Elements of The Plan Warehouse Movement Step
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Elements of The Plan Warehouse Movement Step
PLAN WAREHOUSE MOVEMENT
A transfer requirement (TR) is a document that companies use to plan the movement of materials into and out of bins in a warehouse. In most cases the trigger is either an activity in inventory management or a need to transfer materials within a warehouse. The ERP system automatically creates a trans- fer requirement when an IM activity involving a warehouse-managed storage location occurs. The transfer requirement communicates data from the IM processes to the WM processes. Figure 7-19 illustrates the elements of the plan warehouse movement step.
Figure 7-19: Elements of the plan warehouse movement step
Data
Figure 7-20 highlights the data included in a transfer requirement. Master data include data about the materials and bins involved in the movement. Organizational data include the client, company code, plant, storage location, and warehouse number. Transaction data include the materials to be moved, quantity, date, transfer type (putaway, pick, or transfer), and the source of the requirement. The source is included when the requirement was not created manually and is typically a result of specifi c activity in IM such as a goods receipt.
Figure 7-20: Data in a transfer requirement
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244 CHAPTER 7 Inventory and Warehouse Management Processes
Tasks
The only task involved in this step is to create the transfer requirement. Although the ERP system is generally confi gured to create a transfer require- ment automatically as a result of activity in IM, the requirement can also be manually created. In the case of a transfer posting, a posting change notice (explained below) is created instead of a transfer requirement. Posting change notices can be created either manually or automatically by the ERP system as a result of a transfer posting in IM.
Recall from previous chapters that IM activities occur in procurement, fulfi llment, production, and inventory management processes. In procure- ment, when a goods receipt against a purchase order is created, a transfer requirement is automatically generated as well. Two steps in the production process can potentially generate a transfer requirement. First, when a pro- duction order is released, a transfer requirement for the materials needed for production is created. Then, when the materials have been produced and received into inventory, the receipt of fi nished goods (or semifi nished goods) against the production order triggers a transfer requirement. In inventory management, the stock transfer process uses a transfer requirement. Planning a warehouse movement in fulfi llment is a little different than in other pro- cesses. Recall that a delivery document is created in the shipping step of the fulfi llment process to facilitate picking of materials. The delivery docu- ment serves as a transfer requirement and is used to plan the warehouse movement.
In the case of a transfer posting, however, the system creates a posting change notice rather than a transfer requirement. A posting change notice is a request to change the status of the material, for example, from in quality inspec- tion to unrestricted use. Finally, a transfer requirement can be created manually to facilitate an internal movement of materials from one bin to another within the warehouse. Thus, the source of the requirement for warehouse movement is typi- cally a material document or a production order, as illustrated in Figure 7-21.
Figure 7-21: Reference documents for a transfer requirement
Outcomes
The outcome of this step is either a transfer requirement or a posting change request. Note that there is no fi nancial accounting impact. In IM the FI impact occurs when a goods movement takes place. At that time, IM inventory is
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Processes in Warehouse Management 245
increased or decreased and the FI impact is recorded, as we discussed in the chapters on procurement, fulfi llment, and production.
EXECUTE WAREHOUSE MOVEMENT
Figure 7-22 diagrams the elements of the execute warehouse movement step. Common warehouse movements include picking, putting away, and posting changes. The document that is used to execute these movements is the trans- fer order (TO). The creation of a TO is generally triggered either by a transfer requirement or by a posting change notice. However, TOs can also be created directly from delivery and material documents generated by other processes. Finally, they can be created manually to facilitate internal warehouse transfers.
Figure 7-22: Elements of the execute warehouse movement step
Figure 7-23: Data in a transfer order
Data
Figure 7-23 presents the data involved in a transfer order. The master data and organizational data are the same as those contained in a transfer requirement. If a reference document, such as a transfer requirement, is used, then data from this document are copied into the transfer order. The data in a transfer order include the material number, quantity, data, and transfer type. In addition, identifying the source and destination bins is necessary to execute a WM transfer. The source and
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246 CHAPTER 7 Inventory and Warehouse Management Processes
distination bins are often proposed automatically by the ERP system. However, they can also be provided by the individual who is executing the transfer.
A transfer order consists of a header and one or more line items, as illus- trated in Figure 7-24. The header includes data that are applicable to all line items. Examples are the transfer order (TO) number, reference document number, dates, and warehouse movement type. Line item data include mate- rial number; source storage type, bin, and quant; destination storage type, bin, and quant; target quantities; and actual quantities moved. Note that a particu- lar material can have more than one line item if the material has to be moved from multiple source bins or to multiple destination bins. This scenario can occur in the case of picking when there is insuffi cient quantity in one source bin and in the case of putaway when the destination bin is not large enough to hold all of the materials moved.
Figure 7-24: Structure of a transfer order
Tasks
The key task in the execute warehouse management step is the creation of a transfer order, with or without a reference document, as illustrated in Figure 7-25. Transfer orders can be created either manually or by the ERP system. When they are created manually, the user selects the appropriate reference document or documents, verifi es the data in these documents, and then creates the orders. When a reference document is not used, the user must provide all of the data that would have been contained in the reference document. The ERP system can create the TOs automatically, but only when a reference document exists. The system also can be confi gured to automatically create transfer orders from reference documents that meet certain criteria (e.g., transfer date). Finally, the system can be programmed to directly create transfer orders as soon as a mate- rial document or an outbound delivery for shipment to a customer is created.
Outcomes
The obvious outcome of this step is a transfer order. When the TO is created, the reference document used to generate it is updated to indicate that this step has been completed. In addition, the storage bin data for the source and des- tination bins are updated to note planned movements (an example of this is provided in the section on reporting later in this chapter). As in the case of a transfer requirement, creating a TO has no FI impact. The transfer order essentially is a transaction document that authorizes warehouse employees to physically move the materials from the source storage bin(s) to the destination storage bin(s) indicated in the document.
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Processes in Warehouse Management 247
CONFIRM WAREHOUSE MOVEMENT
Generating a transfer order allows the warehouse employees to physically move the materials from the source bins to the destination bins. After the employees have completed this movement, they retrieve the transfer order and confi rm the movement. The elements of the confi rm WM movement step are presented in Figure 7-26.
Figure 7-25: Reference documents for a transfer order
Figure 7-26: Elements of the confi rm warehouse movement step
Data
Confi rming the warehouse movement involves the same transfer order created in the previous step. Consequently, this step utilizes the same data concerning the materials being moved and the bins.
Tasks
Confi rming the movement involves updating the transfer order to indicate that the movement was completed. The quantities moved from and to various bins
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248 CHAPTER 7 Inventory and Warehouse Management Processes
are entered into the transfer order, and the order is saved. If all of the materials have been moved, then the step is complete.
Outcomes
When a confi rmation of warehouse movement is recorded, the ERP system automatically updates the associated reference documents such as the delivery document, transfer requirement, and posting change notice to refl ect the fact that the transfer of materials has been completed.
In this section we explained the warehouse management process in gen- eral terms. In the following sections we examine WM as it relates specifi cally to procurement, fulfi llment, production, and stock transfers. We also review the fi nancial and material impact of the various steps. We begin with procurement.
WAREHOUSE MANAGEMENT IN PROCUREMENT
To illustrate the warehouse management steps as they relate to procurement, we will use the following scenario. GBI wishes to increase the inventory of t-shirts in its San Diego plant. To accomplish this task, it has sent a purchase order for 1,000 t-shirts to its vendor, Spy Gear. Recall that we used a similar scenario in Chapter 4. In this scenario, however, the materials are to be deliv- ered to the San Diego plant, which is warehouse managed, rather than the Miami plant, which is not. We will assume that GBI has 500 t-shirts in stock. Figure 7-27 illustrates the inventory impact of the steps in the procurement process. It indicates that GBI has 500 t-shirts in storage location inventory and in the warehouse prior to the start of the process (column 2).
Figure 7-27: Inventory impact—procurement
Plan Warehouse Movement
Figure 7-28 diagrams the steps in the procurement process. The fi gure includes both IM activities and WM activities. The bottom part of the fi gure illustrates the physical movement. Recall from Chapter 4 that the procurement process involves a goods receipt from a vendor and that the materials are placed into a specifi c storage location. In our example, when GBI receives the 1,000 t-shirts from Spy Gear, the warehouse personnel place them in the interim receiving storage area and record a goods receipt into the trading goods storage location the ERP system. (You might want to refer back to the San Diego plant layout illustrated in Figure 7-10 and the discussion on storage types regarding the use
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Processes in Warehouse Management 249
of storage type 003, receiving, as the interim storage area for goods received.) The interim storage area is the physical link between the procurement and warehouse management processes. When the goods receipt is recorded, fi nan- cial accounting and material documents are created, as explained in Chapter 4. In addition, the system automatically generates a transfer requirement because the trading goods storage location is warehouse managed. The transfer require- ment is created by an IM activity and serves as the information link between the procurement process and the warehouse management process.
A review of inventory at this point in the process (column 3 in Figure 7-27 ) will show that there are 1,500 t-shirts in the trading goods storage location—the initial 500 plus the 1,000 received from Spy Gear. Warehouse (bin) inventory is unchanged because the shirts have not yet been moved into the warehouse. Instead, inventory in the interim (receiving) storage area increases by the 1,000 t-shirts received.
Elements of The Plan Warehouse Movement Step
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