Understanding SAP EWM: Frequently Used Terms and Their Role in Warehouse Efficiency

SAP EWM in Action - Consumer Electronics Distribution Center

Background

The Consumer Electronics Distribution Center (CEDC) is a 250,000 sq. ft. facility that stores and distributes electronics such as smartphones, laptops, TVs, and accessories for a major electronics retailer. The warehouse handles high-demand inventory with fast turnaround times and requires efficient storage, picking, and shipping processes.

Challenges

• High Product Variety: Thousands of SKUs ranging from small accessories to large TVs.
• Variable Storage Requirements: Fragile items, temperature-sensitive products, and high-value items need specific handling.
• Quick Turnaround: High demand for fast order processing and minimal lead time.
• Compliance and Safety: Compliance with hazardous material regulations for certain electronics like batteries.

To address these challenges, CEDC implemented SAP Extended Warehouse Management (EWM) to streamline warehouse operations, enhance visibility, and improve efficiency.

SAP EWM Implementation

1. Warehouse Number

• Setup: CEDC is set up as a single warehouse entity within SAP EWM, assigned a unique warehouse number. This structure allows it to manage multiple sections, each with its specific storage and operational needs, under a unified warehouse ID.
• Purpose: This setup simplifies reporting and helps align processes for inbound, storage, and outbound flows.

2. Storage Types

• High Rack Storage: For bulkier items like TVs and monitors. These items are stored on high racks to maximize vertical space.
• Fixed Bin Storage: Used for small, high-turnover items like phone chargers, headphones, and small accessories.
• Temperature-Controlled Storage: For products sensitive to extreme temperatures, such as certain high-performance laptops and batteries.
• Secure Storage: For high-value items like smartphones and tablets, with restricted access to ensure security.

Each storage type is configured with specific handling instructions, safety requirements, and control indicators, ensuring items are stored and retrieved efficiently and safely.

3. Storage Sections

• High Demand Section: Located near the picking area, this section is dedicated to fast-moving products such as phone accessories and popular consumer electronics.
• Heavy Section: This area within high-rack storage is allocated for large items (e.g., TVs), which require forklift assistance for movement.
• Fragile Items Section: Part of the fixed bin storage, designed to store breakable items like monitors and audio equipment. Bins in this section are padded and have restricted stacking limits.

Benefit: By categorizing sections based on item characteristics, CEDC can optimize retrieval times, minimize damage, and improve worker efficiency.

4. Storage Bins

• Each storage bin is assigned a unique identifier using a coordinate system (e.g., Row A5, Shelf 3, Bin 2). This level of specificity aids in quick, precise identification of item locations.
• Attributes: Bins in each section are assigned attributes like maximum weight, bin type, and capacity to ensure they meet the requirements for specific products.

Example: Bins storing laptops are assigned specific limits to prevent stacking damage, and each bin is labeled to reflect its exact location in the warehouse layout.

5. Quants

• Definition: CEDC uses quants to track inventory quantities within each bin. Each quant represents a specific product and batch, which is particularly useful for items with serial numbers or batch-tracked inventory like smartphones.
• Real-World Use: If a batch of smartphones needs to be recalled due to a defect, the warehouse can identify and locate each affected unit within minutes by referencing the quants assigned to each bin.

6. Activity Areas

• Picking Area: Contains bins with frequently ordered items, reducing travel time for warehouse operators.
• Counting Area: Designated for regular stock verification to ensure inventory accuracy.
• Putaway Area: Located closer to the inbound receiving dock, allowing for faster unloading and storage.

Benefit: By grouping bins based on activities, CEDC can reduce worker movement, streamline order processing, and improve operational flow.

7. Flexible Bin Management

• Implementation: CEDC uses flexible bins in the open storage area for items with variable sizes and seasonal items, like promotional electronics. When seasonal demand spikes, additional bins are automatically created to accommodate increased inventory.
• Advantage: Flexible bins eliminate the need for permanent storage space for temporary items, optimizing space and reducing idle storage costs.

8. Staging Areas and Doors

• Staging for Inbound Goods: The staging area near the inbound doors temporarily holds goods awaiting quality inspection or putaway.
• Staging for Outbound Shipments: Outbound items are moved to a staging area next to shipping doors, allowing for quick loading and dispatch.

Real-World Example: A new shipment of laptops arrives at CEDC, and the boxes are initially staged near the inbound dock. After quality checks, they are moved to the secure storage section.

9. Work Centers

• Packing Work Center: Dedicated to packing orders before shipping. This area includes bubble wrap, boxes, and labeling equipment.
• Quality Inspection Center: Used for checking the quality and functionality of high-value items like smartphones before they are stored or shipped.
• Deconsolidation Work Center: Items in bulk are unpacked and sorted here for distribution across different storage sections.

Benefit: Work centers optimize task efficiency, allowing specialized tasks like quality checks and packing to be completed quickly and accurately.

10. Warehouse Products

• Product Attributes: Each product in CEDC is assigned attributes such as handling requirements, bin preferences, and storage conditions (e.g., temperature sensitivity).
• Example: Laptops are classified with attributes that assign them to temperature-controlled sections, preventing damage from temperature fluctuations.

11. Hazardous Substances

• Handling Hazardous Items: Some electronics, like certain batteries, are classified as hazardous due to fire risk. EWM enforces safe storage by assigning these products to designated hazardous bins.
• Compliance: Bins for hazardous substances are placed in fire-resistant sections with restricted access.

Real-World Example: When CEDC receives a shipment of lithium batteries, they are stored in designated fire-resistant bins in accordance with safety regulations.

12. Packaging Specifications

• Customized Packaging Levels: Different packaging levels are defined based on product fragility and size. For example, headphones are packed in small cartons, while TVs are placed in padded boxes on pallets.
• Real-World Application: High-value items, like gaming consoles, require extra padding and secure boxes. Packaging specifications ensure these items are packed safely and ready for shipping without risk of damage.

Cheat Sheet