Seminar 8

Seminar 8 Inventory/warehouse management

SAP Conceptual Design

Since for project 2 we are doing a conceptual design for Johnson & Johnson’s SAP ERP system, James has been providing us more insights on how the SAP concepts are related to each other and integrated as a whole picture. This time it was an ERD including all the high level concepts, and we were to determine the cardinalities between each of them. The whole diagram might seem complicated, and some of the relationships are also straightforward. So here I just highlight some points to refresh the memory.

For company code and business area, the relationship is many-to-many. Each company must be assigned to one company code, so that the accounting report and any relevant documents like financial statements of the company can be created at any time. Business area is also called business segment, and this is for financial reporting purposes. For example, for JNJ case, the company may want to generate the financial reporting separately by its 3 segments: Consumer Healthcare, Medical Devices & Diagnostics, and Pharmaceuticals. There may be multiple companies belonging to one business area, and a company can belong to different business areas.

Next was credit control area. Usually a company code can be assigned to only one credit control area, while a credit control area can be in charge of multiple company codes. The controversial part was whether the credit control should be centralized or separated for different companies. If it is managed centrally, the customer’s credit buy is under the same limit no matter from which company. If it is separated, the different credit limits are applied, so generally the customers can make more credit buys, but the company might suffer from the risk not getting back money. It might depend on the situations. If you want an easy control, it should be centralized; if different customer layers are to be applied, separated credit control might be more appropriate.

                                                                            http://askross.ca

Another confusing point was the difference between division and business area. These two can be set according to the same business segments. As mentioned above, business area is more about financial reporting, while division is related to the sales operation, like pricing, discount rules etc. So division is directly connected to distribution channel, and they have a many-to-many relationship. It is also connected to company code, sales organization and plant.

                                                                    http://help.sap.com

The last point was plant. The relationship of plant and company code is many-to-one, which means that a plant can only be assigned to one company code. This is confusing because it is reasonable that two companies are sharing one production plant or warehouse. So it was clarified that plant is a logic concept, so two plants can share one physical room but they are different plants. In addition, sales organizations are supported by plants, and they have a many-to-many relationship. Multiple purchasing organizations or business areas can also be assigned to a plant.

During the discussion and elaborations I felt dozens of information rushing to me, and I need time to digest. But maybe I have to be quick, because I think the information is very helpful for our project 2!

Warehouse Management

I went to Legoland during recess week, so I was so delighted to see those sweet little bricks! But the task was not so sweet… We were to finish the tasks of warehouse workers. We need to build the required shapes using bricks that had specified colours and number of dots. The tasks must be completed as quickly as possible in order to beat other groups. At first our group was doing quite well, but later on when other groups have figured out well functioning “warehouse management systems”, we were left behind.  Some of the groups have divided their “warehouse” (which was a piece of paper) reasonably, so it was more efficient when looking for a specific brick. And they have also made some changes on job allocation.

                                                                        http://74limelane.com.au

What can SAP bring us, while a manual warehouse management system can already improve efficiency?  SAP WMS can be integrated only if the company already has a WMS. It allows material and inventory trace to the storage bin level. This reduces the picking time and also provides a more precise look of what was inside the warehouse for easier management. And again it enables the convenient communication among departments.

But actually the system can be a bit complicated and costly to use for the companies that do not have large or complex warehouses.

Lastly I think this diagram given by James on Piazza really helped me understand the relationships among plant, warehouse, and storage bins etc., so I just paste it here for reference later. :)