SAP Merchandise and Assortment Planning (SAP MAP)

The leading world retail companies constantly develop and improve the business processes and technologies concerning purchases of goods and formation of the range that allows to manage effectively business and in advance to guess desires of buyers, afterwards is successful them satisfying. Work effectively – means to the retail-company in time to offer buyers that product which is necessary to them, in the place, comfortable for them, and at reasonable price.

The retail companies often face problems of accuracy of determination of the range, final retail price and a margin, work with a remaining balance from last collections, and it in turn directly influences freezing of assets and as a result a financial result. Often on such important task as high-quality and exact sales planning, purchases, the range, there is just not enough time. Usually a small part of personnel is involved in planning, but at the same time this process often is technically and methodically difficult. Most the companies assigned planning to it to participants. Thus, planning represents multiple Excel files with copying errors, the breaking formulas, lack of a total unified plan and problems of access rights.

Therefore in the current situation it is especially important to the retail companies interested in development and growth to have the tool allowing to solve all specified problems.

Solution

SAP Merchandise and Assortment Planning (SAP MAP) provides a qualitative technique of planning, is easily integrated with the third-party systems and has the expanded functionality.

SAP MAP is a tool for fall forward and the accuracy of planning, for the organization of joint work of all participants of planning process, for decrease in a human factor in this process, critical for business. Use of SAP MAP helps to optimize loan amount on purchase of goods, to reduce a remaining balance of slow goods in a warehouse, to competently plan sales and, thus, to raise the profit of the company.

Advantages of SAP MAP are provided with the following functionality. The solution allows to predict needs of buyers and to bring them together. Business process of SAP MAP represents communication of the plans allowing to make planning of key performance indicators of activity of the enterprise in all necessary cuts and all participating users of process. The SAP MAP system provides a possibility of drawing up different scenarios and modeling of options of development of the company. Historical and up-to-date data are available at all planning levels to providing schedulers with necessary information for the detailed analysis of key indicators and parameters of sales.

Planning process description. Functionality of SAP MAP

Planning can be separated into two parts – early planning of goods (Pre-Seasonal Merchandise Planning) and assortment planning (Assortment Planning).

Early planning

Process of early planning of goods is separated on roles. Each of roles makes the versions of plans in which the vision of activity of the enterprise is reflected in planning period. After that approval of plans is made, and the head approves the uniform version which will define the strategy of the company.

On early planning there are next stages and plans:

Strategic planning (the head, the owner performs).

At this stage the management sets the financial purposes for planning period. At most the retail companies, especially in Russia, shops are scattered on different corners of the country where there are rules of work. Besides, to survive in modern conditions, the company should have several possible sales channels of products, such as retail stores, Internet trade, trade according to directories, etc.

The management should have an opportunity to define long-term plans of development of the company, to set the financial purposes on regions and activities. The SAP MAP system allows the head, manipulating data of last periods via the intuitive interface, to set all key indicators and the purposes of the company which accomplishment will lead to receiving the maximum profit. Further the management lowers these target indicators on sales on the following levels as a reference point and the purpose.

Planning on categories: designate ways for profit earning.

It is a creative and at the same time responsible task because in the retail industry in general, and in the fashion-sector in particular, success depends on what is on sale in shops. SAP MAP allows to plan key indicators for any hierarchy level of categories, helping to balance structure of stocks as much as possible.

An opportunity to estimate the available stocks of old collections, to make the sales plan on categories in amount-based and quantitative expression, to set average cost value, a margin and original retail price, to define profit on each category is given. At this stage also the amount of sales and discounts which are supposed to be provided to clients during the future season, by each category is planned. There is an opportunity to plan discounts to regular customers, seasonal sales of goods, etc. On the basis of these data and also considering factors of implementation of a remaining balance and a new collection, and losses from defects, the final purchasing budget by categories automatically is calculated.

Thus, the plan for categories gives the chance to detail strategic indicators or to receive independent opinion from category managers what range can provide profitability of the company.

Planning on shops: refining is more whole also management of growth of the company.

Life of dynamically developing retail network means opening of new shops, closing and reconstruction old, development of the new directions. Planning on shops allows to make investments reasonable.

This stage integrates the plans made by managing directors on places. Having objective assessment of the situation and opportunities, they make the decision on that as well as at the expense of what the objects set by the management will be performed. At the same time consolidation of several shops in groups and appointment behind it responsible is possible. Thanks to it there is an opportunity not only to reveal shops which make for least of all profit, but also to see the reasons of it. Managing such planned targets as revenue, profit, purchasing amount, sales, it is possible even to make unprofitable shop successful.

Comparison and the approval of above-mentioned three plans where three independent views of planning period are aggregated is important. The management compares the purposes to results of planning on shops and categories, reveals discrepancies between key indicators and their reasons. Reconciliation of plans allows to understand what opportunities shops have and that the company can sell in them. As a result the head will make the decision, to review the vision of the future period or to charge to correct indicators to persons, responsible for planning for shops or goods. After approval of plans the uniform "approved" version of the plan is created.

Assortment planning

As a rule, the range of retail network represents several thousands of different products and is constantly updated by new collections. At the same time for business crucially that in each shop and in each timepoint there were those goods which will be demanded by buyers. How to define an optimal assortment structure of shops and to make it with the minimum labor costs.

In the course of assortment planning in SAP MAP there is an opportunity to estimate success of sales of different goods in the last period, to get rid of slow goods in the next season and also to analyze how many goods will require to be bought ensuring sales volume.

SAP MAP allows to distribute shops on clusters according to such characteristics as: arrangement, the structure of the population, climate, an average bill, etc. and to appoint to each of clusters the range. Operating is performed not at the level of the specific article, and at the level of property set, characterizing goods (color, a price segment, type and so forth). It gives confidence that business functions without separation from realities and allows to adapt flexibly to the changing conditions in the regional markets.

After drawing up a category matrix the purchasing budget Open-To-Buy (OTB) is calculated. Its purpose - to help the purchaser to determine necessary volumes and an assortment structure which needs to be bought to provide planned targets on sales. It allows to optimize the profit of the company due to minimization of investments into stocks and simultaneous maximizing sales. For achievement of this balance it is required to integrate indicators on sales and opening inventories. OTV is under construction on the basis of the actual trends of sales of goods on categories, combinations of properties, the planned category matrix, the available remaining balance and their structure on categories. OTV allows to calculate precisely purchasing amounts of the goods having certain properties which should be purchased by the beginning of a season. OTB sets regulations of purchases and gives an opportunity to reach the set profitability level.

Drawing up OTB reduces risks of a lack of best-selling goods or casing of a warehouse unmarketable positions during the planned period that in turn directly influences profit and current assets.

Benefits of the solution

Assortment planning is a science to predict sales and to manage stocks which is inseparably linked with art of determination of those categories of goods which will satisfy need of the client. Thanks to the SAP solution MAP the retail companies offer buyers those products which are necessary to them at the moment, in the place, comfortable for them, and at reasonable price, completely satisfying their requirements. As the result, the retail companies achieve the goal of receiving maximum arrived to the planned season of sales.

Integration with third-party products allows SAP MAP "fit" ideally into infrastructure of the company and give an opportunity to control process of management of the range at all stages of work of business. The SAP solution MAP erases borders between a set of separate applications of planning, minimizes a human factor and brings together the analysis, planning and control of accomplishment of the plan.

Use of the SAP solution MAP provides a basis for competent development planning of business of the retail company. The ready technique based on experience of the most successful retail networks allows to receive the guaranteed resultant, namely:

• improve planning processes in the company;
• build the accurate regulations and involvement of all participants of planning;
• coordinate strategic objectives of the company to realistic plans on places;
• reduce losses from overstocking, the unreasonable credits, large-scale discounts;
• - as a result to increase profitability of the company.