Solution in Detail
© 2013 SAP AG or an SAP affiliate company. All rights reserved.
Retail
Integrated Demand and Replenishment
Executive Summary Solution Overview Contact Us
© 2013 SAP AG or an SAP affiliate company. All rights reserved.
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Serving a New Generation of Consumers
The new generation of shoppers is mobile and
well informed, wanting to make purchases
quickly and easily. If one retailer cannot satisfy
their demand, they switch to another that can.
In reality, however, retailers are often faced
with empty shelves for some products while
others are overstocked. This is the costly result
of ineffective inventory management.
Consumer loyalty is declining, and consumer
demand is increasingly difficult to predict. Many
traditional forecasting approaches cannot effec-
tively incorporate relevant factors and trends in
real time, do not feed into automated planning
systems, and cannot manage growing data
volumes.
Fragmented supply chains and a lack of collab-
oration represent another challenge. To be truly
demand driven, operational replenishment
planning must be integrated at each level of the
supply chain and distribution network in order
to reduce logistics costs and optimize inven-
tory. It also involves anticipating the impact of
potential changes and aligning a company’s
operations with business strategy.
Retail companies need sophisticated demand
and replenishment planning approaches based
on real-time consumer data in a multilevel
supply network. Such approaches can support
pull and push scenarios.
In today’s fast-paced world, consumers want access to products at all times and
across all channels. Retail companies need to accurately forecast and manage
their inventory while satisfying consumer demands in this competitive environment. Integrated Demand and
Supply
Smart and Informed
Consumers
SAP Innovations
Optimized Costs
Executive Summary Solution Overview Contact Us
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Changing consumer behavior and the
increasing pace of business require accurate
forecasting of demand to retain customers and
maximize sales. Manual and disconnected
planning systems cannot cope with the
changes in the market and do not support the
necessary alignment within the company itself.
Thus, they need to be replaced by integrated
solutions that accurately predict and align
demand and ensure optimal stock levels
throughout the supply chain.
Automated allocation and replenishment
strategies are key to increasing productivity
and lowering costs. Collaborative supplier
relationships within an integrated, sustainable
supply chain are essential for reducing trans-
port costs and minimizing waste. And, finally,
high-level strategic plans have to be linked with
day-to-day operations.
Solutions for integrated demand and replenish-
ment planning from SAP help retailers meet
shopper demand while optimizing stock
availability and reducing costs.
Integrating Demand and Supply Planning
Ensure aligned and flexible replenishment and allocations
Integrated Demand and
Supply
Smart and Informed
Consumers
SAP Innovations
Optimized Costs
Executive Summary Solution Overview Contact Us
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The benefits of integrating demand and replenishment planning for retail
companies are huge. Best-run companies can expect significant cost savings
through optimized inventory as well as increased sales and improved service
levels by integrating people, processes, and systems in a cross-functional manner.
SAP solutions facilitate forecasting and demand planning as well as multilevel
replenishment and allocations, resulting in:
Meet Shopper Demand and Optimize Costs
Increased forecasting accuracy through sophisticated algorithms and aligned numbers
Maximized sales through greater product availability
Reduced inventory costs due to optimization and automation across the supply chain
Reduced ordering and transport costs due to optimized logistics
Understanding of future trends and their impact on plans
23%
Lower inventory carrying cost
for organizations with higher
forecast accuracy
Source: SAP Performance
Benchmarking
Integrated Demand and
Supply
Smart and Informed
Consumers
SAP Innovations
Optimized Costs
Executive Summary Solution Overview Contact Us
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Database and technology solutions from SAP
enable retail companies to manage Big Data.
These solutions provide the foundation for
executing integrated demand-driven planning
and replenishment based on transactions at
SKU and store levels. SAP provides solutions
that are developed specifically for retail
companies and are closely integrated with
powerful logistics execution functionalities.
Analytics solutions powered by the SAP HANA
platform enable advanced monitoring of every
aspect of supply chain planning. The analytical
data is used to align strategic objectives with
operational execution.
Cloud-based software, such as the SAP Sales
and Operations Planning application, powered
by SAP HANA, allow for fast, low-risk
deployment that minimizes the IT footprint.
Mobile solutions give supply chain profes-
sionals anytime, anywhere access to status
reporting and exceptions and alerts.
SAP Innovations
Solutions for integrated demand and replenishment planning from SAP help
retailers respond quickly to consumer trends and are scalable for retail volumes.
Flexible deployment options and tight integration with logistics provide a better total
cost of ownership. Integrated Demand and
Supply
Smart and Informed
Consumers
SAP Innovations
Optimized Costs
Executive Summary Solution Overview Contact Us
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Enable Customer-Driven Supply Planning
Forecasting and Multilevel Replenishment
Create optimized demand plans using sophisticated forecasting algorithms.
Define optimal supply plans across the supply chain based on anticipated
customer demand and cost aspects.
Allocation
Accurately plan, monitor, and control the distribution of merchandise across all
locations.
Sales and Operations Planning
Align demand and supply plans with financial goals, and synchronize operations
with the rest of the business.
Forecasting and
Replenishment
Solution Overview
Sales and Operations
Planning
Allocation
Demand and Replenishment
Plan
Executive Summary Solution Overview Contact Us
97% Lower revenue loss due
to stock-outs for top 25%
retailers as compared to
average retailers
Source: SAP Performance
Benchmarking
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All rights reserved.
Integrated demand and
replenishment planning is a
comprehensive solution for
retailers that enables demand
and supply planning in a
multilevel supply network.
Integrated Demand and Replenishment Planning
Executive Summary Solution Overview Contact Us
Forecasting and
Replenishment
Solution Overview
Sales and Operations
Planning
Allocation
Demand and Replenishment
Plan
Merchandising
Buying,
Sourcing, and
Manufacturing
Supply Chain
Customer
Finance
People
Forecasting and Multilevel Replenishment Allocation
Collaborative
Planning,
Forecasting,
and
Replenishment
Demand
Forecasting
and Planning
Requirements
Calculation
Quantity
Optimization
Order Proposal
Management
Initial
Allocation
In-Season
Allocation
Buying
Merchandise
and Assortment
Planning
Sales
Transactions
Demand
Review
Demand and
Supply
Alignment
Supply
Review
Sales and Operations
Planning
Financial
Planning
8 / 23 © 2013 SAP AG or an SAP affiliate company.
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Retailers need solutions that optimize their
inventory requirements.
The solutions from SAP enable retailers to
accurately forecast customer demand and
integrate this key information into all levels of
the supply chain. Combined with automated
replenishment, this helps ensure optimal order
quantities for stores and distribution centers
within the supply chain.
Using information at store and SKU levels,
advanced forecasting analytics automatically
adjust for trends, seasons, and events. The
time spent on routine tasks is greatly reduced,
enabling employees to dedicate more time to
customers.
Solutions for forecasting and multilevel
replenishment from SAP integrate
algorithms to analyze and predict
customer demand with automated
functions to optimize inventory across
the supply chain.
Forecasting and Replenishment
71% Of retailers have limited to
no capability to establish
accountability for forecast
accuracy, explain forecast
variances, and analyze root
causes
Source: SAP Performance
Benchmarking
Capabilities
Forecasting and
Replenishment
Benefits
Technology Innovation
Solution Overview
Executive Summary Solution Overview Contact Us
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Demand forecasting and planning uses
advanced modeling techniques incorporating
factors such as holidays, promotions, price
changes, and even external impacts such as
weather. Automated functionality eliminates
time-consuming manual forecasting.
Automated replenishment calculations support
store and distribution center processes,
enabling retailers to calculate optimal quantities
for each product and location. Through multi-
level replenishment, retailers can synchronize
all levels of the supply chain by rolling up store
order forecasts and can become truly demand
driven.
Quantity optimization balances fill-up quantities
with transport costs and can include logistical
restrictions such as advanced truck load
optimization.
Order proposal management enables an
exception-based approach for suggested
quantities and provides transparency of all
calculation steps.
Collaborative planning, forecasting, and
replenishment help retailers achieve sustain-
able reductions along the supply chain.
16% Lower inventory carrying cost
for organizations where
forecasts are dynamic and
updated frequently
Source: SAP Performance
Benchmarking
Drive The Supply Chain Based on Demand
Capabilities
Forecasting and
Replenishment
Benefits
Technology Innovation
Executive Summary Solution Overview Contact Us
Solution Overview
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All rights reserved.
Retail supply chains can include millions of prod-
ucts. Intelligent, automated demand modeling and
forecasting replace the time-consuming manual
analysis of sales patterns, which vary by location
and are impacted by promotions, sales events,
and seasonal trends.
Automated forecasting and replenishment
software from SAP selects relevant forecasting
algorithms based on a product’s selling behavior.
Predict events and promotional uplifts and combine
these with other key influential factors to obtain
accurate and reliable demand forecasts, to eliminate
manual clusters of data and configurations.
To leverage the full potential of inventory savings,
integrate rolled-up customer demand into all levels
of the supply chain and implement optimized
replenishment processes and automated
functionality.
Build acceptance of automatically generated order
quantities through accurate and transparent
calculation steps, which in turn can increase
employee productivity.
Merchandise inventory is a retailer’s
greatest controllable asset. Implement
the right technology to help reduce
inventory levels, and optimize product
availability to meet consumer demand.
Automated Replenishment Prevents Stock-Outs and
Reduces Costs
26% Lower revenue loss due to
stock-outs in organizations
where forecasting incorpor-
ates demand history and
adjustments for bad data and
past promotions
Source: SAP Performance
Benchmarking
Capabilities
Forecasting and
Replenishment
Benefits
Technology Innovation
Executive Summary Solution Overview Contact Us
Solution Overview
11 / 23 © 2013 SAP AG or an SAP affiliate company.
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image #
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Big Data
The SAP Forecasting and Replenishment
application provides a robust and scalable
architecture for processing retail data volumes.
This solution can process tens of millions of
data records each day. Forecasting and
replenishment software from SAP can be
integrated with merchandising software from
SAP or operated as stand-alone software.
Innovations for Forecasting and Multilevel
Replenishment
Analytics
Analytics solutions powered by the SAP HANA
platform enable monitoring of investments and
strategic controlling of forecasting and
replenishment processes.
Mobile
Use SAP Mobile Platform to build intuitive apps
enabling store employees to access and
process information such as order proposals
and exceptions on the shelf.
30% Less revenue loss due to
stock-outs in organizations
where forecasting is per-
formed for all combinations
of SKUs and inventory
locations
Source: SAP Performance
Benchmarking
Innovations by SAP improve forecasting
accuracy by analyzing customer
demand and optimizing inventory in the
supply chain. Capabilities
Forecasting and
Replenishment
Benefits
Technology Innovation
Executive Summary Solution Overview Contact Us
Solution Overview
12 / 23 © 2013 SAP AG or an SAP affiliate company.
All rights reserved.
Allocation software from SAP helps retailers
plan, coordinate, and monitor the allocation of
merchandise to a large number of recipients.
Allocation strategies based on key performance
indicators enable a high degree of automation,
leading to improved productivity. The software
supports business processes such as allocation
of promotional merchandise, allocation of
initial stock, in-season allocation, and store
stock balancing. By providing the right
merchandise in the right quantity at the right
location, retailers can eliminate unnecessary
markdowns, improve customer loyalty, and
reduce inventory carrying costs.
Allocate retail merchandise to multiple
customers or stores. Replace manual
processes with streamlined, automated,
and flexible strategies, and align
inventory levels with customer demand.
Allocation
23% Lower inventory carrying cost
for organizations that gain
visibility into customer
demand and actual sales
Source: SAP Performance
Benchmarking
Capabilities
Allocation
Benefits
Technology Innovation
Executive Summary Solution Overview Contact Us
Solution Overview
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All rights reserved.
Software for initial allocation supports forward
planning and subsequent logistics processes,
particularly for seasonal merchandise with a
short lifecycle and long lead time. Merchandise
is allocated from the distribution center to the
stores or customers based on defined rules.
Retailers can allocate an initial quantity to the
stores and the remaining items to key locations
later in the season, based on forecasted
demand or actual sales.
Allocations also support distribution of non-
seasonal merchandise, such as for promotions
and events, or new products. Multiple
scenarios, including product recalls and
returns, are enabled through flexible rules
and a high degree of automation.
Over- and understocking of products is avoided
through inventory planning and real-time stock
management, and stock clearance activities
can be initiated via the distribution center.
Close integration with logistics execution
enables the automatic generation of follow-on
documents such as for deliveries.
28% Lower revenue loss due to
stock-outs for organizations
that selectively use buffers to
manage variability
Source: SAP Performance
Benchmarking
Enable Flexible Allocation Scenarios
Capabilities
Allocation
Benefits
Technology Innovation
Executive Summary Solution Overview Contact Us
Solution Overview
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Strategies for initial allocation transform the
assortment plan into operational steps based
on actual purchasing situations and logistical
conditions. Base strategies for in-season
allocations on data derived from analytical
queries such as historical sales or extrapolated
demands. Integrate planning, reporting, and
logistics execution to allow informed decisions
based on one consistent data model,
eliminating insular and incoherent planning
approaches.
Apply flexible allocation strategies and recipient
determination logic to support multiple business
processes. Use standard and customized
strategies to support the automatic calculation
of optimal quantities and can include figures
such as stock on order, available stock, and
minimum or maximum restrictions.
Defining rules that are dynamically updated by
transactional processes significantly reduces
the level of manual input while maximizing
inventory availability.
Integrate planning processes across all
departments, and transform them into
operational logistical processes.
Use Integrated Plans and Automate the Allocation
Process
36% Lower overall supply chain
planning cost for
organizations that align
supply to demand
Source: SAP Performance
Benchmarking
Capabilities
Allocation
Benefits
Technology Innovation
Executive Summary Solution Overview Contact Us
Solution Overview
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image #
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Database and Technology
The solution offers proven performance and
scalability for managing huge retail data
volumes to support allocation planning and
efficient supply chain operations.
Analytics
Key figures and analytical functionality powered
by the SAP HANA platform allow retailers to
connect the supply chain view with customer
Innovations for Allocation
demand, to support strategic planning and
deliver operational excellence. Data from
analytical applications is closely integrated
with operational logistics to support decision
making. The result is a flexible allocation tool
that can actively respond to changing demand
situations, current purchase order status, and
logistical constraints.
53% Of organizations report a big
gap between the availability of
Big Data and their ability to
analyze it for insights
Source: SAP Performance
Benchmarking
Capabilities
Allocation
Benefits
Technology Innovation
Innovations from SAP enable allocation
decisions and follow-on logistics
activities through a single consistent
model.
Executive Summary Solution Overview Contact Us
Solution Overview
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The SAP Sales and Operations Planning
application, powered by SAP HANA, supports
the complex task of aligning planning and
execution. In the fashion industry, for example,
planning takes place well in advance to ensure
production activities can be fulfilled. The appli-
cation enables continuous replanning due to
short-term trends that arise in the meantime.
The sharing of data and alignment of plans
between departments and across company
borders enables retailers to prepare for
changes and their impacts.
Top-down financial plans and bottom-up
demand plans are reconciled to drive the
business with one ”plan of truth.”
Sales and operations planning (S&OP)
engages stakeholders in an integrated
planning process that profitably aligns
demand and supply. It helps mitigate
risks of demand and supply chain
disruptions.
Sales and Operations Planning
14% Lower inventory write-offs in
companies where monthly,
collaborative S&OP pro-
cesses lead to alignment of
plans for sales, procurement,
and so on
Source: SAP Performance
Benchmarking
Capabilities
Sales and Operations
Planning
Benefits
Technology Innovation
Executive Summary Solution Overview Contact Us
Solution Overview
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Sales and operations planning supports
consensus demand planning and enables
the creation of one single, trusted sales and
operations plan, which retailers can quickly
adapt in line with changing market conditions.
Financial planning forms the basis for achieving
corporate goals for the overall sales and
operations planning process and enables
retailers to implement top-down strategic
financial plans. Supply chain planning focuses
on a bottom-up operational execution.
Demand review provides a unified view of
demand from all sources including finance,
merchandising, and supply chain and facilitates
consensus demand planning in line with
strategic goals. The supply and inventory
review is based on the agreed plan and
determines the impact of decisions on long-
term constraints in the distribution network.
These inputs feed into an executive review with a
real-time what-if analysis, which enables delivery
of one aligned plan across the organization
through demand and supply alignment.
23% Lower inventory carrying
cost for organizations that
implement a collaborative
demand planning process
Source: SAP Performance
Benchmarking
Implement Consensus Demand Planning
Capabilities
Sales and Operations
Planning
Benefits
Technology Innovation
Executive Summary Solution Overview Contact Us
Solution Overview
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Provide all relevant demand and supply
information in a unified environment with
complete visibility for all stakeholders.
Implement the SAP Sales and Operations
Planning application, powered by SAP HANA,
to plan and analyze data in real time using a
unified model for all demand, supply chain, and
financial data. This data can be imported
directly from SAP and non-SAP software.
Leverage the SAP HANA platform to instantly
analyze large volumes of internal and external,
qualitative and quantitative demand data to
support demand and supply balancing
simulations and decision making.
The application’s social collaboration platform
also allows retailers to track planning progress,
see who has been assigned a key action item,
and review process performance. By enabling
team members to collaborate more quickly and
easily, SAP Sales and Operations Planning
helps accelerate planning and decision making,
drive greater engagement, and achieve greater
acceptance of the plan across the organization.
Create an aligned business plan that
links strategy and operations by
merging demand, supply, and financial
plans in a shared environment that
enables planning, analysis, and
real-time simulations.
Align The Organization
39% Lower revenue loss due to
stock-outs for organizations
with higher maturity of sales
and operations planning
processes
Source: SAP Performance
Benchmarking
Capabilities
Sales and Operations
Planning
Benefits
Technology Innovation
Executive Summary Solution Overview Contact Us
Solution Overview
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All rights reserved.
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image #
here
Database and Technology
The SAP HANA platform enables real-time plan-
ning and analysis of Big Data, plus a unified model
of demand, supply chain, and financial data. Use of
SAP Data Services software enables integration of
the SAP Sales and Operations Planning applica-
tion with other SAP software and allows retailers to
speed up planning and decision making.
Analytics
Key figures and analytical functionality powered
by the SAP HANA platform allow retailers to
Innovations for Sales and Operations Planning
connect the supply chain view with customer
demand.
Cloud
The SAP HANA application cloud provides
delivery, consumption, and interaction that is
extremely intuitive to implement.
Mobile
Users can access sales and operations planning
software via mobile devices such as smart
phones and tablets.
36% Higher operating margin
where organizations use IT
to enable strategic and
competitive advantages
Source: SAP Performance
Benchmarking
Capabilities
Sales and Operations
Planning
Benefits
Technology Innovation
Innovations support real-time planning,
analysis, and social collaboration,
speeding up processes and decision
making.
Executive Summary Solution Overview Contact Us
Solution Overview
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Customer-Driven Supply Chain Value Map
Forecasting and
Replenishment
Sales and Operations
Planning
Demand and
Replenishment Planning
Allocation
Executive Summary Solution Overview Contact Us
Solution Overview
Customer
Insight and
Analytics
Demand
and Supply
Analytics
Inventory
Analytics
Fulfillment
Analytics
Forecasting
and Multilevel
Replenishment
Allocation
Sales and
Operations
Planning
Inventory
Management
Track and
Trace
Multichannel
Order
Fulfillment
Warehouse
Management
Transportation
Management
Real-Time
Customer and
Supply Chain
Analytics
Optimized
Logistics and
Fulfillment
Execution
Integrated
Demand and
Replenishment
Planning
21 / 23 © 2013 SAP AG or an SAP affiliate company.
All rights reserved.
Why SAP?
Integrated demand and replenishment planning balances inventory ownership with
customer service to determine and execute accurate, flexible, and automated
replenishment and allocation plans.
Customer-Driven Demand Planning
Improve sales and customer service levels, and significantly reduce the number of out-of-stocks by
accurately forecasting and satisfying customer demand. Align and balance demand and supply as
market conditions change.
Inventory Optimization with Multilevel Replenishment and Allocation
Lower inventory levels in stores and distribution centers through targeted multilevel replenishment
and flexible initial and in-season allocation strategies.
Sustainable Supply Chain
Streamline the company’s supply chain operations by reducing waste and optimizing deliveries
and logistics activities.
Forecasting and
Replenishment
Allocation
Sales and Operations
Planning
Demand and
Replenishment Planning
39% Lower revenue loss due to
stock-outs for organiza-
tions that transition to a
pull supply model to align
supply plans to actual
demand
Source: SAP Performance
Benchmarking
Executive Summary Solution Overview Contact Us
Solution Overview
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Executive Summary Solution Overview Contact Us
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Solution in Detail
© 2013 SAP AG or an SAP affiliate company. All rights reserved.
Retail
SAP for Retail on SAP® Community Network: http://scn.sap.com/community/retail
Retail wiki on SAP Community Network:
http://wiki.sdn.sap.com/wiki/display/retail/IS-Retail
SAP for Retail on Facebook:
http://www.facebook.com/SAPRetail/82783264322
SAP for Retail on Twitter: https://twitter.com/SAP_Retail
SAP for Retail on LinkedIn: http://www.linkedin.com/groups/SAP-Retail-4022601
SAP for Retail on YouTube: http://www.youtube.com/user/SAP4Retail
© 2013 SAP AG or an SAP affiliate company. All rights reserved.
CMP 23497 (13/03)
Executive Summary Solution Overview Contact Us
© 2013 SAP AG or an SAP affiliate company. All rights reserved.
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