Article

Assess your warehouse setup

– Using the warehouse assessment framework to define your SAP S/4HANA WMS road map

Published

January 2023

Authors

In 2025 or 2027, legacy WMS SAP WM will run out of support. And so, you must make an important and business-critical choice regarding the WMS selection based on the current technical setup if you want to succeed with your current or future implementation of SAP S/4HANA. No matter if you decide on a full SAP S/4HANA implementation or a singular WMS installation, you must make it an active choice and identify which WMS solution(s) fits your business, requirements and timeline. To support the decision process, we offer a guided and data-driven approach to establishing your SAP S/4HANA WMS road map through our warehouse assessment framework.

At one point or the other, every single piece of product within your company will go through your warehouse. And despite its service-oriented functionality, the warehouse is often a key component in a well-functioning supply chain. In combination with the WMS selection opportunities provided in S/4HANA, including the amount of functionality available in SAP S/4HANA WMS in comparison to SAP WM, the switch from WM to, for example, EWM embedded typically represents a significant change journey – regardless of it happening as a part of a SAP S/4HANA implementation or standalone.

From our work with clients, we see a general issue and difficulty for companies to identify, justify and map their multiple warehouses and current installations against this complex target. Not only to identify and define the road map and sequence but also to define the WMS option and dependencies to other strategic projects.

Figure 1: Deciding on WMS

Different WMS options in S/4HANA

Before we lean into our warehouse assessment framework, let us have a quick look at the different WMS options available in a S/4HANA environment.

SAP S/4HANA provides the following WMS deployment options when migrating from SAP WM:

Figure 2: SAP WMS deployment options

As visualised, the spectrum of migration effort, licence and degree of strategic focus from SAP varies a lot. This will be locally anchored and business dependent, but our experience from working with clients is reflected in the figure. What is most interesting is that SAP WM will expire, meaning it cannot be run in compatibility mode after 2025/2027 depending on the current technical setup and SAP notes implemented.

In regard to WMS deployment, the overview shows the following options:

  • Warehouse management: same functionality as LE-WM from ECC but a burning platform in regard to the functionality being disabled in 2025/2027, even in compatibility mode. Migration effort is low but should only be considered if it could ease up the S/4 road map in the short term.
  • Stock room management: Due to the simplicity and small effort, this is a potential favourite as a starting point for simple warehouses.
  • Basic warehouse management: This is the “smallest” of the strategic WMS options. Here you still make a limited effort but are getting more functionality, meaning that as a direct deployment this could also be a good option for smaller or lean businesses. It could also be a business that might have other larger strategic agendas than WMS affecting a potential S/4HANA road map.
  • Extended warehouse management: This option comes in both an embedded and a decentralised S/4HANA version, bringing full functionality and flexibility but also more complexity, license and migration effort.
Figure 3: High-level deployment decision process

But as a business, how do we ensure that the right choice is made? And should we let the S/4HANA implementation drive the choice of WMS, or should the WMS deployment affect/drive the S/4HANA road map?

All these questions are large and complex, and we believe that they cannot be answered without a data-based foundation combined with deep local business-anchored knowledge and analysis. But where to start, how to start and who should execute the task?

With a basis in our existing warehouse assessment framework, we have defined an approach on how to identify, quantify and qualify each separate warehouse instance.

The approach is based on an 8-step process in two different phases; assessment and implementation. In this article, we will only address the assessment part.

Figure 4: Assessment steps for analysis

Step 1: Global site overview

In the initial step of the model, we quantify for each warehouse:

  • Performance and KPIs, such as volume, frequency and time in stock
  • Data-based complexity rating
  • Flow and deviations

As a result, we get a data-based overview of the global warehouse setup and an initial indication of requirements and needs for the new WMS.

As a second party of creating the “global site overview”, we establish a series of hypotheses for qualitative aspects that influence the WMS decision. Examples of such criteria could be:

  • Expansion or automation strategies
  • Dependency on or impact from other strategic projects
  • Site involvement and eagerness
  • Downtime sensitivity
  • Degree of current automation
  • Etc.

Through a guided approach in collaboration with each site, these are developed and applied against the findings from the initial step – further qualifying the direction and sequence of each warehouse and WMS recommendation.

Figure 5: Site selection and scoping

Based on these two internal steps in the “global site overview”, we now have a clear and data-based overview of the global sites and their situation and expectations towards the future and can move on to the next steps; self-assessment and on-site/virtual assessments.

Step 2: Self-assessment

In step 2, we continue to increase the precision in the WMS road map. We do this through the execution of a self-assessment where we provide each site/warehouse with a form to fill out.

With respect to the fact that all companies and warehouses are different, the valuation criteria for this step can be different. However, typical parameter examples could be:

  • Systems in current use in the warehouse
  • Number of shifts, FTEs, split between functions, administrative roles etc.
  • Process maturity evaluation scoring
  • Operational KPIs
  • Budgeting, planned local initiatives, expectations to future flow
  • Limitations and restrictions in current physical settings
  • Etc.

As an output from step 2, we will get a further detailed insight into each site and warehouse containing their own words and qualitative measures and expectations of the future impact on their warehouse.

Based on the self-assessment, we can now increase the detail of the road map for several warehouses and further reduce the list of warehouses with no or an undecided WMS solution recommendation.

With the input from steps 1 and 2, we select a reduced group of warehouses to qualify for an on-site or virtual assessment.

Step 3: Virtual or on-site assessment

In the third step of the assessment, we seek to provide a WMS recommendation for the warehouses, where steps 1 and 2 did not provide a clear indication of which system would be the best fit.

We do this through one of two options:

  • Virtual warehouse evaluation
  • On-site warehouse evaluation

For the virtual evaluation, we have developed a flexible model that can be based on both video, conference and photo documentation depending on the site capabilities and bandwidth. The key elements analysed are similar to the previous steps, with the exception of getting to a deeper level in terms of understanding their processes and challenges in the daily business, incl. transfer of paper-, e-mail- or spreadsheet-driven processes.

For the on-site evaluation, we conduct a 1-2-day workshop session, following a clear and predefined process where we evaluate each warehouse through Gemba walks and explorative work sessions with key personnel in the specific warehouse.

The output from the third step is an evaluation of the individual warehouse at a lower level where each process step is scored and evaluated against the capabilities in SAP WMS. And through which we, in collaboration with you, can make a clear recommendation in terms of which SAP WMS solution is a better fit for that specific warehouse.

We have now completed all three steps of the SAP WMS road map assessment, and as an overall result, a report is created containing an overview of all the findings from all three steps in a consolidated package. This includes a clear overview of the preferred WMS for each warehouse, including expected sequence or urgency for each warehouse. The findings can now be linked to the overall SAP S/4HANA road map or to other strategic projects – or as a stand-alone road map.

Please do reach out to us if you would like to understand how you can assess your warehouse business and build a clear and understandable SAP WMS road map through data and business insights – we are eager to help!