Migration to S4HANA – The Warehouse Approach – Part I

Migration to S4HANA - The Warehouse Approach - Part I

1. Introduction

Nowadays fast-evolving technology environment, business transformation is a central part of the IT strategy of many companies who make efforts to apply modern technology to improve their business and keep existing technology updated and running.

In this context, many companies using SAP R/3 are migrating or planning to migrate to SAP S/4HANA, if they have not already done so. The migration to S/4HANA brings many challenges, and amongst them is the migration of the Warehouse Management System and its processes.

What makes this unique is that SAP released Extended Warehouse Management (EWM) in 2005, effectively replacing LE-WM (Logistics Execution, Warehouse Management) as the strategic warehouse management solution. LE-WM is still delivered in S/4HANA, but it is available in a compatibility mode as a temporary solution to allow customers to migrate their existing warehouse processes with less effort, and the right to use LE-WM functionalities in compatibility mode expires on 31.12.2025 [1] & [2].

SAP introduced Stock Room Management, which is composed of a reduced set of LE-WM functionalities and can be used after 31.12.2025, but it is not a strategic product of and therefore new features will not be released.

But how should customers tackle this migration challenge? Can they leverage pre-existing LE-WM setups? What options are available for the customer?

2. Available Options

There are a few choices available for customers when it comes to the selection of the appropriate Warehouse solution to work with S/4HANA.

Customers can decide to move from LE-WM to Stock Room Management or follow a more strategic path – to implement EWM. If EWM is the chosen path, then it is necessary to decide if it should be deployed embedded in S/4HANA (Embedded EWM) or on a separate server (Decentralized EWM).

2.1 Stock Room Management

If customers are not able to move to EWM before 31.12.2025, they can consider implementing Stock Room Management instead of LE-WM in Compatibility Mode.

It is important to have in mind that some LE-WM features are not available in Stock Room Management such as Task & Resource Management, Value-Added Services, Cross-Docking, Wave Management, and others [3]. Follow this link[4] for an overview of the key features of Stock Room Management.

Prior to the migration, customers will need to check if the features used in their warehouse are available in Stock Room Management. It should also be considered that Stock Room Management is not a strategic product of SAP, and therefore it will not have developments or updates in future releases.

One migration approach could be to use Stock Room Management as a bridge in the migration from LE-WM to EWM, as it could have lower impacts in terms of implementation effort and change management in comparison to a full EWM implementation.

2.2 Extended Warehouse Management

2.2.1 Embedded EWM in S/4HANA

Embedded EWM in S/4HANA can make sense since it covers almost all LE-WM functionalities. This option has two licensing types:

  • Basic Warehousing – Does not need a separate EWM license.
  • Advanced Warehousing – Needs separate EWM license.

Advanced Warehousing has all the Basic Warehousing key features and more, such as Material Flow System, Cross Docking, Labour Management, just to name a few. Follow this link[5] to check the key features of Advanced Warehousing, and this link[6] to check the key features of Basic Warehousing.

Some key advantages of Embedded EWM:

  • No data replication. With Embedded EWM there is no need to replicate Master Data or Transactional Data to another server.
  • Reduced implementation effort and complexity.

If customers run a warehouse where movements are posted manually, and there are no automated Material Flow Systems generating a high number of transactions, then Embedded EWM might be the right solution for you.

2.2.2 Decentralized EWM

Decentralized EWM is deployed in a separate server that is connected to S/4HANA. This solution is suited for large warehouses that require handling a high number of transactions. If you require having your EWM connected to several S/4HANA systems, then Decentralized EWM is the way to go, as this is not possible with Embedded EWM.

Some key advantages of Decentralized EWM:

  • Handles high volumes of transactions.
  • Can connect to various S/4HANA instances.
  • Warehouse operators can continue working with Decentralized EWM, even if S/4HANA is down.
  • Upgrades in Decentralized EWM do not have a direct impact on S/4HANA and vice-versa.

Although most of the features and functionalities are the same in Embedded EWM (Advanced Warehousing) and Decentralized EWM, there are some restrictions due to the nature of the system architecture (embedded vs decentralized) [7].

2.2.3 Pros and Cons

In the table below, you can find a Pros and Cons analysis that highlights the main advantages and disadvantages of each solution.

What's Next?

So far, we have covered the options available for the deployment of the warehouse solution in S/4HANA. In the next post of this series, we will go through some general criteria that can and should be used to support the selection of the right warehouse solution for your company.

Stay connected to know more about this topic.

References

[1] SAP Note 2577428 - Road map for LE-WM in SAP S/4HANA

[2] SAP Note 2269324 - Compatibility Scope Matrix for SAP S/4HANA

[3] SAP Note 2882809 - Scope Compliance Check for Stock Room Management

[4] Stock Room Management key features overview

[5] EWM Advanced Warehousing key features

[6] EWM Basic Warehousing key features

[7] SAP Note 2938308 - Release information and restrictions of Decentralized EWM on SAP S/4HANA 2020

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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