SAP Press SAP for Retail

Prévia do material em texto

Heike Rawe
SAP® for Retail
Bonn � Boston
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Contents at a Glance
1 Introduction ................................................................ 17
2 SAP for Retail – An Overview ...................................... 25
3 Master Data, Forecasts, Analyses, and Connecting 
 Applications ................................................................ 41
4 Planning ...................................................................... 93
5 Purchasing ................................................................... 133
6 Order Processing – Supply Chain Management .......... 171
7 Multichannel Retailing and Customer Service ............ 231
8 Enterprise SOA in SAP for Retail ................................. 295
9 Summary ..................................................................... 315
A Glossary ....................................................................... 323
B The Author ................................................................... 333
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7
Contents
Acknowledgment ......................................................................... 13
Preface ......................................................................................... 15
1 Introduction ................................................................. 17
1.1 Subject of This Book ..................................................... 17
1.2 Aim of This Book .......................................................... 19
1.3 Target Groups of This Book ........................................... 19
1.4 Structure of the Book .................................................... 20
2 SAP for Retail – An Overview ....................................... 25
2.1 Anything Is Possible – The Success Story of Harrods Ltd. 
26
2.2 SAP for Retail – Greater Than the Sum of Its Parts ......... 28
2.3 System Architecture – SAP ERP and SAP for Retail ........ 33
2.3.1 Architecture and Content of SAP ERP – A Brief 
Overview ............................................................ 34
2.3.2 In Perfect Harmony – SAP ERP and the Industry 
Solutions ............................................................ 36
2.3.3 Implementing New Functions at the Flick of a 
Switch – Enhancement Packages and the SAP 
Switch Framework .............................................. 37
3 Master Data, Forecasts, Analyses, and Connecting 
 Applications ................................................................. 41
3.1 Master Data Solution – SAP Retail ................................ 41
3.1.1 Motives for Master Data Administration ............. 43
3.1.2 The Most Important Master Data in SAP Retail ... 45
3.1.3 A Word About Mass Processing .......................... 55
3.1.4 Data Retention Levels for Article Master Data .... 56
3.2 Possibilities of Master Data Administration ................... 57
3.2.1 What Is the Task of SAP NetWeaver Master Data 
Management? .................................................... 57
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8
Contents 
3.2.2 Global Data Synchronization with SAP NetWeaver 
MDM ................................................................. 59
3.3 The Architecture of the Master Data Solution – SAP 
NetWeaver MDM and SAP Retail ................................. 62
3.3.1 SAP NetWeaver MDM ........................................ 62
3.3.2 SAP Retail Operating with SAP NetWeaver 
MDM ................................................................. 65
3.4 Software in Action ........................................................ 66
3.5 The Forecasting Solution ............................................... 68
3.5.1 The Right Article at the Right Place at the Right 
Time at the Right Price ....................................... 69
3.5.2 What If...? .......................................................... 71
3.6 The Analysis Solution – SAP NetWeaver Business 
Intelligence ................................................................... 72
3.7 The Architecture of SAP NetWeaver BI ......................... 74
3.7.1 How Can the Requirements of Mass Storage 
Methods and Administration Be Met? ................ 77
3.7.2 PIPE – An Application of SAP NetWeaver BI for 
the Retail Sector ................................................. 79
3.7.3 Analytical Applications for the Retail Sector ........ 80
3.7.4 Examples of Real Analytical Applications ............ 81
3.8 SAP NetWeaver Process Integration .............................. 84
3.8.1 Implementation Phases and Architecture ............ 86
3.8.2 Shipment of Central Integration Knowledge ....... 90
3.8.3 Using SAP NetWeaver PI in SAP Retail ............... 91
4 Planning ....................................................................... 93
4.1 What Is Planned and How ............................................ 93
4.1.1 Strategic Planning ............................................... 94
4.1.2 Store Planning .................................................... 96
4.1.3 Merchandise and Assortment Planning ............... 97
4.2 The Solution – SAP Merchandise and Assortment 
Planning ...................................................................... 104
4.2.1 NetWeaver BI Integrated Planning – Background 
Knowledge ........................................................ 106
4.2.2 SAP MAP – Functions ........................................ 108
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ContentsContents
4.2.3 Slow Seller Management – Price Planning 
Workbench ........................................................ 116
4.3 SAP MAP Architecture .................................................. 119
4.4 Software in Action – SAP MAP ...................................... 121
4.5 The Solution – SAP Demand Management .................... 122
4.5.1 SAP Price Optimization ...................................... 122
4.5.2 SAP Promotion Optimization .............................. 125
4.5.3 SAP Markdown Optimization ............................. 126
4.5.4 Optimization Procedure ...................................... 127
4.6 SAP Demand Management Architecture ....................... 129
4.7 Software in Action – SAP Demand Management ........... 131
5 Purchasing .................................................................... 133
5.1 The Solution – SAP Retail .............................................. 133
5.1.1 Normal Purchase Order ...................................... 137
5.1.2 Supply Source Determination ............................. 138
5.1.3 Order Optimizing ............................................... 139
5.1.4 Collective Purchase Orders ................................. 142
5.1.5 Perishables Planning ........................................... 143
5.1.6 Seasonal Procurement – Fashion Industry ........... 145
5.1.7 Invoice Verification ............................................. 150
5.1.8 Subsequent Settlement ....................................... 153
5.1.9 Vendor Evaluation .............................................. 156
5.2 The Architecture of Purchasing ...................................... 156
5.2.1 Integration View ................................................. 157
5.2.2 Seasonal Procurement – Process Flow ................. 160
5.3 Software in Action ........................................................ 162
5.4 The Solution for Global Trade – SAP Global Trade 
Services ........................................................................ 163
5.4.1 Import and Export Control (SAP Compliance 
Management) ..................................................... 164
5.4.2 Customs Processing (SAP Customs 
Management) ..................................................... 166
5.4.3 Risk Management (SAP Risk Management) ......... 167
5.4.4 SAP Electronic Compliance Reporting ................. 167
5.5 The Architecture – SAP GTS ..........................................168
5.6 Software in Action ........................................................ 170
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Contents 
6 Order Processing – Supply Chain Management .......... 171
6.1 Today’s Logistics Requirements ..................................... 171
6.2 The Solution – SAP Retail .............................................. 173
6.2.1 Requirements Planning ....................................... 174
6.2.2 Requirements Planning Type and Requirements 
Planning Procedure ............................................ 175
6.2.3 Replenishment Planning ..................................... 176
6.2.4 Merchandise Distribution ................................... 177
6.2.5 Warehouse Processing ........................................ 184
6.2.6 Inventory Management ...................................... 192
6.2.7 Foreign Trade ..................................................... 196
6.2.8 Physical Inventory .............................................. 197
6.3 Supply Chain Management in SAP Retail – The 
Architecture .................................................................. 198
6.4 Software in Action ........................................................ 200
6.5 The Solution – SAP Extended Warehouse 
Management ............................................................... 201
6.5.1 Goods Receipt in SAP EWM ............................... 202
6.5.2 Goods Issue in SAP EWM ................................... 204
6.5.3 Bin Management and Optimization .................... 205
6.5.4 Higher-Level Processes ....................................... 206
6.5.5 Reporting ........................................................... 209
6.5.6 SAP EWM for Retail ........................................... 210
6.6 The Architecture – SAP EWM ........................................ 211
6.7 Software in Action ........................................................ 213
6.8 Other SAP Supply Chain Management Applications 
for the Retail Sector ...................................................... 214
6.8.1 SAP Transportation Management ........................ 214
6.8.2 SAP Event Management ..................................... 215
6.8.3 SAP Supply Network Collaboration ..................... 216
6.9 The Solution – SAP Forecasting and Replenishment ...... 219
6.9.1 Benefits of SAP Forecasting and Replenishment ... 220
6.9.2 Two Main Processes – Automated Replenishment 
and Tactical Control ............................................ 223
6.10 The Architecture – SAP Forecasting and Replenishment 225
6.11 Software in Action ........................................................ 229
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11
ContentsContents
7 Multichannel Retailing and Customer Service ............ 231
7.1 Today’s Customer Service Requirements ....................... 231
7.2 The Sales Channel of Retail Stores ................................. 234
7.3 Interface to the Consumer – SAP POS and SAP 
Enterprise POS .............................................................. 235
7.3.1 What Data Is Sent to POS Systems and What 
Data Is Returned to the Retailing System? .......... 237
7.3.2 The Latest Generation of POS Solutions .............. 240
7.3.3 Integration with SAP NetWeaver BI .................... 244
7.4 The Architecture – SAP POS .......................................... 245
7.4.1 Downtime Security ............................................. 247
7.4.2 The Special Case of Mobile Devices – Enhanced 
Customer Service with Mobile POS .................... 248
7.5 Software in Action – SAP POS ....................................... 249
7.6 The Architecture – SAP Enterprise POS ......................... 250
7.6.1 Central System Management .............................. 251
7.6.2 What Happens When Someone Makes a 
Standard Purchase? ............................................ 255
7.6.3 Downtime Security – High Available Store .......... 256
7.7 Software in Action – SAP Enterprise POS ...................... 258
7.8 The Solution – SAP Retail Store ..................................... 259
7.8.1 SAP ERP in the Store .......................................... 259
7.8.2 Central Maintenance and Administration ............ 260
7.9 The Architecture – SAP Retail Store ............................... 265
7.10 Software in Action – SAP Retail Store ............................ 267
7.11 The Solution – SAP Workforce Management ................. 270
7.12 The Architecture – SAP Workforce Management ........... 274
7.13 Software in Action – SAP Workforce Management ........ 278
7.14 The Solution – Multichannel Retailing with SAP 
Customer Relationship Management ............................. 279
7.14.1 Order Entry ....................................................... 279
7.14.2 Order Processing ................................................ 280
7.14.3 Evaluating Customer Relationships ..................... 281
7.14.4 Multichannel Marketing ..................................... 285
7.14.5 Customer Cards for Customer Retention 
in the Store ........................................................ 285
7.14.6 The Internet as a Distribution Channel ................ 287
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12
Contents 
7.14.7 Distribution Channels – Catalog, Direct 
Mail-Order, and Traditional Mail-Order .............. 292
7.15 Software in Action – SAP CRM Web Shop ..................... 293
8 Enterprise SOA in SAP for Retail ................................. 295
8.1 The Concept of Service-Oriented Architecture .............. 295
8.1.1 The Status Quo and the Challenges .................... 295
8.1.2 SOA – A New Paradigm ...................................... 297
8.1.3 What Is the Difference Between Enterprise SOA 
and SOA? ........................................................... 299
8.1.4 Enterprise SOA – A New Architecture for New 
Business Models ................................................. 301
8.2 Business Process Platform ............................................ 304
8.2.1 Composition ....................................................... 305
8.2.2 Enterprise Services Repository and Control 
Processes ............................................................ 305
8.2.3 Process Components .......................................... 306
8.2.4 Integration Platform ........................................... 306
8.3 Where Do Enterprise Services Come From? ................... 306
8.3.1 Enterprise Service Bundles ................................. 307
8.3.2 Connectivity Kits ................................................ 307
8.3.3 Service Enablement of Existing Applications ....... 308
8.4 Examples of Beneficial Uses of Enterprise SOA .............. 309
8.4.1 Connecting Processes in Innovative Ways ........... 309
8.4.2 Redesigning Processes ........................................ 311
8.4.3 Simple Design and Execution of Processes .......... 311
8.4.4 The Latest Enterprise Services and Additional 
Information ........................................................ 312
9 Summary ...................................................................... 315
Appendices
A Glossary ................................................................................. 323
B The Author ............................................................................. 333
Index ............................................................................................. 335
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Acknowledgment 
The path from conceiving a book to actually completing it is a long and 
often arduous one. I would certainly not have been able to undertake 
th is project without the support of my colleagues at SAP who were 
either directly or indirectly involved in compiling or reviewing the 
manuscript. 
I would like to extend a special thanks to David Llamas, chief informa-
tion officer (CJO) at Harrods, for allowingme to write about Harrods, 
as well as h is sales colleagues, Sue Reynolds and Thomas Hall iday, for 
providing information for that chapter. 
My special gratitude goes to Dr. Dietmar Saddei, head of the develop-
ment department for retail and wholesale solutions, and Verlin Youd, 
head of solution management for retail and wholesale solutions, for the 
unwavering support they have offe red to th is book project. My thanks 
are also extended in particular to my managers , Bernd Lehnert and Wolf-
gang Trunz, for their advice concerning organization and content. 
In addition, my tl1anks go to all those who in so many d ifferent ways 
have contributed to the success of tll is book, in particu lar: 
.,. Introductory chapter, switch framework: Detlef Anton, Hans-Juer-
gen Hessedenz, Christian Hissler 
.,. Master data, forecasts, analyses, and connecting applications: Jorg 
Haupenthal (mas te r data), Dr. Klaus Kopecz (analyses), Brigitte Kuhn 
(mas ter data), Bjorn Panter (master da ta), Panagiotis Papadopoulos 
(master data), Matthias Steinwagner (forecasts) 
.,. Planning: Rob Jansen (SAP Demand Management), Dr. Klaus Kopecz 
(SAP MAP), Christopher Puglise (SAP Demand Management), Chris-
toph Schroder (SAP MAP) 
.,. Purchasing: Stefan Behrendt (SAP Retail), Heike Kraus (Global Trade 
Services), Dr. Holger Wittmer (SAP Retail, in particular, seasonal 
procurement) 
13 
Acknowledgment 
.,. Order processing: Giovanni Greco (SAP F&R), Thomas Gabelmann 
(SAP Retail, allocation tables), Udo Lanzer (SAP Retail), Jens Reich-
ardt (SAP F&R), Wolfgang Schuhn (SAP F&R), Dietmar Schiitze (SAP 
EWM, SAP Retail}, Winfried Thome (SAP Retail) 
.. Multichannel retailing and customer service: Susanne Adam (SAP 
Retail Store), Ulf Bettinger (SAP Workforce Management, SAP CRM), 
Rick Carragher (SAP Enterprise PO$), Bernd Ecker (SAP CRM), Dan-
iel Knopoff (SAP Workforce Management), Dr. Andreas Lubig (SAP 
Retail Store). Henry Lin (SAP Workforce Management), Dr. Christoph 
Pahlke-Lerch (SAP Workforce Management), J iirgen Rink (SAP CRM), 
Matthias Robig-Landau (SAP Enterprise POS), Bernd Sieren (SAP POS, 
SAP Enterprise POS), Philip Sonntag (SAP Retail Store), Bruce Weaver 
(SAP Workforce Management) 
.,. Enterprise SOA: Achim Becker, Dr. Dieter Scheerer 
Special thanks to Markus Becker for his contribution to the SAP 
NetWeaver Process Integration section, Jiirgen Kollomi for providing 
the architecture graphics, and Thea Weires for supplying the portrait 
photograph. Furthermore, I would like to express my gratitude to my 
entire trade engineering team because my colleagues were always happy 
to check my work and offer their support and advice. 
My thanks further go to Lisa Jones, Enda Pendred, and Mohamed Amer 
for giving the book the American retail touch. 
Finally. my thanks to the Galileo Press publishing company. notably 
Frank Paschen and Patricia Kremer for the enj oyable and constructive 
collaboration. 
A fina l note of thanks goes to all those-particularly friends and fam-
ily-who have not been named here but most certa in ly deserve to be 
mentioned. 
Heike Rawe 
14 
Preface 
In January 2008, at the National Reta il Federation convention, the 
world's largest retail trade fa ir, SAP" was voted leading provider of soft· 
ware solutions for 2007 by Retail Info rmation Systems (RIS) magazine. 
This award is a great tribute to SAP but also highlights the challenge of 
how best to meet the needs of customers in the future with offerings that 
are constantly being further developed and advanced. 
The ability to respond rapidly to market demands is absolutely vital in 
the dynamic retail industry. After all, there is noth ing more cons tant 
in th is industry than change; as a result of mergers and acquisitions, 
new technologies, such as enterprise service-oriented architecture (enter· 
prise SOA) and radio frequency identification (RFID), new business seg· 
ments, and new distribution channels, the goalposts are cons tantly shift· 
ing. Companies are required to become more adaptive to new market 
situations. 
There is a need to achieve increased IT efficiency at a lower cost; stand· 
alone systems must be consolidated and transaction costs lowered, while 
global business processes must be fostered and improved in terms of 
quali ty. End-to-end processes at the company level must not be inter· 
rupted a t system boundaries, and internal and ex te rnal partners must be 
able to communicate smoothly and seamless ly. 
SAP for Retail helps retail companies integrate and tighten all processes 
along the value chain , and is geared toward serving a large customer 
base in the best way possible. The industry solution helps retailers make 
the shopping experience more comfortable for consumers, establish the 
righ t distribution channels, ensure that orders are processed smoothly, 
and offer top-quality service. 
SAP for Retail provides th is level of support both nationally and globally. 
The software meets all requirements that arise from internationalization, 
such as modifications to languages, currencies, and formats. In add ition, 
15 
Preface 
SAP for Retail can accommodate a certain degree of d iversification into 
other industries. It is not unusual for SAP for Retail to be used in indus· 
tries outside the core area of the retail sector, for instance, in the oil and 
gas industry for service station sales. 
In light of the advances made by globalization and internationalization, 
as companies increasingly join forces, and because, at the heart of it all, 
flexib ility and openness to innovation are called for, SAP has created the 
unique Business Process Platform to support companies in these times 
of changing conditions. 
At the core of the Business Process Platform is the concept of enterprise 
SOA. From a technological perspective, it is based on SAP NetWeaver" 
and possesses a central container called the Enterprise Service Reposi-
tory. This repository holds descriptions and metadata for the services 
available across the entire company landscape. Business processes can 
be easily modeled by employees without extensive programming skills 
and are reusable. The Business Process Platform the reby makes a major 
contribution to the goal of lowering IT expenditure. 
This book aims to present SAP for Retail. in particular, from the angle 
of the merchandise lifecycle and how it relates to the corresponding 
technology. It describes the architecture and concepts underly ing the 
solutions that SAP AG has developed for the retai l sector. Heike Rawe 
places particu lar importance on the practical application of the solutions 
and on presenting the user interfaces to give the reader an initial feel 
for the software. 
Bernd Lehnert 
Chief development architect for retail and wholesale solutions, SAP AG 
16 
It was trade that lifted the world- both the old and the new-
out of barbarism. 
(Karl-Julius Weber) 
1 Introduction 
The SAP offering for re~ail companies can lake on different forms depend-
ing on the company's needs. At i ts heart lies the SAP Re~a il retail ing sys-
tem, which is accompanied by a range of software solutions, each with 
its own, retail-specific purpose. The aim of this book is to illustrate how 
these retail solutions interact with each other to give the reader a better 
unders tanding of the solution offering. 
SAP for Retail and SAP Retail 
This book is called SAP for Retail, but SAP Retail will also be referred to 
regularly. SAP for Retail covers the entire SAP solut ion offering for the re-
tail sector, whereas SAP Retail relates specifically to SAP Enterprise Resource 
Planning (ERP) system. A more detailed explanation can be found in Sect ion 
2.3 System Architecture- SAP ERP and SAP for Retail. 
1.1 Subject of This Book 
Information technology is a critical success factor for retail companies. 
Sluggish sales markets and increasing competition in retailing make it 
essential for reta il companies to optimize their internal processes.In 
times of e-business and t-business. as well as global and interorganiza-
tional requirements of supply chains and customer relationship man-
agement, companies are regularly forced to redesign their business 
processes. 
£-business refers to online shopping. that is, sales on the Internet. End 
customers can browse electronic catalogs on the Internet, select prod-
ucts, place an order, and pay immediately online. A lesser known term is 
17 
Information 
technology as a 
success factor 
I 
1 I Introduction 
Principles for 
~uccc:;:; 
Capabilities of 
modern retail 
systems 
t-business, which denotes sales th rough the medium of television. T-busi-
ness is often subsumed by e-business. The most recent development is 
m-business: sales through mobile telephones. 
To keep up with the constantly growing demands of the market, every 
company must pay attention to the fundamental principles for success 
and take action accordingly. These fundamental principles for success 
are: 
• The customer is only happy if goods are available in the right place at 
the right time and for the right price. 
• A company must be able to respond flexibly to changes in demand 
patterns to retain its customer base and win new customers. 
• It is only possible to respond promptly to delivery delays if they are 
known of in good time. 
• Working capital can only be freed up for important investments if 
stock levels can be reduced through shorter lead times and procure-
ment cycles. 
SAP AG helps its customers meet all of these challenges with innovative 
technology so they can operate as part of a complex economic network 
and respond effectively to market demands. 
Modern systems in retail respond to changing demands, which means 
they can do more than just control the flow of goods and report sales 
figures to the head office; they are also capable of the following: 
• Complex processes that forecast consumer demand while taking into 
account information about space and capacity in the supply chain and 
automatic item planning 
• Price optimization, markdown management, assortment planning, 
procurement and distribution processes, goods control processes such 
as promotions or price reductions, and accounting for special forms 
of management such as consignment 
• Integration of all possible distribution channels and decentralized 
workforce management, both of which help companies meet the sig-
nificant challenge of customer retention and thereby contribute to 
increased consumer satisfaction 
18 
Target Groups of This Book I 1.3 
Increased transparency of current revenue, sales, and inventory informa-
tion is crucial to the success of any retailer. After all, it is only possible 
to take appropriate action in a given situation with va lid, up-to-date, and 
transparent information. The SAP software supports you. the user, with 
the key challenges you face- not only in streamlining and accelerating 
processes, but also in tapping potential for expansion, analysis, and cus-
tomer retention. 
1.2 Aim of This Book 
The aim of th is book is to provide you with a comprehensive overview of 
SAP software for the retai l sector by presenting the existing components 
and their architecture and examining how they in teract from a technica l 
perspective. This book will explain the most important business pro-
cesses in each of the components. 
After reading this book, you should have a fundamental understanding 
of the architecture and concepts behind each component developed by 
SAP AG for the re tail sector. In addition to re tailing, wholesale is the 
other major part of the trading indumy. SAP AG also offers solutions for 
wholesa le, but these are not discussed in this book. 
Special attention is given to the concept of enterprise service-oriented 
architecture (enterprise SOA), to which an entire chapter is devoted. The 
book relates to the status of developments in 2008, but different releases 
are discussed depending on the component. The releases are identified 
in each chapter. 
This book does not contain information about installing. administering. 
or using the components described. These aspects are described in fur-
ther publications and SAP standard documentation. 
1.3 Target Groups of This Book 
We have a particular image of you, the readers, in mind. This image has 
helped us wri te this book, and we hope it w ill make it easier for you to 
read. 
19 
Overall 
understanding of 
SAP for Retai l 
I 
1 I Introduction 
IT employees in 
the retail sector 
We assume that you work in either an IT company or an IT department 
of a retail company. You have bought th is book or been given a copy by 
a colleague or manager to answer your questions about the SAP product 
portfolio for the retail industry. 
We also assume that you already use SAP software or are currently decid-
ing whether to use SAP solutions. Regardless of whether you are using 
our software al ready or are still at the assessment stage, this book will 
assist you in understanding the software offering. 
You would like to obtain an overview of the SAP offering for the retail 
sector and discover new concepts and technologies. In this respect, this 
book is also ideally suited to IT decision-makers, project managers, and 
any other interested parties. 
SAP partner Another important target group is our partners, who want an overview 
companies of the offering to help identify any niches and develop products that 
complement the portfolio. 
To make sense of the content of the book, you need to have a basic tech-
nical understanding; knowledge of SAP products such as SAP ERP, the 
Business Suite, or SAP NetWeaver® is an advantage. 
1.4 Structure of the Book 
Modular structure You can read the book chapter by chapter or skip over certain chapters 
depending on your preference. If you read chapter by chapter, you will 
experience a journey through the components of the SAP software offer-
ing for the retail sector. To establish a link to the real world of business, 
we have included typ ical questions from both the consumer and reta iler 
perspectives in each chapter. 
These questions constitute a guide to the book and enable readers to skip 
over certain chapters and focus on the parts that are particularly relevant 
for them. In this sense, the book is-to the greatest possible extent-
modular in structure to allow you to choose the parts you read according 
to your preferences and needs. 
The chapters are as follows: 
20 
Structure of the Book I 1.4 
• Chapter 1 Introduction 
What is the object of the book and who is it aimed at? 
• Chapter 2 SAP for Retail -An Overview 
How do the components relate to each other? This chapter takes a 
broad look at the arch itecture of the SAP software for the re tail sec-
tor. It presents the ways in which SAP NetWeaver, SAP ERP, and SAP 
Retail are interrelated, offers a brief outline of the history of SAP for 
Retail, and provides some initial insight into the capabilities of the 
components. 
• Chapter 3 Master Data, Forecasts, Analyses, and Connecting Appli-
cations 
How do manufacturers and retailers know that they are dea ling with 
the same article? How do retailers know which articles they have to 
offer, how many, when, and at what price? How can retailers analyze 
and increase their operational efficiency and speed of response to 
consumer behavior? 
This chapter introduces you to the features of master data administra-
tion that are particular to the retail sector. The emphasis here is on the 
apparel segment, whose master data presents specific requirements. 
Furthermore, the chapter explains the foundations for determining 
requirements and forecasting. In Section 3.6 The Analysis Solution-
SAP NetWeaver Business Intelligence, you become acquainted wi th 
SAP NetWeaver BI and the possibilities presented by analytical appli-
cations. We also explain something that is essential to the understand-
ing of data flows, namely, SAP NetWeaver Process Integration,which 
plays a pivotal part in connecting systems. 
• Chapter 4 Planning 
How can you plan in order to satisfy demand as accurately as possi-
ble? How do you set prices that guarantee a decent margin but remain 
affordable for consumers? How do you plan sales promotions and 
assortments that will w in you new retail customers and satisfY exist-
ing customers? How do you plan price reductions for articles? 
This chapter presents the most important planning options, from 
strategic planning and store planning to merchandise and asso11ment 
planning. 
21 
I 
1 I Introduction 
.,. Chapter 5 Purchasing 
How can you best map relationships with vendors in the system? 
How do you handle order proposals created automatically by the sys-
tem? When do you accept them, and when do you have to modify 
them? What logistical factors must be taken into account in purchas-
ing? SAP Re tail provides special functions tailored to the needs of the 
retail industry that are no t available in other SAP ERP components 
(for example for durable goods, foodstuffs, fresh produce, and fash-
ion articles). Pricing, including free-goods discount and other forms 
of d iscount, is also dealt wi th here. 
1> Chapter 6 Order Processing- Supply Chain Management 
Which factors contribute to optimal order processing with on-time, 
complete, and error-free deliveries of goods to the consumer? How 
do you arrive at the ideal requirement quantity? How can you keep 
costs to a minimum? 
Costs in the supply chain might, for instance, arise from logistics costs 
such as those incurred for procurement and transportation, but also 
from storage, aging, wear and tear, and breakage. Stock inventory also 
result in costs such as interest on capital, dep reciation, and insurance. 
Logistics is a particularly important point for fast-moving consumer 
goods. This chapter describes the functions that are significant for the 
retail sector, in particular, when managing supply chains. 
1> Chapter 7 Multichannel Retailing and Customer Service 
22 
What happens to purchasing data? Despite the large number of retail -
e rs that operate on line only, the trad itional store still has a consider-
able part to play in multichannel retailing. Today's consumers still 
want to see, touch, and try goods in the real world. That said, as 
consumers become increasingly familiar with the Internet, they will 
use it more regularly for purchases in the fu ture. The Internet has 
changed no t only the way in which consumers make purchase deci-
sions but also the ir expectations in terms of personalized information 
and services. Nowadays, consumers want to decide themselves where 
and when they shop. This is the very reason e-business has taken off 
so quickly- with no end to the growth in s ight. This chapter also 
addresses the subject of managing customer relationships and dem-
onstrates how software can be used to improve customer retention. 
Structure of the Book I 1.4 
.,. Chapter 8 Enterprise SOA in SAP for Retail 
How can a retailer keep IT costs down in spite of continually chang-
ing business processes and requirements? How can a retailer mini-
mize the cost of mainta in ing the different systems in a heterogeneous 
system landscape? How can a retailer become integrated in a supply 
chain network with little effort and collaborate with manufacturers 
and vendors? 
Enterprise SOA supports the reta il sector with all of these questions 
and shows the way to the futu re . 
.,. Chapter 9 Summary 
What should you take with you? This chapter provides a brief and 
concise summary of the contents of the book. 
The appendix provides an extensive reference resource. It contains the 
required technical terms. some SAP acronyms. and much more quick 
reference information, all presented in a clearly laid-out format. 
Enjoy! 
Heike Rawe 
23 
I 
Everything should be made as simple as possible, 
but not simpler. 
(Albert Einstein) 
2 SAP for Retail- An Overview 
Wherever goods are traded, information is essentially traded as wel l. 
Software systems that exchange information stored as data records typify 
such information trading. But a system can only work effectively if the 
data is correct and complete. The amount of data that accompanies a sin-
gle article from listing and ordering through to its sale is considerable. 
At a glance, the retail process does no t appear particularly complex: 
Somewhere, someone offers to sell someone else something that was 
somehow procured prior to that point. 
The process only becomes complex in light of the sheer number of ways 
the individual variables in this transaction can be combined. Someone 
might be a sole shop owner or an international retail company, something 
can be any conceivable article, and somewhere might be a specialty store, 
a shop at a service station or some other public place, a grocery store, a 
mass merchant, or a virtual point of sale on the Internet. 
Goods must be ordered, advertised, delivered, checked, paid for, and 
posted -and in some instances they are also exchanged or returned. It is 
not uncommon for a range of different processes to be used within the 
same industry. Conversely, some processes are identical across differ-
ent industries. Every retail company has its own strengths that must be 
backed up by the software or application, that is, the solution in use. 
No matter if you operate a specialty store or a department store, a shop 
zone or a grocery s tore, and rega rdless of the channels and sales formats 
you use to sell your articles , every case results in data to be processed. 
SAP helps you gather and process this data efficiently. 
25 
Retail processes: 
Made complex by 
a wealth of 
variants 
Dist ribution 
channels and sales 
formats 
I 
2 I SAP for Retail - An Overview 
SAP expertise in 
the trade industry 
Over the years, SAP AG has accumulated a wealth of experience by 
working with over 2,700 customers worldwide, which has allowed it to 
establish a team of trade experts. The software company has a develop-
ment team with retail experience. and over 1,000 indus try consultants 
are there to support you. SAP AG has always invested heavily in devel-
opment. Since the early 1990s, together with the leading players in the 
international retail and wholesale market, SAP AG has been developing 
its own standard retail solu tion for the trade industry based on the core 
elements of the SAP ERP system. 
The acquisitions of DACOS in St. lngbert, Germany, in 1994 and Camp-
bell Software in Chicago, USA, in 1999 were followed in 2006 by the 
acquisitions of SAP Khimetrics in Scottsdale, USA, and SAP Trivers ity 
in Montreal. Canada. These last two fam ily members complete the pic-
ture of a flexible, modular software solution for the trade industry that 
includes all of the business processes required in the retail sector. In the 
meantime, the acquired software solutions have been largely integrated 
and partly rewritten. About 90% of the colleagues who joined the SAP 
family as a result of these acquisitions are still wi th us and continue to 
lend their wealth of experience and extensive abili ties to the process of 
creating retail software. 
2.1 Anything Is Possible- The Success 
Story of Harrods Ltd. 
Real life often provides the best illustration, and at this point we would 
like to talk about a very impress ive customer success story: that of Har-
rods Ltd. of London. 
Harrods, the traditional British department store, has a motto, a~rything 
is possible, which it considers both a duty and an honor. Harrods' cus-
tomers not only can buy cloth ing. food, toys, and so on, but at the cus-
tomer's request, the Knightsbridge store wil l deliver live alliga tors, live 
elephants, and even a irplanes. Such a comprehensive asso rtment results 
in the handsome figure of over 1.4 mill ion stock keeping units (SKUs). 
Although Harrods may not keep elephants in stock. an SKU number does 
exist for them. The large amount of product data providesan indica-
26 
Anything Is Possible- The Success Story of Harrods Ltd. I 2.1 
tion of the volume of data to be processed: vendor data, customer, data, 
employee data , business data, dates and times, and so on. 
Before SAP was implemented, almost all of the systems at Harrods oper-
ated independently of each other. There was a legacy system for furni-
ture orders, a planning system for foodstuffs, and many other individual 
systems-even one just for school uniforms. In 2004, Harrods began 
to migrate legacy systems and system silos to the SAP Retail system. 
The multitude of different solutions with countless interfaces was to be 
replaced by a single platform with a manageable number of interfaces. 
However, the decision to use the SAP solution was not motivated solely 
by the desire to achieve a standardized view of the data. Harrods also 
wanted to increase customer satisfaction, manage sales across all chan-
nels seamlessly and with greater service orientation, and generally be 
more agile. 
Motivation to use 
SAP 
Harrods has been using SAP software to manage its assortment since Positive changes 
2006. The introduction of SAP has brought with it considerable benefits 
for Harrods employees. Thanks to SAP Customer Relationship Management 
(SAP CRM), employees can invest more energy in service because cus-
tomer data, data about purchase orders and sales orders, and so on is 
all available in one, central location. In addition, gains in terms of trans-
parency and traceability of goods have helped the company achieve far 
greater operating profits. Rather than simply offering a friendly "I 'll call 
you," employees are now able to name a definite delivery date- much 
to the satisfaction of Harrods customers. 
Furthermore, the process of identifYing potential problems with prod-
ucts has been made far easier. Problems such as low sales figures, high 
return rates, or loss due to theft or inaccuracies in administration were 
reduced to 0.7%- compared with an industry average of 1.2%. 
David Llamas, CIO at Harrods, has also reported that the percentage 
share of IT costs associated with sales has dropped. At Harrods, these 
costs account for just 0. 7%, whereas at other companies of a comparable 
size, the rate is 2 to 3%. 
27 
I 
2 I SAP for Retail - An Overview 
W hat does SAP for 
Retail offer? 
Optimizing t he 
value chain 
2 .2 SAP for Retail -Greater Than 
the Sum of Its Parts 
SAP for Retai l is a complete system to support retail activi ties. w ith par-
ticu lar emphasis on achieving a competitive assortment policy, variable 
sales technologies and the respective operating procedures, as well as a 
distribution logistics system that places the customer at the center. 
SAP for Retail provides all of the important functions that are needed to 
map the business processes in a re tail company. The aim is to map the 
value chain in its entirety. from the consumer to the vendor or manu· 
facturer, and to optimize the various procedures and control processes 
in the Row of goods and information between vendors, reta ilers, and 
consumers. 
According to conventional wisdom. the entire path of a product or ser-
vice is represented in the value chain, from its inception to its arrival 
at the consumer, including the increase in value. Each link in this value 
chain adds value to the one before it. Because it is also one of SAP AG's 
goals to optimize the wide variety of procedures and control processes in 
the Row of goods and information between vendors, reta ile rs, and con· 
sumers, it provides the relevant functions in the software components 
of a solution. 
A solution enables companies to resolve problems using business scenar-
ios and to take advantage of business opportunities. SAP AG's solutions 
result from the flexible combination of SAP applications, consulting ser-
vices. and technical support. They can be complemented by applications 
and services from SAP partners. 
Enhancing the The SAP Business Suite consists of the following products: 
exist ing SAP 
system • SAP CRM 
• SAP ERP 
• SAP Productlifecycle Management (SAP PLM) 
• SAP Supplier Relationship Management (SAP SRM) 
• SAP Supply Chain Management (SAP SCM) 
28 
SAP for Retail - Greater Than the Sum of Its Parts I 2.2 
SAP for Reta il complements these systems with the recently added prod-
ucts for poinc of sale (POS) and demand calculation and control. The 
resu lt is a solution that enables you to keep pace with the dynamics of 
your industry. 
The business processes in a solution are depicted graphically in an SAP 
Solution Map. SAP Solution Maps act as points of reference when you 
are planning and implementing a consistent, integrated, and comprehen-
sive company solution. SAP Solution Maps are based on proven business 
processes and draw on the combined experience of SAP, its partners, and 
its customers. They are geared toward industry-specific processes so that 
you can put together an end-to-end company solution that is compatible 
with innovative software technology. You can find the most recent ver-
sions of Solution Maps on the Internet at www.sap.com. Figure 2.1 shows 
the SAP Solution Map. 
Vendor Planning Merchandising Buying D istribution Sales Customer 
Planni!l.& , 
~~emand Forftc.a.stln~--::::=-
Merchandise. Assortment & Space 
1-
Planning and Opt. 
lttm Management 
Retail Price Man<J,g~ment 
Promotion Manu;ement 
Markdown Man~ement 
Buying -
Vendor Relationship Man~~ 
Ooerational Buvin2 
Globallmport/El<JX>rt ManlY!~ 
Su~l't:Chain 
R~plenishment and lnvt>l'ltory Opt. 
~!Channel Order fu~~~ 
Chain W ide lnvtntory ManDK_ement 
Warehouse and DC Man.a.<r:tment 
TransPOrtation ManaR.ement 
Suoolv Chain Vislbili~ and TroKking 
~tore & Multi Channca::::::l 
Point-of-Sale 
~ Store Operations_:-------
Cat.llog M~ement & e-Commetce 
Call ccntc, 
Multi Channel Customer SeNi<e 
Multi Channel Customer Lo~ 
£nterptlse Management & Support 
Figure 2.1 SAP for Retail 2008 Solution Map 
The 2008 Solution Map forms the basis of this book, which is reflected in Solution Map 
the arrangement of topics inco the chapters Planning. Purchasing. Order 
29 
I 
2 I SAP for Retail - An Overview 
Processing - Supply Chain Management, and Multichannel Retailing and 
Customer Service. Master data, forecasts, ana lyses, and methods for con-
necting appl ications constitute the basis for all activities. which is why a 
separate chapter is devoted to them. 
The following section provides an overview of the SAP components and 
the areas of business for which they were developed. 
Master data The areas of master data, forecasts, ana/yses, and the connection of applica-
tions contain the underlying functionali ty w ithout which a modern retail-
ing system would be unable to operate. 
" SAP Retail 
" SAP NetWeaver Master Data Management 
" SAP NetWeaver Business Intelligence and analytica l applications for 
the retail sector 
Planning The area of planning is concerned with integrating the retailing systems 
with powerful data warehouses and assortment planning and shelf opti-
mization programs from different manufacturers. 
SAP Demand Management makes it possible to manage requirements, 
which means retail companies are better prepared to satisl)r their custom-
ers. Its planning capabilities make it poss ible to pinpoint future demand 
and ensure that it is met. Promotions, article selection, and pricing func-
tions are tools that can be used to ach ieve targets . 
" SAP Retail with Merchandise, Assortment & Space Planning and 
Optimization (operating together with SAP NetWeaver Business 
Intell igence) 
" SAP Demand Management 
Purchasing The aim of purchasing is to guarantee the availability of goods for recipi· 
ents (stores or consumers) at favorable prices. To achieve this, it is nec-
essary to monitor stock, take into account requirement quantities, and 
create order proposals and follow-up documents (either manually or auto-
matically). These elements constitute the foundationfor purchasing. 
" SAP Retail 
" SAP Global Trade Services 
30 
SAP for Retail - Greater Than the Sum of Its Parts I 2 .2 
An important prerequisite for the success of your company is a smoothly Supply Chain- I 
Aowing order processing system. In other words, you must be ab le to Order processing 
de liver goods to consumers on time, in full, and w ithout errors. Because 
it is integrated with the powerful SAP Supply Chain Management solu-
tion, SAP for Retail guarantees that order processing, shipping, and 
sales promotions work seamlessly with the database and processing sys-
tems and with the service centers, regardless of how a given order was 
received . 
.. SAP Retail 
.. SAP Supply Chain Management 
.. SAP Extended Warehouse Management 
.. SAP Forecasting & Replenishment 
The area of multichannel retailing and customer service enables you to reach 
an even wider customer base through different sales channels (retail 
stores, te lephone, mail order catalogs, Internet, and television) and 
respond direclly to the needs of your customers. The POS solutions con-
stitute a key part of this product group. They not only facilitate the pay-
ment process but also gather sales data and send it to other systems. In 
addition, this group includes flexible shift planning for employees . 
.. SAP POS 
.. SAP Enterprise POS 
.. SAP Retail Store 
.. SAP Workforce and Task Management 
.. SAP Customer Relationship Management 
M ultichannel 
retailing and 
customer service 
In light of increasing competition, it is becoming more and more impor- Enterprise SOA 
tant for companies to respond as rapid ly as possible to new market 
demands. That is why SAP developed its enterprise service-oriented architec-
ture (enterprise SOA) concept, which forms the basis for the Business Pro-
cess Platform. SAP Net Weaver constitutes the underlying technology, and 
SAP ERP is the functional core. This provides companies with a concrete 
blueprint for service-oriented IT with which innovations can become a 
reality much faster than was previously possible. This is because in the 
future, business processes will be modeled using enterprise services, and 
there is practically no limit to the ways these can be combined. 
31 
2 I SAP for Retail - An Overview 
SAP for Retail 
architecture 
overview 
Enterprise services map operational procedures with open standards so 
applications , processes, and data can all be brought together irrespective 
of operating system and then used by partners, vendors, or customers 
via the Internet or a portal-flexibly. rapidly. and easily. The result is that 
company and IT strategies go hand in hand. This area is covered by the 
SAP Business Process Platform. 
From a technological perspective, SAP for Retail is composed as shown 
in Figure 2.2. The figure reveals how the components presented above 
are connected and interact with each other . 
.-H SAP NetWeavet Busine1s Intelligence {81) 
SAP ERP}for Retail 
1 
M~ter Data I Financi#I'S I Demand f-o- MaJla&ement (MOM) Management (OM) -o 
I Human Capital I 
Management 
I C01porate I ServicM 
Supplier Relationship r-o---1 Operations 1-o-
Customet ro- Relationship -o Management (SRM) Sop port Management (CRM) . 
: 
r 
J ? .} 
ro- SAP ERP for Supply Chain Store -o Manufacturing Managt>ment {SCM) Solutions 
? ? 
SAP Nt-tWea.ver Proces-s Integration (PI) f--o- _ 
Figure 2 . 2 Overview of the Architecture of SAP for Retail 
This architecture will be explained in more detail in the following 
chapters. 
32 
System Architecture- SAP ERP and SAP for Retail I 2.3 
However, before we come to the heart of the matter, we first will briefly 
present the relationship between SAP ERP and SAP ERP for Retail (SAP 
Retail). 
2.3 System Architecture - SAP 
ERP and SAP for Retail 
SAP ERP represents no more and no less than the planning and use 
of company resources such as capital, operating funds, and staff. SAP 
ERP constitutes a fundamental part of the SAP Business Suite and is the 
result of extensive development work carried out over many years . It 
was worth the effort: Today, SAP ERP can position itself as the software 
solu tion of choice: software that enables companies to operate beyond 
their own boundaries. It is precisely this idea of cooperation and integra· 
tion that is at the heart of service-oriented arch itectures. which, thanks 
to SAP NetWeaver, are already a reality. Figure 2.3 shows the various 
development stages of SAP ERP 6.0. 
r---sA'P R/3 
--
SAP R/3 My SAP ERP SAP ERP 6.0 
Up to 4.6C Enterprise Edition 2004 
~trvice Pr·ocurem;;t'"""J 
Self Sel'\lfce Procurement 
s::: Internet Sales 
0 
Internet Sales 
Self Setvlce 
:p Self Service 
C!j Strategic Enterprise Mgmt. 
u St~tegic Enterprise Mgmt. ·- Supplier Relationship Mgmt. -a. more ... 
a. more ... 
c( Composite Applications Composite Applications 
ltndustry Solutions I Industry Solutions 
SAP ECC 
I Appli<.ation II Extension Sets I ~ Extension Set I SAP ECC Core I 
L SAP Basis JI~AP R/3 Enterprisej -- Switch Fu.tMwork I 1 SAP Enterprise J 111,"::11.=1 I SAP s.s;s I Core co.,~nenUEcQ 
>. 
: <o SAP NetWeave~ t:lO ~ SAP NetWeaver• 
0 ~ e - ~ e 0 E ~ E • 
s::: I ~ ( People lntegration.-J'i: ~ l_feople lntegration~j 
..1:: I t l rnform.atJon Integration I i f I Information Integration I i u 
QJ l 'i · } 2 ~ 1- ~ Process Integration~ J ~ouss Integration J~ 
• 3 • 3 
~ ~ ~ Application Integration 11 l J Application Integration I! 
H ~ v 
•'- L- -
Figure 2.3 From SAP R/3 to the Modern SAP ERP 6.0 
33 
Basic component 
of the SAP 
Business Suite 
I 
2 I SAP for Retail - An Overview 
Composite 
applications 
As the graphic in Figure 2.3 shows, a lot has changed since the early days 
of SAP R/3 . In the early 1970s, SAP designed and established its fi rst ERP 
system. In the 1980s, its successor went on to become the standard soft-
ware on which SAP's reputation was buill. During the dot-com bubble, 
SAP ERP took more of a back seat before returning to take the market by 
storm again wi th its new dimension products. Today, SAP has new offer-
ings in the form of the Business Suite, integrated SAP ERP 6.0, and its 
composite applications. 
Note 
Composite applications use existing applications and IT systems to bring to-
gether and synchronize a heterogeneous IT landscape. Composite applica-
tions come about as a result of business processes and the information that 
such processes require. They can be reconfigured rapidly to cope with new 
business structures and processes and meet the needs of customers and part-
ners. 
2.3.1 Architecture and Content of SAP ERP - A Brief 
Overview 
SAP ERP is based on the proven three-part client server architecture with a 
presentation layer, application server layer (also freq uently referred to as 
business logic), and database layer. The three-layer model is already well 
known thanks to SAP R/3, whose successful era spanning two decades 
will draw to a close in 2012. 
The new level The successor is the SAP Business Suite with SAP ERP, built on the basis 
of the SAP NetWeaver technology platform, which paves the way for a 
new service-oriented architecture (Figure 2.4). 
SAP ERP follows seamlessly from its predecessors and covers all core 
functions. A comprehensive explanation of SAP ERP's functions would 
go beyond the scope of this book, so we invi te those readers interes ted 
in finding out more to visit http://www.sap.com, http://help.sap.com/, or 
https://www.sdn.sap.com/irj/sdn/bpx. Alternatively, you can contact the 
SAP sales team. The following section provides just a brief outline of 
SAP ERP's fu nctions: 
34 
System Architecture- SAP ERP and SAP for Retail I 2.3 
Composites 
=>~> > ) 
IS SRM PLM ERP SCM CRM 
SAP NetWeaver 
>> >L> 
m 
::J 
::J:" 
"' ::J n 
<1> 
3 
<1> 
::J ..... 
Figure 2.4 SAP ERP as Part of the Business Suite Operating with the Business Process 
Platform, the Enhancement Packages, and Composites 
.,. SAP ERP Analytics 
These are information systemsfor management. They enable com-
panies to identify worthwhile and profitable business opportunities, 
link strategic plans with operative plans, and support every business 
unit with analytical tasks . 
.,. SAP ERP Financials 
SAP ERP Financials delivers all of the functions that a modern com-
pany needs to manage all financial matters. This part of SAP ERP helps 
customers manage their banking activities and liquid assets, maintain 
general ledgers and subledgers, comply with instructions from audi-
tors, and much more. One aspect of particular interest for the retail 
sector is the ab ility to manage local features, for example, calculate 
va lue added tax or handle different currencies . 
.,. SAP ERP Human Capital Management (HCM) 
SAP ERP HCM, formerly known as human resources, provides all of 
the functions companies need in a modern economy to manage staff 
data . It is in a company's interest to handle its employees' poten-
35 
Typical functions of 
the SAP ERP 
system 
I 
2 I SAP for Retail - An Overview 
SAP Retail as a 
form of SAP ERP 
Functions 
specifically for 
retail 
tial and productivity well. To this end, SAP has retained the tried 
and tested functions from its earlier human resources solution and 
incorporated them in an end-to-end SAP ERP HCM solution. SAP ERP 
HCM is particularly closely related to SAP Workforce Management, 
which is described in Chapter 7 Multichannel Retailing and Customer 
Service and is likely to be of interest mainly to retail companies that 
work with frequently changing shift plans. 
1> SAP ERP Operations 
This area supports companies with day-to-day activities such as order 
management, procurement, and data lifecycle management. 
1> SAP ERP Corporate Services 
Corporate services refer to centralized and decentralized services that 
may be of interest in addition to a company's core business. for exam-
ple, real estate management, envi ronmental protection, health and 
safety. quality management, and travel management. 
2.3.2 In Perfect Harmony - SAP ERP and the Industry 
Solutions 
Retailing places different demands on software than other branches of 
industry. That is why SAP has developed a special retail solution for com-
panies operating in this sector that can be used when SAP ERP is config-
ured as SAP for Retail. In other words, the retail solution- though not 
immediately noticeable- is already part of SAP ERP. SAP Retail is con-
tained in the SAP ERP Central Component (SAP ECC), the core of SAP ERP. 
and enhances its business applications with retail-specific functions. 
When the system is activated or configured as SAP Retail, these addi-
tional functions, developed specifically for the retail sector, can be used. 
From a technical perspective, to configure means to enhance objects from 
the ABAP Dictionary, for example, database tables , with industry-specific 
fields. Once these industry-specific database fields have been created, 
that is, the configuration is complete, it is irrevers ible. However, the 
functions particular to the retail sector can only be accessed by perform-
ing this configuration. 
A significant difference between the retail system and, for example, a 
manufacturing system is the use of the article master as opposed to the 
material master. Most of the retail-specific functions can only be used 
System Architecture- SAP ERP and SAP for Retail I 2.3 
with articles, not with materials. On the other hand, both articles and 
materials can be used in most other retail-relevant functions in the SAP 
ERP system. One example is fresh item management, which uses not 
only retail-specific functions but also production planning functions. 
SAP Retail and most other industry solutions are integral parts of SAP 
ERP, which means the industry solutions become available immediately 
with each new SAP ERP release and-just like the Business Suite-are 
covered by the 5·1·2 maintenance strategy. SAP introduced the 5·1·2 
maintenance strategy in 2004. The name means that a company run· 
ning a release that follows this strategy has three options when the five 
years of mainstream maintenance are up: upgrade, take advantage of the 
offer of extended maintenance, or continue to operate the release with 
customer-specific maintenance. 
Summary 
~ The entire core functionality is shipped with SAP ERP. 
~ Functionality for each industry can be made available without the need to 
install an add-on. This is ach ieved either with the industry solution or by 
configuring the SAP ERP system in a particular way. 
~ However, some solutions are st ill shipped as SAP ERP add-ons and have 
to be installed separately. In retail, this applies to SAP Workforce Manage-
ment, for example. 
~ In addition to the industry solutions of which only one can ever be acti· 
vated (configured), any number of enterprise extensions can be activated. 
~ Enterprise extensions are also provided as part of SAP ERP and const itute 
additional applications for cross-industry processes. For instance, in addi-
tion to ECC Industry Extension Oil & Gas 6.0, SAP ECC Enterprise Extension 
Retail 6.0 can be activated. This would allow an oil company w ith SAP ERP 
6.0 to cover the functional requirements for its production and logistics as 
well as the retail functions it needs for its network of service stations. 
2.3.3 Implementing New Functions at the Flick of a 
Switch - Enhancement Packages and the SAP Switch 
Framework 
Before the SAP Switch Framework was created, industry solutions, stan· 
dard SAP ERP, and all new releases of these were shipped separately. 
Today, if a company wants to implement new functions, it implements 
37 
5-1·2 maintenance 
strategy 
SAP ERP and the 
industry 
requirements 
I 
2 I SAP for Retail - An Overview 
Activation 
SAP Switch 
Framework 
Innovation on a 
stable core 
an enhancement package, but the underlying SAP ERP re lease remains 
untouched - provided the enhancement package does not contain any 
new functio ns for SAP ERP. 
Enhancement packages offer the advantage of letting SAP customers 
choose which functions they use. The selected functions are then imple-
mented in succession without affecting the underlying release. In addi-
tion, enterprise services are shipped in enhancement packages. 
When the new enhancement package is implemented, there are no 
immediately perceptible changes. The new functions in an enhancement 
package are provided as business functions . Each business function is a 
self-contained function . Changes to the user interface and process logic 
only take effect once the business functions have been activated. This 
allows an existing SAP ERP release to be enhanced successively with new 
functions that are shipped in enhancement packages. 
The paradigm shift in the delivery track (s tandard SAP ERP together 
with industry solutions) created a special role for the SAP Switch Frame-
work. The Switch Framework enables the shipment to be synchronized 
and is used to activate the functions. In addition, it enables customers to 
enhance the ir systems with specific functions. 
Industry solutions are grouped into business function sets. and separate 
functions with in each industry are grouped as business functions. A busi-
ness function set is a group of business functions that can run together. 
The SAP Retail industry extension contains the Business Function Retail 
set, which includes enhancements to the purchasing process, supply 
chain management, and sales order management and added options for 
maintaining master data and integrating composite applications. 
SAP ships enhancement packages for all solutions in the Business Suite. 
Enhancement packages allow innovation on a stable core. In other 
words, as described above. SAP AG delivers new functions in the form of 
enterprise business functions that are initially inactive and do not affect 
existing user interfaces and processes. The new functions only become 
visible once the enterprise business functionshave been activated. For 
this activation, the enhancement packages use the Switch Framework 
technology and a new generation of business functions: enterprise busi-
System Architecture- SAP ERP and SAP for Retail I 2.3 
ness functions. These are not tied to a business function set and can 
require or exclude other enterprise business functions themselves. 
Furthermore, the Switch Framework enables a stable upgrade to take 
place; that is, an SAP customer can implement the latest enhancement 
package but does not have to activate any functions with the Switch 
Framework if they are not needed. This offers the customer the advan-
tage of working w ith the latest release from SAP and being on its main-
tenance track without the need for testing because the functionality 
remains unchanged. 
Figure 2.5 provides an example of how switches and business function 
sets might be assigned. 
Busintss Function Set 
Oil &Gas 
Business Function Set 
Media 
Retail 
I Business Function 1 I 
I Business Function 2 I 
! Business Function 3 I 
Enterprise Business Function 
I Planning & Master Data 
Switch 1 
Switch 2 
Switch 3 
Switch 4 
Switch 5 
Switch 1 
Scr«n 
Element 1 
Element 2 
Package 
Figure 2.5 Technical View of Business Function Sets, Enterprise Function Sets, and 
Sw itches 
Any number of switches can be assigned to these enterprise business 
functions. Switches are technical vehicles that make it possible to assign 
a business function, for instance, planning master data, with all interface 
elements, all coding enhancements, and all Customizing settings that 
belong to planning master data. This means that as soon as the business 
function is activated, all requi red switches become active and the func-
tionality is available. 
39 
Stable upgrade 
I 
2 I SAP for Retail - An Overview 
Options presented 
by the functions of 
the Switch 
Framew ork 
Basically, it is simpler in practice than the theory suggests. First, you 
decide if you want to configure SAP ERP as SAP Retail, and then you 
decide if you want to implement an enhancement package. Only then 
must you decide if you want to use functions from the enhancement 
package and, if so, which ones. 
Summary 
• Activate industry solutions and enterprise business functions. 
• The user interface is simplified because only those functions t hat are actu-
ally used are visible. 
• Customers and partners can enhance delivered systems w ith their own 
functions. 
40 
Study the past if you would define the future. 
(Confucius) 
3 Master Data, Forecasts, Analyses, 
and Connecting Applications 
Master data is the fou ndation of company information. On the basis of 
loose, interrelated business processes with easy access to data, master 
data enables flex ibility and ensures that such data can be reused. Fore· 
casts and analyses are further fundamental business applications; there-
fore, all three are dealt with together in this chapter. SAP NetWeaver 
Process Integration (SAP NetWeaver PI) is also a fundamental applica-
tion. Its purpose is to ensure that SAP and non-SAP applications can be 
connected to each other. SAP NetWeaver PI is described at the end of 
this chapter. 
3.1 Master Data Solution - SAP Retail 
Master data is crucial as the foundation for mapping operational pro-
cesses in all areas of SAP for Re tail. The assortment of articles. the busi· 
ness partners, and the structure of the retail company wi th its branches, 
warehouses, stores, and other sales channels are all mapped in mas-
ter data. The relationship between the company and its vendors is also 
recorded in the master data, as is the basic data for identifying articles. 
Short texts for articles, that is, descriptions of the key attributes of the 
goods, also count as master data, as does information about packag· 
ing measurements (height, width, depth) and un its of measure (such as 
boxes or pallets). The units of measure are used, for example, to ensure 
that trucks are loaded effectively and to calculate storage bins in the 
warehouse management sys tem. Depending on the article, handling 
41 
Usage 
characteristics 
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3 J Master Data, Forecasts, Analyses, and Connecting Applications 
information (for example, the article is nonstackable) or the expiration 
date may be important. 
Standards for Identification 
The aim of ident ification standards is to assign globally unique identifiers to 
identical units (for example, articles). Examples of article identifiers are bar-
codes for foodstuffs or ISBNs for books. The predominant identification stan-
dard in the USA is the Universal Product Code (UPC) issued by the Uniform Code 
Council (UCC). Outside the USA, the European Article Number (EAN), issued 
by the EAN organization, is the leading identification standard. The UCC and 
EAN have cooperated closely for many years. Since December 2002, the UCC 
has been a member of EAN International, which further intensifies the level of 
cooperation. Thus, t he standard is generally referred to as the EANUCC. 
The Global Trade Identification Number (GTIN) is a number that can be used 
to uniquely identify products worldwide. GTIN is a collective term for EAN 
barcodes and UPC electronic product numbers. 
The structure and scope of master data vary according to the company 
and article. Because industry and retail companies exchange vast amounts 
of data on a daily basis, a great deal of effort has been put into standard-
izing master data. 
Basic Data 
Units of Measure 
Identification Numbers 
Groupings 
Internal Controls 
Texts 
Logistics Data 
Requirements Planning Data 
Forecast Data 
Inventory Data 
Purchasing Data 
Subrange 
Planned Delivery Time 
Gross Price and Conditions 
Purchasing Group 
Sales Data 
Sales Status 
Sales Prices 
Figure 3.1 Different Views of Article Master Data 
42 
-
List ing 
Listing Procedure 
Assortment Grade 
POS Data 
Sales Receipt Texts 
Various IDs 
Master Data Solution- SAP Retail I 3 .1 
Managing master data primarily means listing new articles, maintaining 
the existing assortment, discontinuing articles, and linking business part· 
ners, sites (e.g .. stores. distribution centers). and conditions. 
Master data is viewed differently by each of the business units. Figure 
3.1 provides an example of the view of article master data. 
3.1.1 Motives for Master Data Administrat ion 
Retai l business processes can only be efficient if the manufacturer and 
reta iler assign the same attributes to an article and refe r to the same 
attri butes when they communicate. Master data enables trading partners 
to have the same information at their disposal; unique, up-to-date, and 
complete master data is the most important requirement for business 
processes. Here are three examples from the day-to-day operations of a 
retail company: 
• Customer pays for goods 
A customer is standing at the checkout and wants to pay for a pair of 
jeans. The price tag is scanned or is equipped with RFID and commu-
nicates the price to the point-of-sale system. Prices and article descrip· 
tions are displayed automatically on the monitor of the cash register. 
• Retailer places order for goods 
An inventory planner at a DIY (do-it-yourself) retail chain wants to 
order washing machines and needs information about the product, 
such as name, manufacturer, vendors, and condi tions. 
• Goods are placed in interim storage 
Goods arrive at a distribution center. To transport and store the goods 
appropriately. the distribution center employees need the informa-
tion provided on the delivery note concerning the precise content, 
weight, and dimensions of the articles. 
These three daily activities cannot be managed without coherent master 
data. In the SAP environment, master data contains all important infor· 
mation about sites, vendors, customers, and articles including pricing 
and time dependencies. The data is stored in what is known as a master 
record in the SAP Retail system. 
43 
Mostimportant 
requirement for 
business processes 
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3 J Master Data, Forecast s, Analyses, and Connecting Applications 
The changing IT 
landscape 
Creat ing different 
data records 
As a result of mergers and acquis itions or by ente ring new markets or 
tapping new sales channels, many IT departments in retail companies 
face the question of how to deal w ith an IT landscape that consists of 
d ifferent systems and applications with d iffering master data (see Fig-
ure 3.2). They must pursue an intelligent integration strategy to ensure 
that a single view of the master data is achieved. If master data is miss-
ing or incorrect, it causes delays in downstream processes and must be 
reworked and corrected, which has implications in te rms of both time 
and cost. 
Business Unit A 
Business UnitC 
External 
Partner 
Figure 3.2 Retrieving the Same Master Data Objects from Different Systems with 
Different Identification Numbers 
The complexity of master data should not be underestimated, as is 
demonstrated by the example of articles with empties. Such articles are 
assigned to "empties articles" in the data model using bills of material, 
which means they are subject to a deposit (for example, bottles). As a 
result of the deposit and the time at which it is posted and settled, these 
articles are difficult to handle. 
Unfortunately, even if a standard is generally accepted and used, th is still 
does not guarantee that different people will actually create the same 
data records. This problem is particularly common with article master 
data. People create different data records, for instance, because data is 
44 
Master Data Solution- SAP Retail I 3.1 
not updated or there are no clearly defined processes for entering and 
modifying data. 
Efforts to achieve standardized master data management are driven by 
the following challenges: 
.,. Increased efficiency ofiT at lower cost 
.,. Stand-alone systems must be consolidated and transaction costs 
lowered 
.,. Global processes must be supported and improved in terms of 
quality 
.,. Communication between internal and external partners must run 
smoothly 
.,. End-to-end processes enabled at company level without disrup-
tions at system boundaries 
.,. Simplified global purchasing 
.,. Simpli fied global demand and supply chain management 
.,. Shared services and adherence to regulatory requirements 
.,. New technology and standards 
.,. Radio frequency ID (RFID) 
1> Intra- and extra-enterprise processes 
.,. Change 
.,. Mergers 
.,. Company structure and strategies for growth 
.,. Successful positioning of new lines of business and products 
.,. Increased adaptiveness of the company to new market si tuations 
Companies seek to meet these challenges with standardized master data 
management. 
3.1.2 The Most Important Master Dat a in SAP Retail 
In SAP Reta il , master data is adapted to suit typical reta il processes. The 
most important master data in SAP Retail is as follows: 
45 
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3 J Master Data, Forecasts, Analyses, and Connecting Applications 
.,. Articles 
Data gathered here relates to articles that the company purchases, 
sells, or produces. For example, the article master record includes 
information such as the unit of measure and the description of the 
article. All SAP ERP components access this centrally stored article 
data . 
.,. Article grouping 
Articles can be grouped using material groups or article hierarchies. 
These groupings can. for instance. serve as a basis for inventory man-
agement and evaluations. For example, the "screws" material group 
contains different articles with their own properties (such as size 5 x 
3 wood screws and iron screws) . 
.,. Site 
This data relates to places where business is conducted (store, head 
office. distribution center) and includes, for example, address, assign-
ment, size, opening hours, classification, departments , merchandise 
categories, and receiving points. A store might be classified by floor 
space or region, for instance . 
.,. Business partner 
Data about business partners such as vendors, customers, and 
employees is gathered here. Data that can be saved here includes the 
address, sales and distribution data (for example, departments, mate-
rial groups, and unloading points), and accounting data (for example, 
bank details and currency used) . 
.,. Conditions 
Conditions are variable agreements on pricing and differ from case 
to case. They can be defined by the user and s tored at any number of 
levels with relevant periods of validity. 
Detailed explanations of these types of master data are provided in the 
sections that follow. 
Article Master Data 
The article master record is the data record contain ing all of the basic 
article information required in the system. This information is arranged 
according to different criteria: 
Master Data Solution- SAP Retail I 3.1 
.. Data for information purposes (for example, size and weight, units of 
measure and texts) 
.,. Data with a control function in operational processes (for example, 
article type) 
The article o/Pe controls the scope of maintenance of a given article, that 
is, w hich data fields and views can be maintained for that a rticle. The 
particular requirements from purchasing, sa les, materials planning, and 
warehouse perspectives can be accommodated here. Commonly used 
article types in the SAP Retail system include foodstuffs. fresh produce. 
drinks, nonfood, durable goods, fashion , and textiles. These article types 
are already predefined to represent the given view. 
Article type 
The article category controls how the articles are processed from an opera- Single articles 
tiona] perspective. The following categories exist: 
.. Single articles are articles that are managed in particular single pack-
ages or particular un its of weight (for example, pasta) . 
.,. Generic articles can come in a range of varian ts (for example, color or 
size). Generic articles and their varian ts di ffer only in certain attri-
butes, whereas the remaining master data is the same, which means 
that w hen master data is maintained, several attributes need be main-
ta ined only for the generic article itself, from which they are then 
passed on to the variants. The generic article facilitates data entry dur-
ing master data maintenance and in operational processes. 
Another advantage of generic articles is their use in the planning pro-
cess. The buyer can work wi th generic articles in the planning phase 
and only needs to specify the details of va riants during the actual pro-
curement process. 
Example 
A buyer knows during t he planning phase that she needs men's suits but has 
not yet defined the details of the variants. She roughly plans the order for 
men 's suits but does not enter the details (how many of each size and design 
to be ordered) until she actually places the order. This process is often used 
for fashion arti cles. 
Figure 3.3 shows an example of a generic article with variants for which 
the details are not firmed up until the lowest level. 
47 
Generic articles 
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3 J Master Data, Forecasts, Analyses, and Connecting Applications 
I Hierarchy Node, e.g., Sportswear I 
I Category, e.g. Jogging Suit (including Color and Size) I 
I Generic Article, e.g., Jogging Suit, "Boston Marathon" I 
I Variants, e.g., Boston Marathon (Color 11 blue11 , Size "M11 ) I 
I ~ I 
Figure 3·3 Example of a Generic Article w ith Variants 
Structured articles Structured articles are made up of several articles. In addition to the com-
ponents, the quantity of articles used to compose the structured article 
must also be specified. 
• Display 
A display contains a number of single articles or variants of one or 
more generic articles. It is purchased as an independent article and 
therefore has its own article number, purchase price, and purchase 
price conditions. A display is usually put together by the manufac-
turer or vendor and is kept together as a