Migration to S/4HANA – The Warehouse Approach – Part II

Migration to S/4HANA - The Warehouse Approach - Part II

Welcome to the second part of our series 'Migration to S/4HANA - The Warehouse Approach'. In the first part, we introduced you to the warehouse solutions that run with S/4HANA. In this second part, we will share some relevant insights that will certainly help your company to choose the right tool to support its warehouse processes.

1. Deployment Path

Briefly, companies require a solution that covers their warehouse processes, ensures system availability, and enables the evolution of the solution, while minimizing costs.

Having in mind that Stock Room Management will not be developed further by SAP, it is not the recommended solution. However, it can still be considered if the following conditions are verified:

  • The dimension of the warehouses is small
  • The warehouses have a small number of transactions
  • Existing warehouse processes are supported by Stock Room Management
  • There is no integration with external warehouse systems

If customers want to move to a strategic solution that covers more processes and allows better warehouse optimization, then EWM (Extended Warehouse Management) is the way to go. Now the decision is to choose between Embedded EWM or Decentralized EWM. The following image shows criteria that will help you select the right tool to deploy.

01 | Number of S/4HANA instances

This criterion is about checking the current and future system landscape. If it is necessary to connect EWM to several S/4HANA instances, then Decentralized EWM is the right solution, since Embedded EWM does not support this.

In the case of having only one S/4HANA instance, the possibility to implement Embedded EWM can be considered. If you are considering implementing Embedded EWM, you will have to choose between Basic Warehousing or Advanced Warehousing. This choice will be based on:

  • The coverage of the warehouse process requirements by the features available in each solution
  • Licensing costs as described below on criterion #3

02 | Expected Transactional Volume

Transactional volume is a key criterion in this process since it has a direct impact on system performance. It is important to understand your company’s warehouse strategy for the future:

  • Will the number of warehouses grow?
  • What is the transactional volume in each warehouse?
  • Will the integration with Material Flow Systems (MFS) be implemented or grow?

If it is expected to have a high and increasing transactional volume being processed, then there is a potential risk of having performance issues in S/4HANA if Embedded EWM is used. Decentralized EWM is designed to handle a high volume of transactions, and since it is on a dedicated server, it will not affect performance on S/4HANA.

On the other hand, if your warehouses are managed with manual processes and the transactional volume is not high, then Embedded EWM might be an adequate solution since it has lower costs. This brings us to the next criteria.

03 | Costs

We all know that costs have a high influence on any decision-making process. The following image shows the different solutions classified by cost level in ascending order.

04 | Upgrade Cycles

Should EWM upgrade cycles be independent of S/4HANA upgrade cycles? Having independent upgrade cycles allows upgrading EWM independently of S/4HANA and vice-versa and managing system downtimes independently.

Since Decentralized EWM is deployed on a different instance than S/4HANA, it can be upgraded independently of S/4HANA, while Embedded EWM does not allow this

The weight of these criteria will vary from customer to customer, depending on the complexity of the systems landscape

2. Conclusion

This blog series contains general guidelines to help SAP customers define their warehouse migration strategy to S/4HANA.

The selection of the warehouse solution will be the result of the consideration of the key criteria described above, but we know that each project and customer have its own specificities so, besides the criteria mentioned above, other criteria can be used to better support the decision to choose the most adequate warehouse solution.

About the Author

David Silva - Logistic Advisory

David is a functional SAP specialist with proven experience in multiple Logistics modules. His deep knowledge of SAP processes and customer-oriented attitude enables him to deliver successful SAP implementations across several industry sectors.

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