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250 CHAPTER 7 Inventory and Warehouse Management Processes

A review of inventory (see Figure 7-27, column 4) will not indicate any
change in the number of t-shirts in the storage location, interim storage area,
or warehouse bins. This is because the impact on storage location inventory
occurs when the goods receipt is recorded in IM. In addition, at this point
nothing has actually been moved from the interim bins to the warehouse
bins. However, the transfer order will indicate the planned (target) quantities
and bins.

Confi rm Warehouse Movement
Creating a transfer order authorizes GBI warehouse employees to physically
move the materials from the interim receiving storage area into warehouse
bins. After this step has been completed, the TO is updated to confi rm the
quantity and locations (bins). In our example, the t-shirts are moved from the
interim receiving storage area into the warehouse bins proposed by the ERP
system in the TO. The employee then updates the TO to indicate that 1,000
t-shirts were moved.
A review of inventory (see Figure 7-27, column 5) will indicate that stor-
age location inventory remains unchanged at 1,500. The quantity in the interim
receiving storage area is reduced by the 1,000 t-shirts moved and is now zero.
Finally, the warehouse bins now contain 1,500 t-shirts, the original 500 plus the
1,000 that were just moved.
As illustrated in Figure 7-28, the remaining steps in the procurement pro-
cess (e.g., invoice receipt and payment) can continue while the WM process
steps needed to putaway the materials into bins are completed. These steps
can continue because they are based on the material and fi nancial accounting
documents that were created at the time of the goods receipt, which is an IM
activity and is not dependent on WM activities.
You may have noticed that inventory is tracked at both at the storage
location level and the warehouse level. Warehouse inventory is the sum of
the inventory in the interim storage areas and the warehouse bins. Note in
Figure 7-27 that warehouse inventory is always equal to storage location
inventory.

Demo 7.6: Procurement process with warehouse
movements

WAREHOUSE MANAGEMENT IN FULFILLMENT
To illustrate warehouse management in fulfi llment we will employ a different
GBI scenario. Rocky Mountain Bikes (RMB), a GBI customer, has sent a pur-
chase order for 50 bikes, which GBI will ship from the San Diego plant. Recall
that we used a similar example in Chapter 5. The signifi cant differences here
are (1) GBI will deliver all of the bikes in one shipment and (2) the transaction
will include WM steps that were omitted in Chapter 5 to keep the discussion
simple. We will assume that GBI has 500 bikes in inventory before the fulfi ll-
ment process is executed. We depict this scenario in Figure 7-29. Column 2 in
the fi gure indicates the inventory status prior to process execution.

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