sap retail

SAP Business Suite powered by SAP HANA | Fact Book

RetailFind Out How SAP Business Suite powered bySAP HANA Delivers Business Value in Real Time


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SAP Business Suite powered by SAP HANA

RetailDriven by changes in consumer behavior and the advent of newtechnology, the retail market is changing rapidly. Consumers arenow demanding multichannel shopping as they increasinglyinteract through multiple touch points. Besides physical stores,they shop more and more via Web stores and mobile devicesand expect a consistent retail experience, which requiresretailers to harmonize processes across the channel silos. Inaddition, global verticalized players are getting stronger forexample, manufacturers are extending their business to theretail area and vice versa which demands modified supply-chain processes. Looking at these massive transformations ofretail processes, SAP is positioned well to support customersand consumers along this journey.

SAP Business Suite powered by SAP HANA leads the way tonew real-time business practices in the following key areas ofretail:

SAP Customer Activity Repository ....................................................... 5

Master Data Management .................................................................... 13

Item Management, Assortments, and Listing (SAP Merchandising forRetail and Wholesale Distribution) ...................................................... 13

Customer-Centric Merchandising ....................................................... 17

Real-Time Customer Insight and Predictive Analytics ........................ 17

Optimized Merchandise and Assortment Planning (SAP Planning forRetail, SAP Assortment Planning for Retail)........................................ 18

Marketing, Campaign, and Promotion Planning (SAP CustomerEngagement Intelligence) ................................................................... 21

Marketing, Campaign, and Promotion Planning (SAP PromotionManagement for Retail) ...................................................................... 24

Perfect Price and Promotion Execution (SAP Merchandising for Retailand Wholesale Distribution) ................................................................ 27

Collaborative Sourcing, Buying, and Manufacturing ........................ 31

Sourcing and Buying Excellence (SAP Merchandising for Retail andWholesale Distribution) ....................................................................... 31

Customer-Driven Supply Chain........................................................... 36

Demand and Replenishment Planning (SAP Forecasting andReplenishment for Retail, SAP Merchandising for Retail and WholesaleDistribution) ........................................................................................ 36


Integrated Demand and Replenishment Planning (SAP Merchandisingfor Retail and Wholesale Distribution) ................................................ 39

Optimized Logistics and Fulfillment Execution (SAP Merchandising forRetail and Wholesale Distribution) ..................................................... 42

Unified Customer Experience ............................................................. 44

Store Excellence (On-Shelf Availability) .............................................. 44

Store Excellence (SAP Fiori Apps for Retail)....................................... 46

Store Excellence (SAP Merchandising for Retail and WholesaleDistribution) ........................................................................................ 49

Important pillars of the SAP HANA platform strategy for the retailindustry are:x SAP Customer Activity Repository, a new retail application based

on the SAP HANA platform. It is intended to support retailers inbecoming more customer-centric by bringing together customer, sales,and inventory information from siloed applications and offering built-inpredictive functionality. On this repository other SAP retail applicationsare planned, such as for assortment planning, demand planning, andpromotion planning. It is SAPs strategic intention that partners andcustomers will also be able to develop applications on SAP CustomerActivity Repository.

x Running the SAP Merchandising for Retail and WholesaleDistribution package (the industry solution for retail IS-Retail) inSAP Business Suite smarter, faster, and simpler on SAP HANA. Thissupports retail business processes via the generic SAP ERP applicationenhanced by retail-specific business objects (such as promotions) orgeneric objects adjusted to meet retailers requirements (such as articlemaintenance based on material maintenance). Many of the generic line-of-business (LoB) business objects and processes (for example, in theareas of materials management, sales and distribution, and logisticsexecution) cover core retail business processes and therefore are used inthis retail solution. Thus, business innovations delivered by SAP HANA inthe generic solution areas are in almost all cases relevant and beneficialfor retailers as well. Please check the SAP HANA Fact Books foradditional information.


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SAP Customer Activity RepositorySAP Customer Activity Repository allows retail companies to process andanalyze consumer behavior and the impact on future business. Based onSAP HANA, it is a foundation to access retail data in real time that offersbuilt-in forecasting functionality and serves as platform for retail applications.It collects transactional data that was previously spread over multipleindependent applications in diverse formats such as point-of-sale (POS)systems, e-commerce systems, and enterprise resource planning (ERP)systems. It enables retailers to discover, visualize, predict, and share hiddeninsights in real time.

The repository provides a common foundation and a harmonizedmultichannel transaction data model for a series of consuming applications.

Retailers can use SAP Customer Activity Repository to gradually transformtheir system landscapes from traditional database technology to arevolutionary in-memory database technology.

SAP Customer Activity Repository features the following:x POS data transfer and audit (POS data management): POS data transfer

and audit is a very powerful POS data processing and auditingfunctionality helping retailers to perform the data auditing, cleansing,aggregation, and harmonization of POS data in an automated way.

x Multichannel sales repository and multichannel sales analytics: Capturesales transactions across multiple channels by introducing a newmultichannel data model. This enables retailers to get a 360-degree viewof the customer and offers and to get instant aggregation to any desiredlevel across channels without losing the detailed information.

x Inventory visibility analytics: Provide real-time visibility into current stocksituation in the stores by taking ERP stock in unrestricted use andunprocessed sales and goods movements into account.

x On-shelf availability: Best-in-class algorithms help retailers to detect andvisualize out-of-shelf situations in the stores when they happen in realtime and take action to prevent further lost sales. For details please seethe section Store Excellence (On-Shelf Availability).

x Predictive functionality, leveraging the demand data foundation (DDF)and unified demand forecast (UDF): A new generation of forecasting forretail planning applications is part of SAP Customer Activity Repositoryand directly leverages the speed of SAP HANA.


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Business Practices TodayRetailers need to quickly analyze patterns (such as product affinities, buyingpatterns) and react quickly (create/update promotions, replenish stores) sothat the right product mix is at the right channel at the right time. With todaysever-growing amount of enterprise data to sort through, this is increasinglydifficult to do. Today, retailers have complex landscapes that requirereplication of the same data to multiple applications.

AmbitionAmbitions vary by area within the retail organization. For example, marketingstaff need accurate, multichannel sales data spanning multiple customersegments so they can shift promotion spend as customer demand shifts.Planning of supply and demand requires up-to-the-minute inventory to makesure the stores are able to meet the demand. The stores require real-timesales and inventory information to make sure the shelves are alwaysstocked. IT wants to streamline its infrastructure footprint. And finally, theCEO wants to be able to deliver all of this with quick turnaround time, andwith as few costs and headaches as possible.

SAP Customer Activity Repository is intended to support retailers inbecoming more customer-centric by bringing together customer, sales, andinventory information from application silos.

ChallengesTodays retailer is faced with consumers who are socially connected,technically savvy, and used to up-to-the-minute information. They havegreater access than ever before to information right at their fingertips.

Retailers are faced with numerous challenges, one of them being complexlandscapes that require replication of the same data to multiple siloedapplications.


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Figure 1: Retail Solution and System Landscape from SAP prior to SAP Customer ActivityRepository

Figure 2: Retail Solution and System Landscape of Current and Planned Solutions Based onSAP Customer Activity Repository

Retailers require quick access to mission-critical information. Nowadays,when vast amounts of detailed, line-item-level POS transactions must bemanaged, data must be first aggregated and transformed before it can beconsumed. Information related to sales, inventory, and customers fromvarious channels must be gathered from various application silos and sentout to business warehouses. This process can be costly to set up, maintain,and optimize. In addition, the information is often only consumable on a dailybasis.


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Business Innovation with SAP HANAA 360-degree, multichannel view of the customer, thanks to thecoexistence of POS transactions, sales orders, and billing documents, isavailable in one common data foundation. Customer segmentation can bedone via the SAP Customer Engagement Intelligence solution, whichaccesses multichannel transactional data in SAP Customer ActivityRepository. This provides users with the ability to drill through targetsegments, demographics, and transactional data for better insight intoconsumer behavior.

In addition, an interaction center run with the SAP Customer RelationshipManagement (SAP CRM) application can now consume SAP CustomerActivity Repository directly, giving call center agents full access not only toWeb channel orders but to POS transactions as well.

The unified demand forecast uses multiple demand data sources formodeling and forecasting. Retailers can generate a UDF based on powerfulalgorithms and statistical methods that account for the many factorsimpacting demand price velocity, seasons and trends, events, productrelations, and more.

In addition, the previous version of UDF (demand management foundationthat was not based on SAP HANA) lacked the ability to visualize themodeling and forecasting values. With the new UDF visualization, users willnow be able to assess the accuracy of the model, as well as validate theforecast(s).

Because future demand across all customer channels including store, Webshop, channel, regional and category sales can be better anticipated,retailers are in the drivers seat when it comes to optimizing plans anddecisions across all levels of the value chain.

Real-time inventory visibility is now available by merging ERP unrestrictedstock data with unprocessed sales and goods movements from the storetransaction log all within the same repository. This allows immediatesnapshots on inventory stock and valuation, while avoiding time-consumingoutbound processing and aggregation of data.

ReduceTCOBy having a singleplatform for allretail applications


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Figure 3: An SAPUI5 Demo Application, Displaying Multichannel Sales and InventoryInformation (showing how front-end applications can easily access views that expose thegranular, line-item data based on SAP HANA in SAP Customer Activity Repository)

Innovation in DetailCollection, Auditing, and Processing

SAP Customer Activity Repository consolidates data related to customertransactional activities in one, unified platform. Transactions that retailerscustomers carry out in their brick-and-mortar stores are transferred to therepository using trickle-feed processing. Sales documents created in thesource SAP ERP software as a result of orders customers place on theWeb, through a call center, or from a catalog are regularly replicated to therepository. SAP Customer Activity Repository classifies all these transactionby the order channel in which they were carried out.

Collecting loyalty information at the point of sale as well as the replication ofcustomer information from a source CRM system to the repository allowsretailers to drill down to the individual customer level when analyzing thetransactional data.

Inventory Visibility

SAP Customer Activity Repository allows retailers to gain insight into trueinventory position. Inventory information is replicated to the repository fromsource SAP ERP software and combined with the unprocessed POS salesinformation available in the repository. (This includes POS sales figures aswell as store goods movements that have not yet been sent to SAP ERP that is, goods movements not related to sales transaction, such as goodsreceipt postings and postings of spoiled merchandise to scrap.) Combiningthe current inventory information from SAP ERP with unprocessed POSsales figures gives retailers a clearer picture of their inventory.


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Predictive

Another key advantage of using SAP Customer Activity Repository is thedemand data foundation (DDF) component, allowing retailers to predictfuture customer activity. By taking advantage of the predictive functionality ofthe repository, inventory and pricing strategies can be prepared to meet theexpected customer demand and expected financial results.

DDF makes use of the UDF component, based on SAP HANA, that will allowthe retailer to forecast customer-driven demand. By modeling the causalfactors of historical data, retailers can then forecast how these factors affectthe future.

UDF will enable multiple consuming applications to model and then forecastconsumer demand at the level of product, location, order channel, salesorganization, and distribution channel.

Reduced Total Cost of Ownership (TCO)

By limiting the amount of replication of sales data, and by providing onesingle platform for all retail applications, retailers can streamline theirinfrastructure.

The co-deployment option for SAP ERP together with SAP Customer ActivityRepository on the same instance of SAP HANA makes replication of somedata obsolete, and it reduces maintenance efforts for the solutions.

SAP HANA supports the ability to store billions of records of unaggregatedline-item transaction details. This data can be accessed directly without theneed for additional aggregation and transformation, which reduces the needfor additional outbound systems and business warehouses.

Analytics

All data contained in the repository is exposed to consuming applicationsthrough information views included in SAP HANA Live for SAP ERP andcontent from SAP HANA for SAP Customer Activity Repository. Therepository leverages all the flexibility and the convenience of views in SAPHANA to simplify access to retailers customer transactional data. Also, thedata in SAP Customer Activity Repository is stored at the most granularlevel. This allows retailers to react faster, predict more accurately, and makeinventory and pricing decisions with better efficiency than ever before.


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BenefitsReact quicker to customer demand and stock the store shelvessooner: Analyze sales and inventory across channels, digging into billionsof line-item-level transaction details based on SAP HANA directly withouttaking the time to set up business warehouses.

Simplify the IT landscape: Eliminate replication of the same salesinformation to multiple applications, and access one pool of data fromvarious applications. Also, the characteristics of SAP HANA such as highcompression, scalability (both scaling up and scaling out), and parallelismenable retailers to readily scale up their IT infrastructure while opening newstores.

Understand the multichannel business end to end: Gain a holistic viewof sales transactions across all channels, including:x One consolidated pool for customer transactions across channels.

x Availability of POS, sales order, and return transactions at one placex Real-time access into customer sales data across channels

x Real-time flash reports within split seconds

Eliminate organizational siloes: The UDF does away with the previousmultiple forecasting algorithms and provides one single unified forecastalgorithm, so that all teams across organizational units are working with thesame results.

Reduce lost sales: Algorithms driven by SAP HANA that analyze billions ofline-item details can generate on-shelf availability alerts so that shelves arealways stocked.

Improve inventory visibility: Real-time views of inventory quantities andvaluations for the store channel are available.


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Road Map and OutlookSAP Customer Activity Repository is planned to continue to act as a centralhub for all retail operations and will innovate by providing additional, real-time inventory key performance indicators (KPIs) allowing for deeper accessto information throughout the supply chain. Additional retail applications forretail assortment planning, demand planning, replenishment, and markdownoptimization are planned to eventually consume SAP Customer ActivityRepository as their single source of truth, allowing retailers to break free oftheir current operating siloes, and taking advantage of a unified platform forall multichannel retail planning and analytic decision making.

Furthermore, the SAP Customer Activity Repository is also available as aturnkey or preassembled application the SAP HANA Customer ActivityRepository rapid-deployment solution that comes already loaded withanalytics. This provides a quick path to going live and accelerates innovationadoption with lowest TCO possible. For further details seehttp://service.sap.com/rds-car.

Product Details/PrerequisitesMandatory

SAP HANA software, SP06

SAP HANA studio

SAP Landscape Transformation replication server for SAP HANA 2.0

SAP NetWeaver 7.40 technology platform

SAP ERP 6.0, enhancement package 5

SAP HANA Live for SAP ERP, SP02

Optional

SAP CRM 7.0, enhancement package 2, or SAP CRM 7.0, enhancementpackage 2, version for SAP HANA, or higher

SAP HANA database clients

How to Get Startedhttp://help.sap.com/car


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Master Data ManagementItem Management, Assortments, and Listing(SAP Merchandising for Retail andWholesale Distribution)

Business Practices TodayItem management comprises all activities around products, includingexchange with collaboration partners, article maintenance, data cleansing,attribute enrichment, and distribution to other solutions (please see separatesections titled Store Excellence for communication with store solutions).Article master data is maintained for specific aspects, or views, such as:x Basic article data with groupings, categorizations, available units of

measure with their respective Global Trade Item Numbers (GTINs), andmore

x Purchasing data with relevant suppliers, including the respectiveprocurement data and purchase prices

x Sales data with relevant sales units of measures and their sales prices

x Logistics data for the distribution centers and stores with attributes forcontrolling the supply chain, including replenishment and forecastingparameters

Retail is the industry with the highest product volumes; there are retailerswith more than 1 million different SKUs and thousands of stores (thusresulting in close to a billion product-location combinations). Efficient articlemaintenance is only possible with sophisticated reference/default/copy-frommechanisms, forcing the retailer to maintain data explicitly only where reallynecessary. Obviously, item management for these data volumes and theclever referencing mechanism result in high demand for performance. Thus,in certain scenarios users would benefit from improved performance to beable to maintain articles more efficiently. Furthermore, shorter process stepsrunning in the dark reduce the likelihood for negative side effects, such aslocking issues. Additionally, to react to business requirements, massmaintenance tools are needed to support the user.

Listing is a central functionality in retail to control which products will becarried in which locations. The business object assortment serves as thelink between articles and locations.

Listing checks evaluate whether an article-location combination is relevantfor a specific process, such as whether an article can be purchased at aspecific date by a specific store, or whether information for an article shouldbe sent to the POS solution of a specific store. Those listing checks areexecuted from many different processes. The combination of the high reuseof listing check functionality with the transactional volume of a typical retailerresults in extremely high requirements for performance of the listing check.

>60%Faster article massmaintenance for levelarticle-location*

>50%Faster article creation*


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AmbitionRetailers need efficient maintenance options to cope with massive volumesof product-related activities. This is true for maintenance in dialog, whenusers need to adjust articles, assortments, and listings to reflect newbusiness insight, as well as for reorganization and housekeeping-likeprocesses, which help ensure a lean master data basis.

The listing checks that evaluate relevance of an article-location combinationin most operational process steps must be as efficient as possible.

Challengesx Response times of functionality managing massive volumes of articles

and article-related master data, like assortments

x Execution times of listing checks being carried out in most operationalprocesess (like purchase order creation)

Business Practice Optimizations with SAP HANAAs the basis for all real-time processes in retail and the foundation forinnovation and value-adding processes, the initial focus was on optimizingthe performance for SAP HANA for important retail processes related to thearticle maintenance, assortment, listing, and listing checks.

Value HelpValue help (also known as search help) is widely used across all SAPsolutions. On many input fields the user can press the F4 key and get a listshowing the valid inputs. Evolving technologies allow more sophisticatedapproaches, with Google driving innovation in this area. Having a Google-like search in SAP solutions is a big advantage for end users: it saves time,is more efficient, and helps to avoid missing existing documents and objects,which could easily lead to wrong business decisions. The new searchcomprises three aspects:x Type-ahead search: When the user starts typing in a search field, a drop-

down box appears offering suggestions for how to complete the search,or offers some results.

x Fuzzy search: When the user doesnt quite know how to spell a word, afuzzy search helps to find results that are similar to the search term.

x Multicolumn search: In SAPs legacy search capabilities, one search termis matched to one field at a time. For example, if a search term ofMontreal is typed for a customers name field, then only search resultswhere the customer name contains Montreal will be returned. However,in a multicolumn search, if the search term matches any field (city, streetname, customer name, or other), then that record will be returned by thesearch.

>320%Faster mass listingand listingreorganization*

>60%Faster assortmentassignment*


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Optimizations in DetailPerformance optimizations for SAP HANA in article maintenance,assortments, listings, and listing checks were focused on the followingkey processes, transactions, and reports:x Assortment assignment (sites): WSOA6

x Mass listing: WSM3

x Listing reorganization: WSM8

x Listing check in selected scenarios like purchase order creation(ME21N), collective purchase order (WF10), and rack jobber processingin POS inbound (RBDAPP01)

x Display listing conditions change docs: WSLI

x Mass changes to articles: MM46

x Create article and change article: MM41 and MM42

x Value help for various business objects (not only master data butoperational documents as well)

Benefitsx Based on faster dialog and batch transactions in article maintenance,

assortments, listings, and listing checks, retail organizations can reactfaster to business insight and requirements.

x Higher end-user acceptance is gained by reduced response times.

Road Map and OutlookIn future releases, SAP plans to evolve the software in the following areas:x Performance optimizations for additional process steps in listing checks

are planned.

x After the end of the lifetime of an article, the retailer needs to do somehousekeeping to reduce the number of active articles (for example,fashion retailers often have six-digit numbers of products they mustremove from the solution after the end of a season) to avoid negativeconsequences based on volume (and resulting performance issues). Theprocess is called article discontinuation. Many detailed checks arenecessary to evaluate whether an article can be discontinued (to ensurethere is no more inventory, there are no open purchase orders, and soon). These checks are very performance-intense, and thusdiscontinuation of all articles of a season can negatively affect otherprocesses being executed in parallel.

>120xFaster display oflisting conditionschange docs*


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Product Details/PrerequisitesThe following performance optimizations for SAP HANA as described underOptimizations in Detail are available with SAP ERP 6.0, enhancementpackage 7, SP02. See also these notes:x Assortment assignment (sites): SAP Note 1910429, SAP Note 191039

x Mass listing: Listing reorganization: SAP Note 1911874

x Listing check (in selected scenarios, such as rack jobber in POSinbound): SAP Note 1911212, SAP Note 1912694

x Display listing conditions change docs: SAP Note 1912676

The following performance optimizations for SAP HANA are available withSAP ERP 6.0, enhancement package 7, SP03. See also notes:x Item management: mass maintenance of articles: MM46 SAP Note

1939329, SAP Note 1911874, SAP Note 1944594

The following performance optimizations for SAP HANA are available withSAP ERP 6.0, enhancement package 7, SP04. See also notes:x Create article: MM41 SAP Note 1954120, SAP Note 1962074, SAP

Note 1964287, SAP Note 1966329

x Change article: MM42 SAP Note 1973246

The following performance optimizations for SAP HANA are available withSAP ERP 6.0, enhancement package 7, SP05. See also notes:x Value help: SAP Note 2019994

How to Get StartedSAP ERP 6.0, enhancement package 7, SP02, SP03, SP04, SP05, or vianotes listed above


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Customer-Centric MerchandisingReal-Time Customer Insight andPredictive AnalyticsThis end-to-end process is supported by SAP Customer Activity Repository.As the repository delivers beyond this process, it has a section of its own inthis document. Please see the preceding section for more information onreal-time customer insight and predictive analytics.


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Optimized Merchandise andAssortment Planning(SAP Planning for Retail, SAP AssortmentPlanning for Retail)

Business Practices TodayMerchandise and assortment planning is used to define corporate budgetsand efficient assortments for every channel. The goal is to provide real-time,what-if, demand-driven forecasts that incorporate metrics for weekly,product, customer, and store performance. The SAP Planning for Retailapplication facilitates a comprehensive planning process that cascadesinformation from the financial and merchandise plan to meet departmentobjectives in partnership with finance and merchandising organizations. Thisenables retail buying and planning organizations to accurately budgetplanned purchases for vendor products against merchandise, location, andcustomer hierarchies.

AmbitionGet the right products, in the right clusters, in the most desired shoppingchannel. Use the latest optimization techniques and real-time analytics,planned for delivery with the SAP Assortment Planning for Retail application,to rapidly and intuitively segment large amount of sales data to suggestrelevant assortment line plans for each selling channel. The results are fullyassorted proposed product lines by store cluster.x Make planning cycles faster and more accurate with sophisticated

planning functions that are executed in real time

x Quickly access accurate planning information to make better decisionson which assortment drives customers to buy

x Refine assortments in the right store for the right customer to enhanceprofitability

ChallengesFlawed execution It is difficult to get products to the customer in time togenerate new sales in a highly competitive environment.

Lack of information There is insufficient planning at store level toaccurately match customer demand and shopping habits.

Lack of consistency Different and in many cases manual sources ofinformation and metrics deliver complicated, disparate planning processes.


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Business Innovation with SAP HANAThe software greatly benefits from in-memory planning, becausemerchandise planning requires aggregation and disaggregation of high datavolumes, which would lead to performance issues with traditional databases.

Merchandise and Financial Planning

Develop sales and margin targets by channel as a basis for top-downfinancial planning and open-to-buy budget.

Channel Planning

Plan comparable, noncomparable, and new-store sales performance toanalyze selling locations, and labor schedules.

Innovation in DetailData access: The ability to read, save, and copy plan data decreasesresponse time dramatically.

Calculation speed: Time-dependent calculations such as weeks of supplyand inventory turn decrease response time dramatically.

Microsoft Excel look and feel: Planners feel comfortable with SAPBusinessObjects Analysis software, edition for Microsoft Office, using theExcel user interface.

Predelivered content: Workbooks standardized on the cost method ofaccounting allow implementation in less than 90 days.

Benefitsx Integrated plan delivering aligned and targeted product assortments

across channels

x Fine-tuned category mix and pricing for local needs to increase sales

x One unified view of customer demand

x Improved customer service with fewer stock-outs to drive increasedsales

x Increased speed of products to the customer


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Figure 4: SAP Planning for Retail: SAP BusinessObjects Analysis, Edition for MicrosoftOffice. This is ideally suited because planners prefer to work and are experienced withspreadsheet tools

Road Map and OutlookThree functional enhancements are planned to be delivered as new planningcontent for SAP Assortment Planning for Retail.

Assortment optimization process (pick) Leverage technology of SAPHANA integrated with our predictive analytics library to build location clustersand suggest product mix to build a master assortment list for the upcomingseason.

Assortment planning process (plan) Enable the assortment planner todetermine the most profitable product assortment per location, leveraginghistorical trends to build sales and purchase plans.

Assortment release to execution (purchase) Integrate master assortmentlisting, placeholder products, and demand plan quantities to SAP ERP,generating purchase order proposals, allocation instructions, new products,and assortment listings.

Product Details/Prerequisitesx SAP HANA, limited runtime edition for applications and for the SAP

Business Warehouse application

x SAP BusinessObjects Planning and Consolidation application, version forSAP NetWeaver

x SAP BusinessObjects Analysis, edition for Microsoft Office

x SAP Planning for Retail

How to Get StartedRamp-up knowledge transfer documents

Rapid-deployment solutions


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Marketing, Campaign, andPromotion Planning(SAP Customer Engagement Intelligence)

Business Practices TodaySAP Customer Engagement Intelligence is a fully integrated softwaresolution that consists of several analytic applications, including SAPAudience Discovery and Targeting and SAP Social Contact Intelligence.

In this document the focus is on SAP Audience Discovery and Targeting, asit has the highest relevance for chief marketing officers at retailers andideally fulfills the retailers requirements regarding customer segmentation.

Today, only a few retailers use sophisticated segmentation, and typicallyprocesses are not integrated.

In the road map section, plans for further functionality in the SAP ProductRecommendation Intelligence application are introduced.

AmbitionRetailers ambition is to give personalized promotions to consumers withofferings tailored to the exact needs of the specific customer or a targetgroup.

To make fact-based sales and marketing decisions, retailers must analyzecustomer information in real time across multiple dimensions such asrevenue, margin, cost of service, and predicted lifetime value.

Challengesx Customer segmentation is created manually or via batch.

x Product selection is based on experience of marketing department only.

x The data basis (that is, sales history) needs to be replicated.

x Resulting segmentations are not integrated with subsequent processsteps.


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Business Innovation with SAP HANASAP Audience Discovery and Targeting offers hierarchical, decision-treesegmentation for rapid targeting of large customer populations using SAP ornon-SAP data stored in an SAP HANA database. Using statistical algorithmsand predictive models out of SAP HANA, retailers can trigger initiatives(such as customized offers) for each segment and channel and managetarget groups for quick insight to action. Benefits include:x Real-time customer insights for intelligent sales recommendations and

decision making

x Support for personalized customer engagements, enabling a moreindividualized sales approach

x Support for strategic and effective selling to close the gap between go-to-market strategies and sales execution

x Ability to base the solution on SAP Customer Activity Repository,resulting in: Up-to-the-minute view of the customer, independent of channel One set of data and insight across channels, products, and operations High-speed predictive analytics delivering a single calculation of

customer demand across all channels Common real-time data platform to execute planning applications Open innovation platform for customers and partners

x Deployment possible in the cloud as well as on premise

Innovation in DetailSAP Audience Discovery and Targeting leverages the powerful predictiveengine in SAP HANA to run advanced statistical algorithms. These are usedto detect correlations in customer behaviors that can help to anticipatecustomer needs and offer highly targeted promotions and sellingrecommendations to the retailers sales force.

Because SAP Audience Discovery and Targeting can be based on SAPCustomer Activity Repository, please see details in that section as well.

Benefitsx Retail can invest the right resources in the right customers, products, and

channels.

x Purchase opportunities are being maxed, and consequently, the retailerachieves higher revenue.

x Sales conversion rate are higher.

x Cross-selling and up-selling opportunities can be identified.

x Customer engagements can be actively managed to reduce attrition ofcustomers.


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Figure 5: Lab-Preview Screenshot from SAP Audience Discovery and Targeting. Geographicalinformation on distribution of a selected customer set can be used to support segmentationprocess.

Road Map and OutlookIn the future, the SAP Product Recommendation Intelligence application(also part of SAP Customer Engagement Intelligence) is planned to enablethe following:x Make smart context-aware product recommendations in real time during

customer conversation using predictive models relevant to theconsumers and verified against their peer group, supporting theirobjective in alignment with their consumer decision stage

x Base input for the recommendations on a consumers purchase historyfrom all channels with prestructured (business event) clickstream data

Product Details/Prerequisitesx SAP HANA, SP06

x SAP Customer Engagement Intelligence 1.1

x SAP Customer Activity Repository (optional)x SAP ERP (optional)

x SAP CRM (optional)

How to Get Startedhttp://help.sap.com/cei


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Marketing, Campaign, andPromotion Planning(SAP Promotion Management for Retail)

Business Practices TodayUsually, retail customers run a large percentage of their business throughpromotions. Approximately 90% of retail companies around the worldexecute promotions, which can account for between 20% and 50% of totalrevenues. To get the planning right, they need an application that is bothpredictive and transactional to help them execute more financially effectivepromotions than their as-is planning process.

Ambitionx Facilitate collaboration and bring predictive analysis to the planning

process

x Plan and execute multichannel promotions

x Use best-in-class forecasting algorithms as basis for various levels ofplanning; single version of the (forecast) truth as this forecast is alsoused by other relevant solution (such as for promotional procurement)

x Smoothly integrate with mobile promotions and loyalty managementsolutions

ChallengesCurrently, much of the retail market carries out a lot of the promotionalplanning process in a fragmented and isolated way. This results insuboptimal promotions (from a price and product mix perspective) and thuslost revenue. Furthermore, the process requires manual intervention and istherefore error-prone, resulting, for example, in unsatisfied customers if thepromoted product is not available.

Business Innovation with SAP HANAThe SAP Promotion Management for Retail application can solve theseproblems by consolidating master data on SAP Customer Activity Repositoryrunning on SAP HANA and delivering an application for collaboration andexecution. Please note that SAP Promotion Management for Retail runs onother databases as well.

The main advantages of SAP Promotion Management for Retail add-on forSAP Customer Activity Repository (running on SAP HANA) are:x The ability to make use of the pushed-down best-in-class algorithms

x Additional analytics and dashboards to understand promotionaleffectiveness before, during, and after the event


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See also the advantages of SAP Customer Activity Repository, includingshared master data and no redundant persistence of sales history.

Innovation in Detailx See benefits in the section on SAP Customer Activity Repository

x Advantages of unified demand forecasting

Figure 6: Lab-Preview Screenshot from SAP Promotion Management for Retail, DisplayingForecasted Quantities (from Unified Demand Forecast) as Well as Actuals


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BenefitsPlease note that the following KPIs, based on SAP analysis and research,refer to business processes addressed by SAP Promotion Management forRetail. Of course, KPIs should be expected to deviate based on acustomers business processes and context.x Improved revenue due to more effective promotions Industry and

customer benchmarks estimate this range of improvement between 1%and 12%

x Improved gross margins due to efficient promotions Industry andcustomer benchmarks estimate this range of improvement between 3%and 5%

x Improved working capital through leaner inventory and more frequentturns Industry and customer benchmarks estimate this range ofimprovement between 1% and 3%

x Ability to execute a unified demand forecast across channels and supplychain activities

x Improved financial analytics and performance measurements nowpossible with speed and flexibility of SAP HANA

Road Map and OutlookSAP plans to continue innovations related to the forecasting algorithms thatpower many of the existing business processes within SAP CustomerActivity Repository and SAP Promotion Management for Retail, and futurebusiness processes related to planning (see the section OptimizedMerchandise andAssortment Planning(SAP Planning for Retail, SAP Assortment Planning for Retail). As moreapplications leverage the foundation of SAP Customer Activity Repository,including forecasting, these applications will evolve to support shorterlifecycle selling seasons and fast-fashion products. SAP plans to continue tointegrate demand intelligence throughout the relevant solution portfolio torecommend best promotions and pricing in line with customer preferencesand demand patterns. In addition, SAP plans to continue to focus onexpanding multichannel promotion planning and execution capabilities toenable retailers to market to customers across channels and devices.

Product Details/PrerequisitesFor deployment on SAP HANA:x SAP HANA software, SP06

x SAP NetWeaver 7.4

x SAP Customer Activity Repository 1.0

x SAP Promotion Management for Retail 8.0


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How to Get Startedhttp://help.sap.com/retail-pm

Perfect Price and Promotion Execution(SAP Merchandising for Retail andWholesale Distribution)

Business Practices TodayFor retailers, promotions are the key mechanism to attract customers andincrease sales. Thus, efficient promotion maintenance and seamlessintegration into operational processes are of major importance especiallybecause retailers often work with many promotions in parallel, each of whichcan be valid for a high number of products and stores. Promotionmaintenance is separated in two main process steps: First is the creation orchange of a promotion (either in dialog or via an application programminginterface). Second is the creation and transfer of the information to therelevant follow-on activities (like allocation creation for procurement, or priceactivation), typically executed in batch mode.

AmbitionTo increase revenue, customer loyalty, and market share, retailers needeffective pricing capabilities. Strategic and operational pricing functionalityenables retailers to counteract pressures such as competitive online pricingand rapidly changing consumer preferences, while protecting profits despiterising costs.

By understanding the unique patterns that shoppers produce when makingpurchases, retailers can proactively manage their pricing. Efficient executionof prices at the point of purchase across all channels helps improve grossmargin and can be achieved by applying a defined set of rules.

Strategic and operational pricing leverages shopper demand patterns,enabling the retailer to align pricing with their overall merchandising strategy.This enables anticipating what shoppers want through analytical insight andpredicting the trade-offs between revenue, profit, and price image.

Tight integration with all solutions touched during the various stages of apromotion from long-term planning, to forecasting, to execution, to vendorfund settlement is a necessity. Retailers want to address customers viaselective or multiple channels simultaneously.

>220%Faster promotionchangemaintenance*


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ChallengesWorking with many products and many stores via promotion maintenance insome contexts may not be very user friendly because of long responsetimes. Thus, users may not work efficiently, and adjustments may becumbersome to apply.

Batch processes for subsequent process steps can have long runtimes,which prevent adjusting promotions on short notice to react to businessinsight or exceptions (for example, when delivery from vendor or logisticsservice provider is delayed and a product needs to be substituted).

Business Practice Optimizations with SAP HANAAs the basis for real-time processes in retail and the foundation forinnovation and value-adding processes, the initial focus was on optimizingthe performance for SAP HANA for important retail processes, includingpromotion maintenance, and subsequent process steps.

Optimizations in DetailPerformance optimizations for SAP HANA in the area of promotionmaintenance and subsequent processing steps have focused on thefollowing:x Promotion maintenance

Promotion creation via transaction: WAK1 Promotion change via transaction: WAK2

x Subsequent processing Supply source determination via transaction: WAK20 Price activation via transaction: WAK16 Allocation table generation via transaction: WAK17 Promotion listing via transaction: WAK18

Benefitsx Support more efficient, user-friendly interaction

x Enable short-term adjustments of promotions, so reaction to businessinsight from real-time analytics is possible, along with faster reaction inthe case of exceptions (such as in the supply chain)


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Road Map and OutlookA significant portion of the runtime of both promotion maintenance and thesubsequent processing step, price activation, is spent in the area of salesprices/conditions in general. Planned future optimizations in this area willlead to considerable performance gains in promotion management.

Content for operational reporting for retail based on SAP HANA Live isenvisaged, among other optimizations in perfect price and promotionoptimization, such as promotion execution monitoring. Promotions are ofmajor importance for retailers for different reasons, including increasingrevenue by attracting customers to enter stores and buy both promoted andregular merchandise, strengthening customer loyalty, and increasing profitsby taking advantage of special supplier/manufacturer contracts. All regularbusiness processes are relevant for promotions as well (planning, marketing,merchandising, supply chain, analytics, and so forth), and often exist inparallel to the regular processes in a promotion specific flavor. Aspromotional processes are even more time critical and resource intense(based on increased quantities), the retailer needs to take extra care thatpromotional processes are smoothly integrated and that potential issues andexceptions are detected as soon as possible and mitigated. Thus, a unifiedpromotional monitoring is needed that offers transparency of all relevantprocesses (such as detecting incorrect master data, missed order dates,incorrect POS communication, supply chain related incidents, critical stocklevels, and the like) in one spot, including the necessary insight-to-actionfunctionality to resolve issues.

Predictive applications for price optimization and markdown optimization onSAP Customer Activity Repository are planned for the future. These willoptimize retail prices to maximize profitability and appeal to consumers.They will help retailers set optimal pricing to respond to increasingcompetition, narrowing margins, and changing consumer tastes. They willalso replace manual pricing with automatic pricing at the store and SKUlevel, in alignment with core business objectives and customer demand. Theintegrated execution saves overhead, simplifies dynamic price changes asconsumer demand shifts, and maximizes overall sales and profitability.


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Product Details/PrerequisitesThe performance optimizations for SAP HANA described underOptimizations in Detail are available with SAP ERP 6.0, enhancementpackage 7, SP02. See also notes:x SAP Note 1897248 and some prerequisite notes: SAP Note 1890618,

SAP Note 1893101, SAP Note 1902241, and SAP Note 1907808

The following performance optimizations for SAP HANA and processrenovations are available with SAP ERP 6.0, enhancement package 7,SP05. See also notes:x Improve the accesses to purchasing info records and the prerequisite

notes: SAP Note 2018087, SAP Note 2002558, SAP Note 2015049

How to Get StartedSAP ERP 6.0, enhancement package 7, SP02, SP05, or via notes listedabove


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Collaborative Sourcing,Buying, and ManufacturingSourcing and Buying Excellence(SAP Merchandising for Retail andWholesale Distribution)

Business Practices TodayCollaborative sourcing, buying, and manufacturing allow retailers toanalyze their overall business network, collaborate more effectively withbusiness partners, and streamline execution in order to deliver broader anddifferentiating value to consumers cost-efficiently.

Sourcing and buying excellence comprises smart sourcing and buying ofproducts and services from external vendors. This strongly contributes to theretailers bottom line.

Collective purchase orders are used by retailers for efficiently procuringarticles from a vendor if the recipients of the articles (store or customers) areknown at the time of procurement and a pull process based on orders ofthe recipients will be used to plan the distribution. This allows retailers tocontrol the flow of merchandise from the vendor to the recipient and toleverage the vendors capabilities of prepacking for a most efficient flow inthe retailers warehouse (for example, cross-docking or flow-through).

The monitoring of merchandise distribution is a time-critical process inretail. It includes adjustments of the recipients quantities based on actualgoods receipts quantities from the supplier, and the generation of therespective outbound deliveries to the stores,

The compensation management process between the retailer and thevendor has a major impact on the retailers margin due to possiblechargebacks if the agreed order volume has been achieved or exceeded. Itis an important basis for further fact-based negotiations with the vendors.Compensation management functionality is the successor of the subsequentsettlement functionality, offering high flexibility for all types of sales andpurchasing rebates, including chargebacks and vendor funds. Thecondition contract is the central object that serves as an outline agreementbetween vendors and customers to grant purchasing or sales rebates,chargebacks, and vendor funds for a certain time period. The periodicalsettlement of the contract can take place based on internal or external datasources for example, cumulated statistical business warehouse or LISdata, customer-owned revenue statistics, revenues from vendors, purchaseorders, or agency business.


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The agency business functionality supports third-party billing and invoicingprocesses. Company headquarters may bundle and settle the payment flowstoward their own stores/subsidiaries or offer the settlement of payments totheir vendors and franchisees/customers as a service for which they chargefees. The bundling and settlement of invoices is a huge volume businessprocess. Some customers settle up to a million items per day.

Global trade management is the central component for trading business orspecific direct (drop) shipment processes within SAP ERP. The specificcharacteristic of trading business is the direct connection between suppliersand customers through purchase orders and sales orders in a tradingcontract, which allows the allocation of expenses to one specific deal andthe calculation of profit margins. Trading business is especially affected bythe technology revolution and must respond to requirements for moretransparency, faster decision making, and better risk mitigation. Opportunitytrading becomes more and more important; it requires reacting quickly onnew demands and supply offers and using new channels for sourcing andselling. The margin pressure is extremely high, and in many cases marginscan just be secured by opportunity trades. Immediate insights into the statusof deals and into their logistics execution, as well as alerts for potential risks,are critical success factors for our trading customers.

AmbitionRetailers need efficient execution in real time to help eliminate errors, reducemanual intervention, and save costs. This applies whether they areexecuting sourcing events to find qualified vendors, managing agreementsand contracts, reconciling and settling trade funds, or managing operationalprocurement and distribution planning processes from ordering to invoicing.

For the efficient execution of sourcing and buying in retail, the real-timeprocessing of collective purchase orders and merchandise distribution isimportant, in addition to taking advantage of generic optimizations inmaterials management.

Contract and compensation negotiations with the vendors should besupported efficiently based on real-time insight into the contract situation andthe underlying data relevant for the compensation. This can providesustainable savings and stimulate competition among qualified vendors tocut costs while minimizing risks.

The settlement runs in compensation management and agency businessneed to be as streamlined as possible, considering the huge data volumesconcerned.

Realization of opportunities is a vital challenge in global trademanagement. This requires in particular a streamlined and efficientprocessing of trading contracts.


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Challengesx Long runtimes of batch jobs for processing of key retail business objects,

such as the creation of collective purchase orders, and merchandisedistribution, make it difficult to react quickly to changes.

x To reduce the procurement lead time and enable closer interaction withthe vendors, faster processing time for collective purchase orders isneeded.

x Periodic settlement of huge amounts of contracts with complex pricingprocedures entail long runtimes.

x Real-time transparency in the supply chain is needed to better control thesupply network and as basis for effective negotiations with the vendors.

x Efficiency and transparency for trading contract processing are requiredto ensure the profitability of trading businesses.

Business Practice Optimizations with SAP HANAAs the basis for a real-time supply chain management in retail andwholesale distribution and as foundation for innovation and value-addingprocesses, the initial focus was on optimizing the performance for SAPHANA for important retail and wholesale distribution processes related to thesupply chain, including agency business.

Optimizations in DetailPerformance optimizations for SAP HANA in the area of collectivepurchase orders were done for transaction WF10.

The merchandise distribution monitor WF30 was optimized for SAPHANA.

Performance optimizations for SAP HANA in compensation managementand agency business were made for the following processes:x Condition contract maintenance: WCOCO

x Condition contract settlement: W2BR_SV

x Vendor billing document processing: WLF1

Performance optimization for global trade management mainly concerns thetrading execution workbench, in order to accelerate the display of sourcedocuments.

To speed up trading contract processing for global trade managementrunning on SAP HANA, an SAP Fiori app to approve trading contracts isnow available,

>60%Faster processing ofcondition contract*


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Benefitsx Based on faster dialog and batch transactions in collective purchase

orders and merchandise distribution, businesses can react faster tosupply chainrelated changes.

x Reduced processing time for collective purchase orders enables closerinteraction with the vendors and faster procurement.

x Higher end-user acceptance is gained by reduced response times.

x Accelerated insight into the condition contract in the context ofcompensation management allows more effective negotiations with thevendors.

x Accelerated condition contract settlement significantly relieves the batchwindow.

Road Map and OutlookIn future releases, SAP plans to evolve the solution in the following areas:x Enable buyers to analyze large volumes of data and perform real-time

what-if calculations while negotiating with their vendors.

x Content for operational reporting for retail based on SAP HANA Live isenvisaged, among other areas in the supply chain, such as for vendorevaluations.

x Performance optimizations in the area of global trade management: Forglobal trade management running on SAP HANA, SAP plans to improveoperational reporting to speed up processes in daily business.


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Product Details/PrerequisitesThe following performance optimizations for SAP HANA as described underOptimizations in Detail are available with SAP ERP 6.0, enhancementpackage 7, SP02. See also these notes:x Collective purchase orders: SAP Note 1910901, SAP Note 1911097x Process condition contract: SAP Note 1879393

The following performance optimizations for SAP HANA are available withSAP ERP 6.0, enhancement package 7, SP03. See also notes:x Merchandise distribution monitor: SAP Note 1942569

x Condition contract settlement: SAP Note 1928202

x Vendor billing document: SAP Note 1929646

The following performance optimizations for SAP HANA are available withSAP ERP 6.0, enhancement package 7, SP05. See also notes:x Collective purchase orders: SAP Note 2017658, SAP Note 2021197,

SAP Note 2015403

How to Get StartedSAP ERP 6.0, enhancement package 7, SP02, SP03, SP05, or via noteslisted above


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Customer-Driven Supply ChainDemand andReplenishment Planning(SAP Forecasting and Replenishment forRetail, SAP Merchandising for Retail andWholesale Distribution)

Business Practices TodayFrom a procurement-planning perspective, retail products are procured intwo main ways: pull mode and push mode. Pull mode means that thequantities to be procured are requested from the locations from which thedemand will be fulfilled for example, via replenishment of reorderable itemsfrom the stores. This type of replenishment is based on sales forecasts andorder optimization rules. The process itself shows various degrees ofautomation and user interactions in the different steps, and is at times alsodependent on the type of merchandise that is planned.

AmbitionHaving the right quantities of the right product at the right location at the rightpoint in time is a key differentiating factor in retail, so the importance of thereplenishment process cannot be overestimated. Yet this process needs tobe supported by the most sophisticated algorithms for analyzing andpredicting customer demand. It should be highly automated with as littleinteraction by the user as possible. A true demand-driven replenishment is ofcourse multilevel capable and processes information from the lower level tooptimize stock across the entire supply network. It enables the creation ofaccurate and timely purchase orders based on anticipated customerdemand, current inventories, and both logistical and cost aspects. In additionto helping prevent stock-outs and minimizing overstock, the softwaresupports efforts to launch sales campaigns, build customer and vendorrelationships, and reduce labor costs.

ChallengesAt many retailers, several solutions are needed at different levels of thesupply chain with little to no integration. These are often modularapplications that are not connected to the execution system (ERP back end).Consequently, the time needed to run replenishment for a large amount ofproduct often challenges the available time windows.


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Business Practice Optimizations with SAP HANAKey benefits of a deployment of functionality in SAP Forecasting andReplenishment for Retail that runs on SAP HANA are:x Making possible a consistent overall SAP HANA strategy for customers

x Improved performance along several process steps, thus enabling time-critical batch windows to be more relaxed

x New deployment options available with the SAP HANA Enterprise Cloudservice

Using the power of SAP HANA to run a state-of-the-art replenishmentsolution like SAP Forecasting and Replenishment for Retail will not onlyresult in performance improvements but also enable new options foroperational reporting.

Optimizations for SAP Forecasting and Replenishment for Retail have beencarried out in the areas of inbound interface processing, the forecasting andreplenishment processor, multi-echelon replenishment, and aggregatedorder forecast.

Optimizations for SAP Merchandising for Retail and Wholesale Distributionhave been carried out in the areas of outbound interface processing.

Optimizations in DetailAlthough activities have been focused on porting functionality in SAPForecasting and Replenishment for Retail to SAP HANA, severaloptimizations have been carried out in the areas of inbound interfaceprocessing, the forecasting and replenishment processor, and aggregatedorder forecast. Significant performance improvements have been achievedespecially for inbound staging processes. Performance optimizations forSAP Forecasting and Replenishment for Retail running on SAP HANA areplanned to focus on the following areas:x Inbound: Inbound processing for stock and consumptionx Inbound: Creation and processing

x Inbound: General inbound processing

x Forecasting and replenishment processor

x Multiple-echelon replenishment aggregated order forecast

In addition, major performance improvements are also possible forcustomers who will run SAP Merchandising for Retail and WholesaleDistribution on SAP HANA, including:x Outbound processing (initialize) for master data, lane, purchase order,

sales order, promotion (DIF), stock, and consumption: TransactionsFRE01, FRE11

x Outbound processing (delta) for lane, sales price, purchase order, stock,and consumption: Transactions FRE02, FRE05

>200%Faster orderforecastaggregation*


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New search capabilities for relevant business objects, as described in thesection Value Help, improve user efficiency, and user acceptance.

BenefitsAutomated replenishment is a core process strongly supported with SAPForecasting and Replenishment for Retail, and it significantly benefits fromimproved performance, as time-critical batch windows can be relaxed.

Product Details/PrerequisitesThe following performance optimizations for SAP HANA, as described inOptimizations in Detail, are available with the SAP Supply ChainManagement 7.0 application, enhancement package 3, SP03. See alsonotes:x Inbound: Inbound processing for stock and consumption:

SAP Note 1933603

x Inbound: Creation and processing: SAP Note 1951643

x Inbound: General inbound processing: SAP Note 1950504

x General forecasting and replenishment processor: SAP Note 1929668

x Multi-echelon replenishment aggregated order forecasting aggregation:SAP Note 1929668

x Collective note: SAP Note 1927627x Value help: SAP Note 2019838

The following performance optimizations for SAP HANA as described inOptimizations in Detail are available with SAP ERP 6.0, enhancementpackage 7, SP04. See also note:x Collective note: SAP Note 1967837

How to Get StartedSAP ERP 6.0, enhancement package 7, SP04, or via notes listed above

SAP Supply Chain Management 7.0 application, enhancement package 3,SP03, or via notes listed above

>25xFaster delta transferof lane and purchaseorders data(from SAP ERP)*

>90%500%Faster inbound processingof demand influencingfactors and stock*


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Integrated Demand andReplenishment Planning(SAP Merchandising for Retailand Wholesale Distribution)

Business Practices TodayFrom a procurement-planning perspective, retail products are procured intwo main ways: pull mode and push mode. Pull mode means that thequantities to be procured are requested from the locations from which thedemand will be fulfilled for example, via replenishment of reorderable itemsfrom the stores. In push mode the quantities of a product for a store aredetermined centrally, such as for one-off seasonal merchandise orpromotion-related events. The allocation table is the planning tool used bya purchasing organization to distribute stocks of a product among sites atspecific periods. An allocation table consists of items in which the totalquantity of an article to be allocated is defined.

There are various methods to determine quantities for individual stores (forexample, taking into account historical sales and current inventory). How anarticle is procured is defined at the item level, that is, via direct delivery fromthe vendor to the store, or via delivery to the distribution center and then tothe stores. Follow-on operational documents (purchase orders, stocktransfer orders, deliveries) can be created automatically. The allocation tableis fully integrated with the merchandise distribution and collective purchaseorder; see the section Collaborative Sourcing, Buying, and Manufacturing.

The main aspects of procurement planning include the following:x Plan, monitor, and control retail merchandise allocation and distribution,

among several retail locations.

x Distribute quantities via allocation strategies, and automate logisticsprocesses for building inventories based on location-specific customerdemand.

x By streamlining the manual processes involved in managing retailinventories, empower staff to increase their productivity and improve thecustomer-shopping experience.


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AmbitionHaving the right quantities of the right product at the right location at the rightpoint in time is a key differentiating factor in retail, so the importance ofallocation functionality cannot be overestimated. Thus, full real-timeintegration in all retail processes (demand, stock transparency, supply chainstatus) as well as usage of sophisticated predictive algorithms enables theretailer to meet consumer demand at the lowest possible inventory levelsand with the leanest supply chain.

ChallengesWorking with outdated data, as well as using many manual steps and fixedratios, leads to nonoptimal distribution of the quantities, with the potential ofout-of-stock situations or high capital binding in overstock situations.

Business Practice Optimizations with SAP HANAWith improved performance, users can work more efficiently with high-volume allocations.

As a basis for a real-time sophisticated allocation management in retail,initial focus was on optimizing the performance for the key allocationtransaction on SAP HANA.

Further innovations relevant for the supply chain, see the section on SAPCustomer Activity Repository and find out how the repository supports real-time processes (inventory visibility) and helps prevent out-of-stock situations(on-shelf availability algorithms).

Optimizations in DetailPerformance optimizations for SAP HANA in the area of allocation focusedon allocation table creation, changes, and the generation of follow-ondocuments.

BenefitsUsers can work more efficiently with allocation table maintenance, thusleaving more time for sophisticated quantity calculations, and shorter cyclesto adjust the allocation table to gain insight from related business processes,especially from the supply chain.

Short-term adjustments of allocation tables are enabled, so reacting tobusiness insight from real-time analytics, or reacting faster in case ofexceptions (such as those caused in the supply chain), is possible.

>30%Faster allocationtable creation*


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Road Map and OutlookSAP plans to evolve the retail industry functionality in SAP ERP in thefollowing area in future releases:x Optimize replenishment based on retail functionality in SAP ERP (used

by some retailers who do not need the sophistication of SAP Forecastingand Replenishment for Retail for their stores) for usage on SAP HANA,and evaluate additional innovation

Further planned innovations for retail include:x New allocation solution as consuming solution on SAP Customer

Activity Repository, with all the resulting benefits

x Customer demand planning. In retail, this is a business planning processthat enables supply chain teams to develop demand forecasts for alldifferent customer sales channels as input to supply and inventoryplanning. As part of an integrated planning strategy, demand planningaims at aligning top-down hierarchical sales/financial plans and bottom-up demand forecasts toward an active and agreed-upon demand planthat drives procurement and inventory decisions. While merchandisingand marketing are influencing and shaping demand, demand planningaims at accurately predicting demand as a basis for fulfillment.

Product Details/PrerequisitesThe performance optimization for SAP HANA as described in Optimizationsin Detail is available with SAP ERP 6.0, enhancement package 7, SP02.See also notes:x Allocation table creation: SAP Note 1908941, SAP Note 1910645The following performance optimizations for SAP HANA are available withSAP ERP 6.0, enhancement package 7, SP03. See also notes:x Allocation table changes: SAP Note 1943502

x Generate allocation follow-on documents: SAP Note 1943502



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Optimized Logistics andFulfillment Execution(SAP Merchandising for Retailand Wholesale Distribution)

Business Practices TodayIn light of decreasing margins, rising customer expectations, and mountingsupply chain complexity, retailers face the challenge of ensuring the cost-efficient and reliable execution of their operations. Best-run companiesmaster this challenge by optimizing logistics and fulfillment executionprocesses, which is of paramount importance in order to remain competitivein todays environment.

Retail stock overview provides an overview of all stocks for a selection ofretail articles or generic materials at all organizational levels. This is a verycentral functionality in both distribution center and store-related scenarios.

AmbitionTransparent inventory levels are the basis for the most critical processes aretailer runs: customer-facing processes (with the goal to increase sales andcustomer satisfaction) and supply chain processes (with the goal to savecost). Thus the ability to run accurate inventory lookups in real time is amust-have for a retailer.

ChallengesThe retail stock overview is called from multiple roles within a retail companyfor various sizes of sets of products and locations, such as sales personnelin customer-facing operations, supply chain managers as part of inventoryoptimizations, and category managers to control assortments. It is oftencalled several times a day per person. Therefore it is important to increaseefficiency of this central functionality.

Business Practice Optimizations with SAP HANAAs the basis for a real-time logistics and fulfillment execution in retail, ourinitial focus was on optimizing the performance on SAP HANA for importantretail transactions related to logistics and fulfillment.

Optimizations in DetailOptimizations for logistics and fulfillment transactions were done exploitingthe ability of SAP HANA to very efficiently access granular data via views, aswell as execute aggregations and calculations on the fly close to data.

>330%Faster retail stockoverview*


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Benefitsx Real-time data retrieval of inventory information for a range of articles

and organizational levels

x Real-time overview of the current stock situation in the distribution centeras the basis for efficiently distributing the requested goods to the receiverand save costs

x Real-time overview of the current stock in the store to quickly answer orreact to customer requests and thus increase sales and customersatisfaction

x Several business scenarios for store and distribution center that benefitfrom this optimization (such as procurement, store and multichannelsales order management, and store connectivity)

x Transactions with high usage in other industries besides retail, thusproviding cross-industry benefits

Road Map and OutlookIn future releases, content is planned for operational reporting for retailbased on SAP HANA Live, which may also leverage generic content in thearea of logistics and fulfillment execution.

Product Details/PrerequisitesThe performance optimization for SAP HANA as described underOptimizations in Detail is available with SAP ERP 6.0, enhancementpackage 7, SP02. See also notes:x Retail stock overview: SAP Note 1876946, SAP Note 1884131

Further technical optimizations for better maintainability are available withSAP ERP 6.0, enhancement package 7, SP04. See also SAP Note1983672.



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Unified Customer ExperienceStore Excellence (On-Shelf Availability)

Business Practices TodayGone are the days of the loyal customer who will only shop at his or herfavorite store no matter what. Nowadays, if the consumer walks into a storeto purchase an item, it better be on the shelf. Retailers struggle to balancekeeping consumers happy with the high costs of managing inventory levelsand monitoring shelf stock. Often, system stock is not a good indicator ofwhat is actually on the shelf. The system may have 10 units on hand, butthose 10 units may be in a back store or in overstock. If consumers do notfind the item they want the moment they arrive at the shelf, or have troubleaccessing it, they will often leave the store and visit a competitor, or buy acompeting brand.

AmbitionOn-shelf availability is critical to retaining customers and increasing thebottom line, yet most retailers struggle with lost sales due to items not beingaccessible for purchase. Retailers want to reduce the amount of randomstore walks they do on a regular basis to combat this epidemic. A real-timealert-driven tool is required, based on actual transaction history, trends, andother demand-influencing factors (discounts and promotions), notifying thestore associate where the on-shelf availability exists and what follow-onactions to take.

ChallengesProcessing potentially billions of detailed line items in sales transaction logsin a fast and reliable manner is virtually impossible using todays classicrelational database models.

Business Innovation with SAP HANASAP HANA allows for fast, accurate, on-the-fly number crunching byprocessing vast amounts of fine-grained information. It allows for embeddedpredictive algorithms to run on demand, returning the results to the associateon any sort of device, be it mobile or desktop.


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Innovation in DetailWhy are algorithms within SAP HANA required to detect on-shelf availabilityissues?

The algorithm resides within SAP Customer Activity Repository andanalyzes billions of line-item details to generate sales models for thousandsof items. Then, on a scheduled basis, an analysis is triggered against thismodel. If products are not selling as frequently as expected, alerts aregenerated. These alerts can even be fine-tuned by the retailer based onfactors such as confidence levels and other demand influences (promotions,fast vs. slow sellers, discounts). All of this analysis would take hours, if notdays, to run against the massive amount of sales data were it not for thevast in-memory computing power of SAP HANA.

BenefitsRetailers can analyze, discover, and optimize issues in the supply chain thathave an impact on on-shelf availability.

They can take advantage of the information to:x Gain insights into past on-shelf availability situations

x Identify hotspots (for example, stores, suppliers, days of the week)

x Define measures to optimize hotspots

x Monitor success and continue with optimization

Product Details/PrerequisitesOn-shelf availability algorithms are part of SAP Customer Activity Repository1.0.

On-shelf availability algorithms do not support a standard mobile or desktopuser interface. SAP offers a template to create a dashboard and ODataservice to create a mobile app.

How to Get Startedhttp://help.sap.com/osa


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Store Excellence (SAP Fiori Apps for Retail)

Business Practices TodayToday, retailers are serving a new generation of consumers. Consumerswant to feel totally satisfied with their purchases. To remain competitive,retailers must connect with their customers and offer a superior experiencethrough store excellence. Retailers must empower their employees to fulfilltheir customers' needs by providing the right people, solutions, andtechnology.

A recent innovation is the creation of SAP Fiori apps for retailers (based onthe SAPUI5 technology), which deliver many advantages.

The classical end-user experience has been focused on transactionexecution and not usability. Today, however, more and more organizationswant to empower a wider set of employees to access and interact withspecific ERP data and processes, ideally without making additionalinvestments in training. A retailer may have information and functions in theERP solution that are used by multiple roles. Users may be required to opendifferent screens when they want to view this information. With SAP Fioriapps, the retailer can provide end users with access to the most importantand relevant information and functions in one single environment. And SAPFiori provides a single entry point for each role, via an SAP Fiori launchpad.

AmbitionSAP Fiori apps for the retail industry aim to make employees moreproductive. In-store merchandising apps are provided for the roles of storeassociate and store manager, and fact sheet apps for the roles of masterdata specialist and promotion specialist. Fact sheet apps display contextualinformation about central objects in business operations. From these apps,users can navigate to relevant information and can access related functionsin the operational system.

ChallengesEmpower employees to fulfill their customers' needs by providing the rightpeople, solutions, and technology.


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Innovation in Detailx The In-Store Merchandising app lets retail store associates access

information in back-end systems to improve transaction speedproductivity and accuracy, and it enables customer service and inventorymanagement. It increases productivity by providing store associates withrole-based and real-time access to functions (such as product lookup)and information (such as detailed product) to provide customers withinformation they need. Companies can increase workforce efficiency,improve store performance, and increase store sales, shopper loyalty,and customer and employee satisfaction.

x The Article fact sheet app displays contextual information about anarticle. Users can access related functions in operational system. Theycan view information such as unrestricted-use stock, articles by category(such as single and generic), and articles by type (such as tradinggoods). They can navigate to the Site, Allocation Table, Promotion, andother fact sheet apps. And they can access functions such as displayarticle, display stock overview, and display price overview.

x The Promotion fact sheet app displays contextual information aboutpromotions. Users can access related functions in the transactional back-end solution. They can view most relevant information such as promostart/end dates, promo type, promo sales price, and more. They cannavigate to Article, Allocation Table, Purchase Order, Site, and other factsheet apps. Furthermore, users can access functions such as displaypromotion, subsequent processing, and define additionals.

x The Allocation Table fact sheet app displays contextual information ofan allocation table. Users can access related functions in thetransactional backend solution. They can view total sales values ofarticles of an allocation table, and values of generated sales orders. Theycan display activity status of follow-on document processing. In addition,users can display status and options for allocation table maintenance.

x The Site fact sheet app displays contextual information about sites (storeand distribution center). Users can access related functions in thetransactional back-end solution. They can view current open goodreceipts, view sites by category such as store or distribution center, seestatus of sites such as open or closed, navigate to related Promotion,Allocation Table, Purchase Order, and other fact sheet apps, and accessfunctions for display site and stock overview.

x The Bonus Buy fact sheet app displays contextual information aboutbonus buy. Users can access related functions in the transactional back-end solution. They can view bonus buy and access-related functions.


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Benefitsx Role-based access to all relevant information

x Real-time mobile and desktop software to save time, increase sales, andimprove customer and employee satisfaction

x Increased workforce efficiency, more sales, and enhanced customerloyalty and employee satisfaction

x Optimized inventory accuracy and replenishment

Road Map and OutlookSAP plans to evolve the solution in the following areas in future releases:x Adding fact sheets for additional business objectsx Enhancing the In-Store Merchandising app to support the following

processes Adjust stock and count ad hoc Transfer stock Order stock Receive stock In-store pickup In-store markdown Request local article Store manager analytics Customer order management

Product Details/PrerequisitesThe SAP Fiori app for in-store merchandising requires SAP ERP,enhancement package 7, SP04, and SAP Mobile Platform 3.0.

Retail fact sheet apps require SAP ERP 6.0, enhancement package 7,SP02, and UI for SAP ERP 6.0, enhancement package 7.

How to Get StartedSAP Help


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Store Excellence(SAP Merchandising for Retailand Wholesale Distribution)

Business Practices TodayRetailers with physical stores use POS solutions to support the in-storeprocesses. As SAP ERP is the system of record for both master andtransactional business objects, data needs to be exchanged between SAPERP and the POS solution(s). POS outbound and inbound data exchangeneeds to be distinguished. Typically, part of POS outbound master data issent to the store POS solutions, including product information, sales prices,taxes, promotional information, and so forth. POS inbound comprises,among other things, sales transactions (product quantities plus terms ofpayment), financial transactions (such as down payments), and goodsmovements (such as post to waste) from POS solutions to the retailcomponent. As a result of processing those transactions, correspondingdocuments will be posted in SAP ERP (goods movements documents toadjust inventory, financial documents to reflect payments, and the like).

Because of high volumes and the resulting long execution times, manystore-related business processes are executed during the night via batchprocessing. As there are interdependencies (for example, to runreplenishment, inventory needs to be up-to-date, so POS inboundprocessing must be executed successfully prior to the replenishment run),the batch processes need to be executed sequentially. On the other hand,the nightly batch window (bound by store opening hours) is limited, which isshortened even more when a retailer operates in different time zones.

In addition to the store communication mentioned here, there is typically highvolume data exchange to realize vendor collaboration, as well as integrationwith other solutions. Together, this results in enormous data volumes fordata exchange. To ensure data and process integrity, data exchange needsto be permanently monitored, and any errors corrected as soon as possible.For certain scenarios the usability of tools is limited

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