Replenishment strategies in an SAP EWM managed warehouse

In our post we review the basic stock replenishment strategies that can be used in the SAP S/4HANA Extended Warehouse Management system,

as well as the replenishment processes within the warehouse and related to manufacturing, implemented during a previous Hungarian automotive project of our company.

Replenishment strategies in an SAP EWM managed warehouse

Replenishment process in the SAP EWM solution

In the SAP EWM, the replenishment process ensures the appropriate stock level for picking storage bins. The importance of the replenishment process should not be underestimated, as this in-warehouse process is quintessential in ensuring an effortless delivery and production supply.

The amount of replenishment can be determined at the Storage Type level or Storage Bin level. This main setting can be specified per Warehouse type in the SAP EWM system:

Storage Type level

In this case, SAP EWM reviews the complete stock of the Storage Type to determine the required replenishment quantity (for a given product). Replenishment can be made to any Storage Bin within a given Storage Type.
The parameters required for the operation of the process has to be specified for each Product and Storage Type: Minimum quantity, Minimum replenishment quantity, Maximum quantity.
When designing the warehouse process, it is important to keep in mind that the Maximum Number of Storage Bins (how much storage space can a given Warehouse Product occupy) is a stronger parameter than the Maximum Quantity. For example, if maximum 2 Storage Bins are allowed for a product within a Storage Type, even when the Maximum Quantity is for example set to a volume that would take up 5 Storage Bins, the replenishment will only be created for 2 Storage Bins.

Figure 1: Product replenishment at Storage Type level.

Storage bin level

In this case, Storage Bins have to be assigned in SAP EWM for the products in need of replenishment. The stock level is verified for each Storage Bins. The replenishment can only be fulfilled at this Fixed Storage Bin.
Minimum and Maximum quantities have to be specified for Storage Bin and Product.

Figure 2: Product replenishment at Storage Bin level.

Replenishment strategies in SAP Extended Warehouse Management system

In SAP EWM, the replenishment strategy defines how the stock replacement is performed. The strategies can be categorized as:

Scheduled replenishment: can be run scheduled (or manually) at specified intervals. This group includes:
- Planned replenishment.
- Order related replenishment.
- Crate part replenishment.
Non-planned replenishment: runs when a transaction is executed. This group includes:
- Automatic replenishment.
- Direct replenishment.

Let’s take a closer look at the selectable strategies in the SAP Extended Warehouse Management.

Planned replenishment

Initiated when the stock level drops below the Minimum Quantity level.
The replenishment quantity is calculated taking into account the Minimum and Maximum quantities – to the multiples of the Minimum supply quantity, rounded down.

Figure 3: Planned replenishment.

Order related replenishment

The aim is to fulfill the open quantities of the Outbound Delivery Orders.
Initiated when the required quantity falls below the Minimum Quantity level.
The replenishment quantity is calculated taking into account the open Warehouse requests – to the multiples of the Minimum supply quantity, rounded up.

Figure 4: Order related replenishment.

Crate part replenishment

This strategy is related to the production supply, which can be used to service the Production Supply Areas (PSA) with fixed quantities.
Starts when the stock level in the Production Supply Area falls below the Minimum Quantity (or Minimum Crate Quantity).
The quantity is calculated taking into account the Replenishment Quantity (or the number of containers to be replenished).

Figure 5: Crate part replenishment.

Automatic replenishment

Initiated at a Warehouse Task confirmation, when the stock level falls below the Minimum Quantity level.
The replenishment quantity is calculated taking into account the Minimum and Maximum quantities – to the multiples of the Minimum supply quantity, rounded down.

Figure 6: Automatic replenishment.

Direct replenishment

At Pick Denial, initiated by the use of an Exception Code.
The replenishment quantity is calculated taking into account the Minimum and Maximum quantities – to the multiples of the Minimum supply quantity, rounded down.

Figure 7: Direct replenishment.

In warehouse and production related stock replenishment processes for an automotive company in the SAP EWM solution

For our automotive manufacturing partner during an S/4HANA implementation project, we provided the following standard solutions related to their replenishment process requirements in the “embedded” EWM. At the company’s site a wide range of logistics processes are used, therefore several methods provided by SAP EWM are utilized to ensure the replenishment of the stocks:

1. Within the Central Warehouse, from the Narrow Aisle Area to the Reserve Storage Area, and then from the Reserve Storage Area to the Picking Area.

Figure 8: Replenishment within the warehouse.

The stock level at the Picking Area is constantly decreasing during the execution of picking Warehouse Tasks. The stock level of the Picking Area is checked by a scheduled “job” every few minutes in the SAP EWM system. For a product where the stock level has fallen below the Minimum Quantity, the SAP Extended Warehouse Management system creates a replenishment Warehouse Task.

As the Picking Area is replenished from the Reserve Storage Area, storage space is freed up in the Reserve Storage Area, therefore the replenishment can also take place from the Narrow Aisle Area to the Picking Area. (Stocks that have reached the maximum number of Storage Bins allowed in the Reserve Storage Area are putaway in the Narrow Aisle Area, because the storage strategy can “only” find free Storage Bin in the Narrow Aisle Area.)

In this process, SAP EWM examines the stock level for a given product at the Storage Type level, and the replenishment activity is executed on schedule with the Planned strategy.

2. From the Central warehouse to the Production Supply Areas within the Plant

Figure 9: Stock replenishment from the warehouse for the production.

The stock level in the Plant is constantly decreasing in the Production Supply Areas with confirmation of the Production Orders. The stock level for these storage bins is monitored by a scheduled SAP EWM “job”. The EWM creates a replenishment Warehouse Task for each product which stock level has fallen below the Minimum Quantity.

In this process the replenishment of the Production Supply Areas, i.e., the production supply is managed at the Storage Bin level, using the Crate part replenishment strategy.

3. Replenishment of Kanban crates from the Reserve Storage Area

Figure 10: Replenishment of Kanban crates in a roller conveyor.

From the roller conveyors, the warehouse workers pick up and transport the Kanban crates for the production according to the Kanban principle. Picked Kanban crates reduce the stock level at the roller conveyor storage bins, for which, unlike for the previous ones, a scheduled “job” is not running in the SAP EWM system. Warehouse workers handling roller conveyors start replenishment on the scanner when the stock levels drop, so they manually create a Warehouse Task, that they then also perform.

In this process, the EWM creates the Warehouse Tasks according to the amount of load quantity of the Kanban box, which is beneficial because the system provides the warehouse worker with information about how many boxes they have to prepare and how much quantity is needed to fill the empty Kanban boxes.

Layout-oriented storage control in the replenishment process

For all three types of replenishment processes we use the EWM Layout-Oriented Storage Control, which allows Handling Units to reach the destination storage bins starting from the source storage bins through transfer points.

These transfer points were created as a mapping of the physical layout, which breaks the entire process into sub-processes to be performed by individual warehouse workers. More information about how the Layout-Oriented Storage Control works is available in our earlier article.