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SAP Forecasting & ReplenishmentSolution Update and Outlook
Forecasting and Replenishment User Forum BostonJune 2012
© 2011 SAP AG. All rights reserved. 2RKT
The information in this presentation is confidential and proprietary to SAP and may not be disclosed without the permission of SAP. This presentation is not subject to your license agreement or any other service or subscription agreement with SAP. SAP has no obligation to pursue any course of business outlined in this document or any related presentation, or to develop or release any functionality mentioned therein. This document, or any related presentation and SAP's strategy and possible future developments, products and or platforms directions and functionality are all subject to change and may be changed by SAP at any time for any reason without notice. The information in this document is not a commitment, promise or legal obligation to deliver any material, code or functionality. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement. This document is for informational purposes and may not be incorporated into a contract. SAP assumes no responsibility for errors or omissions in this document, except if such damages were caused by SAP´s willful misconduct or gross negligence.
All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates, and they should not be relied upon in making purchasing decisions.
Legal disclaimer
© 2011 SAP AG. All rights reserved. 3RKT
SAP and SAF – a long-term relationship
One decade of co-innovation between SAP and SAF on SAP Forecasting and Replenishment
Acquisition of SAF finalized on September 27th
Major decisions and benefits
Integration of SAF product offering into SAP portfolio enable more flexibility in going to market
Increasing expertise in sales, consulting and development for one of the most critical Retail business scenarios
Joining forces in product strategy on our way forward to the next generation of solutions
Extension of current offering for Forecasting and Replenishment in Retail and beyond
Industry know-how and science meet on future platforms – in-memory, mobile technology
© 2011 SAP AG. All rights reserved. 4RKT
Planned innovations Future directionSolution today
Overview of SAP road map for Forecasting & Replenishment
Plan and market better
Supply and distributebetter
Sell and servicebetter
Operate better
On Shelf Availability
CAR, UDF
F&R
Integrated Planning
Demand Planning,Replenishment, Allocation
© 2011 SAP AG. All rights reserved. 5RKT
Solution today Planned innovations Future direction
Overview of SAP road map for Forecasting & Replenishment
Plan and market better
Supply and distributebetter
Sell and servicebetter
Operate better
On Shelf Availability
CAR, UDF
F&R
© 2011 SAP AG. All rights reserved. 6
Retail 2012 Solution portfolio
Solution today
Shopper insightMerchandise and assortmentProduct, store, and customer lifecycleLifecycle pricing Marketing and promotionsLoyalty management
FinanceReal estate and asset managementHuman capital Risk and complianceSustainable operations
Integrated demand and replenishment planningSourcing and buyingIntegrated product developmentPrivate label productionLogistics and fulfillment managementSupply chain performance mgmt
Store and point of saleE-commerceM-commerceSocial mediaCustomer service contact centerCustomer service managementMultichannel order managementBusiness intelligence
IT operational and service excellenceEnterprise information managementEnterprise data warehousingBusiness integrationUser productivity
Focus innovations in 2011
© 2011 SAP AG. All rights reserved. 7
SAP® Forecasting and Replenishment for Retail
SAP® Forecasting and Replenishment for Retail –
for use with SAP Merchandising for Retail
(standard integration)
SAP® Forecasting and Replenishment for Retail –
for use with other merchandising solutions
(open integration)
Flexible deployment - tailored to customers’ needs
Uniform pricing - attractive also for midmarket companies
One future roadmap
One brand
Twodeployment
options
Yoursolution
SAP Forecasting & ReplenishmentBranding
© 2011 SAP AG. All rights reserved. 8
SAP Forecasting & ReplenishmentCustomers, sub-segments, implementations
• All regions: EMEA, NA, LA and APJ
• All sizes: LE, ME A 20 bn CHF multi format Retailer in Switzerland A 50 mil EUR supermarket chain in Dominican Republic
• All segments: General Merchandise: DIY, furniture, consumer electronics, etc. Grocery, convenience, drugstores Fashion / department stores
• All scenarios: Store replenishment DC replenishment Multi-level replenishment
• All deployment options: Integrated with SAP Merchandising Open Integration / stand-alone
© 2011 SAP AG. All rights reserved. 9
Almost full automation of replenishment process through high acceptance rate of generated order suggestions with reduction of out-of-stocks from 8 to 2%
Reduction of out-of-stocks by 75% with simultaneous reduction of warehouse stock by 10%
Reduction of inventory levels in the store by 13% with almost complete elimination of order costs (96%)
Reduction of inventory level by 20% with increase of service degree to 98,5%
Increased sales by more than 1% and about 70% OOS reduction in some locations due to automated replenishment
Other references: Axfood, COOP Norge, Dohle Handelsgruppe (Hit), EDEKA , Grupo El Arbol, Jysk, MassStores, Tegut, Pick‘n‘Pay
SAP Forecasting & ReplenishmentCustomer successes
© 2011 SAP AG. All rights reserved. 10
Solution Enhancements Key Benefits Fully automated store
replenishment for optimized product availability
Advanced DC replenishment with truck load optimization to meet supplier restrictions
Sophisticated algorithms, yet robust, high-volume processing capabilities
Transparency and insight into results provided throughout all steps of the process
One solution for multi-level optimization
Packaged offering available for fast track implementation
Two deployment options – fully Integrated with SAP Merchandising as well as open integration (stand-alone)
Solution today
Reduction of cost of ordering, inventory and logistics cost along with reduction of carbon footprint
Support for ranging decisions and supply chain transformation
Visibility and usability to keep track of all relevant KIP’s in the organization
Reduced TCO through deployment of one solution serving all scenarios
SAP Forecasting and Replenishment provides automated capabilities for demand-driven replenishment to synchronize inventories along the supply chain, improve in-stock positions and reduce cost.
Solution Highlights
SAP Forecasting & ReplenishmentSolution Highlights
© 2011 SAP AG. All rights reserved. 11
Decision ImplementationPiloting Rollout Operation
Modeling Service - Store DIF
Strategic Inventory Parameter Optimization
What-if Analysis
Pack Size Opt.
Feasibility Study
Optimal Profitability
Young Fashion
Reality
F&R Optimization Services for Retail
Solution today
Modeling Service - Product DIF
* DIF = Demand Influencing Factor
© 2011 SAP AG. All rights reserved. 12
Solution Enhancements Key Benefits
SAP Forecasting & ReplenishmentLatest innovations
Enhanced capabilities for truck load optimization
Forecast improvements
Enhancements in order forecast (order forecast for aggregation)
Consider time-dependent data for promotions
More detailed information about automated calculation steps
Improved user interfaces, e.g. within the replenishment workbench
Improved exception handling
Enhanced connectivity of SAP F&R with SAP ERP for Retail, e.g. source list integration and transit stock consideration
Solution today
Reduction of purchasing and logistical cost
Increased forecast accuracy leads to better results
Improved support of multi echelon scenarios with the new Order Forecast for aggregation
Improved accuracy of promotional forecasts
Improved traceability of automated processes
Better usability for increased efficiency
Reduced TCO through better integration with SAP ERP for Retail
Release 5.2 of SAP Forecasting and Replenishment Standard Integration provides more sophisticated functionality for DC replenishment as well as usability improvements.
© 2011 SAP AG. All rights reserved. 13
Solution Enhancements Key Benefits Investment Buying
Enhanced capabilities for truck load optimization
Forecast improvements
Enhancements in order forecast (order forecast for aggregation)
Consider time-dependent information for promotions
More detailed information about automated calculation steps
Improved management of unknown DIFs
Improved usability of DataAnalyzer
Solution today
Reduce purchasing costs and take advantage of supplier promotions
Reduction of purchasing and logistical cost
Increased forecast accuracy leads to better order proposals
Improved support of multi echelon scenarios with the new Order Forecast for aggregation
Improved accuracy of promotional forecasts
Improved traceability of automated processes
Higher degree of automation
Increased efficiency
Release 2.2 of SAP Forecasting and Replenishment Open Integration provides more sophisticated functionality for DC replenishment as well as usability improvements.
SAP Forecasting & ReplenishmentLatest innovations
© 2011 SAP AG. All rights reserved. 14
Future directionSolution today Planned innovations
Overview of SAP road map for Forecasting & Replenishment
Plan and market better
Supply and distributebetter
Sell and servicebetter
Operate better
On Shelf Availability
CAR, UDF
F&R
© 2011 SAP AG. All rights reserved. 15
Key BenefitsSolution EnhancementsUsability improvements Order Lists Table enhancements Fast Actions buttons User preferences as tabs, with small button Configurable widths of columns Extended screen resolution and browser compatibility Customer specific exception descriptions Display polling time, polling dayPerformance improvements Pre-calculation of active predictors in B Pre-calculation of demand in BIFunctional improvements Completion of order review process Filtering / sorting by customer specific info Exception acknowledgement for order lists Reporting API
Planned innovations
Increased flexibility and configurability of user interface
Better response times Valuable customer specific enhancements added to
standard product
SAP Forecasting & ReplenishmentPlanned enhancements for F&R stand-alone
© 2011 SAP AG. All rights reserved. 16
Solution Enhancements Key Benefits Consideration of customer sales
orders as exceptional demand Enhanced integration of SAP
PMR with SAP F&R
Planned innovations
Reduction of out-of-stocks due to unplanned orders
Improved transparency and visibility in F&R
Aligned promotional forecast quantities in promotion planning and replenishment.
Significant reduction of data maintenance for promotional periods
Release 5.2, SP03 of SAP Forecasting and Replenishment Standard Integration provides improvements in transparency and integration.
SAP Forecasting & ReplenishmentPlanned enhancements for F&R integrated
© 2011 SAP AG. All rights reserved. 17
Customer Activity RepositoryFoundation for predictive retail applications
Web Channel
OnShelfAvailability
Assortment Planning
Promotion Planning (PMR)
Merchandise Planning
Price Optimization
Markdown Optimization
Loss Prevention Analytics
Partner Solutions
Custom Solutions …
…
Dashboards
Mobile
POS
Financial Planning
Demand Planning
Customer Segmentation
POS Sales Audit
Replenishment& Allocation
CustomerActivity
Repository
Market Data
Demographics
Social Media
Customer
Promotions
Multi-Channel Sales
Merchandise
Pred
ictiv
e A
naly
tics
Retail Analytics Model & KPIs
Assortment
Locations
Click Stream
Mul
tiple
Cha
nnel
s
Inventory
Goods Movements
BW / HANA
…
© 2011 SAP AG. All rights reserved. 18
Solution Enhancements Key Benefits Predefined data model to capture
sales transactions across channels in one consolidated repository
Enriched data model to support flexible reporting and analytics
Real time feed of sales data from any channel
Data cleansing, auditing and enrichment as well as error resolution functionality provided through POS DM
Instant aggregation to any desired level while data is kept at lowest level
Foundation for predictive applications (e.g. MAP, PMR, F&R)
Unified forecasting enables prediction of future sales and one version of truth
Planned innovations
Real time visibility into consumer sales data across channel and channels specific down to transaction level
Instant aggregation to any desired level without losing the detailed information (keep data at lowest level)
Support flexible, high speed analytics and calculation of mass data
Avoid replication of POS data and perform extensive calculations and predictive analytics where the data resides
Common foundation and one version of truth for predictive applications
Historic and predictive sales data available in one view
Customer Activity Repository
The first release of the in-memory based Customer Activity Repository provides real time access and visibility into consumer sales data across channels. A game changing foundation to process and analyze consumer behavior and impact on future business in real time.
© 2011 SAP AG. All rights reserved. 19
Solution Enhancements Key Benefits Analyze on-shelf-availability for
all types of products – slow or fast movers – using scientific algorithms which analyze sales patterns.
Provide historic analysis at aggregate levels as well as real time analysis based on real time POS data.
Based on POS DM using in-memory technology (HANA).
No perpetual inventory at store level is needed.
If available, system inventory and other information can be used to analyze possible root cause
Available on iPAD, easy to use for store associates, alert driven.
Planned innovations
Store Managers and VP of Sales can analyze on-shelf availability at aggregate level to detect patterns of occurrence (e.g. weekdays, categories, daytimes, etc), analyze root causes and take corrective measures to prevent them from happening in the future.
Store associates can detect on-shelf availability in real time for promotional and non-promotional products, respond directly and take corrective actions.
Perpetual inventory at store level is no prerequisite but can be used to provide additional information to analyze root cause.
Helps store managers to optimize resource deployment.
Inventory AnalyticsOn-Shelf Availability
On-Shelf-Availability analysis provides visibility to on-shelf situations in retail stores. It can be used to analyze patterns of out-of-shelf situations after the fact to proactively prevent them in the future or it can be used to detect and visualize on-shelf availability situations when they happen in real time and take immediate actions to prevent further lost sales.
© 2011 SAP AG. All rights reserved. 20
Future directionPlanned innovationsSolution today
Overview of SAP road map for Forecasting & Replenishment
Plan and market better
Supply and distributebetter
Sell and servicebetter
Operate better
On Shelf Availability
CAR, UDF
F&R
© 2011 SAP AG. All rights reserved. 21
Integrated retail planning processes
Financial Plan
3-5 years High level sales
plan (sales,margins, markdowns)
By channel, month, store type
Management objective
Assortment Plan
12 months/ 1 season Assortment plan
seasonal products Key item plan non-
seasonal products Units retail, cost By location group
Promo, Price,Markdown Plan
12 to 0 weeks Promotions, prices
and markdowns Hit revenue target
from merch. plan By category, by
week/day Bottom-up
Merchandise Plan
12 months For season/quarter Revenue, profit,
margin by merch.group
By month/week Bottom-up
Marketing Plan
18 months Number of campaigns Budget for campaigns Profit By channel, customer
segment Top-down
Demand (and Supply) Plan
Continuous / In-season Demand analysis In-Season monitoring Demand / supply
match Drive activities, such
as ordering, campaigns etc.
Operational Processes
Operative horizon Purchasing Inventory
Management Warehousing Transportation Etc.
Allocation Plan
Pre-season / in-season Automatic or system-
supported allocation of fixed quantities across multi-level supply network
Demand driven allocation in-season
Replenishment Plan
Continuous Automatic ordering
of re-orderable products
Multi-level supply network
© 2011 SAP AG. All rights reserved. 22
SAP Forecasting and ReplenishmentFuture direction
MerchandisePlanning
Promotion Planning
Assortment Planning
Price Planning
MarkdownPlanning
Customer Activity Repository (CAR) on HANACommon data foundation for multi channel analytical reporting and predictive applications in Retail
2012 2013 2014 2015 >>
Unified Demand Forecast
On-Shelf Availability Analysis
Demand Planning
Replenishment Planning
Replenishment & Allocation Planning
F&R 5.2 SP03 (for use with SAP Merchandising Software)
F&R 2.2 SP01 (for use with other Merchandising Software)
Planned Delivery
OptimizationServices
Appendix: Planned
© 2011 SAP AG. All rights reserved. 24
Solution Enhancements Key Benefits Functionality
– Cell locking (enhanced)– Rules of precedence
Implementation – RDS Package for Planning (SAP
Planning for Retail – Channel Financial, Merchandise and Key Item Planning)
– New ABAP based planning modeler Premium Microsoft Office user
interface: SAP Business Objects Analysis, edition for Microsoft Office– Conditional formatting– Filters by measure– Notes at cell level– Sort breaks by hierarchy– Easy and dynamic calculations– Interactive multi dimensional
analysis SAP Planning for Retail powered by
HANA – Planning engine and Starter
Package support
Planned innovations
Functionality – Complete session locking– Flexible rules based calculation
Implementation – Reduced implementation cost– Simplified implementation– Best business practice templates
User Experience – Superior user experience for power
users– Excel based application design– Common user experience for
planning and reporting / analytics– Easy publishing to MS Power Point
and Live Power Point presentations
– Superior user experience for occasional users
– Custom / industry specific planning features
Performance – High volume, high speed
Innovation without disruption
Merchandise & AssortmentIn-Memory Retail Planning
The SAP Planning Suite for Retail evolves to an in-memory planning application with best in class user experience and a highly flexible planning engine.
© 2011 SAP AG. All rights reserved. 25
Solution Enhancements Key Benefits Enhance offer construction speed
and performance through mass creation and maintenance capabilities
Enhanced display planning and forecasting capabilities
More flexible desktop publishing views and integration with third party printing and execution systems
Option to leverage a HANA based platform with on-demand database
General usability enhancements and feature updates to improve overall performance
Planned innovations
Reduce data entry times with automation and reduced clicks
Integrate with display planning and planogram systems –including forecasting and in-store placement
Reduce promotional print and execution costs
Improve financial analytics and performance measurements now possible with speed and flexibility of HANA database
Marketing & PromotionsPMR Enhancements and HANA Infrastructure
The SAP Promotion Management for Retail application extends to a HANA infrastructure and enhances display planning features, desktop publishing functionality, and general performance and usability.
© 2011 SAP AG. All rights reserved. 26RKT
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