Sap retail merchandising and assortment planning overview 1

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Merchandise and Assortment Planning (SAP MAP) Overview – Part I

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1. Introduction2. Strategic Planning3. Store Planning4. Merchandise Planning5. Capacity Planning6. eSOA services for integration SAP MAP to SOP

(Shelf Optimization Program)7. Assortment Definition8. Assortment Planning9. eSOA services for integration SAP MAP to SAP ERP10. Release Workbench

Agenda

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Within Retail Industry

Retailers …Are facing increase competition and market saturationAre looking to optimize the performance of their merchandise and supply chain functions

Imagine …An integrated solution which enables retailers to unite their analysis and their planning functions with their execution systems

What if …Retailers could have a planning solution that will provide the capability to approach their planning process from the top-down as well as their bottom-up, unit perspective. To plan at all levels of the product, location and time hierarchies To base plans on more than last year by incorporating a CustomerDemand forecastTo be proactive regarding the future as opposed to reacting to the past.

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Planning in Many Companies Today

Heterogenousplanning tools

Bad performance of mass data processing

Coordination of planning process istoo difficult

Missing acceptanceof planning results

Lack of integrationdue to isolatedplanning applications

Plan data is not reliable

Organizational changesare very difficult to incorporate

Plan/Actualcomparison toodifficult

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Life of the Planning Department

Financial Controller

MerchandisersBuyers

VP Planning

• Budgets are distributed by paper, with paper copy versions, to the VP of Planning to key into one Excel spreadsheet

• Budgets are transferred to each Merchandisers’ Excel

• Product Details are keyed into both Merchandiser and Buyer Excel spread sheets manually

• Plan for the ‘Collection’ is transmitted and approved

• In-season stock and sales figures are keyed in twice

• In-season OTB management is manually controlled between VP Planning and Financial Controller

COSTLY, INEFFICIENT, SLOW Duplicate data keying–> improvement of 80% from 2 months to 2

weeks

Costs of duplicate keying–> estimate 9,000 USD per week

Data discrepancies–> 10% of all keyed items leading to incorrect

replenishment of stock and so lost sales

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Requirements to Integrated Planning

Multi-level PlanningDrag/Drop Swap AxisEdit KPI measurementsCurrency conversionFiltersGraphingSortingOffline Planning

Cell formatting based on conditionsUser defined exceptions / alertsCopy store history from like storesCopy from Version A to Version BAdding images and documentsFlexibility in planning viewsDynamic user changesIntegration to execution applicationsFocus on usability and workflowSolid BI foundation to plan on what isimportant to each retailer

Just to mention some important requirements …

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Functionality NetWeaver 2004 vs. NetWeaver 7.0

SA

P N

etW

eave

r 7.0

SA

P N

etW

eave

r 200

4 BEx AnalyzerWeb Applications

Excel Add-in

Analytical Engine

BI P

latfo

rm

Data Warehouse

BEx AnalyzerExcel Add-in

BI P

latfo

rm

Data Warehouse

Planning EngineOLAP Engine

BI-BPSWeb Interfaces

Excel in SAPGUI

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BI Planning Architecture

Enterprise Reporting, Query and Analysis

Business Planning & Analytical Services

Enterprise Data Warehousing

Aggregation Levels, Planning Functions & Sequences• Distribute• Formula• Copy• Revaluate• Repost• Forecast • Custom defined• …

Planning Modeler

Architected Data MartsOperationalData Store Data Warehouse Layer

MasterData

BEx Query Designer

BEx Web

Web Analyzer Web Application Designer

BEx Analyzer

Analytical Engine

Caching services Plan data cache

OLAP services• Drill Down• Currencies/Units• Calculations/Formulas• Exceptions/Conditions• Variables• Hierarchies• Aggregation• Sort• …

Planning specific services• Enqueue• Validations• Data slices• Characteristic relations

Pattern

Information Broadcasting

Enterprise Portal

Report DesignerMS Excel

Add-in

The reporting, analysis, and interpretation of business data is of central importance to a company in guaranteeing its competitive edge, optimizing processes, and enabling it to react quickly and in line with the market. With Business Intelligence (BI), SAP NetWeaver provides data warehousing functionality, a business intelligence platform, and a suite of business intelligence tools with which an enterprise can attain these goals. Relevant business information from productive SAP applications and all external data sources can be integrated, transformed, and consolidated in BI with the toolset provided. BI provides flexible reporting, analysis, and planning tools to support you in evaluating and interpreting data, as well as facilitating its distribution.

Integrated Planning is situated in different areas:Data Warehouse:The plandata will be stored in realtime-infocubes. Plandata can be loaded by

extractions into the Data Warehouse as well as retracted to other systems. Another possibility to transfer the data is via Open Hub or XI into SAP NetWeaver.

BI Platform:The modeling of the data model and planning functions for BI integrated planning

can be done within the planning modeler.Business Explorer Suite:Most of the UI´s of Integrated Planning is delivered by the Business Explorer Suite.

Furthermore is the Visual Composer available to built BI Cockpits for Integrated Planning.

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Characteristics

High fashion:• goods will be sold during 3 month (up to

6 month).• after selling phase articles will

be marked down directly; leftover stock is destroyed

• these article are sold directly and there is no replenishment

High share of new products

Short life cycle

Normally not replenishable on short term basis

Push oriented

Importance of OTB and markdown

Seasonal Merchandise

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Characteristics

Low share of new products

Long life cycle

Normally replenishable on short term basis

Pull oriented (procured / reordered on real customerdemand

Importance of shelfoptimization and CategoryManagement

Non-Seasonal Merchandise

Basics:

This can include apparel (t-shirts, socks, some accessories, some sport articlesetc.), food, perishables, DIY, many hardlines and even recurring seasonalmerchandise

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Process Overview

Strategic/Objective Plan

Store/Location Plan

Stock PlanSales PlanComp-/Non-Comp

Merchandise Plan

Stock PlanSales PlanOTB*Markdown Plan*

Execution / Operative Processes

Store Clustering / Assortment Definition

Capacity Plan

Assortment Plan

*seasonal merchandise only

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SAP MAP Content Overview

IP / BPSGeneric Planning

Engine

Assortment Definition/Store Clustering

SlowsellerManagement

OTB

Master Data Planning

Release Workbench

AggregatedLongterm Forecast

Content/Predefined Templates

InventoryPlanning

No predefined templates are availblevia standard delivery BI_Cont 7.03, SP9

Integrationto SOP / ERP

7 Content / Predefined Templates: Within SAP NetWeaver 2004s two different planning tools are provided to setup a planning scenario: Business Planning and Simulation (BPS) and the new Integrated Planning (IP). For BPS a predefined planning scenario (planning layouts and functions) is provided within the MAP content. For the new planning tool IP there is no predefined planning scenario available. The InfoCubes and InfoObjects contained in the MAP content can be used for both planning tools.Usage of the following MAP applications assortment definition, master data creation (forplanned master data) and the release workbench is independent of the use of the planningtools.

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MAP Content - Overview

ScorecardsSales ScorecardStock ScorecardProductivity ScorecardPlanned Share of SalesComparison of Merchandise Plan and Rollout PlanStore Sales ScorecardStore Stock ScorecardStore Productivity ScorecardFashion Sales ScorecardSales Scorecard for Basic MerchandiseFashion Stock ScorecardStock Scorecard for Basic MerchandiseProductivity-Scorecard ModeProductivity Scorecard for Basic MerchandiseAssortment PlanPurchase Order Template

ReconciliationPlan Comparison Store Plan/Goods Plan/Strategy PlanPlan Comparison Collection Plan/Product Plan

AnalyticsCross Category Analysis and ValuationSales/Goods Receipt AlertRegional AnalysisPlan AnalysisRegional Category PerformanceAssortment Analysis and EvaluationSales Coverage of ProductsFashion Plan AnalysisSales/Goods Receipt AlertSlow Seller Management AnalysisData Mining: Price Band Data Mining: Volume GroupsComparable StoresTop X Sales Analysis PlanCategory Performance, TrendCategory Performance

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Agenda

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Setting the strategic direction and financial objectives for an organization is one of the most important ongoing financial activities within any retailing organization. It establishes the necessary framework to provide the financial direction that merchant and planners need to develop their individual strategies supporting the organization’s goals.

What is Strategic Planning ?

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Strategic Plan / Objective Plan

Strategic Plan

Store Plan

Merch. Plan

Execution

Assortment Definition

Capacity Plan

Assortment Plan

Business plan Analyze market trendsDefine strategic merchandising goalsQualitative information managementRoll down to Store and Merchandise PlanCompare Store, Merchandise and Strategic PlanMonitor overall purchasing budget

Main Objectives

Sales, Gross marginStock, Inventory turnsReceiptsShrinkageMarkdownsPurchasing budgetPlan Actual, see History, execute Forecast

Company, Distribution Channel / YearCategory / Month / Season

Planning Levels

Key Figures

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Strategic Planning –Example from IDES Demo (1)

Planning Templates are displayed in a folderstructure this example provides twotemplates for strategic planAt the top of the tab page planning functionsthat can be used for this planning step aredisplayed (some examples are forecast, copy, distribute, save, open and delete)User sees at which level of detail planning ispossible in the planning step (navigation pane)In this example, Drill-Down to distributionchannel is already openedChange of Drill-Down is possible (small picture)Swap Axes is possible (small picture)Remove of Drill-DownDrag & Drop of characteristics and key figureswith automatic adjustments of the correspon-ding totalsFiltering of characteristics and key figuresCurrency translationSorting of key figures (ascending / descending)

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Graphics can also be includedOn changes of key figures the graphics areautomatically adjusted

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After having finalized planning on distributionchain level, this strategic plan goes down to category levelOrder of drill-down can be changedSeason can be expanded to month

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Agenda

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Store / Location financial unit plans provide the specifics to execute the corporate strategic objectives. The detailed location plans provide the roadmap for lower level assortment plans. These insure all parties in the financial, merchandising and store organizations are executing to the same objectives. These plans are created pre-season and updated in-season as trends and information is updated

What is Store Planning?

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Strategic Plan

Store Plan

Merch. Plan

Execution


Capacity Plan

Assortment Plan

Store Plan / Location Plan

Implement strategic planEvaluate historical data for each storePlan comparable and non-comparable store sales Open, close, move, renovate stores Integrate sales estimates for stores Roll up to the strategic plan to ensure compliance with higher-level targets

Main ObjectivesSalesSales forecastGross marginStockInventory turnoverGoods receiptsShrinkage MarkdownsOpen POs...

Distribution chain District, region / YearStores/department / Month / WeekCategory

Planning Levels

Key Figures

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Store Planning – Sales PlanExample from IDES Demo (1)

Store sales planning in this sample templatecan take place at week levelIf plan data is for example entered on monthlevel, the value will be distributed according to given ratios on week level and the totals will beadjusted automatically

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Store Planning – Sales PlanExample from IDES Demo (2)

Display of attribute values of characteristicsin a separate pop up available attributesare listedin this case the planner chose „storeclosing date“ and „store category“ to be displayed in his templateAttributes provide a further help in planning key figures for the stores

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Easy comparison across all stores is possiblesimply position on a key figure in yourtemplate and choose filter and drill-down by storein this example you can compare „Salestotal $“by opening the drop-down menu youcan set your filter to another key figure

Store Planning – Sales Plan Example from IDES Demo (3)

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Store Planning – Stock PlanExample from IDES Demo (4)

In this example planning takes place for the key figures Markdown, Shrinkage, Goods Receipts and Closing InventoryKey figures Inventory Turn and Opening Inventory are calculatedNumber of periods (here weeks) displayed can be changed easily

Formulas in this Example:Receipts = Closing Inventory – Opening Inventory + Sales + Markdown + ShrinkageClosing Inventory = Opening Inventory – Sales – Markdown – Shrinkage + Receipts

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Store Planning – Cluster PlanExample from IDES Demo (5)

In this example, the user can plan key figures on assortment level(cluster A, cluster B …), but can also drill-down to store levelWeek filter is set for periods 1 to 4Views can easily be changed, e.g. drag & drop the characteristic „Week“in the navigation pane

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Comp- / Non-Comp Concept

05/11/1990Site1

Site2Site3Site4Site5Site6

01/01/1972

01/01/1972

08/01/2000

12/12/2005

01/01/2006

12/31/9999

12/31/9999

12/31/9999

12/31/9999

12/31/9999

12/31/9999

Site1Site2Site3Site4

Site5Site6

Comp-/Non-Comp Stores View1

1 1 1 1 21 2 2 1 21 3 2 2 11 4 3 2 1

2 1 2 1 22 2 2 1 1

Dec07 Jan08 Feb Mar …Nov

Site 5 open since 12 months – non comparable


Site1Site2Site3Site4Site5

Site6

Comp-/Non-Comp Stores View2

1 1 1 2 42 2 1 2 33 2 2 1 24 3 2 1 11 2 1 2 2

2 2 1 1 1

Jan08 Feb Mar Apr …Dec

Site 5 open since 13 months - comparable


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Store Planning – Comp-NonComp PlanExample from IDES Demo (6)

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Agenda

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What is Merchandise Planning ?

Merchandise plans provide the specifics to execute the corporate strategic objectives. The detailed merchandise plans provide the roadmap for lower level assortment plans. These insure all parties in the financial, merchandising and store organizations are executing to the same objectives. These plans are created pre-season and updated in- season as trends and information is updated.

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Strategic Plan

Store Plan

Merch. Plan

Execution


Capacity Plan

Assortment Plan

Merchandise Plan

Reconcile to Strategic/Store PlanSales/Markdown planInventory planCompare product categoriesPlanning of OTBPlan average retailContribution plan

Main ObjectivesSales, Gross marginMarkdowns, Markdown sharesPlanned goods receiptsPurchasing quotaInventory data (e.g. stock on hand)Weeks of supplyOTBPromotionsPlan, Actual, History, Forecast...

Division, Department Class, Sub-classSubcategory, Season YearSegment, Halfyear, Quarter, Month, Week, Rollout

Planning Levels

Key Figures

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Merchandise Planning – Sales PlanExample from IDES Demo (1)

In our IDES demo, merchandise salesplanning is possible for different levels of the merchandise hierarchy and over thedistribution channelsThis template has been altered bydrilling-down to segment, removing thedistribution channel and filtering for thekey figure „Sales Total $“As a result the planner can focus on thiskey figure and compare it acrosssegments

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Merchandise Planning – Preseason Stock PlanExample from IDES Demo (3)

Multi-level planning is possible for Category / Subcategory / Segments and Totals / WeekPlanning takes place for key figures Markdown, Shrinkage, Receipts and Closing InventoryKey figure Sales Total is taken over from the Store Sales PlanKey figures Inventory Turn and Opening Inventoryare calculated automaticallyOTB is also calculated (assumption here: OTB Plan = Receipts Plan

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Merchandise Planning – Further Examples (1)

Cell-specific settings can be set to allow documents (documents can bestored at characteristic, key figuresand data cells)Just click on the document symbol

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Merchandise Planning – Further Examples (2)

Once you have prepared your personal view for a certain plan you can „Save View as Variant“To bring up your view, „Open View“ and select theright one

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Main ObjectivesPlan and monitor purchasing budgets

Main Question for purchaserHow much money can I spend for the category business shirts to avoid over stock?

Open To Buy (OTB)

???

Planning LevelsSegment / MonthHalfyear

Key FiguresPlanned OTBBudgets Released %Goods ReceiptsOpen PO‘sOTB in-seasonBOP, EOP...

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Process Overview OTB

tTime purchasing phase

2008/2009

in-season phase

2009

planning phase

2008

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Overview OTB

Update Actual Data

Budget ExpenditureOTB

MerchandisePlan Plan

Data

Initial Purchasing BudgetTotal Budget

ErrorWarning Release

Reduce Plan

Actual Data

PurchaseOrder

Creation

BI ERP

Openinterface

(XML)

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Operational purchasing

ERPRetailPlanning/Plan revision

OTB extrapolation

Current documentdata

Purchasing

OTB check

Planningstep 1

...

...

OTB planung

OTB Allocation

Planungstep N

Planned OTB pools Actual OTB poolsTarget OTB pools

OTB planningdata transfer

BW

OTB procurementin purchasing

Detailed Overview OTB

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Merchandise Planning – Inseason OTB PlanExample from IDES Demo (3)

Multi-level planning ispossible for Category / Subcategory / Segments and Totals / WeekInseason OTB = Closing Inventory Adjusted– Opening Inventory Adjusted+ Sales Total Adjusted+ Markdown Adjusted+ Shrinkage Adjusted- Receipts Total AdjustedAny other calculation of OTB would be possible too

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Agenda

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What is Capacity Planning ?

Capacity planning is the art of determining on category level (article hierarchy level) the space that will be needed in stores / store groups to present the merchandise over some future periods of time. At this external and internal capacity can be distinguished. Whereas external capacity planning assigns the kind and number of fixtures to categories taking the given number of fixtures in a store / store group into account, the internal capacity planning plans the units of merchandise that actually fit on these fixtures (season-dependent).

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Strategic Plan

Store Plan

Merch. Plan

Execution

Assortment DefinitionCapacity Plan

Assortment Plan

Capacity Plan

Master Data Object Fixture:Number, description

Fixture type (e.g. rounder, pyramid, table, multivario)

Picture, outline

Height, width, depth

Key Figures:Sales Quantity, Goods Receipts, Number of Stores, Space Profitability, Capacity Demand, Capacity Offer

Plan, Actual, History, Forecast

Function:Use in BW-BPS and BI-IP (capacity planning)

Use for article assignment in layout module (LM) (internal capacity)

Main Objectives:

Product assortments are not overskewed when checkedagainst capacity constraints

Avoid empty shelves

Provide better inventory control

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Capacity Planning – Questions to Consider

Internal capacityInternal capacityExternal capacityExternal capacity

Fixture object

Number of fixtures, for example, for each hierarchy node/store group/ month

Estimated capacity in pieces for a fixture, for example, hierarchy node/store group/month

What fixture capacity will I make available for a particular merchandise area over a certain period?

How many units of merchandise can I put on a fixture? Season-dependent?

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Capacity Planning – Process Overview

Which capacity is available for properly presenting merchandise of each and every merchandise area per store group and per period ?

Which additional capacity is available at individual stores ?

1) Maintain the number and kind of fixture for each referencestore / store cluster per merchandise area

maintain master data object fixtureassign fixtures to hierarchy node / store groups / month

2) Plan for each fixture options / piecesoptions are planned if the focus is mainly on colour planning and presenting merchandise on fixture based on colour rangespieces are planned if size planning is also included

3) Plan seasonal aspectshow much carry-over merchandise is still on stock after end of season?how much new merchandise can be brought to the stores / can fit on the fixtures taking carry over merchandise into accountnumber of pieces for a given fixture may also depend on the season

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Agenda

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Article master Article master data, Movement data, Movement

datadata

Placement dataPlacement data

Both manufacturers and retailers can provide external shelf optimization programs with required data and send back placement information for

further processing.

SAP NetWeaver BI Shelf optimization

SAP NetWeaver BI <-> Shelf Optimization

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ES Bundle – Planning to Shelf Optimization Integration

Business ValueSending assigned articles to be optimized by shelf space partners enables the best possible use of shelf space to maximize sales and profits. Assortments are not over-skued when checked against capacity constraints, which results in better inventory controls. Optimize assortment-to-shelf results by addressing the retailers strategic assortment goals while responding to floor and shelf space realities.

Provides Integration of SAP Merchandise Assortment Planning with 3rd party Shelf Optimization Program (SOP):SAP Export – dependent on the scenario a shelf optimization system needs for the corresponding shelf (store layout element) the assigned articles with master data and movement data. Based on this information the program is able to optimize the required space per article and so to use the valuable selling space most efficiently by avoiding overstock and out of stock situations.SAP Import – the optimized store layout element (if necessary also changes in the assignment of articles happened due to space constraints) with the placement parameters per article is sent back to SAP MAP in order to be confirmed and communicated to the operational merchandise management system where the valuable information can be used in follow processes such as replenishment.

Use CasesThe assortment planer is able to start the data request for SOP out of SAP MAP using the release workbenchAlternatively: the assortment planer is able to start the data request directly out of SOPThe space planer is able to change the used space of the assortmentOut of SOP the space planer is able to update the optimized planogram(store layout element) in SAP MAP accordinglyThe space planer is able to create a new store layout element out of SOP when necessary

Assortment Planner Category ManagerAssortment Planer Space Planer Category Manager

Defines store layout element,

assigns articles

Releases store layout element

Approves store layout element

Releases Plan to ERP

Optimizes Space, releases store

layout element

SOP

SOP

MAP MAP

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Assortment Plan for Basics

Overview of MAP Integration to SOP: Service Operations, Business Objects (BI 7.03, SP9)

SOP

SOP Database

Related BO:MAP Store

Layout Element

InfoObjects in BI:0RT_ASRTVRS, 0RT_AVRPRDS, 0RF_AVRFIXS

Read MAP Assortment Store Layout Element

Maintain MAP Assortment

Updates used space of an existing assortmentCreates new assortmentUpdates store assignment

Pull: all relevant Store layout element data

Fixtures assigned to Store layout element

BI

Read MAP Store Layout Element

Store Fixture

Request MAP Assortment

Store Layout Element

Related BO:MAP Assortment

InfoObject in BI:0RT_ASORT

Service Operation

MA

P Release W

orkbench

Push: all relevant Storelayout element data

Maintain MAP Store layout element

Optimized storelayout element

MAP = Merchandise And Assortment Planning

Five eSOA Services:

Read Merchandise And Assortment Planning Assortment Store Layout Element Synchronous outbound service that will be initiated by the SOP solutionPull scenario: This service reads in SAP MAP all relevant data for an assortment version

Maintain Merchandise And Assortment Planning Store Layout ElementAsynchronous inbound service that will be initiated by the SOP solution.Updates the assignments of a existing assortment version (store layout element). It is called out of SOP and

updates the optimized assortment version in SAP MAP accordingly.Creates a new assortment version and returns to SAP MAP the optimized product assignment

Request Merchandise And Assortment Planning Assortment Store Layout Element Asynchronous outbound service that will be initiated by the MAP release workbenchPush scenario: This service reads in SAP MAP all relevant data for an assortment version (Store layout element)

Provides the same information as the service Read Merchandise And Assortment Planning Assortment Store Layout Element, the difference is this service is initiated by SAP MAP

Maintain Merchandise And Assortment Planning AssortmentAsynchronous inbound service that will be initiated by the SOP solutionUpdates the space value of an existing assortmentCreates a total new assortment Updates the assignments of assortments to stores creations, changes in the time dependency and

deletions should be allowed

Read Merchandise And Assortment Planning Store Layout ElementStore Fixture Synchronous outbound service that will be initiated by the SOP solutionSends the fixtures which are assigned to an assortment version (store layout element)

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Sap retail merchandising and assortment planning overview 1