Logistics Functions In SAP Business Software

What are the various logistics components in SAP?

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SAP is the number one vendor of standard business application software. SAP is also the third-largest software supplier in the world.

Further, SAP delivers scalable solutions that enable its customers to further advance industry best practices. SAP is constantly developing new products to help their customers respond to dynamic market conditions and help them maintain their competitive advantage.

The current versions of SAP are the result of the nearly forty years of development that has been driven by the needs of customers. This article will examine the elements of logistics within SAP and how the logistics functionality and can help you manage key logistics and supply chain activities.

There are many components to the logistics functions in SAP. The components include the following SAP areas:

  • Materials Management (MM) – the materials management component is the foundation for the logistics functions of a company. The component includes purchasing functionality, inventory movements, accounts payable and the material master file, which contains the information on all materials and services used at a company.
  • Sales and Distribution (SD) – the sales and distribution component incorporates the processes from customer order to the delivery of the product to the customer. The component includes the sales functions, pricing, picking, packing, and shipping.
  • Quality Management (QM) – the quality management component is used to ensure and improve on the quality of your company’s products. The functions of this component include the planning and execution of quality inspections of purchased and finished products.
  • Plant Maintenance (PM) – the plant maintenance component is used to maintain the equipment that is used in the production of your company’s finished products. The component focuses on the planning and execution of preventive maintenance on equipment and tools used in the production process.
  • Production Planning (PP) – the production planning component manages a company’s production process. The functions of this component include capacity planning of a company’s production, master production scheduling (MPS), material requirements planning (MRP) and the shop floor functions of producing a company’s finished products.
  • Customer Service (CS) – the customer service component manages a company’s service that it provides to customers for repairs and warranties. Items can be sent back for repair or visits made by staff to customer facilities. If a company makes finished products that are sold with warranties, then the SAP customer service component will help a company to service and repair those items with maximum efficiency.
  • Warehouse Management (WM) – the warehouse management component helps companies to accurately manage inventory and maximize storage capacity. This component can reduce the time it takes to place and remove items from the warehouse by suggesting the most efficient location to store a material and the most efficient way to place and remove that material from the warehouse.

And , of course, there is additional functionality that integrates with the Logistics area, such as Transportation Management, Batch Management, Handling Unit Management, Logistics Information System (LIS), Variant Configuration, Engineering Change Management, Project Systems (PS) and Environmental, Health, and Safety (EHS).

All of these can be important in the Logistics area, depending what a company requires.

At the end of the day, what an Enterprise Resource Planning (ERP) system should help a company do is to optimize its supply chain.  A company knows its supply chain is optimized when that company is delivering what its customers want when that company's customers want it - and when that company is spending as little money as it can accomplishing that.  

Any ERP system is an investment - and the cost of a system as robust and functionally integrated as SAP is significant.  However, if a company isn't delivering what it's customers want when its customers want it - then it may be time for that company to make an investment in a system that can help reduce logistics costs while improving service levels.  

This Logistics Function article has been updated by Gary Marion, Logistics and Supply Chain expert.