My name is Ina Glaes and I am the package product owner for retail specific rapid-deployment solutions. In this blog series I would like to introduce SAP Planning for Retail rapid-deployment solution to you, a retail specific package that address the challenges in retail planning business.
Retailers are always aimed at maximizing return on investment and this has a special meaning in the area of merchandise planning. It means to maximize sales potential on the one hand and minimize losses from markdowns or stock-outs on the other hand. Another important factor is the customer or to be more precise, the customer demands which has to be analysed and incorporated – not only on a global level, but at least regional if not local or even individually. Business changes fast in our days, so shorter planning cycles to be able to react faster to shifts in customer preferences and trends are essential – not to forget the investment in time for planning process itself. This includes also transparency of actual to plan performance for executives and based on that faster decisions and adjustments.
All of these facts lead to the need of an integrated solution to define corporate budgets, open-to-buy planning, utilizing real-time, what-if demand-driven forecasts. The solution should eliminate large amounts of manual effort, provide transparency on a weekly base and support processing varying levels of budgets, e.g. by merchandise hierarchy and location.
The SAP Planning for Retail rapid-deployment solution enables consistent, end-to-end planning and retail business processes based on industry best practices. The solution integrates and facilitates channel financial, location-to-merchandise, and open-to-buy processes including inventory management, purchase planning, and budgeting. You can perform what-if, demand-driven forecasts in real time and measure performance by week, product and store. While legacy planning systems and activities typically require batch or overnight processing, SAP Planning for Retail provides a centralized repository for all planning activities that enables the fast reconciliation of strategic merchandise plans and reduces manual efforts.
The rapid-deployment solution can be implemented with clear, predetermined costs and project timelines, and it scales to meet your current and future needs. In as little as 6 weeks you get a fully scalable SAP Planning for Retail system which includes pre-defined content around Channel and Merchandise Planning and which is extensible based on your specific needs.
Let’s take a look at the business scope offered with this rapid-deployment solution...
The package provides new content for Channel Financial and Merchandise Planning supporting one end-to-end planning process that cascades information from financial and merchandise planning, that meet department objectives in partnership with finance and merchandise organizations.
Before we jump into the processes, I would like to tell you something about the user interface. Most buyers are used to work with Microsoft office, and we decided to use SAP BusinessObjects Edition for Office as frontend for this solution, because this provides a new add-on module to enhance Microsoft Excel with planning specific capabilities not available in the base excel application. The ability to filter, slice and dice data, add conditional formatting and exception reporting are just a few of the new offerings provided with the add-on. It allows adding, removing and rearranging of key figures and characteristics across rows and columns. And a key advantage is that the end user has a gentle learning curve without extensive and expensive trainings.
Depending on your organizational set up, you can start the planning cycle top-down, bottom-up or middle-out. Special planning functions allow to copy, aggregate and distribute data from one level to another, reconciliation reports help to bring all information together to allow gap-analysis with strategic plans and needed amendments. But let’s assume that you start with the channel financial planning.
Channel Financial Planning is the process of initially developing a corporate budget at a very high level, usually a 3 to 5 year horizon, based on an increase or decrease in selling location targets across all available sales channels. It leverages historical sales and margin data and allows cross category margin analysis and assessment. Comparable and new store sales planning is included as well as store openings, closures, moves and renovations.
Once the initial plan has been developed, markdown targets and margin expectations are planned, in many cases to the department level. These targets are refined for the upcoming fiscal year, and may be planned to the week level, inclusive of individual store performance. The capability to plan bottom-up or top-down using merchandise plans supports the creation of a financial projection or channel merchandise plan for each selling location. Reconciliation between the different levels and roles is supported with reconciliation reports.
Screenshot Channel Mix
The next part is Merchandise and Financial Planning.
The merchandise plan is broken down to the lowest levels of the merchandise hierarchy to build a receipt budget by week that is used for open-to- buy purposes. KPIs include, but are not limited to, markdowns, reductions, and inventory and above/below the line adjustments to gross margin, receipts and inventory. Plans are usually developed in value with average unit retail prices for inventory, receipt and sales added to understand unit volumes at a high level. The sales flavors regular, markdown, promotional and clearance sales KPIs are planned individually including the average retail price of the sales type. In-season plan updates recalculate open-to-buy budgets based on trend. With that the analysis of business trends to identify variances to plan are possible on a weekly basis and allow stakeholders to take action.
Screenshot Merchandise Planning – OTB and Unit Flow Plan
SAP Planning for Retail addresses the retailer’s planning needs down to a more granular and detailed level. It brings a new element of speed to a retail planning process that is known to be slow. And the delivery via a rapid-deployment solution avoids a lengthy project, reduces risk, and provides faster time to value.
For further reading, check out the 2nd blog in this series:
Are you looking for fast business value with SAP Planning for Retail? Part 2
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