SAP

Well first of all there are some inherent themes with SAP that are standardization, integration and data integrity. These alone will test your resolve as SAP demands users to follow processes whose foundation is very much built on these themes and therefore requires a level of support not normally seen with less structured or some point to point solutions.

For example, Master Data is critical to ensure accuracy and integrity of the process so this forms one of the bases for the SAP solution. But what this means to a retailer is the formation of a data group to ensure that the information being loaded into SAP is complete, accurate and timely. On top of this there are normally more elements of data required in SAP than other solutions due to the integration of all the processes within the solutions - this is not a solution where you can change the pack size in the warehouse processes to suit yourself!

But this combination of integrity and integration has some major benefits to your organization. The fact that the information that is garnered from the day to day activities can be analyzed with confidence to support more robust decisions on ranges, shelf quantities and overall stockholdings. Sales information can be quickly retrieved and 'Flash' sales can be analyzed for new product launches within hours of being on sale. This in itself can be the difference between a good season and one where you are discounting to move discontinued lines.
So we have some rigidity built in the processes and I can see that may be of advantage to me in some aspects, but how will my staff manage this? I keep hearing that SAP is complicated?

Experience has shown that the emphasis of SAP Retail (and SAP in general) is to give users the opportunity to be more outward facing into the business or partners, to leverage the information they are getting to refine their actions and results. The solutions automate where possible the transactions to allow the users to manage the results and to spend more time looking at the more valuable or important facets of their operation.

And while doing this it does not make is necessarily more complicated to use than any other tool, in fact it can make life a lot easy on a day to day basis. The critical aspect to using any solution is appropriate and sufficient training and not just in the tools themselves. Too often time is spent teaching users how to do a transaction rather than taking them through the critical process change that is happening and explaining why it is changing, the benefits and the importance of their role in it. This is probably the biggest single learning from any solution implementation and not just SAP Retail.

Much focus may be put at the consumer facing side of the business but not to the behind the scenes aspects that support these activities so there is an imbalance that appears over time. Change Management aligned to the solution implementation is critical to get the most from an implementation and this should be seen as must do rather than a nice to have.

So if I get my staff organized and trained properly, get them to adhere to the disciplines of the SAP solution, will my bottom line improve?

All things being equal, an implementation of the SAP Retail solutions can have a significant impact on your business bottom line by helping to manage costs and ensuring margin maintenance. Some examples of this are in the Price Optimization where this solution can plot and execute the optimal markdown pricing for seasonal items to ensure these items are only reduced to what is required to drive sales therefore holding the margin as high as possible. A German retailer who trialed this solution to compare two identical stores, one being a control store and the other utilizing this solution, saw some interesting results:  the optimized store holding a higher margin for the same items over the period of the trial while maintaining sales - the solution was able to calculate the demand/price ratio more accurately than the store staff.

Another example where costs can be managed this time is in the Forecasting and Replenishment solution where sophisticated algorithms provide extremely accurate store and warehousing replenishment results that manifest themselves in reducing lost sales and inventory at the same time. A UK retailer found in a trial that a 50% reduction in inventory was achievable while also increasing in store availability by nearly 25% for the sampled items.
Another aspect of the SAP solutions is the availability of standard reporting content through the BW solution. Specific retail content has been developed by SAP to give out of the box reporting and this can be refined further to your own requirements. Coupled with SAP Business Objects to give you dashboard reporting and you can visually see what is happening in your stores hour to hour if necessary.

So SAP Retail comprises some very sophisticated solutions while a well executed implementation will help release benefits that will drive you to a more profitable result.

About the Author

Mark Everson is a Principal Consultant with the Retail CoE. He has more than two decades of rich experience in Business and IT, with 15 years of SAP experience. Mark is the ramp up coach for SAP F&R projects in the UK and Head of SAP Retail consulting, UK. Mark will blog on SAP Retail.