How do you source products at the lowest possible cost to keep your customers loyal when you are one of the largest home improvement retailers, with stores all over the world?
Not an easy problem to solve, but one we were thrilled to tackle heads down.
Our customer is a large multinational with more than 79000 associates, 1120 stores in nine countries and host nearly 6 million customers every week. Being so large and geographically diverse offers a great scale advantage, but brings also some challenges to stay competitive and offer the best service possible.
Our customer uses different operating companies (OpCos) and in many cases different currencies and enterprise systems across the different geographies. This environment makes it difficult to have visibility into its product data. Vital information like inventory, sales, stock-in transit, open orders was very difficult to reconcile using the information that each OpCos was providing.
The management felt that the lack of visibility was inhibiting them from obtaining common sourcing and branding operations on a global level. They felt that if they had better insights into their products, it would empower their sourcing organization to obtain an overall reduction of product costs and at the same time achieve stock reductions, increase net margins and improve vendor information.
They had attempted to consolidate this information before, but the lack of a platform to facilitate this task and the fact that many of these OpCos operated in different currencies, calendars and using different product and organizational hierarchies made the task difficult to achieve in a reasonable time.
We positioned SAP HANA as the platform to accurately harmonize the above data across multiple OpCos and to provide their supply chain team with the desired functionality. In order to achieve our aggressive timeline of only 3 months to complete the project, we agreed with the customer to include three of the largest OpCos and two years’ worth of transactional information (e.g. sales, orders). We wrote scripts to harmonize this data, and all other required master data like operating calendars, hierarchies, currency conversion tables, etc. The process required working closely with the customer’s business users validating this harmonization activity.
At the end of this Proof of Concept, we were able to demonstrate that the SAP HANA platform was doing a great job to merge multiple OpCos data and allow a view on consolidated data across multiple OpCo’s hierarchies, currencies and operating calendars. As part of our deliverables we included Dashboards that were capable to query 7.4 billion records in less than 10 seconds. The SAP HANA deliverables included the calculation of 26 required KPIs and the creation of forecasted sales data for OpCos that did not have these forecasting capabilities.
The data consolidation gives them the following advantages:
- Achieve substantial better vendor terms that translated into lower costs prices, lower lead times and minimum order quantities.
- Reduce stock by having visibility of actual and forecasted sales and demand information to be able to recognize over and under ordering amounts.
- Improve data alignment, increase net margins and overall better reporting capabilities.
The above direct sourcing solution has the potential to save the company millions and gives them four critical capabilities which were not able to have before:
- Consolidated demand and sales forecast that can be shared among all OpCos
- Consolidated and harmonized information in the form of business KPIs and dashboards across these OpCos
- Business analysis at the overall company level
- Ability to share consolidated sales and demand forecasts with their vendors
To identify their use cases and goals we used the Design Thinking methodology. The SAP HANA Platform was the technology that allowed us to consolidate the massive amount of data and provide real-time reporting. Finally, the Agile development process gave us the ability to accomplish this complex project in a short amount of time and deliver insights that managers could use to improve their business processes and negotiate better deals.
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