Goal

Glimpse of Logistics Execution (LE) and its evolution.
Explains processes over view from warehouse/stockroom management perspective especially in the context of its existence in S/4 HANA world.

Overview

Before deep diving in to the Warehouse Management functions, it is quite important to get the glimpse of evolution of LE as module, and its integration with procurement and sales & distribution  processes, and basic functions of LE.

Evolution and Future of LE

With R/3 4.5A release, SAP separated warehouse processes from Materials Management (MM), shipping and transportation processes from Sales & Distribution (SD) and grouped these core logistics execution processes in to a separate module Logistics Execution (LE).

Same set-up is continued until the release of SAP ERP 6.0 but with the next generation version S/4 HANA built on HANA platform SAP decided to move away from modular naming convention and started rebranding a group of functions as a Line of Business (LoB). But for a SAP consultants it makes no big difference as they still see the same arrangement (except minor or unnoticeable changes) in the SPRO configuration nodes.

Important change that we need to consider here is the SAP’s decision to exclude Warehouse Management (LE-WM) and Transportation (LE-TRA) from the target architecture in S/4 HANA. While Transportation (LE-TRA) will be completely killed after 2027, Warehouse Management (LE-WM) got its revival with new a brand name Stock Room Management but with reduced functionalities. The future of Shipping (LE-SHP) remains safe as it is part of target architecture but its name got changed to Delivery Management. (See Introduction for more information)

Basic Functions of LE

Logistics Execution is the link between procurement and distribution, regardless of whether the processes involved are internal or related to third-parties (vendors, customers, or service providers). Inbound delivery connects the procurement process with warehouse management process to facilitate putaway and good receipt. Warehouse management process is integrated with production processes which facilitates both staging of the raw materials required for production and receipts from production. Again outbound delivery links the sales and distribution process with warehouse management to execute picking, packing and shipping of products to customers and distribution centers.

Process mapping with LE

In Logistics Execution (more specifically from WM perspective), goods receipt and goods issue processes are basically mapped in two ways.

1. Without Delivery (simple process mapping)

In this approach good receipts or goods issues are posted against an immediate preceding document such as purchase order or sales order respectively. Though it looks simple and efficient approach from a system transactions perspective, in real time business world it makes the logistics operation more manual and inefficient because it does not provide an option in the system to manage and record real time activities between ordering and stock postings.

For example, in case of procurement, it is quite important and advantageous to know the real time details such as when (dates), what (material, batch, quantity), and how (packaging information, means of transport etc.) from the supplier well before shipments are received at the warehouse. This information provides an opportunity to plan logistics with forwarding & clearing agents, transport planners, and also to plan resources for internal warehouse operations.

Delivery document acts as an intermediate document between purchase order and goods receipt and facilitates the information regarding the activities between purchase order and goods receipt.

2. With Delivery (comprehensive process mapping)

In this approach an additional intermediate document, Delivery, is created against the purchase order / sales order. Subsequent goods receipt / goods issue is then posted against the delivery document. Delivery document is equipped with the functionalities to capture details and statuses of packing, picking/putaway, goods receipts/issues and transportation etc.

From a WM perspective both approaches (with and without delivery) are supported. But there are certain advantages in WM processes with delivery based approach.

With Delivery Approach: WM activities (i.e. creating and confirming a transfer order) can be completed against the delivery document before posting a material document in the Inventory Management. Goods receipt / issue posting against delivery completes the process.

Important advantages-

1. WM activities and resources can be planned well before the actual shipment.
2. As the inventory posting happening after warehouse activities, system stocks always reflects the reality.

Without Delivery Approach: WM activities (i.e. creating and confirming a transfer order) can’t be completed without posting a material document in the Inventory Management because goods receipt / goods issue posting generates a transfer requirement, which forms the basis for WM activity (i.e. creating and confirming transfer order). A putaway or picking activity with a transfer order completes the process.

Note: Even with deliveries, system allows the material document posting in Inventory Management before WM activities similar to ‘Without Delivery’ approach.