If a firm uses EWM it typically will not use WM, and vice verse. WM has been around for some time, while EWM is the new kid on the block. Therefore, the question many executives want the answer to is what is EWM and how is is better or different than WM.
Many companies do not use software to manage their warehouses. For instance they may only have an interest in managing inventories in the warehouse. For this, nothing more than IM within SAP ERP is necessary. The transfer order is what controls the movement (transfer order with transport order for lead times) Posting goods issue and goods receipt will keep the company up to date on material movement. Secondly, the goods receipt and goods issue areas connect or relate the storage location within IM to the warehouse number in WM. The need for WM comes into play when the management of the physical layout of the warehouse becomes necessary. When a company wants to use information to actually manage the warehouse, then WM (or another third party product which is bolted on to SAP ERP) is brought on line. WM and IM are strongly integrated as movements of material in WM relate directly to IM. IM is then the connection to the rest of SAP ERP such as FI, SD and PS. However, WM has direct connection to IM, Delivery Processing, Production Control, and QM. WM adds value for clients who require the following:
- Batch management
- Medium to high volumes and medium to high numbers of different materials
Acually, we cover the EWM vs. WM discussion in more detail in this link below.
WM has been around for some time as part of SAP ERP, EWM can be seen as an attempt by SAP to go after the more specialized warehouse management market. The concept is that WM stabilizes from a development perspective and the more advanced functionality continues to evolve in EWM. Currently the more advanced users go with other non-SAP warehouse management solutions.
What is the Prospective Client Market for EWM vs. WM?
- This would tend to be clients who have very high warehouse management needs such as Third party logistics providers, EWM was actually developed with Catepillar Logisics which is a third party logistics provider. It was also developed in conjunction with SPP (Service Parts Planning), which means that it is able to manage small and numerous items. (to understand more about SPP see this post…http://www.scmfocus.com/sapplanning/2009/05/02/major-functionality-in-spp-2/ )
- Large volume clients (which includes 3rd party logistics providers within this)
- Those that perform cross docking, slotting (this is how material is pre-located in a warehouse based upon activity, see below for more on slotting), kitting, pick zones and value added services
- Those that want a high degree of functionality in labor management
Catalyst on the Difference
The consulting company Catalyst has a very good white paper on the topic entitled Comparison WM to EWM WhitePaper.pdf.
Extended Warehouse Management (eWM) was released with SAP’s Supply ChainManagement module (SCM). The terminology can be confusing, but there are reallytwo different forms of eWM, depending on how they are being used. When SAPWarehouse Management is being used with SAP release ECC 5.0 or higher, in thecentralized mode, it is referred to as ERP eWM. When SAP WM is being used inthe decentralized form in conjunction with the SCM module, it is referred to asSCM eWM. In it’s decentralized form, the capabilities of eWM are expanded.Basically, ERP eWM is little changed from the functionality that exists in SAP 4.7.With SCM eWM, the functionality includes what 4.7 xt. 2.0 can do as well asimproved workflow, process integration and the various other features mentionedabove (under evolution).SCM eWM offers increased flexibility and capabilities beyond ERP eWM. Typically,SCM is tailored to organizations who have high SKU and line item volumes, veryfast moving product, complex cross docking requirements, detailed packaging andshipping processes, and third party logistics services (3PL) on either the Inbound orOutbound side, or both. – Catalyst Global Services
The book Selecting Software from WMS and ERP Providers provides an interesting quote, not just on EWM vs WM but on normal warehouse management systems vs. those designed from a 3PL perspective.
3PLs need much more software functionality than the standard WMS. The additional logic and coding is twice as complex as a private warehouse WMS solution. Issues such as inventory ownership (3PLs do not own the inventory under the roof), customer contracts, rates, item setup, preferences for inventory allocation, – picking allocation, task workflows, exception and normal processing procedures, billing, manual billing of accessorial charges, client reporting and profits and loss reporting is expected by most 3PLs. – Philip Obal
As far as the server environment, EWM can and in most cases would be run on its own server for performance reasons. In fact it is not recommended that it run on an SCM box that is running planning applications.
- An organizational unit is the Supply Chain Unit for a EWM Warehouse Number
- The organizational unit that represents the subdivision of a storage type is a storage section
- Goods arrive and leave the warehouse through doors
- A work center in EWM is represented by a storage type
- An activity area defines storage bins
While WM is part of SAP ERP, EWM is part of SCM. Therefore, master and transactional data must be brought across from SAP ERP rather than being inherent. This is a significant but not new difference. For instance, forecasting can be done in SAP ERP, but for those accounts that want to do more advanced forecasting that what is offered within SAP ERP, SCM Demand Planning can be used, which also sits on the SCM box and requires integration.
One of the important items to bring over is storage bin data. Obviously, when choosing EWM, you are choosing to exert more effort in integration than when going with WM.
While WM has been part of R/3 and now ECC for some time. EWM requires both SCM 5.1 (EWM existed before 5.1, but it has been greatly enhanced in 5.1) and also requires R/3 4.6c with service pack 06 and up.