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SAP S/4HANA for Fashion and Vertical Business: Retail, Wholesale and Manufacturing Under one Roof

Sincere thanks to Sabine Lankau, SAP Solution Manager for S/4HANA for Fashion and Vertical Business for her contributions to this blog post. More content like this can be found in the SAP Enterprise Support value map for SAP S/4HANA*.

 

The fashion industry is fast paced and emotional. When we think about the shopping experience and how businesses communicate with customers, what shoppers expected yesterday will be different today. Sales and marketing functions, as well as production and procurement are increasingly digitalized, and this presents new challenges for fashion companies. We see retailers creating their own brands and selling products using their own sales channels. Similarly, manufacturers are taking the traditional role of retailers by selling their products in their own stores or directly to consumers online.

These companies have a strategy where they control their own value or process chain including suppliers, distributors or retail locations. This is vertical integration and such ‘verticalization’ requires the right technology solution to ensure that all processes run at their best.

Fashion related concepts that were initially developed for SAP Fashion Management on ERP were already added in SAP S/4HANA Retail for merchandise management 1610. However, it wasn’t until the 1709 release that fashion was given real attention with features surrounding ‘fashion wholesale requirements’, and ‘fashion manufacturing’ that came with feature pack stack 02.

Today, SAP S/4HANA Retail for merchandise management and its sister application SAP S/4HANA for Fashion and Vertical Business share the same common foundation but are targeting different customers with specific features as shown in the table below. Of course, some customers will need a combination of all features:

Figure 1: Fashion and Retail Feature Scope

Data Source: SAP S/4HANA 1909 Feature Scope Description (Document Version: 1.3 – 2020-02-06)  

 

Figure 2: The Intelligent Suite for Retail Future Reference Architecture

(Note: “SAP C/4HANA” has since been re-branded to “SAP Customer Experience”)

 

Why SAP S/4HANA for fashion and vertical business?

SAP S/4HANA for fashion and vertical business is a complete end-to-end solution, enabling fashion companies to offer insights to operational data, empower users with contextual, real-time information for faster and better decision-making. Processes can easily be extended to drive business model improvements across all retail, wholesale and manufacturing while providing flexibility and agility to drive compelling customer experiences. All of this comes with a simple and intuitive SAP Fiori interface and the speed of SAP HANA so that fashion companies can create smarter, faster fashion based on a common data set and forecast foundation; and simplify their IT landscape and business processes to unlock business innovation.

Figure 3: The Value of the Verticalized Intelligent Enterprise

Image source

As the image below illustrates, SAP S/4HANA for fashion and vertical business is at the core of a comprehensive suite of fashion offerings from SAP that spans the entire value chain, enables next generation processes and achieves significant cost savings for our customers.

Figure 4: Intelligent Suite – SAP Portfolio of Solutions Driving Value for Fashion

Image source
(Note: “SAP C/4HANA” has since been re-branded to “SAP Customer Experience”)

As the image above also shows, SAP S/4HANA for fashion and vertical business integrates with the SAP Customer Activity Repository (CAR).  With its full inventory of all previous customer interaction history and transactions, CAR is a very powerful enabler of digital core capabilities for both retail and fashion and enables customer profiling and personalized promotions as well as better planning, execution and prediction capabilities.

When SAP S/4HANA 1709 was launched, SAP shipped significant extensions for retailers but also brand-new functionality to address vertical business and fashion requirements in the area of wholesale.

Figure 5: SAP S/4HANA for fashion and vertical business – Evolution

Image source

 

What’s New in SAP S/4HANA 1909 for fashion and vertical business?

When it comes to functional extensions and enhancements, SAP S/4HANA 1909 enables you to:

  • Reduce inventory carrying costs through enhanced supply-assignment capabilities;
  • Avoid overstocking, with a flexible purchasing commitment; and
  • Increase efficiency by automating processes for seasons.

Enhancements in Season Management

  • Enhancements in Season Master Data: 1909 brings improvements in Season Management and Season Master Data. For example, ‘Season Category’ has been introduced which can be used as filtering criteria and additional information in documents. There is a new Grouping Rule and some smaller enhancements in the Season Workbench  which include   for example ‘Preferred Delivery Date’ and ‘Partner Function as Grouping Attribute.’
  • Enhancements in Season Completeness Check: The Season Completeness Check is a significant enhancement. Retailers want to evaluate the completeness of a season when ordering stock to ensure that their merchandise and style collections are presented properly in stores. The new SAP Fiori app ‘Manage Season Completeness’ enables this by providing the user with information such as an overview of orders, missing products, and whether season, collection and/ or themes are complete. The completeness is then evaluated based on a season completeness percentage and on a key-item completeness percentage (quantity is not considered for the completeness calculation). The system can then generate proposals/options to improve the season completeness and the user can decide to accept the proposals to meet the completeness percentage.

The notion of completeness helps the user in  follow on processes such as ‘Pack Separately – Ship Together (PSST) Functionality’, which allows you to create grouping rules and use them to group items that must be shipped together based on customer’s business rules. With this app, users can now expand the result of each grouping rule value to view the different season completeness groups and the details in each group or priority in Supply Assignment (ARun). A complete season means that you get priority in the assignment of stock based on your demand. With SAP S/4HANA 1909, we offer  two strategies  to verify season completeness  You can choose either “Shared Strategy” or “Non-shared Strategy” in Manage Season Completeness.

  • Automation Scenario for Master Data Change: Here we can differentiate many use cases. Firstly, you can allow additional customers to access the collection or season; secondly, you can add new styles or collections; thirdly you can remove styles or collections. Additionally, you can change the priority. This is all underpinned by automated processes.
  • Enhancements of Season Re-determination: Based on the above changes in Season Master Data, the user gets an indication whether a new season determination should take place or not. However, once an order item is processed by the Season Completeness app, a season completeness indicator will be assigned to it and therefore avoid a redetermination of seasons for items where a season has already been determined.

 Enhancements in Flexible Purchasing Commitments

  • Multi-Level Purchase Contract Enablement: An efficient procurement process is crucial in the fashion industry, along with the ability to make solid order promises to suppliers early on. However, it can be difficult to make precise decisions at an early stage. Considering this, you can make high level commitments now with a view to providing more details later, giving you flexibility to react to market changes in the meantime, so you can avoid overstocking and maintain a good relationship with your supplier. Flexible Purchasing Commitments was available in 1809 but there are many new features today. With Multi-Level Purchase Contract Enablement, you can create a ‘source contract’ with a vendor where only the generic article is entered now, and later you can specify the exact variants that you wish to order for the referenced contracts.
  • Prepack Handling in Contracts and Call-off Purchase Orders: The same flexibility is required for prepack handling where we might not know the exact composition or structure of a prepack early on in the process but we already  want to create a purchase contract  for a generic article or  its variants that are part of a structured article/prepack later on. The contract call-off can then be on prepack level and the components of the prepack can reference the articles in the purchase contract.
  • Direct Ship Flexibility: Third Party Order/ Purchase-to-Order Alignment Enablement: SAP S/4HANA 1809 provided the possibility of decoupling of sales order items and purchase order items in case you were faced with a customer cancelling a sales order or reducing the quantity of an order. To avoid a huge amount of work in cancelling the purchase order and making lots of system changes, the purchase order would simply be left in the system. In the 1909 release, you don’t have to create new purchase orders because the system checks what is available in the system already and if you can use these existing purchase orders from before to fulfill your new sales orders. This is possible once the merchandise/articles in question are the same. This alignment of third-party order (TPO) and purchase-to-order (PTO) items with pre-existing freely available purchase order items enables the efficient consumption of existing purchase order items.
  • Value Added Services (VAS) Plant Capability Features: In the past it could happen that you would attach a VAS to your product or merchandise but it could transpire that a particular distribution center or plant that was intended to carry out this service was not capable of fulfilling this request. To avoid this, there is now a ‘plant capability check’. Delivery creation for sales order and stock transport order document containing VAS is not allowed if they cannot be provided in the respective location.

Enhancements in Supply Assignment (ARun)

  • Dynamic Supply Prioritization: This gives you the ability to do supply assignment while sorting the supply based on different types of supply and considering supply type specific time intervals. For example, on-hand and warehouse stock can be kept for short notice demand while demand that is to be fulfilled later can be assigned to future supply. This is where the SAP Fiori app ‘Configure Supply Sort Rule’ comes into play. The app allows you to prioritize different supply types and specify time intervals.
  • Workflow Events Handling: Here you can handle exceptions related to un-assignment of orders. A class-based event is raised when orders deviate from exception rule in background mode of ARUN Insight to Action (ITA) tool.  These can be easily managed within the framework of standard workflow where this ‘triggering event’ can be configured to perform desired tasks.
  • Supply Demand Overview (SDO) for all Documents: Up to the 1809 release, the Supply Demand Overview (SDO) only displayed information related to ARun related objects, which did not give users a complete picture.  However, with 1909 all relevant objects be they ARun relevant or not, are evaluated by the new ‘Supply Demand Overview – All Documents’ app. This app is able to visualize the complete demand and supply status using the following data sources:
    • Open Demand
    • Open Supply
    • Normal Assignments (ARun result)
    • Preview Assignments (ARun result)
    • Temporary Assignments

As you can see, one prerequisite behind this complete overview for the user is that ‘temporary assignments’ must be calculated and there is also new SAP Fiori app for this purpose called ‘Schedule Temporary Assignments’.

  • ITA – Selection of Demand based on Supply: Sometimes is it necessary for you to identify demand elements that have been assigned to a known supply. One example can be the “inbound for outbound” (IFO) process where you might be aware of an incoming delivery that was subject for supply assignment and now you want to know which demand elements are now assigned to it and might be applicable for the IFO process. ITA (transactions ARUNITA) has been enhanced with two new tabs that allow for SO and/or STO selection by the assigned supply. Users can now use the selection criteria of these new tabs to select existing assignments.

You can visit the SAP Fiori Apps Library and filter by Retail industry or by role to view available SAP Fiori apps for both SAP S/4HANA Retail and Fashion. Some new examples are listed below:

Planned Innovations 2020/2021:

Enhancements to make-to-order and make-to-measure (MTO/MTM) processes in article personalization

Increase stock visibility through consideration of “protected stock” in supply assignment and in the related SAP Fiori apps for supply demand overview

Improve operational efficiency by taking orders using SAP Intelligent Robotic Process Automation (SAP Intelligent RPA)

Improve profitability with smooth integration of SAP Mill for textile products

Improve profitability for contract manufacturers by accurately calculating costs for samples

Increase sales force efficiency by enabling situation handling in supply assignment

You can view the full list of current and planned innovations, as well as the future product direction in the SAP S/4HANA Product Roadmap for Retail and Fashion.

For guidance and support in implementing SAP S/4HANA fashion and vertical business you can consider SAP Model Company for fashion and vertical business.

References

‘SAP S/4HANA 1909 Feature Scope Description’ on SAP Help Portal

SAP S/4HANA Product Roadmap for Retail and Fashion

‘What’s New Viewer – SAP S/4HANA’ on SAP Help Portal

SAP Value Paper: ‘Transform Fashion and Vertical Business with SAP ® Solutions’

SAP News Center:

SAP S/4HANA and the Fashion Industry: Vertical Integration en Vogue

Blog posts on the SAP Community:

How to ensure a smooth migration from SAP Apparel and Footwear Solution (AFS) to SAP S/4HANA for fashion and vertical business – Part I

How to ensure a smooth migration from SAP Apparel and Footwear Solution (AFS) to SAP S/4HANA for fashion and vertical business – Part II

Useful Resources

Fashion and Vertical Business on SAP Help Portal (Implementation Considerations, Integration and End-to-End scenarios)

Simplification List for SAP S/4HANA 1909 Initial Shipment Stack (pg. 939-1006)

Intelligent Enterprise Poster for Retail Fashion – Business capabilities required on the journey to the IE and how SAP supports these

‘SAP S/4HANA for fashion and vertical business development update’ presented at ASUG Conference May 2019

Useful SAP Notes

2385984 – S4TWL – SAP S/4HANA Retail for Merchandise Management, SAP S/4HANA for Fashion and Vertical Business – Simplification Items

2884551 – Migration from Apparel and Footwear solution (ERP) to SAP S/4HANA Fashion and Vertical Business

Run several industries on one SAP S/4HANA Platform:

2616967 – Coexistence of SAP S/4HANA Retail for merchandise management/SAP S/4HANA for fashion and vertical business and other industry/LoB solutions in SAP S/4HANA

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