Optimize SAP LE Organization Structure: Best Practices & Configuration in 6 Steps

In this comprehensive guide, we break down the 6 essential configuration steps of Logistics Execution (LE) to maximize performance, improve logistics workflows, and ensure seamless integration within SAP.

Whether you’re refining existing setups or starting fresh, these best practices will help you achieve a highly efficient, revenue-generating SAP LE system. Let’s dive into the key strategies that drive success!

Note

You can download the excel file from the below link to copy paste the values of all the steps while doing configuration

Please click on the below to take you to the download page. Scroll down till you reach to the download file of SAP LE organization structure & then download the file

1. Logistics Execution (LE) Organization Structure in S4 HANA

The SAP Logistics Execution (LE) organizational structure acts as a bridge between procurement, inventory management, sales, and finance.

By integrating critical elements such as shipping points, warehouses, distribution centers, and storage locations, SAP LE ensures seamless coordination between Material Management (MM) and Sales & Distribution (SD) modules.

For instance, during a goods receipt (GR) or goods issue (GI), LE directly communicates with MM to update inventory levels and with SD to trigger outbound delivery processes. Furthermore, each logistical movement within LE is tied to financial postings in the Financial Accounting (FI) module, ensuring real-time accuracy in cost accounting, stock valuation, and profitability analysis.

A well-structured SAP LE setup supports key SAP scenarios like third-party processing, drop shipments, intercompany stock transfers, and batch management, making it essential for businesses aiming to scale operations while maintaining tight integration across the SAP landscape.

Please see below all the components of SAP S4 HANA Logistics execution organization structure elements in pictorial form for our car business.

We will configure this organization structure in this post

2. 6 Steps of LE Organization Structure Configuration

2.4 Step 4: Determine Picking Locations

The picking rule defines how the system determines the picking location

Thee are two rules for picking location determination. We can not change them

a) Picking Rule “MALA”

MALA rule determine the picking location according to:

• Storage condition from the material master
• Delivering plant of the delivery item
• Shipping point of the delivery (see the section above on Shipping point determination)

We will use “MALA” picking rule

b) Picking Rule “RETA”

RETA rule is generally used in retail sector

• Storage location
• Delivering plant of the delivery item
• Situation

c) Assignment of Picking Rule

Picking rule is assigned to delivery type

for our car business, we have configured a customized delivery type “YOBD”

Please click HERE to check the detail of “YOBD” delivery type configuration

Let,s assigned the “MALA” picking rule to our delivery type “YOBD”

SPRO –> IMG –> Logistics Execution –> Shipping –> Picking –> Determine Picking Location –> Define Rules for Picking Location Determination

So as per rule “MALA”, we will assign the picking locations to the combinations of shipping point and storage condition for every plant.

Note : We will determine picking storage locations in outbound deliveries. Since we have all type of storage locations like Std Storage Locations, IM HU Managed SLOC, WM Managed, EWM Managed so we need to determine picking storage locations corresponding to storage conditions accordingly.

EWM Picking location in outbound deliveries will be “PP1S – EWM Available for sales” , which is different from EWM Inbound deliveries SLOC as “PP1D – EWM Receive on Dock”. The available stock is changed from PP1D to PP1S through EWM functionality of stock availability

• IM Picking -If a Material is managed in IM SLOC then IM Standard SLOC should be determined
• IM With HU Mandatory – If a material is managed in IM SLOC but HU is mandatory
• WM Picking – If a Material is managed in WM then WM managed SLOC should be determined
• EWM Picking -If a Material is managed in EWM then a EWM managed SLOC should be determined
• WM With HU Mandatory – If a material is managed in WM SLOC but HU is mandatory
  

Note:

For EWM There are two separate Storage Locations for inbound goods & outbound goods.

For our car business we have mapped these two as below

• PP1D – EWM Rec. on Dock
• PP1S – EWM Av. for Sale

Please check the blow post for detail configuration

Configure SAP S4 HANA Material Management Organization Structure in 5 Minutes – Step 7: Create Storage Location

Please note that 

--> for EWM "Picking" Storage Location "PP1S - EWM Av. for Sale" is maintained in this configuration.

--> for EWM "Receiving" Storage Location "PP1D - EWM Rec. on Dock" is maintained HERE

We will see the component of picking location determination in detail i.e. “Storage Conditions”

2.4.1 Step 4.1: Define Storage Conditions

Storage Conditions in SAP LE (Logistics Execution) refer to predefined settings that dictate how materials should be stored, handled, and managed within a warehouse or storage location. These conditions ensure that goods are maintained under the right environmental factors, such as temperature, humidity, and safety requirements, to prevent damage and maintain quality.

Storage conditions are entered in the material master record for each storage location.

Below storage conditions are defined for our car business

Below 4 Storage conditions are configured for our car business

• P1-IM Managed Stock
• P2-WM Managed Stock
• P3-EWM Managed Stock
• P4-IM Managed HU Required Managed Stock
• P5 -WM HU Managed Stock

So depending upon the material handling i.e. material is inventory managed or HU mandatory or Warehouse Managed or EWM managed , we will input storage condition in the material master

Now picking location is combination of shipping point * Plant * Storage conditions

2.5 Step 5: Assign Goods Receiving Points for Inbound Deliveries

Here we define the determination of inbound shipping point corresponding to Storage location.

Note : Storage location in inbound delivery depends on the SLOC given in Purchase Order Which comes from material master record. Here we will assign inbound shipping point corresponding to every Plant & every SLOC.

2.6 Step 6: Define Transportation Groups

A transportation group classifies materials that share similar transportation requirements, such as packaging type, loading equipment, or shipping method.

Proper configuration of transportation groups helps streamline shipment scheduling, optimize freight costs, and enhance warehouse and distribution center operations.

In SAP S/4HANA, transportation groups are assigned to material master records and work closely with shipping points and routes to automate delivery processes.

--> In SAP S/4HANA, Transportation groups are assigned to material master records

--> Transportation groups are a vital components in determining Routes.

Created below transportation group for our companies

Logistics Execution Organization structure configuration ends here.

Since now we have configured All Modules Organization structure like FI (CLICK HERE), SD (CLICK HERE) , MM (CLICK HERE) & LE (in this post) now we can start creating Materials, Vendors & Customers and further scenarios (after activation of material ledger which is mandatory in S4 HANA)

Appendix

we will also see in brief what is changed in S4 HANA compared to traditional SAP R/3 or ECC with respect to Logistics execution.

3. Difference between LE in SAP ECC vs SAP S4 HANA

SAP LE is changed a lot in SAP S4 HANA compare to LE in SAP ECC.

Understanding the difference between Logistics Execution (LE) in SAP ECC and SAP S/4HANA is critical for businesses planning to transition to SAP’s next-generation ERP system.

While SAP ECC has long supported logistics operations through its dedicated LE module, SAP S/4HANA introduces a more streamlined, integrated approach by embedding logistics functions into the Extended Warehouse Management (EWM) and Transportation Management (TM) components.

This shift impacts everything from warehouse management and delivery processing to goods movement tracking and supply chain visibility. In this article, we’ll explore how LE has evolved in S/4HANA, what’s been replaced or enhanced, and how these changes affect SAP consultants, logistics professionals, and businesses optimizing their digital supply chain strategy.

3.1 Logistics execution (LE) in SAP ECC

In SAP ECC business suite , Logistics execution is a combination of the below components

• Shipping
  • Inbound Deliveries
  • Outbound Deliveries
• Transportation (LE-TRA)
• Warehouse Management (LE-WM)

3.2 Logistics execution (LE) in SAP S4 HANA

SAP S/4HANA is successor of SAP R/3 and SAP ERP and is optimized for SAP’s in-memory database SAP HANA.

As SAP Business Suite 4 only runs on the SAP HANA database it is packaged as one product, SAP S/4HANA. While SAP’s classical R3, ERP and ECC based business suite and related products were designed to run on several database platforms, including those from Oracle, Microsoft and IBM.

3.2.1 Shipping in SAP S4 HANA

Shipping is not much change in S4 HANA. Sap S4 HANA also uses the outbound & inbound delivery and respective configuration same as SAP classic R/3 or ECC.

3.2.2 Transportation in S4 HANA

As per SAP simplification document, LE-TRA is not the target architecture within SAP S/4 HANA and the recommendation is to use Transportation Management (SAP TM). Even though LE-TRA functionality is still available within the SAP S/4 HANA, this is not considered as future technology. So basically TM replaces LE-TRA in S4 HANA.

3.2.3 Warehouse Management in S4 HANA

As per SAP simplification document, LE-WM is not the target architecture within SAP S/4 HANA and the recommendation is to use Extended Warehouse Management (SAP EWM). Even though LE-WM functionality is still available within the SAP S/4 HANA, this is not considered as future technology. So basically EWM replaces LE-WM in S4 HANA.

The earliest version of EWM till 2016 were only available as a decentralize EWM is on a separate server built either on on NetWeaver or SCM stack with any database. Then from 1809, decentral EWM is built on S/4HANA platform with HANA database.

from S4 HANA 1609 , an embedded version of EWM is also available within Sap S4 HANA.

You can read more on EWM on S4 HANA in detail HERE.

Note

Refer the post SAP HU vs HU to have a flavor of inbound & outbound delivery creation and process with respect to a HU mandatory Storage Location.

Refer the post Configure SAP S4 HANA Sales Documents in 10 Minutes to be familiar with the process of Outbound delivery configuration.

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