The first important consideration is to separate the method of picking from the strategy for sourcing material. The method of picking addresses how the picking activity is organized. It could include use principles such as wave picking and two different forms of batch picking. The strategy for picking deals more with the determination of what item will be picked. Strategies such as first-in-first-out (FIFO), last-in-first-out (LIFO), or shelf-life expiration date (SLED) all fall under this category.
Methods
Sending pickers out one delivery at a time and expecting the picker to retrieve all material for that specific delivery is most likely an ineffective method to move products through your warehouse. Depending on your order profiles, WM supports many methods that promote more operational efficiency than simply picking an order at a time, including wave picking and batch picking.
Wave Pick
One of the most common picking methods is a wave pick. This is a grouping of orders together and a release for retrieval at a single point in time. Since the orders have been grouped together, you can monitor their status as a single work unit and as discrete orders. For example, if I group 10 orders, I can monitor how close all 10 are to being done, as well as how close a specific order is to being done. This is useful if, for example, SAP’s Advanced Planning and Optimization (APO) planned shipments into trailers and you had an expected pickup time for that trailer. Since the staging area on the dock is precious, you do not want to pick the orders too far in advance of the trailer’s arrival. However, you do want to get all the materials required for the trailer to the dock before it arrives. By placing all the trailer’s orders into a single wave, you can manage the release of picking to the floor and also the status of the picks. This allows you to better utilize your dock space, dock doors, and loading personnel.
The wave pick is a unique method in that you can use it in conjunction with other picking methods. Specifically, you could build a wave of deliveries and still execute either of the two following pick methods.
Batch Pick (Two-Step Method)
Sometimes orders arrive that are very similar. For example, in a new product launch, your entire sales force might need to get two cases of the new item. Or every Tuesday, one of your retail customers might send requests for 50 of its stores to replenish from the weekend’s sales. In both of these examples, you are likely to have a large number of similar orders. Allocating many pickers to this and traveling repeatedly between the bins containing the materials might not be the most efficient method to retrieve all that material.
In a two-step pick, you can group several orders together, retrieve the total demand from bins, and stage them in an intermediate area. Then pickers can move within this intermediate area, which is much quicker than moving across the warehouse, and pick the materials. Essentially two-step picking centers on reducing travel time, which is one of the largest gains a warehouse can realize. Figure 1 shows how much simpler the two-step pick is for similar orders.
Figure 1
Process flows for traditional and two-step picking. Picking four orders by journeying to each bin involves more traveling than a two-step pick, where the total material needed is staged and orders are picked from the staged material.
Batch Picking (Cross-Delivery Transfer Order Method)
This last method is a way to reduce travel time. You can also use it when your orders are not similar. For example, say you have an aisle with material for six different orders. The quickest method to pick those items would be to travel down the aisle and pick for all six deliveries in one pass (versus in six passes down the aisle picking one delivery each time). Functionality introduced in the Enterprise release and also available in the SAP ERP Central Component (ECC) version allows you to combine several different orders into a single picking activity (transfer order). This means you can combine all six deliveries on a single transfer order and sequence the picker down the aisle just once for all materials.
Let’s now explore the picking strategies WM Release 4.6C and Enterprise provide.
Strategies
As with most functionality within SAP, the first important consideration is the organizational structure. When performing picking, some of the organizational elements are the same as for placement. To better explain this I’ve expanded the table used in the last article to include all warehouse management organizational elements and also to show if they play a role in placement, retrieval, or both (Table 1).
| Warehouse Management term | What it is | A warehouse example | Influences strategy | Influences picking or placement strategy |
| Storage type | A warehouse zone; an area where all the bins generally serve the same purpose | A high rack location | Yes
(Except for stringent FIFO, more on this later) | Both |
| Storage section | A subdivision of a storage type (zone); a subset of bins that should be treated slightly differently than other bins within that storage type | A row (level) within a high rack location | Yes | Placement only |
| Picking area | A method to group bins together so you can split picking transfer orders or monitor picking progress by a subset of a storage type (zone) | A section within a pick to light or a group of bins geographically close to each other and where picks from them are common | No | N/a |
| Bin | A distinct location to which you can direct a user | A specific slot within the warehouse | Yes, through the bin capacity attributes | Placement only |
| Quant | An identifier used internally within WM to track inventory | A license plate the user never deals with; it is internally managed by SAP | Yes, the goods receipt date is an attribute of the quant, so date-based picking (FIFO, LIFO) relies on the quant | Picking only |
| Table 1 | Summary of WM organizational structure |
With the definitions established, let’s apply them in a picking strategy.
First: Locate a Storage Type
Similar to placement, WM allows users to define removal indicators on the material master. These refer to the strategies configured in the IMG. In fact, the same IMG configuration table that stores the placement strategies stores the removal strategies. This means that, just like placement strategies, additional factors can influence the strategy. However, it’s most important to remember how to identify which line in the strategy table refers to a removal. To explain this, I’ll use screenprints of the material master and the strategy configuration table.
Figure 2 shows the material master, warehouse management view number one. The Stock removal indicator is circled; in this case it is 003. To understand what storage types will be searched, look at the configuration table in Figure 3 and find the line with indicator 003 for your warehouse and an operation of type A. Remember from my prior article that operation refers to a placement, removal, or other activity within the warehouse. Operation of type A is a pick. The line this material master refers to is circled.
Figure 2
WM view 1 on the material master
Figure 3
Storage type search sequence
You may be wondering what the wildcard (***) refers to or why the storage types are different for retrieval than for placement. (You can see in Figure 3 that the removal strategy differs from the placement strategy. Look for indicator 002 with operation E).
Let’s address the purpose of the wildcard (***). The strategy is always executed left to right. SAP WM initially tries to locate this material in storage type 001. If it cannot find any in 001, then it looks in 003. If it is also unsuccessful there, it looks in the next storage type. Since this is a wildcard (***), WM has permission to look anywhere within the warehouse to source that material.
Some of the warehouse’s nuances account for why the removal storage types differ from the placement storage types for this material. Most likely material is placed into a reserve location and replenishment brings it to a forward picking location. Therefore, having a removal strategy that differs from the placement strategy makes sense. The placement and removal strategies do not have to be similar.
The first three columns in Figure 3 are the most important. Column 1 (value 600) is the warehouse number. Column 2 (value A) is the operation, a pick or a placement. Column 3 (value 003) is what the material master references (003 on the material master is a pointer to this value). For more detail on the columns in this table, refer to my previous article.
One additional item that merits a brief mention is the Picking storage type on the material master, circled in Figure 4. This has no relation to the way WM selects inventory. Instead it is used in SAP’s rough workload estimating (RWE). RWE is a method to estimate how long work will take to execute. As I mentioned, travel time has a significant influence on warehouse productivity. To estimate the time needed to complete pending work, the system must know what areas are involved in the picking process. Rather than executing the strategy and absolutely identifying the source locations for picking, it uses the picking storage type on the material master to estimate where the material will be picked — hence the rough estimate. Remember it has no bearing on the actual picking process. It does not identify the actual bin that will be selected, because that bin could be empty.
Figure 4
Picking storage type on the material master
Second: Pick Your Material
Once you determine the storage type, it is time to pick your material. WM has a variety of predelivered strategies that correspond to many common requirements. Table 2 shows SAP-delivered strategies. However, you can also create a custom strategy via a user exit.
| WM strategy | What it does | An example of why to use it |
| FIFO | Searches for the oldest material | Enforcing inventory turns is important to reduce spoilage |
| LIFO | Searches for the newest material | If material is placed in a stack or arranged in a row down an aisle and the most recently placed one is the most accessible |
| Partial quantities | Looks for partial pallets that best match the requested order amount | To minimize the number of partial pallets freeing up bin space |
| Large-small quantity | Segments a single order line into the quantities in which the material is stored | Assume a case is 10 units and you have both a case and an each pick area (an each pick area is where you pick single units or subcase quantities). If you have an order for four units you would not want to split a case; instead, you would pick four from the each area. Similarly, if you had an order for 11, you would not pick 11 from each area; you would pick one case from the case area and one unit from the each area. This strategy supports those types of decisions. |
| Shelf life expiration | Searches for material with the shortest shelf life | Use this when materials are date sensitive. However, the oldest FIFO date might not represent the oldest product (remember FIFO is when the warehouse received it; it is a warehouse-centric date. Shelf life indicates when it was manufactured and represents how much longer an item is saleable; there is a different between these two measurements). |
| Fixed bin | Always retrieves material from the same location | A fixed picking line |
| Table 2 | Overview of SAP WM removal strategies |
A picking strategy, like a placement strategy, is an attribute executed within a storage type (Figure 5). To reach this in the IMG, go to transaction OLML (a subset specific to warehouse management) and then Logistics Execution>Warehouse Management>Master Data>Define Storage Type.
Figure 5
Storage type definition where a strategy is assigned to a storage type (zone)
Special Considerations
A few nuances to picking are worth considering. They include the interaction between Sales and Distribution (SD) and WM, how batches are managed, and stringent FIFO.
SD and WM
Most of the modules interact with WM via transfer requirements that turn into transfer orders. SD is different in that transfer orders are generated directly from the delivery note, meaning that SD and WM are much more tightly integrated than other modules. Additionally, as transfer orders are confirmed, the picked quantity on the delivery note is automatically updated to reflect the new total picked.
Batch Management
You can carry out batch determination at several levels. You can dictate on a delivery note which batch the warehouse is to pick. However, this can lead to inefficient picking processes as the specified batch may not be in the forward picking area.
If a batch is specified on an outbound delivery, the system considers that when running through its strategy. If that specific batch is not in the first storage type, it looks in the second, then the third, and so on. It is very possible that the system will bypass material in your initial storage types, which are most likely the bins from which you prefer to pick from a geographic perspective (i.e., to reduce travel time). This may happen even if the material in those bins is acceptable to the customer and their attributes match exactly the batch specified on the delivery note. Essentially, WM says, “The customer asked for a specific batch. This must be important. If they asked for a specific batch, let me find that batch.” That means the batch can trump all removal strategies centered on establishing ideal material flows. This can cause havoc in warehouse processes, undermining the replenishment strategy and process flows.
Therefore, when possible it is best to delay batch determination as long as possible. In fact, you can determine the batch when the transfer order is allocated. In this method, the material positions within the warehouse are considered, keeping the desired warehouse material flows. This means that WM first locates materials based upon how you want material to flow through the facility and then verifies the material is acceptable based on what the customer needs. For example, if the customer requests a certain characteristic and the batch in the primary picking position lacks that characteristic, the system will not select it. If it is acceptable, it will. Delaying batch determination as long as possible and performing this “Is there a reason not to pick this batch?” logic preserves some warehouse efficiency while still enforcing your batch determination logic.
Stringent FIFO
A special FIFO picking method searches across all storage types for the oldest product. Normal FIFO looks within storage types. This means the normal FIFO might not source the oldest material if it is in one of the later storage types in the search strategy. Specifically, if the first storage type has material that was received in 2006 and the second storage type has something received in 2005, the system retrieves the material received in 2006. To avoid this:
- Use stringent FIFO to look in all storage types for the oldest material. Keep in mind this decreases warehouse efficiencies because pickers may be sent to undesirable locations to pick older material.
- Look at your replenishment strategies. A proper replenishment strategy, which sources material in FIFO order from the reserve location to the forward location, should closely mirror your FIFO requirements. To put it another way, if you replenish in FIFO order, you’ll most likely be picking in FIFO order. It will be unusual for you to end up with the situation described above (2006 material in your picking strategy before 2005 material).
One last consideration on the stringent FIFO strategy: Be sure to exclude certain storage types from consideration. Stringent FIFO looks across all storage types including your interim locations (such as your docks). Unless you exclude your intermediate areas, you could send pickers to your shipping (916) area to pick what you just staged for a different customer! To set the storage type exclusion, go to OLML>Logistics Execution>Warehouse Management>Strategies>Stock Removal Strategies>Define Strategy for Stringent FIFO.
Cross-Docking
Cross-docking is a method whereby you don’t store product in its normal location but instead you either stage it or take it directly to a waiting truck. SAP offers three different cross-docking solutions. One is in WM and involves pre-planning cross docks. The second is available to SAP Retail customers and is slightly more advanced. The third, which is the most recent and most robust, is the WM cross-docking solution introduced in 4.7 SCM Extension Set 2. This offering provides true cross-docking capabilities and can execute either planned (you know you will cross-dock it and cause trucks to arrive at the same time to support the cross dock) or opportunistic (it just happens that someone is receiving something that is needed for an outbound shipment) cross-docking. Complete with cross-docking monitors and planning documents, the solution in Extension Set 2 can increase operational efficiencies significantly by reducing material handling.
User Exit in Picking
As with most of its functionality, SAP provides the ability to customize the base solution. Perhaps you wish you could combine the attributes of two different strategies depending on a certain situation. The first consideration when you find yourself contemplating this is to re-examine the organizational structure of the warehouse. Should you simply split your storage type into two and assign the appropriate strategy to the two new storage types? If the answer is not that simple, however, you can consider a custom strategy. This was detailed in my previous article.
So How Does It All Work Together?
Overlooking the special case of stringent FIFO, SAP looks within storage types for materials that match the requirement. This means looking at all units of that item within the storage type (looking at the quantities) and, if more than one location has inventory, looking at the quant to determine which location to pick from (Figure 6). For example, if five bins in a storage type have the item, the system looks at the goods receipt date on the quant to determine which bin to pick from in support of a FIFO pick. If no material is found in that storage type, then it looks across storage types until it finds an appropriate one (Figure 7).
Figure 6
How SAP searches within WM organizational elements for the material to pick
Figure 7
How the system searches within WM organizational elements for the material to pick
Ok, But It Does Not Work…
Clearly, as with stock placements, many factors can influence which stock WM recommends picking. Fortunately, you can use the troubleshooting guide discussed in my prior article.
Creating transfer orders in the foreground allows you to step explicitly through the logic WM is executing and better understand why your strategy may be going astray. The simplest way to launch this is from within a delivery note by selecting Subsequent Functions>Create transfer order. That brings you to Create transfer order for an item transaction (transaction code LT03) with the delivery and warehouse defaulted. Select Foreground for the Foreground/background option and proceed to the screen shown in Figure 8. Clicking on the circled icon (create in foreground) launches the transfer order removal process, which is highlighted in Figure 9. Selecting Environment>Storage bin search log then shows the detailed logic executed to determine the bins (Figure 10).
Figure 8
Launch transfer order creation in the foreground
Figure 9
Create a transfer order in the foreground
Figure 10
A log detailing the rules the system considers when determining the source bin
Keep in mind that when you begin configuring a warehouse, you’ll find inter-relationships among placement strategies, picking strategies, and your warehouse organizational structure (since the strategies are a factor of the storage type, the primary WM organizational element). You should anticipate spending a decent amount of time experimenting with the right structure to mirror your operation flows. I’d recommend not designing just your placement or your removal strategy, but both at the same time. They are interdependent, so be sure to take a holistic view of your facility.
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