The challenges the retail sector faces are clear: intense global competition, variable markets, and discerning customers. Brand loyalty is on the decline. Customers are spending less and using the Internet to gather information and make their purchases.
To remain profitable in the long term, retailers have to do business efficiently, offer their products through every available channel, and meet customer expectations – with regard to social responsibility, for example.
SAP for Retail provides the technical basis needed to meet all of these demands. Not to be confused with SAP Retail – a version of SAP ERP tailored to retail requirements – SAP for Retail is an industry-specific solution portfolio.
It includes planning and analysis tools whose main areas cover assortment planning, logistics, customer and human resource management, and financial accounting. The solutions also support the SAP NetWeaver technology platform, making it possible to integrate them with software from SAP and other providers.
In this article, we’ll introduce you to the key functions of SAP for Retail and preview the enhancements and innovations you can look forward to in the future.
Read on to learn about the following topics:
The structure of SAP for Retail
Regardless of whether you deal in textiles, consumer products, or food items, SAP for Retail divides business processes into five categories: Business Insight, Merchandise Life Cycle Management, Supply Chain Management, Shopper Experience, and Corporate Operations.
The portfolio provides the necessary tools and functions for these areas, as well as a service-oriented architecture and support for collaboration and social media integration.
Business performance and consumer demand are two primary aspects of company managers have to monitor.
- Retail performance management: This area covers merchandise, supply chains, stores and channels, corporate operations, and business intelligence tools using dashboards and reports created by SAP Crystal solutions and SAP BusinessObjects Explorer. Profitability, expenses, and sustainability are just a few of the fields managers can analyze.
- Shopper insight: By analyzing buyers, you can identify their needs and render business decisions accordingly throughout your company. Demand forecasts also facilitate predictions down to the item level and provide supply chain support while factoring in seasonality and advertising campaigns.
Merchandise Life Cycle Management
Planning products and assortments requires strategic marketing over their entire lifespan.
- Strategic planning: Cross-area budgets can be distributed across various product categories and overarching financial goals assigned to different branch offices. It’s also possible to conduct planning by merchandise category and organize and assess offers and advertising campaigns.
- Pricing: Using price optimization and management software, you can set prices for a product’s entire life cycle. SAP for Retail also supports daily pricing and analyzes possible price reductions and markdowns – at the end of a season, for instance.
Supply Chain Management
Retail chains need to take aspects such as restocking and allocation, procurement and financing, purchasing, processing, and logistics into account.
- Purchasing: SAP for Retail synchronizes processes all the way from supply source determination to purchasing. It also optimizes inventory management using flexible methods of order fulfillment and availability checking.
- Inventory management: Procedures such as inventory accounting and settlement benefit from real-time analysis of current stock, while RFID and other technologies increase precision and lower operating costs.
- Supply chain execution: A comprehensive overview of sales channels reduces security stocks and raises the level of service your various branches provide. SAP for Retail also makes use of warehouse and transport management software.
To increase customer loyalty and keep them coming back, providing a pleasant shopping experience – from selection to prices to service – is essential.
- Point of sale (POS): Centralized electronic fund transfers (EFT) speeds things up at the register, minimizes fraud, and increases employee productivity.
- Catalog and e-commerce management: SAP for Retail includes solutions for designing online business content and campaigns.
- Multichannel customer service: Present personalized offerings on all of your sales channels.
- Branch operations: The employees at your branch locations receive real-time information and inventory reports, while data on transactions and incoming customers give you a picture of the current workload.
- Customer retention: Centralized sales-relevant information reveal individual purchasing habits, which enables you to systematically accommodate customers and retain their business.
Solutions for managing finances and human resources make business management easier and more profitable. Products such as SAP ERP and the SAP BusinessObjects solutions for governance, risk, and compliance (GRC) fall under this area.
- Financial management: SAP delivers detailed financial reports and aids in conducting corporate governance – even for subsidiaries abroad.
- Human capital management: Human resource management software identifies the best employees and helps retain their services.
- Production support services: Enables retailers to manage their assets and facilities according to local security guidelines.
Enhancements for SAP for Retail
Various updates are in the pipeline for SAP for Retail, some of which – such as Promotion Management for Retail – are already finished. Others are in different phases of planning and development. An overview follows directly below.
SAP Point-of-Sale Loss Prevention for Retail is designed to reveal inventory irregularities, which are often caused by unintentional or deliberate staff wrongdoing and can affect as much as 1.5% of a company’s sales revenue. Its loss-prevention functions are integrated into SAP POS Data Management and SAP NetWeaver Business Warehouse.
Meanwhile, the SAP BusinessObjects enterprise performance management solutions now interface better with SAP BusinessObjects Business Intelligence, SAP BusinessObjects Financial Information Management, and SAP NetWeaver Master Data Management.
SAP BusinessObjects Sustainability Performance Management expands the SAP BusinessObjects portfolio by enabling companies to determine the extent to which they observe social and ecological concerns based on key figures and report the results to internal and external stakeholders.
SAP is also advertising the talent management component’s new user interface and improved ability to better harmonize companies’ goals with their employees’ individual performance targets.
Merchandise Life Cycle Management
With SAP Promotion Management for Retail 7.1, you can plan advertising efforts all the way from marketing to controlling. Its end-to-end analysis – which covers logistics and points of sale – promises a lower total cost of ownership (TCO), and its forecast functions can predict the success of individual products, product categories, and entire advertising campaigns.
Version 7.1, which targets the growing multichannel shopping sector, debuted at the National Retail Federation (NRF) event held in New York on January 12.
Meanwhile, an enhancement for SAP Merchandise and Assortment Planning is set to help companies stay within their established budget limits. The application can apply additional formulae when making calculations, and SAP continues to improve its usability and compatibility with third-party products.
Supply Chain Management
New forms of analysis facilitated by RMA (Retail Method of Accounting) Stock Ledger are to offer advantages in warehousing, such as more accurate calculation of contributions margins. Here, RMA Cost Allocation assigns various warehousing costs to RMA Stock Ledger.
Order processing and transport management will soon be more integral elements of SAP ERP, and an expansion of export controlling and compliance functions is also ahead.
SAP Customer Relationship Management (SAP CRM) is due to receive a more tightly integrated loyalty management component featuring, for example, comprehensive partner management (including invoicing).
In addition, the options SAP provides with regard to refunds continue to gain flexibility, and the company is introducing new tools for issuing benefits and vouchers. For POS applications, end-to-end integration is on the way through the PCI standard bus based on enterprise service-oriented architecture.
In the area of e-commerce, SAP is reworking its user interfaces and implementing real-time offer management and payment methods such as PayPal. A Web channel e-service will also enable customers to obtain round-the-clock assistance for their problems.
Finally, instant-messaging functions within SAP CRM are about to make SAP’s collaborative component for call center employees even easier to use.
SAP ERP Financials automates the process of reorganizing profit centers by means of a new general ledger. Elsewhere, integration into the SAP back end through a central platform is increasing the efficiency of Shared Service Centers, and a uniform interface is improving the user experience offered by the SAP BusinessObjects GRC solutions.
Following installation of EHP 5, users can automate standardized processes in human resource management and run them within the shared service model. Employee self-services, meanwhile, are undergoing renovation in the Java-based Web Dynpro development environment.