Sap retail forecasting and replenishment innovation overview
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SAP Forecasting and ReplenishmentWhat’s new in 5.2 plus customer innovationsSAP F&R ForumJune 2012
© 2011 SAP AG. All rights reserved. 2RKT
The information in this presentation is confidential and proprietary to SAP and may not be disclosed without the permission of SAP. This presentation is not subject to your license agreement or any other service or subscription agreement with SAP. SAP has no obligation to pursue any course of business outlined in this document or any related presentation, or to develop or release any functionality mentioned therein. This document, or any related presentation and SAP's strategy and possible future developments, products and or platforms directions and functionality are all subject to change and may be changed by SAP at any time for any reason without notice. The information in this document is not a commitment, promise or legal obligation to deliver any material, code or functionality. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement. This document is for informational purposes and may not be incorporated into a contract. SAP assumes no responsibility for errors or omissions in this document, except if such damages were caused by SAP´s willful misconduct or gross negligence.
All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates, and they should not be relied upon in making purchasing decisions.
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© 2011 SAP AG. All rights reserved. 3RKT
Solution Enhancements Key Benefits Investment Buying
Enhanced capabilities for truck load optimization
Forecast improvements
Enhancements in order forecast (order forecast for aggregation)
Consider time-dependent information for promotions
More detailed information about automated calculation steps
Improved management of unknown DIFs
Improved usability of DataAnalyzer
Solution today
Reduce purchasing costs and take advantage of supplier promotions
Reduction of purchasing and logistical cost
Increased forecast accuracy leads to better order proposals
Improved support of multi echelon scenarios with the new Order Forecast for aggregation
Improved accuracy of promotional forecasts
Improved traceability of automated processes
Higher degree of automation
Increased efficiency
Release 2.2 of SAP Forecasting and Replenishment Open Integration provides more sophisticated functionality for DC replenishment as well as usability improvements.
SAP Forecasting & ReplenishmentLatest innovations
© 2011 SAP AG. All rights reserved. 4RKT
Key BenefitsSolution EnhancementsUsability improvements Order Lists Table enhancements Fast Actions buttons User preferences as tabs, with small button Configurable widths of columns Extended screen resolution and browser compatibility Customer specific exception descriptions Display polling time, polling dayPerformance improvements Pre-calculation of active predictors in B Pre-calculation of demand in BIFunctional improvements Completion of order review process Filtering / sorting by customer specific info Exception acknowledgement for order lists Reporting API
Planned innovations
Increased flexibility and configurability of user interface
Better response times Valuable customer specific enhancements added to
standard product
SAP Forecasting & ReplenishmentPlanned enhancements for F&R stand-alone
© 2011 SAP AG. All rights reserved. 5RKT
Solution Enhancements Key Benefits
SAP Forecasting & ReplenishmentLatest innovations
Enhanced capabilities for truck load optimization
Forecast improvements
Enhancements in order forecast (order forecast for aggregation)
Consider time-dependent data for promotions
More detailed information about automated calculation steps
Improved user interfaces, e.g. within the replenishment workbench
Improved exception handling
Enhanced connectivity of SAP F&R with SAP ERP for Retail, e.g. source list integration and transit stock consideration
Solution today
Reduction of purchasing and logistical cost
Increased forecast accuracy leads to better results
Improved support of multi echelon scenarios with the new Order Forecast for aggregation
Improved accuracy of promotional forecasts
Improved traceability of automated processes
Better usability for increased efficiency
Reduced TCO through better integration with SAP ERP for Retail
Release 5.2 of SAP Forecasting and Replenishment Standard Integration provides more sophisticated functionality for DC replenishment as well as usability improvements.
© 2011 SAP AG. All rights reserved. 6RKT
Solution Enhancements Key Benefits Consideration of customer sales
orders as exceptional demand Enhanced integration of SAP
PMR with SAP F&R
Planned innovations
Reduction of out-of-stocks due to unplanned orders
Improved transparency and visibility in F&R
Aligned promotional forecast quantities in promotion planning and replenishment.
Significant reduction of data maintenance for promotional periods
Release 5.2, SP03 of SAP Forecasting and Replenishment Standard Integration provides improvements in transparency and integration.
SAP Forecasting & ReplenishmentPlanned enhancements for F&R integrated
© 2011 SAP AG. All rights reserved. 7RKT
Enhancements Optimization: Transport Load Optimization
Sophisticated capabilities for transport load optimization (TLO) Features with respect to the algorithm: Save transportation resources through reduced number of loads Fill-up to full loads regarding weight and volume Achieve similar range of coverage for the freight Consider user-defined minimum fill thresholds (for weight and volume)
Features with respect to order proposal management Assignment of order proposal items (or subsets of it) to transportation units (such as trucks or
containers) can be reviewed and changed in the Replenishment Workbench Purchase orders in SAP Retail can be automatically split by transportation unit
Key Benefits Reduction of purchasing and logistical cost Increase sustainability factor Ease goods receipt
Optimization
© 2011 SAP AG. All rights reserved. 8RKT
Transport Load Optimization - The Algorithm, Simplified
1) Initial load
2) Consolidation and TU saving
3) Fill-up, dropping or leaving
Weight and volume thresholds not reached and dropping possible
Dropping and filling-up not possible
Fill-up allowed and possible
Key Benefits Reduction of purchasing and logistical cost Increase sustainability factor
Optimization
© 2011 SAP AG. All rights reserved. 9RKT
Transport Load Optimization – The Result
Key Benefits of Order Proposal split Ease goods receiptOptimization
F&R Order ProposalVendor: V1
DC: DC West
Product Qty. TU assignm.
Product A 34 PAL Truck 1
Product B 10 CAR Truck 2
Product C 8 PAL Truck 2
Etc.
Purchase Order 1
Product Qty.
A 34 PAL
Purchase Order 2Product Quantity
B 10 CAR
C 8 PAL
Etc.
Transfer to SAP Retail
Optional Split
Configuration and definition
of vendor restrictions
Automatic Replenish-ment run including
TLO
© 2011 SAP AG. All rights reserved. 10RKT
Enhancements Optimization: Absolute Vendor Discounts
Absolute vendor discountsDefine absolute values for discount scales (before, only percentage values could be maintained)
Key Benefits Reduction of purchasing and logistical costOptimization
© 2011 SAP AG. All rights reserved. 11RKT
Enhancements Visibility: Corrected Consumption History
Output of corrected (= pre-processed) consumption history:Background: Before the actual forecast calculation, FRP executes a data preprocessing of the consumption history including, among other things, outlier correction and correction of lost sales. Moreover, the consumption history used for forecasting can be originate from other data (for example reference product/module or substitution). This is done in order toimprove the forecast quality.
New: The corrected consumption history created by the Forecasting and Replenishment Processor (FRP) and used for forecast calculation can be displayed on the Times Series screen together with the reasons for correction.
Key Benefits Improved visibility of results from automated forecasting and replenishment processes Better user acceptance
Visibility of results
© 2011 SAP AG. All rights reserved. 12RKT
Enhancements Visibility: Pre-allocation and Optimization
Output of pre-allocated forecast and intermediate values of order optimization steps (see calculation details of order proposal items)
Key Benefits Detailed information about automated calculation steps Better user acceptance
Visibility of results
© 2011 SAP AG. All rights reserved. 13RKT
Enhancements Forecasting
Alternative determination of zero stock days for correction of lost salesSo far, zero stock days were identified if the stock at the end of the day was zero. Now, there is the option to count zero stock days only if the sales/goods issues were zero too. (Background: there could have been goods receipts later the day covering the demand for that day even if stock was zero at the beginning of day).
Elimination of collinear DIFs and multi-step noise suppressionStatistical enhancements with respect to filtering out DIFs that are either unsignificant or always occur at the same time than other DIFs.
Improved handling of first-time DIF occurrences using default correction factorsYou can define a default correction factor for each Boolean DIF related to the forecast. The system applies this factor for occurrences of the Boolean DIF if the effect of the Boolean DIF could not be determined for different reasons (e.g. first-time occurrence).
More flexible definition of Ignore DIFsYou can now define more than one Ignore DIF. As an example, you can change an existing DIF into an Ignore DIF if needed.
Trend component in regression method with dampening factorFor location products with a linear upwards or downwards trend, the regression forecast can now continue the trend with a configurable dampening factor. This further improves the forecast quality, particularly with respect to DIF effects.
Display zero forecast for non-listing periodsDepending on configuration, the system can either display forecast values for future non-listing periods (default) or can set the forecast to zero in order not to confuse users.
Key Benefits Increased availability of product and further reduction of inventories through improved forecasting
capabilities Forecasting
© 2011 SAP AG. All rights reserved. 14RKT
Enhancements Replenishment: New Order Forecast Mode
New: ‘Order Forecast with Variable Reorder Point’Situation: standard order forecast provides the most likely order projection for an individual location productHowever: there are special circumstances in which the aggregation of all ‘most likely’ order forecasts into a
higher level does not represent the most likely situation at that level: Location products with very small consumption values (ultra slow sellers)
Location products with stock or open orders clearly exceeding the demand of the next demand period
Solution: A new order forecast mode specifically designed for aggregation purposes and the option to calculate the classical and the new order forecast in parallel
Key Benefits Increased availability of product and further reduction of inventories
Used whenever individual location products are regarded
Always used for order balancing
Can be used for:
Aggregated order forecast (multi echelon or DIF)
Various CPFR scenarios
Replenishment
© 2011 SAP AG. All rights reserved. 15RKT
Example: Consider an item sold in 10 stores On average, we sell 0.2 unit per store each week We start with stock 1 unit in each store Order forecasts were until now calculated based on most likely stock projections:
Sto
ck
1
1 2 3 4 5 6 7 8 9 10Week
Order one in week 5
Order one in week 10
Enhancements Replenishment: New Order Forecast Mode – Situation before this Enhancement
© 2011 SAP AG. All rights reserved. 16RKT
Classic Order Forecast (left) and new Order Forecast (right)
Source: Stephan Kolassa (March 2011); Order Forecast for Slow Sellers, (SAF Best Practice No. 09)
© 2011 SAP AG. All rights reserved. 17RKT
Custom Solution: Daily Forecast for Fresh Items
Fresh products are difficult to forecast due to: highly volatile sales patterns seasonal products with discontinued sales time series short replenishment cycles require forecasts on daily
granularity
Objectives Increase availability Enable automated order process Reduction of spoilage
Scope Advanced forecast methodology, disruptive step forward in
forecasting approach Provide forecasts with daily granularity Demand and order calculation are performed in the existing
F&R modules
© 2011 SAP AG. All rights reserved. 18RKT
Custom Solution: Daily Forecast for Fresh Items
Approach at Coop (CH) Close collaboration with Coop to design and validate the new
solution Currently developed as Add-On (Project Solution) for SAP
F&R for Retail Results of the pilot are being expected soon
Interim solution approach till the availability of UDF and replenishment at HANA Suitable for Fresh Items and other assortments that benefit
from daily forecast Suitable for F&R Open Integration (less integration effort)
and F&R Standard Integration (higher integration effort)
Interested? Please contact the F&R Consulting Team (David Elias, david.elias@sap.com) for possible next steps Assessment Effort estimation and contractual offer Implementation
© 2011 SAP AG. All rights reserved. 19RKT
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