
An initial assessment of the companys business
model, focusing on the supply chain, is a
necessary fi rst step. While it is important to
create metrics based on current volumes and
the existing supply chain network, any future
changes to the model must also be considered.
A high-level description of business requirements
should follow the assessment. At this point,
the companys needs for system support in
key warehouse process areas should become
apparent. Weightings can be applied to various
requirements to provide a more complete target
vision. The documentation and approval of these
requirements will speed up the decision-making
process and will also increase the believability of
the ensuing business case.
A comparison of the SAP WM and EWM solutions | Page 3
Understanding your supply chain business model

Any decision on a WMS must be preceded by a thorough
analysis of your as-is and future business models. Here is

a list of suggested business process attributes that should
be measured and understood fi rst.
Volumes
The number of receipts, putaways, picks and transfers

within a warehouse must be measured in terms of order
lines per day or units per day. Are these volumes expected
to increase over time? Does seasonality cause fl uctuations
in the supply chain at different times of the year? The
number of stock-keeping units (SKUs) is also a relevant
indicator of volume.
Facilities
The number of facilities, and the types of activities carried

out at each facility, needs to be considered.
The emphasis on pick-and-pack activity is typically
much higher at distribution center facilities than at
manufacturing sites, for example, while manufacturing
sites require support for the staging of materials to
production areas. The supply chain network may also
include one or more third-party logistics providers (3PLs).
The number and type of facilities will give you a sense of
the overall complexity of your supply chain and provide a
starting point for developing your functional requirements
for a WMS.
Warehouse process complexity
Warehouse processes can vary from simple to highly

complex. In goods receipt, for example, materials may
simply need to be offl oaded from trailers or rail cars and
forwarded directly to storage areas with no intermediate
handling, while other inbound materials may require a
sequence of process steps, such as quality inspection,
deconsolidation, sorting, relabelling and putaway. Be sure
to review all of the processes that are carried out at all the
sites: inbound, outbound and internal processes, such as
inventory counting and replenishment.
Page 4 | A comparison of the SAP WM and EWM solutions
Understanding your supply chain business model

Labor complexity
Smaller warehouse facilities can be operated by a few

skilled and knowledgeable employees while larger
ones can require the efforts of dozens or hundreds of
individuals. With higher numbers of workers, it is more
important to understand the time and effort expected
to be spent on specifi c warehouse tasks. In order to
maximize employee productivity, you need to be able to
gauge actual efforts against standard measurements, and
to dynamically adjust the fl ow of the operation according
to unique events. A robust labor management system,
integrated within the WMS, is necessary to realize these
benefi ts.
Automation and technology
Many modern warehouses feature automated storage

and retrieval systems (ASRS), conveyor systems or other
(contd.)
advanced material-handling technologies. Often, this

type of system can be operated as a black box, utilizing
interfaces that are designed to exchange master data
and business transactions with a host system. But
sometimes its preferable to connect these sub-systems
to your WMS directly to provide the ability to manage the
equipment as another type of warehouse resource. In
addition, most warehouses today require real-time data
collection and entry using handheld or vehicle-mounted
portable computing devices, such as radio frequency (RF)
terminals. Radio frequency identifi cation (RFID) may also
be part of your current or future plans; your decision on a
warehouse system and platform will be infl uenced by this.
Understanding the capabilities of the different WMS
options will allow you to quickly assess the suitability of
these systems to the needs of your companys supply
chain and warehousing operations. The following section
highlights and compares the functional abilities of the two
SAP warehouse management applications, WM and EWM.
Functional capabilities: SAP WM and SAP EWM

The WM and EWM capabilities for key functional areas are reviewed and compared below.
WM EWM
Warehouse structure and organization
Basic warehouse
structure
Storage types, storage sections, storage
bins are used to model the physical areas
of the warehouse
Same structures as in WM
Storage type and section may be up to 4 characters
in length, as opposed to 3 characters in WM
Storage bin numbers may be up to 18 characters in
length, as opposed to 10 characters in WM
Each storage bin is unique at the warehouse level in
EWM
Additional warehouse
structures
Doors, material staging areas, pick areas
Structures related to yard management
structures like yards, parking spaces and
checkpoints are modeled outside of WM,

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solutions

Understanding your supply chain business model

analysis of your as-is and future business models. Here is

The number of receipts, putaways, picks and transfers

The number of facilities, and the types of activities carried

Warehouse process complexity

Warehouse processes can vary from simple to highly

Understanding your supply chain business model

Smaller warehouse facilities can be operated by a few

Automation and technology

Many modern warehouses feature automated storage

advanced material-handling technologies. Often, this

Functional capabilities: SAP WM and SAP EWM

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