Sei sulla pagina 1di 59

SAP Functions in Detail

SAP APPAREL AND FOOTWEAR (SAP AFS)


Copyright 2002 SAP AG. All rights reserved. No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG. The information contained herein may be changed without prior notice. Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors. Microsoft , WINDOWS , NT , EXCEL, Word, PowerPoint and SQL Server are registered trademarks of Microsoft Corporation. IBM , DB2 , DB2 Universal Database, OS/2 , Parallel Sysplex , MVS/ESA, AIX, S/390 , AS/400 , OS/390 , OS/400 , iSeries, pSeries, xSeries, zSeries, z/OS, AFP, Intelligent Miner, WebSphere, Netfinity, Tivoli , Informix and Informix Dynamic ServerTM are trademarks of IBM Corporation in USA and/or other countries.

UNIX , X/Open, OSF/1, and Motif are registered trademarks of the Open Group. Citrix, the Citrix logo, ICA, Program Neighborhood, MetaFrame, WinFrame, VideoFrame, MultiWin and other Citrix product names referenced herein are trademarks of Citrix Systems, Inc. HTML, DHTML, XML, XHTML are trademarks or registered trademarks of W3C , World Wide Web Consortium, Massachusetts Institute of Technology. JAVA is a registered trademark of Sun Microsystems, Inc. JAVASCRIPT is a registered trademark of Sun Microsystems, Inc., used under license for technology invented and implemented by Netscape. MarketSet and Enterprise Buyer are jointly owned trademarks of SAP AG and Commerce One. SAP, SAP Logo, R/2, R/3, mySAP.com, and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and in several other countries all over the world. All other product and service names mentioned are the trademarks of their respective companies.

ORACLE is a registered trademark of ORACLE Corporation.

CONTENTS
SAP Apparel and Footwear (SAP AFS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Characteristics of the Apparel and Footwear Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . Globalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Product Life Cycles and Seasonality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pressure on Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase in Customer Service Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Multiple Distribution Channels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Information Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Key Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Style/Color/Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Style/Color/Size Master Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Categories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Seasonal Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Generic Key Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Integration of Logistics and Financial Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fine-Tuning Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Multi-Company, Multilingual, Multicurrency Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Triangle Processing Intercompany Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Order Management and Fulfillment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sales Order Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Standard and AFS Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EDI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Internet and Intranet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . mySAP TM Customer Relationship Management for the Apparel and Footwear Industry . . . . . Fast Order Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit Card Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reference Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mass Order Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Multi-Store Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mark For Feature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rush Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assortments and Prepacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 10 11 13 13 14 14 16 16 16 16 18 18 18 18 18 18 18 19 19 19 19 19 19 21 21 21 21 22 22 22 22

Sales Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Availability Checking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit Limit Check . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Price Flexibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Special Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Value-Added Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bulk Order Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Order Scheduling and Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Order Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Allocation of Customer Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Allocation Preview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Allocation against Quantity Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shipping and Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Delivery Creation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shipping Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shipping and Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23 23 24 24 24 24 24 24 24 25 26 27 27 27 27 27

Billing Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Billing Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 SAP AFS Logistics Information System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Logistics Information System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 mySAP Business Intelligence for the Apparel and Footwear Industry . . . . . . . . . . . . . . . . . . . . . . mySAP Business Intelligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Data Warehousing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reporting and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Business Content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 28 28 30 30

Sourcing, Inventories, and Supplier Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Procurement Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Purchase Requisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Source Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Political Restrictions and Quotas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vendor Capacity Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 33 34 34

Request for Quotation (RFQ) and Quotation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchase Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MultiLevel Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventory Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stock Transfer and Transfer Posting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Logistical Invoice Verification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Special Business Processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subcontracting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vendor Collaboration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Third-Party Order Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Procurement of Consignment Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

35 35 35 36 37 37 38 38 38 40 40 40

Warehouse Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Production and Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sales and Operations Planning (SOP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Demand Planning with SAP APO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Production Demand Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pre-sizing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Materials Requirements Planning (MRP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bill of Materials (BOM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Routing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Material Requirements Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Parallel Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Automatic Planning Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Evaluation of Planning Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capacity Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Production Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Apparel and Footwear Specifics in the Production Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Combined Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 43 44 45 45 45 46 46 47 47 48 48 48 48 49 49 50

Product Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Split Valuation with AFS Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Split Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Valuation of SKUs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Grouping with Valuation Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Product Costing for AFS Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Product Costing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Costing of Valuation Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Product Characteristic-Dependent Quantity Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Special Production Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost Object Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Make-to-Stock Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Variance Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Customer Make-to-Order Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

51 51 51 51 51 52 52 52 52 52 52 52 53 53 53 53

Profitability Analysis for AFS Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Apparel and Footwear Specific Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Profitability Analysis at Product Characteristic Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Customer Service and Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 SAP AFS Quality Assurance Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Future Focus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

SAP APPAREL AND FOOTWEAR (SAP AFS)


SAP Apparel and Footwear (SAP AFS) is the SAP e-business solution for the apparel and footwear industry. SAP AFS was developed in collaboration with renowned industry leaders to address the particular requirements of the apparel and footwear industry. The development of the solution was mainly focused on illustrating industry-specific processes based on the SAP e-business platform mySAP.com, a family of solutions and services that empowers employees, customers, and business partners to collaborate successfully anywhere, anytime. SAP AFS enables you to benefit from the latest SAP technology and infrastructure enhancements. It is the obvious choice for companies operating in the apparel and footwear sector. This document consists of two parts: Characteristics of the apparel and footwear industry and a discussion of the issues facing executives in the entire logistical supply chain. Key capabilities of SAP AFS.

CHARACTERISTICS OF THE APPAREL AND FOOTWEAR INDUSTRY


The apparel and footwear business is highly demanding, forcing companies to contend with constant challenges in a global business environment: there is relentless pressure on price, cost, and lead times. Trends are created overnight, and the industry has to rapidly adjust. Contract domestic and offshore production combined with global procurement processes create complex value chains that can be inefficient and difficult to monitor. Fashions often change quickly and without warning. In the apparel and footwear industry, companies must cope with seasonal fluctuation, proliferation of design variations, scant information about volatile demand that results in forecast uncertainty, stock shortages, and costly markdowns. Apparel and footwear companies today are increasingly assuming the role of coordinator for both internal and intercompany processes as their core competencies shift away from production and steadily move toward planning, controlling, and monitoring textiles in the value chain. Multilevel division of labor and outsourcing have long been common practice in this industry. In the past, companies achieved their greatest cost-cutting potential by optimizing their production processes. However, the production of clothing and shoes can only be automated to a certain degree, causing the savings potential by these means to quickly reach its limit. The next step was to transfer production to low-wage countries, which in turn meant sacrificing high quality and transparency in the production process. Having production sites spread out around the globe has made supervision and monitoring of the production process more difficult, the transport routes longer and more expensive, and meeting confirmed delivery dates a perpetual challenge. Areas such as product development, raw material and finished goods requirements planning, production planning, coordination and control, transport optimization and monitoring, and quality assurance are taking on more and more importance and therefore tend to remain at headquarters. As a result, the information flow and collaboration among partners in the textile supply chain (logistics service providers, textile manufacturers, contractors, agents, and so on) are increasingly more critical to the success of apparel and footwear companies. Fundamental changes and restructuring are taking place in the apparel and footwear market.

Globalization Domestic as well as foreign company-owned and contract manufacturing have brought an increase in international trading; as a result, business is now transacted in many different countries with various cultures and currencies. This has given rise to software solutions and information technology that support enterprises in their ability to move goods and information expediently and reliably across any distance. The increasing threat of cheap imports and tougher competition have forced companies to adopt a more flexible approach to their manufacturing capabilities. This includes the integration of global sourcing and contract manufacturing as part of a comprehensive sourcing strategy. This strategy has to support a variety of capabilities such as in-house production at domestic or foreign sites, contract manufacturing at domestic or foreign sites, or a combination thereof.

As manufacturing does not always take place in the same country as the final customer, additional requirements regarding customs and quotas are involved, and country of origin restrictions may arise. Sourcing entails both internal and external considerations. It becomes necessary to track production in order to plan or confirm exact product delivery dates and quantities. The improvement in logistics capability and the increasing demand for textile products in the less traditional apparel and footwear consumer markets (such as China, the Far East, India, and Eastern Europe) have led to a truly global marketplace. It is critical for companies wanting to capture and service this demand to be able to operate in all corners of the world. Companies can best profit from this potentially huge market if they are able to transact business efficiently on an international scale, internally as well as externally. They also have to manage the vagaries of fluctuating exchange rates.

Vendor Performance Tooling Amortization Production Complexity Production Capacity Factory Status Lowest Landed Costs WHICH QUALITY Shortest ETD Lowest FOB Costs WHERE

WHAT

PURCHASE ORDER Vendor Product Price Quantity Delivery Date etc.

WHICH PRICE

Enterprise Demand

?
INTERNAL

PURCHASING

?
OUTSOURCE

VENDOR

VENDOR

VENDOR

VENDOR

Figure 1: Decision Support for Global Sourcing

10

TYPE OF SHOE Running Basketball

STYLE Style 4711 Style 4712

COLOR (WAY) WHT/BLU/BLK WHT/RED/BLK WHT/RED/GRN

SIZE W-8 R-8 N-8 W-9 R-9 N-9 ... ... ...

Figure 2: Product Structure: SKU Style/Color/Size

Product Life Cycles and Seasonality Seasonality influences the entire product life cyle. It impacts planning styles, the procurement of raw materials, warehousing capacities, production, delivery, and the orchestration of selling and marketing activities. Product development cycles are shortening and overlapping as customers demand shorter time-to-market cycles. The need for reacting flexibly and promptly to market trends and changing consumer needs has resulted in a proliferation of design variations. The issue of style/color/size and other product characteristics affect the entire supply chain. Only investment in new, advanced technologies can facilitate the handling of large numbers of styles and stock keeping units (SKUs) and the storage of potentially large volumes of data.

The product structure of apparel and footwear companies varies from one to several levels. Not only style, but also color, size and other dimensions need to be stored including the information relevant for the respective level. In addition, the seasonality of the products leads to short life cycles and multiple new styles on a regular basis. In some cases, variations of the same product such as different grades of quality or countries of origin require additional stock segregation and valuation. The number of stock keeping units (SKUs) that needs to be stored can therefore be very large. Continued investment in new technology is essential for staying ahead of competitors, especially when it comes to design capability. This includes investment in sophisticated computeraided-design (CAD) systems as well as technological innovations in the use of fabrics and fibers. In this way, a company can manufacture products whose design sets them apart from cheaper imports.

11

Apparel and footwear companies promote a variety of product groups. Each of these groups may reflect some of the following aspects: They can be restricted to certain sales channels. They can be offered through sales programs, deals, or promotions to encourage future business. They can provide opportunities for cross-selling. They can entail sales commission or licensing charges due to a third party, the retailer, or the manufacturer. Standard designs and carryovers remain in the production line from season to season with possible minor changes to color or detail. Fashion products are sold for a particular season and can have a very short lifetime with new products entering the marketplace four or more times a year. Standard designs and fashion products can be merchandised as a collection or assort-

ment, packaged in different combinations, or sold separately. A fashion company may also supply store fixtures and point of sale materials. Special items might be produced solely for a specific customer. This can involve tailoring an existing product, creating totally new designs, or supplying private labels. Accessories such as hats, gloves, belts, and bags may each use unique size scales (often different from country to country), stocking and ordering policies. The seasonality of the apparel and footwear business means that fashion items are highly perishable. Certain items must be available for corresponding seasons or events, with special needs to mark down or move inventory that will soon be out of season. Price lists, reports, and inventory displays must be available by seasons or events rather than the usual calendar periods.

RELATES PRODUCT, SIZES, AND PRICES TO SEASONS

Region: North America Season: Spring Valid: March to May

Region: Australia Season: Spring Valid: October to January

Figure 3: Seasonality A Business Parameter

12

Flexible Manufacturing

Shared Information

Sophisticated Order Allocation

Transfer Vendor Manufacturing

Transfer Distribution

Transfer Retail Outlet

Transfer Consumer

Sophisticated Planning and Forecasting

Systems Integration

Point of Sales, Vendor-Managed Inventory

More and More Demands

Figure 4: Enabling Core Business Processes and Meeting Customer Service Requirements

Pressure on Costs Increases in raw material and labor costs that go hand in hand with retailers demanding high-quality, low-priced goods, speed, and quality of service must be addressed as follows: Raw material prices became an issue in the mid-1990s when the price of cotton started to rise significantly, having been on a downward trend at the beginning of the decade. Larger apparel and footwear companies have the option of reducing costs for raw materials by putting pressure on textile manufacturers due to the size of their orders. The smaller companies, however, have to compensate by reducing labor costs. The highest labor costs are concentrated in assembly phases, especially in the sewing room. Traditionally, apparel manufacturers focused on minimizing direct labor costs by implementing the bundle system. The increase in inventory costs and risks has also made production throughput times more important. If assembly cycle times are reduced, the inventory level has to meet the immediate replenishment demand decreases. With consumers looking for bargains, retailers were not, in the past, inclined to accept increased costs. Suppliers therefore had to explore other ways of maintaining margins. This led them to reconsider their business activities, pursue more cost-effective manufacturing, and develop innovative product ideas.

Increase in Customer Service Requirements Customer service has become a very important issue due to complex and demanding customer requirements and diminishing customer loyalty. Consumers today are more educated and conscious of what they buy so that their expectations are rising steadily. Apparel and footwear companies are therefore putting their efforts into creating strong brands and focusing on marketing: Changing practices in the retail industry are shifting more responsibility to upstream manufacturers, who in turn are seeking stronger partnerships with their suppliers. In order to meet customer service requirements both in terms of order fulfillment and on-time delivery, a high degree of shared information supported by advanced systems integration, flexible manufacturing strategies, and more efficient planning systems are necessary. Cycle times for satisfying customer orders can range from priority delivery within 24 hours to bulk and single delivery, or vendor-managed inventory with just-in-time replenishment to seasonal planning months in advance. In addition, apparel and footwear suppliers must invest in technology to package, label, route, and move the floor-ready merchandise rapidly from the production site directly to the retailer (direct shipments).

13

Retailers are demanding more and more services including drop and cross-dock shipments, vendor managed inventory (VMI), rapid replenishment, exchanging information on the current status of ordered products, boxing, and bar coding. Apparel and footwear suppliers are under pressure to fulfill retailers orders flexibly, rapidly, precisely, and efficiently. They are forced to keep more finished goods in stock, risking over-inventories or to innovating production processes to reduce that risk.

Companies, partners, and customers are using the Internet to a greater extent to conduct business-to-business processes such as sourcing, demand planning, replenishment, and collaborative design, marketing, and selling products. Successful performance in the apparel and footwear business includes quick response to retailer replenishment requests, achieving a high level of order completeness, short lead times for new products and a quick go-to market. However, this does not necessarily provide a direct financial return. Financial performance is not only affected by increases in labor and raw material costs, inefficient sourcing, punishment for late deliveries, and a lack of transparency regarding contract manufacturers. It is also affected by the risk of holding high inventories of finished goods or work-in-process inventories that go along with planning insecurities. The resulting greater need for mark-downs and write-offs reduces profits. To thrive in this fiercely competitive environment and to address the continuing problem of effectiveness across the apparel and footwear supply chain, well-advised companies develop strong relationships with vendors, retailers, partners, and consumers. By collaborating with one another and exchanging real-time information, apparel and footwear companies are able to minimize competition whilst maximizing their opportunity for identifying and fulfilling customer needs. SAP AFS is the SAP e-business solution that helps you manage the transition from traditional enterprise-centric business processes to adaptive supply chain networks. With SAP AFS, suppliers, manufacturers, distributors, and customers all work together towards a common goal.

Multiple Distribution Channels Multiple distribution channels exist that are typical for sales in the apparel and footwear industry, which all require different processing. Different practices, methods of transportation, distribution systems, pricing conditions, and policies may apply to each of these channels. Distribution channels can include company-owned retail stores, retail franchises, and shop-inshop, but the most common channels of distribution include wholesale, retail stores, mass merchandisers, department stores, specialty retailers, distributors, and licensees. Consumers can purchase in a variety of ways such as by catalog, the Internet, electronic kiosks, direct mail, and telemarketing. Information Technology Information technology advancements significantly improve trade throughout the world by enabling the electronic processing of customer orders in real time, even over long distances.

14

CONSUMER Internet buying CONSUMER DEMAND Shop-in-shop Catalogue Direct Franchisees

DECISIONS

Practices, Policies, and Procedures

Pricing Conditions

DEMAND PLANNING
Distribution System

CUSTOMER Telesales CUSTOMER DEMAND Wholesale EDI Method of Transportation

Figure 5: Multiple Channels of Distribution

15

KEY CAPABILITIES
SAP Apparel and Footwear is the best-of-breed e-business solution for the apparel and footwear industry. It not only addresses the logistical needs of apparel and footwear companies worldwide (such as sales and distribution, materials management, and production planning and execution). It also seamlessly integrates financials, controlling, and all supply chain elements to guarantee your management and staff up-to-date information at the push of a button anywhere, anytime. This document presents in detail the following key capabilities specific to SAP AFS: Style/color/size Generic key capabilities Order management and fulfillment Sales order processing Sales capabilities Order scheduling and allocation Shipping and transportation Billing capabilities SAP AFS Logistics Information System Sourcing, inventories, and supplier Relations Overview Purchase rrequisition Source allocation Request for quotation, quotation, and purchase order Multi-level contracts Inventory management Invoice verification Special business processes Warehouse management Production planning Production planning and control Sales and operations planning Production demand management Material requirements planning (MRP) Bill of materials (BOM) and routing Capacity planning production orders and combined orders

Product controlling Overview Split valuation with AFS materials Product costing of AFS products Cost object controlling Profitability analysis for AFS products

STYLE/COLOR/SIZE

Style/Color/Size Master Data SAP AFS has enhanced standard SAP R/3 data structures to facilitate the handling of potentially very large volumes of data. These enhancements derive largely from the size and seasonal requirements of the industry and relate to the building of product levels based on style/color/size as used throughout the logistical cycle. A grid has been developed to support these specific enhancements and safeguard high levels of performance. This tool ensures that as styles change from season to season, the enormous number of stock keeping units (SKUs) can still be maintained quickly and easily. Copy and referencing functions also support volume changes due to seasonal influences. The product characteristics are represented as AFS dimensions. Dimensions can be flagged as being relevant to certain applications in SAP AFS (for example, for material requirements planning, seasons, or pricing) and thereby increase the flexibility of grid processing. Dimensions are individually definable for every customer and product. Categories In addition to grid dimensions, you can further specify product characteristics by categories. Categories provide an additional layer of detail, allowing you to segregate levels of quality, customer segments, country of origin, and so on. The SAP AFS management of categories has been further enhanced so that category fields can be flagged as being relevant to certain applications in SAP AFS (for example, for planned requirements consumption, bill of material maintenance, or sales status). It is therefore no longer mandatory to maintain all the possible combinations of valid categories.

16

Dimension 1: Color

Dimension 2: Waist

Valid Sizes for Color BLACK

Dimension 3: Inseam

Figure 6: Style/Color/Size Master Data in Product Grid Format and Grid Processing

17

Seasonal Processing The apparel and footwear industry is a highly seasonal business that calls for tight control over product sales and delivery availability. SAP AFS features a season function to define and control seasonal delivery periods and handle specific order periods honoring season-related deadlines. This means you have full control over customer orders, articles, and time frames within order processing. Pricing can be carried-out depending on special events and seasons. For example, during an end-of-season sale, you can decrease the price for an article depending on how sales progress. Furthermore, you can define delivery programs for seasons, collections, and themes and assign the delivery program a delivery date.
GENERIC KEY CAPABILITIES

Multi-Company, Multilingual, Multicurrency Processing Despite multi-company, multilingual, and multicurrency sales order processing, international business must still be able to place orders in only one language. Business transactions with partners in other countries can be converted automatically into other languages and currencies. Each partner is able to process transactions in the appropriate local language and local currency, thus simplifying cross-border trading and supporting a global market. The same applies to country-specific size scales. Foreign Trade The global nature of the apparel and footwear industry also involves continuous changes in foreign trade and customs regulations, which can be formidable obstacles for any organization operating internationally. These affect the entire supply chain from raw materials to finished goods, from inventory to financial accounting. The foreign trade capabilities of SAP overcome such barriers and include support for EDI interfaces for foreign trade information, flexible management of export licenses, automatic declarations to authorities, and representation of preference agreements. SAP ensures that international borders are not trade barriers. Triangle Processing Intercompany Transactions Large international companies transact business with several different companies and in numerous countries. It is therefore important to introduce processes to support such transactions. In triangle processing, an order is taken by one country for a customer, owned by a second country, and delivered by a third. The second country invoices the customer and pays commission to the country in which the order was placed. Grid processing in SAP AFS caters specially to all of these requirements.

Integration of Logistics and Financial Applications Standard logistics and financial applications are integrated with SAP AFS. Logistical business processes automatically lead to corresponding real-time postings in accounting. For example, as a result of a direct shipment request from a customer in sales, a purchase requisition is handed to the purchasing department. Customer-relevant data is then transferred to the purchase order. Purchased products can then be shipped directly to the customer. As soon as an incoming vendor invoice is received, it is automatically visible in the accounts payable department. Fine-Tuning Techniques Customizing can be used to adapt the system to suit the individual operating needs of your company. By fine-tuning order types for example, systems can be quickly matched to everchanging business demands without affecting turnover figures. Constant change is the norm. With SAP AFS, you can define new business processes and adapt existing ones as and when needed, and not just during initial implementation.

18

ORDER MANAGEMENT AND FULFILLMENT


SALES ORDER PROCESSING

Standard and AFS Materials SAP Apparel and Footwear offers a variety of order entry methods and screens, which have been developed together with our customers. All order screens in SAP AFS can be used to order both non-sized and style/color/size materials, regardless of whether orders are entered manually or received through EDI or the Internet.

Payment

Internet and Intranet Internet and intranet application components provide apparel and footwear companies with a variety of ready-to-use and highly configurable business-to-business, consumer-to-business, and intranet applications. Such applications are specifically designed for business transactions and not just for information access. Standard Business Application Programming Interfaces (BAPIs) have been amended to satisfy the SAP AFS style/color/size requirements. The ability to share and exchange information with suppliers and buyers in real time through the Internet allows companies to implement integrated global supply chain management. mySAPTM Customer Relationship Management for the Apparel and Footwear Industry In response to ever increasing profit pressures, organizations have become more efficient, driving costs out of their operations. Furthermore, they have also focused on the quality of their products and services, such that quality is no longer as great a distinguishing factor among different companies. The result of these efforts is that price and quality have converged, shifting the focus of corporate efforts to the customer. Organizations have recognized that they must therefore provide more value in different forms to their customers, and set their key corporate goal to achieve customer value leadership. To accomplish this goal, organizations must create a customer-centric e-business by making the customer the center of all their activities. mySAPTM Customer Relations Management (mySAPTM CRM) connects customers to the knowledge, people, and processes of a company's entire value network, creating customer value leadership through: Superior customer relationships Innovative customer-focused products and services Excellent customer-centric processes

Sales Order Processing

Invoicing

Inventory Sourcing

Delivery

Figure 7: Sales Order Cycle

EDI Electronic data interchange (EDI) plays a critical role in sales, since business information must be transferred as quickly as possible. EDI accelerates and integrates sales operations, ensuring that data transmitted electronically is immediately available to SAP AFS users and applications. In particular, EDI translates customer information into AFS system information, such as dimensions, and can even trigger a workflow process. For example, a workflow event could be automatically initiated for a sales order on the basis of an invalid article number, credit hold, or other user-defined criteria. An added benefit is that work activities can be prompted by the system, should exception messages need to be processed, and users are otherwise free to concentrate on their regular activities.

19

Order 1

Order 2

Order 3

Order 4

Order 5

Telesales Tele-Sales Order 1

EDI EDI Sales Sales Order 2

Internet Internet Sales Sales Order 3

Mobile Mobile Sales Sales Order 4

Faxed Faxed Sales Sales Order 5

KEYED

AUTOMATIC

KEYED

SPECIAL FEATURES: Fast and user friendly Customer product grids No repetition of style numbers Subtotals Hierarchical overview Copy quantities Customer service reason codes

SAP AFS

Figure 8: Multiple Methods of Order Entry

mySAP CRM includes capabilities that are interwoven within the entire customer interaction cycle. These capabilities are discussed in detail below. The mySAP CRM Interaction Center facilitates inbound and outbound communications mainly in the areas of telesales, telemarketing, and service. With SAP AFS 3.0, apparel and footwear companies can utilize the mySAP CRM Interaction Center. Interactions can be blended across all remote channels including telephone, Web, chat, and e-mail. Customer contacts are tracked, monitored, and enhanced for multichannel communication. Inbound calls from your customers (for example, retailers) enable you to automatically identify the customer through the calling phone number. All relevant customer information is available for your call-center agent at a glance. After identifying your customers needs, you can branch to any SAP AFS transaction without keying in redundant information, such as the customer number. With mySAP CRM for the Apparel and

Footwear Industry, you can take advantage of solid expertise SAP has in customer relationship management. The customer care and help desk supports all types of questions, complaints, and returns, with escalation and workflow processing plus many other activities. In the near future, e-selling, e-services, and mobile sales will be available for apparel and footwear companies. E-selling provides comprehensive capabilities for selling apparel and footwear articles through the Internet, while creating a new, strategic sales channel. It covers all phases of the sales cycle, sophisticated product selection, multimedia product catalogs, advanced personalization, convenient shopping-basket management, secure transactions, complete order status checking, as well as supporting payment processing and fulfillment. Intelligent Web analyses and a flexible Web design based on state-of-theart technology top off the solution. E-service offers your customers (retailer and end-consumers), prospects, and business partners access to specific information (such as product catalogs, content, and pricing) and self-service functions (such as order entry and tracking requests) through the Internet.

20

Furthermore, there are plans to support mySAP CRM Field Sales. That means you can deliver key customer and prospect information to your sales personnel in the field. This facilitates the planning and maintenance of sales activities (such as appointments, visits, and calls), and provides activity reports. This also includes capabilities to create clearance sales and take orders. With mySAP CRM Mobile Sales, your field sales force will be supported using mostly autonomous mobile devices. Fast Order Entry Screens designed specifically for SAP AFS have helped speed up manual order entry. Status data such as Sales area and Customer ship-to are displayed on each screen. You are not restricted to using the SAP AFS fast order entry screens; you can create your own screens to suit your individual requirements. This can be particularly useful in a telesales environment. Credit Card Processing The system automates credit card processing by prompting for credit card details (such as number, expiration date, and so on) and auto-dialing for authorization. On receipt of authorization, it captures the details needed for later settlement. Reference Capabilities Cross-reference capabilities allow appropriate product numbers to be found based on different criteria, such as customer product number, UPC/EAN codes (Universal Product Code/ International Article Number), or by referencing a discontinued product to a new product. Appropriate products may also be determined from a list based on pack-code selection rules. For example, a customer may not want articles with coupons to be included in the packaging of any product. The appropriate pack codes can be filtered out of a selection list before the system performs the substitution.

Mass Order Management The apparel and footwear industry has many customers and therefore a large volume of orders. As a result, when your customer service department is compelled to make a general change affecting many orders, considerable time and effort is involved. Two tools are available with SAP AFS to assist productivity: Stock display/mass order display a where-used inquiry on stock consumed/required by orders Mass document change enables users to select many orders and change certain agreed fields in a single process For fast changes to schedule lines in sales orders, SAP AFS enables you to enter data and change entries for selected items or schedule lines.

SELECTION SCREEN Customer Requested delivery date Material Execute selection

CHANGE SCREEN Requested style From: 1475 To: 1476

1475

SELECTION FOUND LIST Sel E E E Order 543 556 610 851 Customer PO No 1000 47355 1131 4600 41899 3299 AB_12 Material 1475 1475 1475 1475 Qty 10 18 12 50 Rq Dlv 12/06/00 15/06/00 15/06/00 20/06/00

CUSTOMER ORDERS

Execute change

UPDATE REPORT

Figure 9: Mass Order Management

21

Multi-Store Orders To service key accounts with multiple outlets or stores using the best possible method, SAP AFS features a new order type known as the multi-store order. This method allows users to accept orders for multiple locations but treat them as a single logistical component. Many stores transmit articles, delivery quantities, and dates for many stores simultaneously. Order maintenance and allocation can be carried out either for each individual store or the whole group of stores together. Delivery can be made directly to the stores or a customer distribution center. When delivery is made to a customer distribution center, articles can be labeled mark for onward delivery to a specific store to facilitate easy cross-docking for the distribution center. The system proposes which stores delivery should be made to on the basis of a predefined customer store hierarchy. A critical marker indicates stores with high delivery priority, due to store openings, fashion shows, or other reasons. In stock shortage situations, the system can determine the quantities to be distributed to the individual stores by means of distribution rules. For instance, using equal distribution, the system assigns an equal quantity of pieces to all stores, whereas with the first-in, first-out (FIFO) logic, the system takes the delivery priority into account and may disregard stores with a low priority. Mark For Feature SAP AFS mark for information helps direct deliveries to particular points within a customer organization. This feature is often used when a large retail chain requests an order to be shipped to a distribution center and marked for a store or department for cross-docking. Mark for information such as department names and details can be automatically copied into the sales orders as a new partner function. Customer-run loading points information may also be copied from the customer master record.

Rush Orders SAP AFS is equipped to handle rush orders if stock needs to be shipped immediately. Sales order entry, allocation, and delivery creation are all carried out at the same time, so that the order can be given to picking without delay. Assortments and Prepacks Assortments and prepacks can be defined using the SAP AFS bill of material (BOM) structure. Assortments are a group of finished goods, whose pricing and processing are done not as a unit, but at the level of the individual components. For example, an assortment could be a golfing outfit consisting of ten golf balls, a golf shirt, and golf pants. The assortment can consist of non-sized and sized products. Sizes for the finished goods, if needed, are specified per item in the assortment during the order-taking process. The system may adjust the quantities for each component of the assortments in case of stock shortage so that they are always based on complete combinations. Prepacks are again logical combinations of finished goods; however the pricing and processing of prepacks are performed for the unit and not on the basis of their individual components. Prepacks have a single size associated with them. For instance, a golfing outfit medium consists of ten golf balls, golf shirt (medium), and golf pants (waist 32, length 33). If you want to combine colors and sizes of one article, such as shoes, in a particular quantity, you can use a quantity distribution profile instead of using an assortment or prepack. This way, the system automatically inserts the respective quantities for the grid values. Using a factor, you can also increase these quantities accordingly. Once you have defined a quantity distribution profile, you can use it again for other products.

22

Other SAP AFS features in Sales Order Processing include the following: Threshold dates for order cancellation: Some apparel and footwear customers carry over unfulfilled sales order requirements into their next purchase order. In this case, a new cancellation date can be entered on a sales order to establish the last date on which an order can be delivered. If the scheduled delivery date is later than the cancellation date, the order can be canceled using the mass document change feature, or rejected from allocation. Item independence: SAP AFS enables you to treat each item in a sales order as a separate order. Cross-divisional sales: Even different product families (for example, divisions such as shoes, apparel, and accessories) can be handled within the same sales order. Customer service reason codes: Should customers decide to change the terms of an order, customer sales representatives can enter a reason code. Time, user, change, and reason are then recorded and always accessible.
SALES CAPABILITIES

The fill rate risplay enables order-taking staff to inform customers immediately of fill-rate options based on available delivery dates and quantities. By drawing the customers attention to the order cancellation date if exceeded, staff can suggest that orders be put back to achieve a better fill rate. A warning or error is displayed if an order no longer falls within a given season.
Material Scheduled Scheduled Cumulative Day after Delivery Quantity Order Required Date Quantity Delivery Date Jan. 01 Jan. 15 Jan. 30 50 25 25 50 75 25 0 14 30 Line % Order % Complete Complete

1475 1475 1475

150% 175% 100%

33% 50% 67%

Figure 10: Example of Proposed User Fill-Rate Information

Availability Checking The SAP AFS available-to-promise (ATP) check is an optional feature to determine whether or not the quantities and delivery dates requested by a customer can be met. When an order is entered, the check verifies whether sufficient stock is available to fulfill the order. If the order cannot be shipped right away, the availability check determines in real time when sufficient stock will be available and proposes a delivery date for the future. The system can be configured to perform a check based on physically available stock or against planned receipts. Replenishment lead times can also be taken into account. To optimize procurement and production, ATP may only be checked within the SKU-level horizon. Beyond this horizon a more global check is carried out at product/style level to see if there is enough time to specify exact size distribution in a later stage of procurement.

This enables companies to make decisions during sales order processing based on real-time information about potential delivery bottlenecks. It helps to complete business processes on schedule and, at the same time, promotes greater customer satisfaction. With back order orocessing, SAP AFS also offers a report to list all sales orders that have only been partially delivered or not delivered at all. Using the rescheduling tool, you may execute the ATP again upon goods receipt and have the system adjust the delivery dates.

23

Credit Limit Check SAP AFS features a variety of flexible options for credit checking, such as credit rating data, planning level, open limit, and open items. You can set credit limit checks at any point in the sales cycle between order receipt and actual shipping. A total limit and/or limits for specific credit control areas may be defined for a given customer. There are also customizable options for system response when credit limits have been exceeded. SAP AFS also features an additional credit check at the time of order allocation. Price Flexibility SAP AFS incorporates strengths such as pricing flexibility and a pricing functionality specifically designed for the needs of the apparel and footwear industry: Pricing at different levels: by style, color, size, category, and so on Seasonal pricing by reference to the season tables Two-date pricing to motivate customers to keep to defined order and delivery windows Price maintenance optimization by creating grid value groups, which reduces the effort involved in maintaining pricing records Associated taxes by size where a material is priced by size (such as tax exemption for childrens shoes) Royalty agreements built into pricing Special Operations SAP AFS allows items to be marked for special processing. For example, an article can be marked to indicate that a generic product such as a polo shirt or overalls is to be customized by the addition of embroidery, badging, cresting, or striping, thus making it exclusive to that customer.

Value-Added Services Many retailers require services, usually done in the distribution center, which change or improve the appearance of their goods before accepting delivery. Such services (such as packing, ticketing, hanging, hemming, and so on) ensure that goods can be put on display immediately upon arrival. A new value-added service (VAS) database has been developed for SAP AFS, which records these requirements and incorporates them for the particular customer at the time of order entry or delivery. Alternatively, such requirements can be entered manually. If desired, these services can influence the sales price accordingly. Bulk Order Processing SAP AFS allows entry of a customers promise-to-buy. The source of the promise-to-buy may be an internal ordergenerating system, such as a vendor-managed inventory, where it is not immediately necessary to know the ship-to points or delivery quantities. At a future date, the customer sends actual orders and instructions with ship-to points and quantities. These quantities are offset against promise to buy quantities. It is therefore possible to compare the customers expected take-up with the actual take-up at any stage in the order process.
ORDER SCHEDULING AND ALLOCATION

Order Scheduling Order scheduling is an optional process in which order lines are automatically grouped or split into deliveries that suit the customer and manufacturer. This guarantees optimal deliveries and the highest of customer satisfaction. It takes specific customer and global business rules into account in order to calculate optimal delivery schedules. Order scheduling is parameter driven. Applicable rules and the sequence in which they are applied can be customized. The order scheduling architecture is designed to enable the addition of new user and customer rules. A typical example of order scheduling is: all order lines that are scheduled to be shipped within a few days of each other are grouped on one shipping date to make an efficient delivery.

24

ARun Functions SAP AFS Optional Process WMS Warehouse Management System (external system) GI Goods Issue

Check

Backorders

Selection

Grouping

Sorting

Allocation

Release

Order Scheduling

Allocation Preview

Order Entry

ATP Check

Save Order

Allocation Run

Delivery Creation

Delivery Changes/ Post GI

Invoice

Allocate Rush Order

Management Tool

WMS

Figure 11: Sales Order Process Flow

Allocation of Customer Orders Tremendous improvements in customer service are achieved through the use of customer order allocation (allocation run). SAP AFS can be user-configured to sequence certain customer orders so that they are given preference when stock is allocated. The orders are then only released for shipping when the order meets customer or business rules on order fulfillment and/or available credit. This way, you only make deliveries you know the customer will accept and pay for and you can avoid potentially costly charge backs. You can specify checks to ensure the deliveries contain enough core sizes (heart sizes) and not just fringe sizes. In the case of stock shortage, you can decide how you allocate stock to orders. For example, by filling orders up to their agreed minimum release quantities, you can increase the number of acceptable deliveries, and therefore increase customer satisfaction.

Depending on your business requirements, you may give high priorities to the orders of important customers and distribute the remaining stock equally among the other customers, rather than not being able to fulfill a sales order at all. The system may check a customers credit limit upon allocation and either exclude the customer from further allocation completely or exclude the sales order items that exceed the credit limit. With SAP AFS, your customer service department can concentrate on managing the exceptions for example, by calling customers and releasing agreed orders using the management tool. Alternatively, the order exceptions can automatically enter subsequent allocation runs to accumulate more stock

25

until the release rules are met, or you can use the Management Tool to de-allocate the stock for allocation to other orders. By setting the allocation run to reject or report orders that are close to or past the cancellation date, you further enhance delivery acceptance. The allocation run can operate on your orders in simulation mode, and you can save the simulation results. Then, you can examine the results to determine the optimum order allocation settings (such as customer allocation priority), thus maximizing customer satisfaction. Allocation Preview The allocation run can also run in preview mode with future planned receipts instead of stock. Allocation preview determines which orders can be delivered and when, should the

ATP (available to promise) situation change. It can also take into account which release rules and customer delivery priorities you would normally use in your allocation process. For example, the purchase order delivery date for sales orders taken six months in advance may change. The customer can be informed of the shift in dates or the change in expected delivery quantities. In preview mode, the results are saved in detail for reporting. This means you can see from a complete order perspective how purchase orders that are late or whose quantity has changed impact your orders. You can also see which customer orders would therefore be late or have problems being delivered because, for example, their release rules cannot be met. Concepts for fixed allocation against future goods receipts are under review, and this functionality is to be included soon in the SAP AFS Allocation Run.

Order Release Planning

CUSTOMER SALES ORDER #

CUSTOMER PARAMETERS PRIORITIZATION

ORDER RELEASE PRIORITY

Product

Customer Type Partial Shipment

Customer Order 5 Customer Order 3 Customer Order 2 Customer Order 1 Customer Order 4 CUSTOMER DELIVERIES

Price Fill Percentage Quality Core Sizes Style/Color/Size Order/Delivery Dates

Improved Customer Responsiveness

Figure 12: Allocation Run Process Flow

26

WILL A DELIVERY ON MONDAY BE SOON ENOUGH FOR YOU?

PRODUCTION, DETAILED SCHEDULING, PLANT LEVEL

FORECAST, DISTRIBUTION PLANNING, PER MARKET

Figure 13: Enhancement of Transportation Tracking and Real-Time ATP Check

Allocation against Quantity Contracts The allocation run may also take quantity contracts signed with customers into account. For allocated contracts, the system automatically assigns incoming goods receipts to open contract release orders to ensure smooth and on-time delivery. The benefit of order allocation is that available stock is optimally distributed among customer orders. Customer orders are fixed and released to the shipping department, which denotes the end of the order allocation process. You can run preview, simulation, and allocation online or in the background.
SHIPPING AND TRANSPORTATION

Shipping Capabilities SAP AFS enhances shipping capabilities by integrating grid value settings, as well as introducing and transmitting valueadded services (VAS) to a warehouse through standardized interface. Shipping and Transportation Shipping and transportation management in SAP AFS tightly integrates materials management and financial accounting. Consequently, up-to-date shipping information is always available. The shipping module provides comprehensive support for foreign trade processing, deadline monitoring of shipments in process, and flexible delivery processing. Picking, packing, loading, and flexible shipping output are also supported.

Delivery Creation SAP AFS provides flexible options for creating delivery notes (for example, by mode of transport, carrier, date, route, and so on). This is the first step to trigger the actual picking of the goods.

27

BILLING CAPABILITIES

mySAP BUSINESS INTELLIGENCE FOR THE APPAREL AND FOOTWEAR INDUSTRY

Billing Facilities SAP AFS provides best-of-breed billing and pricing capabilities. The material grid structure is reflected in the billing document so that sizes and associated prices/taxes can also be displayed. Other highlights of the billing capabilities include: Automatic invoice creation using data from the sales order and delivery notes to accelerate processing A full set of billing services to process invoices, credit and debit memos, and rebates The ability to reference original invoice data in credit and debit memos, which saves time and simplifies communications The real-time integration of billing functions with financial accounting to ensure fast and accurate accounting records Integrated credit card authorization and billing Billing information is also transferred to profitability accounting for immediate analysis.
SAP AFS LOGISTICS INFORMATION SYSTEM

mySAP Business Intelligence Interpreting information is critical to the success of companies in the apparel and footwear industry. mySAP Business Intelligence (mySAP BI) combines data warehousing with comprehensive analyses delivered through an enterprise portal. With mySAP BI, you can measure the effectiveness of business operations and take immediate corrective action when needed to ensure continuous improvement. mySAP BI enables apparel and footwear companies to access the vast supply of information available in the Internet economy, and rapidly turn it into real knowledge on which to base decisions and actions. SAP offers an innovative and sophisticated solution that helps apparel and footwear companies implement industry-leading measurement technologies. mySAP BI offers apparel and footwear companies access to both internal and external information resources, including data from business partners. It also enables them to take advantage of leading industry-specific and cross-industry benchmarks, providing a framework for key performance metrics and optimizing operations. Analytical applications give you control over supply chains, customer relationships, and other enterprise activities. This lets you streamline operations, reduce costs, and promote a strong customer orientation. In fact, mySAP BI promotes a closed-loop approach to managing corporate information. It comprises the most comprehensive set of solutions to gather information, turn that information into knowledge, and navigate the business successfully anywhere, anytime. Data Warehousing Data warehousing delivers a common view of enterprise data, enables analysis and interpretation of integrated, consistent information, and empowers organizations to turn insight into action. The tools and technologies used for designing and managing a data warehouse enable the extraction, integration, and

Logistics Information System The Logistics Information System is a flexible tool for collecting, compressing, and evaluating data (information) from other applications. The central elements form self-defined information structures, which in turn can be filled with customer-specific data using various tools. The information systems have been enhanced to allow analysis and reporting right down to size level. As a consequence, other areas of your company can also access sales information at the required level. For example, production planning and control can break down planning requirement data to a lower level, such as size. Although the Internet has changed the way business is carried out today, interpreting information and translating it into action remains critical to the success of a company. With mySAPTM Business Intelligence (mySAPTM BI), SAP offers integrated, fully Web-enabled capabilities for enterprise performance management.

28

ADMINISTRATOR WORKBENCH

ENTERPRISE PORTAL
BUSINESS EXPLORER

Scheduling

Monitoring

Administration

Third-Party Tools

Web Reporting and Publishing

Multidimensional Analysis

XML

ODBC

API

SAP BW SERVER
OLAP PROCESSOR Metadata Repository METADATA MANAGER DATA MANAGER

Master Data

STAGING ENGINE

PSA

ODS

Interfaces

BAPI

FILE

XML

Feeding Services

Extraction Engine

DB Connect

ETL Tools

Data Source

SAP Applications SAP BW File

Non-SAP Applications Data Provider

EXTRACTION, TRANSFORMATION, AND LOADING

Figure 14: Data Warehousing

transformation of data from multiple sources to support decision-making processes in the enterprise. The data warehouse infrastructure serves both as a collector and provider of data and information (for instance, by populating data marts and the Operational data store (ODS)). mySAP BI comes with a

pre-configured, extendable metadata repository to ensure integrated, consistent, and accurate data. It provides users with a better understanding of the information they are analyzing, and enables the integration of different applications and tools within an enterprise.

29

Reporting and Analysis Reporting and analysis provides decision-support tools such as query, reporting, and multidimensional online analytical processing (OLAP) analyses for collaborative decision making. Users can access data on different levels (detailed or summarized), and share and analyze business information within their Web browser (PC or mobile). mySAP BI contains tools for query design, Web application design, and data visualization. These tools allow users to create analytical applications, represent data graphically, visualize relationships between business information and spatial information (geographical analyses), and easily build comprehensive information cockpits that users can access through an enterprise portal. mySAP BI includes predefined templates for OLAP queries, and formatted reports enabling users to easily define new ones: Winners and losers Sales per style, color and size, product group, and so on Sales per country, region, sales representative, key account, and so on Returns statistics

Order fulfillment statistics ABC analysis Seasons/collections/themes Supplier loyalty Invoice verification Inventory management (material movements, material revaluation) Stock statistics Material consumption statistics Target and actual comparisons: Production quantities, delivery dates, scrap, and so on

Business Content mySAP BI is shipped with information models, and the entire data flow in business content is pre-configured. The models contain predefined templates for reports and analyses with corresponding technical definitions, such as extraction and transformation rules or data models such as InfoCubes, queries, or Web applications.

BEST PRACTICE MODELS

CUSTOMER-SPECIFIC BUSINESS CONTENT

INDUSTRY-SPECIFIC BUSINESS CONTENT (APPAREL AND FOOTWEAR-SPECIFIC CONTENT)

GENERAL BUSINESS CONTENT Financial Accounting Accounts receivable Accounts payable Special ledger General ledger Controlling Profitability accounting Cost accounting Overhead cost controlling Profit-center accounting Logistics Sales and distribution Purchasing Inventory management Warehouse management Manufacturing Human Resources Personnel management Time management Payroll

Figure 15: Comprehensive Business Content 30

SAP BUSINESS INFORMATION WAREHOUSE


MATERIAL T-Shirt 4711 T-Shirt 4711 Shoes 0815 Coat 666 ... SIZE XL L 44 56 ... COLOR BLK Red BLK BLK ... ... QUALITY 1st 1st 2nd COUNTRY DE DE US DE ... SALES VALUE 10.00 USD 15.00 USD 25.00 USD 15.00 USD ...

WHAT IS THE SALES VALUE OF ALL MATERIALS IN COLOR BLACK?

EXTRACTION

WHAT IS THE SALES VALUE OF ALL MATERIALS WE MANUFACTURED IN GERMANY?

SAP R/3
MATERIAL T-Shirt 4711 T-Shirt 4711 Shoes 0815 Coat 666 ... GRID VALUE XL BLK L Red BLK 44 56 BLK ... CATEGORY 1st DE 1st DE US narrow DE ... SALES VALUE 10.00 USD 15.00 USD 25.00 USD 15.00 USD ...

Figure 16: The Elementary Field Concept

With mySAP BI's data warehousing component, SAP Business Information Warehouse (SAP BW 3.0B), SAP has, for the first time, delivered business content tailored to the needs and requirements of the apparel and footwear industry. SAP BW 3.0B includes extraction routines and information models that can transform data from materials management, sales and distribution, production planning, and more into real information and knowledge. mySAP BI for the Apparel and Footwear

Industry delivers content enabling you to run analyses and reports right down to SKU level (dimensions and categories). Therefore, SAP AFS has introduced the concept of elementary fields. Elementary fields contain information about material characteristics such as color, size, or quality. These fields can be mapped with grid dimensions, category fields, and additional material master fields.

31

SAP BUSINESS INFORMATION WAREHOUSE


INFOCUBE INFOCUBE INFOCUBE INFOOBJECTS FOR ELEMENTARY FIELD

COLOR TRANSFER STRUCTURE BLK

SIZE 3132

QUALITY 1st

COUNTRY EU

BAPI

DATA SOURCE REPLICATION

DATA SOURCE

TRANSFER STRUCTURE

BLK

3132

1st

EU

ELEMENTARY FIELDS

LIS

MAPPING

BLK

31

32

1st

EU

CHARACTERISTICS

COMMUNICATION STRUCTURE

BLK3132

1stEU

SKUs

SAP AFS

Color

Waist GRID VALUE

Length

Quality

Country

CATEGORY

Figure 17: Extraction of AFS-Specific Data into SAP BW

SAP delivers a best practice set of elementary fields: size, color, country, stock quality, and required quality. The range of elementary fields can be easily extended to meet your specific requirements. SAP AFS content includes the following objects to gain information from other mySAP.com business applications: Data extraction: AFS extractors, AFS DataSources, AFS transfer rules, and AFS InfoSources Data storage and enrichment/movement: AFS update rules and AFS InfoCubes

Data retrieval and presentation: AFS queries, AFS workbooks, and AFS Roles

The predefined data models can be extended very easily without modification. The apparel and footwear-specific content enables you to implement an information system out-of-thebox. You can also very easily perform ad hoc querying by using drag-and-drop characteristics and key figures. Furthermore, you can integrate the business content into mySAPTM Enterprise Portal for convenient user access anytime, anywhere.

32

SOURCING, INVENTORIES, AND SUPPLIER RELATIONS


OVERVIEW PURCHASE REQUISITION

Procurement Cycle SAP AFS covers industry-specific raw material and component procurement processes, sourcing of finished products, inventory management, subcontracting, and invoice verification. The SAP AFS procurement cycle is illustrated in the diagram below. The great advantage of procurement using SAP AFS is that all routine jobs, from purchase requisition creation through purchase order generation, can take place automatically without any significant help from the purchasing department. They need only intervene in exceptional cases. Because purchasing, warehousing, accounting, and other departments all have access to the same data, no additional effort is necessary for creating and processing purchase orders. You can generate all documents with reference to the data available in the system. In this way, time and effort as well as data entry errors are kept to a minimum. The integration of style/color/size and category definitions to meet the requirements of the apparel and footwear industry has enhanced materials management processes and capabilities.

The purchase requisition is a request to the purchasing department to procure a certain amount of materials or services by a particular date. Purchase requisitions are created manually by the department making the request, or generated automatically by material requirements planning (MRP). The processing of purchase requisitions has been extended to include dimensions and categories. You can distribute the purchase requisition quantity by percentage across dimensions. The distribution can be based on historical data or definable standard distributions. Using SAP AFS source allocation, you can find and assign the most suitable vendors for a requested material to the purchase requisition. Once a supply source has been assigned, the purchase requisition can be marked for request for quotation (RFQ) processing.
SOURCE ALLOCATION

As a result of todays trend towards globalization, the importance of procurement has increased. A module for optimum vendor selection has been developed for SAP AFS. This is an optimized tool you can use to evaluate the most effective channels for procurement. During a source allocation run,

8 Handling of Payments 7 Invoice Verification

1 Determination of Requirements 2 Determine Source of Supply/ Source Allocation

PROCUREMENT 6 Goods Receipt 5 Purchase Order Monitoring 4 Order Processing Vendor Selection 3

Figure 18: SAP AFS Procurement Cycle 33

various suggestions for procurement are generated, proposing the most suitable vendor. This can be either an internal production site or an external vendor. The source allocation sets fixed parameters to determine the ideal vendor, and facilitates the addition of company-specific parameters by the customer. The vendor determined is then assigned to the appropriate purchase requisition. Political Restrictions and Quotas Political restrictions on foreign trade play a special role in the apparel and footwear industry. During vendor selection, SAP AFS takes the import restrictions stipulated by the government or by your companys policies into consideration. You can choose to completely exclude certain countries and companies from your possible vendors or regulate the delivery quantity of certain vendor countries by setting a quota arrangement. If you restrict the import quantity of certain products or product groups, vendors from the specified countries will no longer be

considered by the system if their delivery quantities surpass your limit. In order that two production sites within one company do not exhaust the quota at the same time, only a portion of the total quota for a particular product or product group is allocated to each site. The total quota and the portion consumed by the order are displayed in a list. Vendor Capacity Planning In business practice, you may source the same product from several vendors. You agree with each vendor on the quantity that they are able to supply. Vendor capacities can be determined in different ways, such as according to vendor and material or material group. The capacity is defined as basic capacity, overload capacity, and maximum capacity. If a vendor has reached the maximum capacity for a particular material or material group, the user is informed accordingly. Thus the user can optimize capacity distribution for internal and external production across all vendors.

VENDOR 1000 LEVEL 0


VENDORS TOTAL CAPACITY ELEMENTARY FIELDS

Total Capacity Overload Capacity Per Period

100,000 hours 10,000 hours

LEVEL 1

Tooling Capacity Tooling Set A 50,000 hours

Total Capacity Tooling Set B 80,000 hours

LEVEL 2

TOTAL CAPACITY Overload Capacity Consumed Capacity Consumption Overload Capacity

Model Capacity Model A 50,000 hours

Model Capacity Model B 20,000 hours

LEVEL 3

Material 70 white 1 pair = 5 hours

Material 80 black 1 pair = 2 hours

CAPACITY BY PRODUCT

Figure 19: Source Allocation Vendor Capacity

34

Further user-defined criteria for source allocation are: Vendor rating: The user can specify and weight the main criteria for evaluating a vendor. Factory status: User-defined partner status for a vendor Complexity factor: Evaluation criterion for the quality of production that indicates how well the vendor is able to produce a product with complex production phases. Amortization costs for tools: For equipment supported by the company Smallest FOB (free on board): Costs excluding dispatch costs Smallest landed costs: Costs including dispatch costs Estimated time of arrival (ETA): Quickest possible delivery
REQUEST FOR QUOTATION (RFQ) AND QUOTATION

PURCHASE ORDER

You can automatically generate purchase orders from the list of purchase requisitions to be processed by the buyer, and to which a source of supply has been allocated. If the vendor for a material is already fixed, you can create the purchase orders straight away without first creating a purchase requisition. Order quantity entry for various items in the purchase order can be created at dimension and category level. Distribution profile features and rounding functions are also available in the purchase order. If certain dimensions of a material cannot be supplied or delivered by a particular vendor, the system allows you to define a purchase grid with the valid dimensions for this material/ vendor relationship. These are automatically taken into consideration in the purchase order.
MULTILEVEL CONTRACTS

A request for quotation (RFQ) is sent to various vendors asking them to submit a quotation. The quotation contains a vendors prices and conditions for the materials needed. Data from the quotations received is maintained with the respective request for quotation. The request for quotation and quotation are therefore seen as one. In addition, the request for quotation and quotation contain information at dimension and category level. Quantities can be automatically distributed among dimensions and categories. Prices can be defined using the SAP condition technique at SKU level. Using a price comparison list, you can carry out a quotation comparison at the SKU level to establish the best quotation.

It is quite common in the apparel and footwear industry to draw up long-term purchase agreements with external vendors, who deliver materials or supply services under certain conditions. SAP AFS can process these agreements without yet having to define precise information at material or SKU level. Using these functions, the customer can issue a purchase agreement for an undefined quantity for a future date. With the approach of the scheduled delivery date, the contract takes on a more concrete form as a new scheduling agreement to the original contract. Additional information is determined, such as raw material color. Exact quantities and destination are confirmed when the delivery date is established. By using this function, your company has greater flexibility when planning the purchase of materials and can react more quickly to changes in the market.

35

PRODUCTION PLANNING

VENDOR

PROCUREMENT OF RAW MATERIAL

ROUGH PLANNING

DETAILED PLANNING

MANUFACTURING

LEVEL 3 Material A-Size: 38 L Quantity: 1,500 pieces Validity Period: July 1st August 1st LEVEL 2 CREATION DATE Material A Quantity: 7,000 pieces Validity Period: July 1st September 1st LEVEL 1 Target Quantity: 100,000 pieces Material Group: T-Shirts Material A Material B Validity Period: July 1st December 1st December January April July Validity Period of LEVEL 1 Contract Validity Period of LEVEL 2 Contract Validity Period of LEVEL 3 Contract

Release Order

October

Figure 20: Multilevel Contracts Logistic Background INVENTORY MANAGEMENT

Inventory Management with SAP AFS offers you the following: Management of on-hand stock based on quantity and value Planning all stock movements Inventory movement processing In the inventory management system, the exact physical stock is always displayed using real-time processing for all cases in which stock has changed and the resulting inventory has been updated. Users can view the current stock situation of a material any time. Whenever there is a change to the stock, the data is immediately updated and made available to upstream and downstream departments. Stock value is also updated when a goods movement is posted, and value updates are triggered in

other business applications, such as G/L accounting. Single items are generated for any account assignment objects involved. The amounts posted are created automatically by the system based on data from the purchase order and material master record. Consequently, when creating a goods movement you only have to enter the quantity to be moved. During goods movement, documents are created that form the basis for the quantity and value updates and (at the same time) record the movement. All relevant features in inventory management (such as goods receipt to purchase order, reservations, goods issue, transfer posting, and stock transfer) have been enhanced to show data at SKU level. The stock requirements list, all goods movement documents, and the most important evaluations include information at SKU level.

36

Inventory When balancing stock accounts, a company must carry out a physical inventory count of warehouse stock at least once every fiscal year. Various procedures can be used. The SAP system supports the following inventory procedures: Periodic inventory Continuous inventory Cycle counting Inventory sampling procedure It is possible to include freely available stock, stock in quality inspection, and blocked stock. Inventory processing for warehouse stock and special stock is also supported. SAP has extended the inventory sampling procedure; it can now be carried out at the dimension and category levels. Information at SKU level is available in all relevant processes such as physical inventory document creation, creation of payment results in the system, and posting results.

Stock Transfer and Transfer Posting In addition to posting goods receipts and goods issues, SAP AFS enables you to enter internal goods movements at the SKU level by using transfer posting and stock transfers. With transfer postings, you change the material number, the stock type, or the batch of a material. In SAP AFS, you can also transfer post the grid values and category values of the output material to other SKU values of the receiving material. With stock transfers, you enter the physical goods movements between different production sites or company locations. The receiving production site makes a request for a product using a stock transport order, whilst the issuing production site posts a goods issue with reference to the stock transport order. You can create the goods issue as a goods movement in inventory management or using delivery note processing. The withdrawn quantity is recorded as stock in transit of the receiving production site.

RECEIVING PLANT A
B B A B C UNRESTRICTED USE STOCK Goods Receipt

Stock Transport Order

ISSUING PLANT B
B B B A Goods Issue C UNRESTRICTED USE STOCK

STOCK IN TRANSIT

Figure 21: Stock Transfer

37

The receiving production site posts a goods receipt with reference to the stock transport order. This reduces the stock in transit and the open purchase order quantity. It is also possible to post the goods receipt in the receiving production site as one step. At the same time, the issuing production site posts a goods issue so there is a no-stock-in-transit situation. Even if the respective production sites belong to different company codes, you can still create a stock transfer as follows: Stock transfer from one production site to another using a one- or two-step procedure Stock transport order with or without a delivery note
LOGISTICAL INVOICE VERIFICATION

Posting of account movements resulting from invoices Updating of data such as open items and material costs Retrospective processing of invoices that were blocked due to substantial variances in the ordering transaction

Logistical invoice verification has been enhanced in SAP AFS. To enable invoice verification to check invoices for content, price, and calculation accuracy, all information has been enhanced to include dimension and category level. This information is now available, for example, at the time of invoice creation.
SPECIAL BUSINESS PROCESSES

Logistical invoice verification is part of materials management. At the end of the logistical chain after planning, purchasing, and inventory management, invoices must be checked for accuracy as regards content, price, and calculation. When an invoice is posted, all data from the invoice is stored in the system and updated in materials management and other applications in real time. Logistical invoice verification includes the following features: Completing the procurement procedure: from purchase requisition through purchasing to goods receipt Processing invoices that did not originate in procurement (for example, services, travel expenses, and seminar costs) Processing credit notes, either in the form of invoice cancellation or discount The payment or evaluation of invoices is not part of invoice verification. This information is forwarded to the financial department. Invoice verification establishes the connection between materials management and accounting (financial accounting, asset accounting, and cost accounting), and includes the following: Creation of incoming invoices and credit notes Checking of invoices resulting from account movements for content, price, and calculation accuracy

Special business processes characterize the apparel and footwear industry. Such processes include outsourcing of production, in-house production in domestic or foreign plants, subcontracting, full-package sourcing, and purchasing of semifinished and finished products. Subcontracting Material procurement through subcontracting is processed in SAP AFS using subcontracting orders. The following functions are available: Order of material or service with a vendor Provision of material components for production or embellishment Available-to-promise check for components to be provided Material withdrawal from companys own stock or delivery by third-party vendor Monitoring of subcontracting stock at SKU level Creation of delivery notes for components to be provided Post product as consumption using goods receipt posting and handling of consumption deviations Post finished product as goods receipt Outsourcing certain operations of an in-house production process. A subcontracting order is then generated including the provided components

38

PURCHASING

INVENTORY MANAGEMENT

INVOICE VERIFICATION

PURCHASING

STORAGE LOCATION

STORAGE LOCATION

INVOICE VERIFICATION

PURCHASE ORDER Subcontract Item Components

PROVISION OF COMPONENTS

GOODS RECEIPT FOR FINISHED MATERIAL INVOICE Production Costs

TRANSPORT

COMPONENT CONSUMPTION

SUBCONTRACTING VENDOR

SUBCONTRACTING VENDOR PRODUCTION

SUBCONTRACTING VENDOR

Figure 22: Subcontracting Overview

Sales Order

Procurement

Allocation Run

Delivery Picking and Post Goods Issue

Invoice and Financial Accounting

ATP

MRP

Create Subcontract Order

Monitor Stock of Material

Provision of Components

Post Goods Receipt for Purchase Order

Invoice Receipt for Purchase Order

Figure 23: Subcontracting Process Flow

39

Stock of provided materials stored at the subcontractor site is treated as special stock of the respective vendor. This is because it is neither available nor does it exist in the total stock of the production site, although it is your companys property. Vendor Collaboration External vendors can be integrated into the purchasing process by Web Access, even if they do not have an ERP system. Confirmation processes are defined and assigned to the purchase orders. Vendors can access their purchase orders through the Internet and can enter the confirmation steps. When the confirmation steps are saved, the information is transferred back to the purchase order in the backend system of the ordering party. This ensures direct and prompt feedback from your vendors, and allows you to precisely plan further processing. You can use vendor collaboration to monitor subcontracting, raw material procurement, and full-package sourcing.

Third-Party Order Processing Another important business process in the apparel and footwear industry is third-party order processing, also known as direct shipment. Here, your company does not carry out the delivery of products to the customer. Rather, the goods are commissioned to an external vendor, who sends them directly to the customer and invoices you accordingly. You can choose how to handle certain items. For example, if a large quantity of a product you would normally deliver yourself is ordered, you can decide to handle it as a third-party item. Furthermore you can determine that certain products, such as accessories procured from a private label manufacturer, are always handled through third-party order. This process is supported throughout the system at the SKU level. This means that all relevant information is available at the SKU level, from sales order creation to the automatic generation of a purchase requisition and the conversion to a purchase order. In addition, the process is fully transparent in the purchasing and sales departments, and in the planning department (MRP). Procurement of Consignment Material Consignment material is a material that is stored at your production site but remains the property of the vendor. A binding material valuation using the predefined vendor price is not carried out until the material is withdrawn or transferred to your own stock. The price can be established at the SKU level and unused material can be returned. The settlement statement is sent to the vendor, for example, each month, quarter, and so on. All movements for consignment materials are firmly allocated to consignment stock at the time of posting by setting the special stock indicator.

Figure 24: Vendor Collaboration

40

MASTER DATA Consignment Info Record Consignment Stock Record

PROCUREMENT PROCESS

Vendor Purchase Order Consignment Item

Goods Receipt

Invoice

Warehouse Companys Own Stock Vendor Consignment Stock Available for MRP Not valuated Belongs to vendor

Goods Issue

Production Site

Figure 25: Procurement of Consignment Material WAREHOUSE MANAGEMENT

For the timely and efficient processing of logistic requirements, companies are dependent on computerized organization and management of their warehouses. Apparel and footwear companies in particular need to be able to manage highly complex warehouse structures and a multiplicity of warehousing facilities.

For SAP AFS, standard warehouse management business applications have been enhanced by integrating style/color/size definitions: Material master maintenance: You can choose whether the warehouse management view and relevant features are maintained at the material or SKU level. This also includes general data such as volume, gross weight, and capacity consumption.

Put-away strategy/picking strategy: It is possible to determine strategies at the SKU level (style/color/size/categories), by which the system establishes storage bins for stock to be put away or picked. With SAP AFS, you can make the best use of the available warehouse capacity and assign optimum storage locations to the stock received. Similarly, SAP AFS allocates the optimum picking location to picked stock. Storage section determination: You can define in which storage section each material or SKU should be stored. For example, you might store common sizes in storage section 1, and less frequent sizes in storage section 2. General storage strategy: It is also possible to maintain general storage strategies (bulk storage indicator, special movement indicator, and 2-step picking) at the SKU level. Palletization data: Palletization data is maintained at the SKU level. Various quantities and pallet types can be maintained, depending on the SKU.

41

Fixed space: Should a material be allocated to a fixed space, it is possible to assign various storage locations, quantities, control, and replenishment quantities. Selection screens: You can enter the SKU as a selection criterion to display just one grid value category per material, for example, or warehouse internal documents, depending on the selection. Inventory count result: You can create count results right down to SKU level, irrespective of whether you are dealing with a material which should be stored at that location or was found there. The count result is created for each location at SKU level. Replenishment: With a transfer requirement, the production supply area in the warehouse is replenished based on a released production order. The system creates the transfer requirement item at SKU level, based on the demands of the production order.

Decentralized WM: In the ERP system, all partial processes are processed that are a preparation of the activities in the warehouse. Inventory management, valuation, ATP, and credit checks are processed in the ERP system, for example. In the Warehouse Management system (WM) all functions are provided that serve the handling of warehouse processes. BAPIs: Communication between ERP and the WMS system is processed through a BAPI. All BAPIs, as well as master data IDocs, are enhanced with SKU Data. Radio Frequency (RF): Internal warehouse and combined processes are covered by RF functions, which have been enhanced with SKU Data. The necessary SAP Console also displays all SKU information on a character-based RF device.

42

PRODUCTION AND MANUFACTURING


OVERVIEW

In mySAP.com, you can comprehensively plan your demand program (product type and quantity) and production. Production encompasses procurement, storage, and transport of materials and intermediate products, and material requirements planning (MRP) for all bill-of-material (BOM) levels. Production planning and control in SAP AFS has been designed for the special needs of the apparel and footwear industry. In particular, demand management, material requirements planning (MRP), planned orders and production orders include a product structure (style/color/size) and categories specific to this industry sector. The logistical cycle begins either with sales and operations planning (SOP) and forecasting, or with sales and production demand management. The sales department receives customer requirements from the market and demand management fore-

casts sales. The resulting independent requirements (in particular, requirements for finished products and trading goods) trigger material requirements planning. Order quantities and delivery dates must be determined and the respective procurement activities must be launched to ensure requirement coverage. Ordering transactions or subcontracting are initiated for outsourced products. Appropriate vendors must be selected or outline agreements made. Quantities resulting from production or outsourced procurement are put on stock and administered by inventory management. The following diagram illustrates the logistical cycle between sales and procurement. The system comprehensively plans, monitors, and coordinates all functions.

FORECAST/PLANNED REQUIREMENTS

MRP

SALES Sales ORDER Order

CUSTOMER REQUIREMENTS

PURCHASE PURCHASE REQUISITION REQUISITION

External

Internal

PLANNED PLANNED ORDER/ ORDER/ Secondary Secondary Requirement Requirement

PURCHASE PURCHASE ORDER ORDER

PRODUCTION PRODUCTION ORDER ORDER

PLANT PRODUCTION SITE

Figure 26: Materials Requirements Planning

43

In addition, SAP AFS supports various procurement processes relevant to the apparel and footwear industry such as private label and make-to-order production (for example, custommade products).
SALES AND OPERATIONS PLANNING (SOP)

SOP builds on information structures a statistical file containing operational data. This can either be planned future data or actual historical data, containing characteristics, key figures and a time base. Information structures are used for evaluation, projection, and analysis of data in all logistical information systems. SOP is especially useful for long-term and mid-term planning. In the apparel and footwear industry, long-term and mid-term planning are generally carried out at the product group and style levels. You can save the underlying statistical historical online in SAP BW as well as in the logistical information system with each logistical transaction (for example, sales order, purchase order, and production order).

Sales and operations planning (SOP) is a flexible forecasting and planning tool that determines not only sales and production targets, but targets from other areas throughout the logistical cycle. Forecasting and planning can be based on historical data, current data, and/or estimated future figures. Capacities and resources imperative for reaching these targets can also be determined using SOP.

SOP provides a method for: Sales planning Production planning Feasibility estimates QUANTITY Sales plan Production plan Capacity estimate MAY JUNE JULY TIME

Figure 27: Sales and Operations Planning

44

DEMAND PLANNING WITH SAP APO

PRODUCTION DEMAND MANAGEMENT

mySAPTM Supply Chain Management (mySAPTM SCM) enables companies in the apparel and footwear industry to anticipate consumer behavior (including the impact of promotions) and forecast demand more accurately. mySAP SCM combines distribution and transportation capabilities to support demanddriven replenishment for maximum profitability. Retailers and carriers can be seamlessly integrated into the supply chain processes. The SAP Advanced Planner and Optimizer (SAP APO) is one of the key functional areas of mySAP SCM. SAP APO enables supply chain partners to forecast and plan demand while considering historical buying and selling behavior, market intelligence, and sales objectives. The demand is optimally matched to supply so as to maximize the return on assets with consideration of operational constraints. SAP APO updates and synchronizes plans based on the dynamic exchange of information and allows you to derive total supply chain production requirements and make results available to all members of a supply chain. With SAP AFS 3.0B you can execute demand planning in SAP APO and then transfer the demand plan as planned independent requirements to demand management. Demand planning can thus be executed in two different ways: At the material level without additional dimension values (style/color/size). At the material dimension level (style/color/size) When the demand plan is transferred to demand management, the planned independent requirements are created. In the event that not all of the dimensions were considered in the first planning phase, the pre-sizing profile is then used to distribute the planned independent requirements among all the material characteristics.

Production demand management determines requirement quantities and delivery dates for finished products. Demand management uses planned independent requirements and customer requirements, which are created in order processing, to create a demand program. The input from SOP can be copied to the planned independent requirements as default data. It is possible to break this data down to the level of style/color/size (pre-sizing). Pre-sizing SAP AFS pre-sizing distributes aggregate planned independent requirements to detailed planned figures at the SKU level using distribution profiles. Distribution to a more detailed period split is also possible, from annually planned figures to weekly planned figures, for example. Furthermore, seasonal influences can be taken into account in the distribution profiles, for example, so that an annual planning value can be distributed to periods throughout the year. Planning values would then be increased for certain seasons (for example, back-to-school, Christmas, and so on).

45

You can calculate distribution profiles from statistical historical values stored in the logistical information system. SAP AFS pre-sizing includes: Manual determination of percentage distribution values per size or period. Calculation of percentage distribution values based on historical data from the logistical information system. Calculation of distribution profiles for new products with no historical data based on the historical data of reference products. Aggregation and disaggregation of historical data that can be used to calculate distribution curves (for example, historical data per product group, per season, per a combination of a number of seasons, or for individually selected reference products). Simulation option based on user-defined criteria.

MATERIALS REQUIREMENTS PLANNING (MRP)

Bill of Materials (BOM) Bills of materials (BOMs) and routings contain important data to ensure integrated materials management and production control. Pattern making, grading, and pattern engineering form the production structure of a new product waiting to be produced. The result is a number of sketches, a list of all necessary components and their size-specific consumption, and technical and product costing conversion the BOM and routing. The BOM has been enhanced so that all size-specific dependencies on material consumption, selection of certain components, and cost accounting are included in one BOM. You can also maintain dependencies for other product characteristics in the BOM (such as color, shade, quality, customer-specific

GRID A 6 8 10 12 14 JACKET (SAP AFS Material) BLK WHT RED

MRP

FABRIC (SAP AFS Material)

ZIPPER (SAP AFS Material)

BUTTON (Standard Material)

GRID B BLK WHT RED . BLU RED GRN

GRID C MRP 44 46 48 50

Figure 28: SAP AFS Bill of Materials

46

extras, and so on). It is possible to set up different locations for procurement of components, which are selected depending on the time interval for which the locations are defined. Often, you must make changes to a large portion of the product range due to alterations in style or seasonal characteristics. You can easily achieve this in SAP AFS by using the mass change and referencing functions. Routing A routing describes the operations (process steps) as well as the details about the work centers and production resources and tools required for producing a material. You can thus specify in the routing how various product characteristics affect lead times and each production operation. Routings are selected based on the different characteristics for lead-time scheduling and production order processing and then taken into account during lead-time scheduling and capacity planning. Material Requirements Planning The main task of material requirements planning is to ensure material availability (for example, to procure the necessary material requirements on schedule for sales and manufacturing). This task includes monitoring stock and, in particular, making suggestions for procurement, purchasing, and production. MRP is triggered by independent requirements from sales and demand management forecasting (such as requirements for finished products and trading goods). MRP determines order quantities and delivery dates and the respective procurement documents created to ensure coverage (planned orders for internally produced goods, and purchase requisitions for outsourced production). Both documents are planned internally and can be changed, rescheduled, or deleted at any time.

In addition, secondary requirements, the quantity of material components (for example, leather, fabric, or lining) or assemblies (for example, shoe sole or bootleg) are determined for internally produced goods using BOM explosion. Secondary requirements are necessary for the production of the finished product or assembly. Planned orders and purchase requisitions are created at each BOM level if there is a material shortage. Once MRP has completed quantity planning and scheduling, the planned documents are converted into fixed procurement documents (planned order to production order, purchase requisition to purchase order). Lot-sizing procedures and planning parameters are available to ensure an optimized calculation of the entire order quantity and each individual grid value in the order. Lot-sizing procedures enable planning results that show only certain size groups in one order, or that a particular relationship between size quantities are calculated for each order. It is also possible to distribute order quantities across the different sizes automatically using predefined distribution profiles. The most common lot-sizing procedures are available, but it is also possible to integrate individually customized ones. By using planning parameters for the SKU level, you can define, for example, minimum order quantities, rounding values, and safety stock for each size or size group. The MRP enables you to plan in one time frame at size level for future periods and all requirements beyond that time frame at article level. This ensures that planning only occurs at the necessary level of detail.

47

Products labeled as AFS-specific are processed by SAP AFS MRP (such as products with more logistically relevant characteristics that might include size, color, shade, and quality).

Automatic Planning Run The automatic planning run in MRP determines material shortage and generates the respective procurement document. The system informs you of critical areas and exceptions, allowing you to modify planning results accordingly. Evaluation of Planning Results Planning results can be reviewed and evaluated by a series of different methods (for example, stock requirements list, MRP list, planning results per MRP controller, product group, order report, and so on). Evaluation capabilities allow your MRP controller to process planning results from an aggregated level to the most detailed SKU level, with the help of diverse selection criteria. SAP AFS points to critical areas without delay. All relevant features are accessible through one single, user-friendly, and easy-to-handle window, the AFS MRP Cockpit.
CAPACITY PLANNING

SKU LEVEL

MATERIAL LEVEL

MRP PLANS REQUIREMENTS AT SKU LEVEL

MRP GROUPS REQUIREMENTS TOGETHER AT MATERIAL LEVEL

SIZE-LEVEL HORIZON Current Date

BEYOND SIZE-LEVEL HORIZON 30 Days

Figure 29: SKU Level Horizon in SAP AFS MRP

Parallel Processing The total planning run time is improved considerably by using parallel processing. It can run either on different servers or in different server modes to further speed up processing.

SERVER 01 MRP DISPATCHER Material 01

SERVER 02 Material 02

DB SERVER DB Changes

Planning File Entry

SERVER 03 Material 03

Economic resource planning is present in various areas of a company. Capacity planning with SAP AFS supports all phases of planning: long-term estimated planning, mid-term planning, and short-term detailed planning. Capacity planning comprises three components: Capacity analysis: Available capacities and capacity requirements are determined and illustrated in lists and graphics. Capacity leveling: Optimum reservation of capacity and selection of appropriate resources. Planning boards in graphic and table form are available to illustrate the capacity situation and process capacity leveling. Capacity planning: Capacity loading for AFS-specific products is based on routings that are selected according to the above-mentioned criteria. The influence of different product characteristics in the individual production operations and lead times can be established in the routing for AFS-specific products. Routings for lead-time scheduling and production order processing are selected according to these criteria.

Figure 30: Paralell Processing

48

PRODUCTION ORDER

Production orders determine which product or assembly is produced, as well as the work center, activity, delivery date, and production costs. The production order also includes details of the resources (personnel, materials, production resources and tools, and so on) required to calculate the order cost. You can use the production order to monitor the order status for goods produced in-house. The order includes scheduling, capacity planning, and status management. The order process report has been enhanced by adding the operations. This process enables you to monitor the individual production steps within one single report. Cost accounting is carried out in the same way for each production order. When a production order is created, the following actions are carried out: Routing selection: Routing operations and sequence are transferred to the production order. BOM explosion: BOM items are transferred to the production order. Reservations: Reservations are generated for BOM items in stock. Planned costs are established for the production order. Capacity requirements are generated for the work centers. Purchase requisitions are generated for non-stock components and externally processed operations. Apparel and Footwear Specifics in the Production Process The specific characteristics of the production process in the apparel and footwear industry have prompted SAP to make further developments for this step in the supply chain. For example, production in bundles is typical in the apparel industry. In the footwear industry, shoes can be grouped according to size, for instance, and shipped in large cartons. All specific information contained in BOMs and routings reappears in the production order. It is also possible to assign component batches to a production order to control different shadings or dye lots.

Production orders in the apparel and footwear industry usually consist of several logistical subdivisions: Total quantity of the product to be produced Different sizes (SKUs) with varying quantities Grouping together of products in smaller logical production lots, such as bundles Central transactions such as confirmations, monitoring production status, and goods receipt can also be processed for individual bundles/cartons, individual sizes, or a combination of the two. In addition, you can integrate markers into the production order and planned order. The production order sizes resulting from a marker and the quantities derived from the fabric ply height form the rates for sizes and quantities received from MRP. If necessary, planned quantities in the order are adapted accordingly.

SAP AFS PLANNED ORDER BLU BLK EXTERNAL MARKER LIBRARY Marker 1: 32 x 30 32 x 32 34 x 32 Marker 2: 30 x 30 28 x 32 50 50 50 50 50

Waist Inseam 28 30 32 34 28 50 50 30 32 30 50 50

TOTAL: 230 PIECES

TOTAL: 250 PRIECES

Figure 31: Markers Quantity Adjustment

49

An available-to-promise check (ATP check) for production orders displays all competing requirements for a particular component. It enables your MRP controller to decide in stock shortage situations, for instance, whether a certain component needed for several production orders can be consumed by another time-critical production order. Combined Orders In the apparel and footwear industry, production orders are often combined, especially in production phases such as cutting and pattern engineering. This might be the case, for example, when the same fabric is used for different products. By combining several production orders, cutting and use of fabric are rationalized. However, settlement, costs, and logistics of each production order remain separate for each finished product.

In SAP AFS, several production orders can be logically grouped in a combined order. Transactions such as roll selection, confirmations, goods receipt, and goods issue can either be processed together for the combined orders, or separately for each individual production order. Selection of suitable rolls of fabric and leather for a production order based on criteria, such as shade and leather quality, plays an important role in production for the apparel and footwear industry. SAP AFS uses roll-selection features where the optimum choice of material input for a production order (for example, fabric or leather) is selected. You can freely define criteria by which the system sorts and selects data to efficiently allocate a quantity of input material for a production order or combined order.

COMBINED ORDER NUMBER 38

Production Production order order 10023 10023 Routing Routing11

10023

10024

Production Production order order 10024 10023 Routing Routing21

Cutting

Embroidery

Sewing

Sewing

Quality Check

Quality Check

Figure 32: Combined Orders

50

PRODUCT CONTROLLING
OVERVIEW SPLIT VALUATION WITH AFS MATERIALS

Special structures are available in SAP AFS to illustrate products or materials and their industry-specific characteristics. These special structures, known as grid values, dimensions, and categories, facilitate the processing of logistical business processes at the levels below the material master. At the same time, these structures influence product controlling in SAP R/3 and mySAP.com. Additional industry-specific capabilities are available in the areas of product and material valuation, product cost planning, cost object controlling, and profitability analysis to accommodate the characteristic levels listed above. Nearly all other mySAP.com accounting components are supported at the SKU level (financial accounting, overhead costs controlling, and so on).

Split Valuation Stock keeping units (grid values and categories) of a material or product generally do not have the same purchase price or production cost. Procurement costs, raw material expenditure, and production costs can vary tremendously, making flexible material valuation of stock keeping units essential. Valuation of SKUs SAP AFS takes valuation differences at product characteristic level into account by managing SKUs separately. You can assign a separate valuation price to each stock keeping unit, which can either be a standard price or a moving average price.

VALUATION DIMENSIONS PRODUCT COST PLANNING

Material: Plant:

Jeans 0001

GRID VALUE: 30/30 COST OBJECT CONTROLLING CATEGORY: BLUE/ STONEWASHED

GRID VALUE: 32/32 CATEGORY: BLUE/ STONEWASHED

GRID VALUE: 33/33 CATEGORY: BLUE/ STONEWASHED

CATEGORIES

Figure 34: Split Valuation of SAP AFS materials


PROFITABILITY ANALYSIS 1 2 3

Quality

Figure 33: Product Controlling

51

Grouping with Valuation Types As costs for sizes, colors, or categories of a material do not always significantly differ, and to avoid numerous single valuations impairing performance unnecessarily, SAP AFS can combine separate grid and category material characteristics in what is known as a valuation type. By using valuation types the common valuation of any number of stock keeping units for a particular material is simplified.
PRODUCT COSTING FOR AFS PRODUCTS

for stock valuation and product cost controlling. The system carries out valuation type costings based on one determinable preference SKU for each valuation type. Product Characteristic-Dependent Quantity Structure The basis of product costing is the respective quantity structure (bill of material and routing). A products quantity structure can be defined according to grid and category. Product costing in SAP AFS examines this grid or category-dependent determination. In the costing of a particular SKU, the system explodes the bill of material according to the grid values/categories to be calculated, and determines the relevant routing together with its operations. Cost Elements The most important costing elements of a product are material and production costs. The system determines a products material costs based on the prices and quantities of the components used. At the same time, the system looks at grid- or category-dependent component prices and quantities over the entire cost roll up (and all production steps). Production costs are planned based on the respective routing and the operations defined therein. In addition, material and production costs can be debited with an overhead rate. Special Production Scenarios When determining the quantity structure, product costing considers production scenarios typical to the apparel and footwear industry, such as cross-plant production or subcontracting of materials. In the case of subcontracting, the system automatically determines the relevant costing information from the purchasing info record of the subcontractor. In the case of externally procured materials, you can create raw material costings with a respective cost component split. You can refer to the conditions of the purchasing info record, for example. In this way, delivery costs such as freight or customs can be included in the material valuation.

Product Costing In the apparel and footwear industry, material usage and production processes generally depend on information such as sizes, colors, and so on to be produced. Consequently, manufacturing costs of the produced SKU can differ enormously. With SAP AFS, it is possible to calculate the manufacturing costs of a product at the level of the produced SKU. Costing of Valuation Types The stock valuation of products to be calculated is performed in the same manner as for raw materials or trading goods (by using split valuation for stock keeping units). You can create separate costings for valuation types of a product and use these

AFS VALUATION VIEW Plant: Material: Grid 30/30 30/31 32/31 32/32 34/32 Pref. SKU 0001 Jeans Val. Typ Small Small Large Large Large

COSTING SMALL $10

COSTING LARGE $12

Figure 35: Costing of Valuation Types

52

COST OBJECT CONTROLLING

Cost object controlling within mySAP.com facilitates the controlling of planned costs and actual costs with reference to cost objects. Depending on the production scenario, the system uses various objects for the collective cost. Make-to-Stock Production The production order is at the center of product controlling during make-to-stock production. Cost object controlling for production orders allows the target costs to be analyzed and compared with the actual costs of a production order. Cost object controlling in the system takes the entire controlling

Variance Determination Following final delivery of an order, you can separately determine and settle the resulting costing variances (planned, target, actual) according to variance categories (scrap variance, input variance, lot size variance, and so on). Customer Make-to-Order Production In general, the sales order is the relevant controlling document in make-to-order production processes. Therefore, all sales order costs are collected across the entire production spectrum, and updated in the controlling object Sales Order for evaluation.

TARGET COSTING GOODS ISSUE Production Production Order Order CONFIRMED OPERATIONS GOODS RECEIPT

SETTLEMENT P+L

VALUATION AT DIMENSION OR CATEGORY LEVEL

Figure 36: Production Order Processing

process into consideration as well as target and actual characteristic-dependent material valuations and manufacturing costs. The target costs are the planned costs of the finished product based on the lot size in the production order. However, the product costing planned costs are different they are based on a (planned) costing lot size. The actual costs arise from the actual consumption of resources by the production order for example, component withdrawal and material movements.

At the same time, logistical make-to-order production can also be carried out without processing sales order controlling. In this case, the cost object controlling results in a production order as in make-to-stock production.
PROFITABILITY ANALYSIS FOR AFS PRODUCTS

Profitability analysis in mySAP.com enables you to evaluate market segments or strategic business units with respect to your companys profit or contribution margin. The market segments are classified according to products, customers, orders, or any combination of these, whereas the business units include company codes, business areas, or profit centers.

53

The main goal is to provide the areas of sales, marketing, product management, and corporate planning with information to support internal accounting and decision making. Apparel and Footwear Specific Characteristics Master data or basic structures can be freely defined for profitability analysis. You determine the analysis objects (characteristics) and the analysis value fields for your profitability analysis. The system creates a multidimensional analysis object from the combination of characteristics, from which an analysis can be planned and identified by the comparison of costs and revenues. In addition to the characteristics region, customer, and so on, you can also integrate a series of other industry-specific information. In this way, you can establish the profit that is issued with certain seasonal products. You can also ascertain how a particular grid value or grid-value group contributed to or affected this profit.

SAP AFS CHARACTERISTICS Sales Region Product Product Group Customer Customer Group Season Valuation Type Category Grid Value North Prod1 Snowboard Cust1 Wholesale Wi2001 L FD 164

Grid Value

Valuation Type

VALUE FIELDS Revenue Sales Deduction Planned Freight Costs Cost of Sales 980 100 150 550 PROFITABILITY SEGMENT Revenue Revenue Sales Deduction Deduction Sales Cost of of Goods Goods Sold Sold Cost

Figure 37: Profitability Analysis for SAP AFS Products

Profitability Analysis at Product Characteristic Level SAP AFS supports the value flows by creating revenues and sales deductions from sales orders or billing documents with their sales conditions. You can perform the costing valuation using the respective product/SKU plan costing or with the help of defined conditions. SAP AFS takes valuations and conditions at SKU level into consideration with regard to both the revenue and costs.

54

Se as on

CUSTOMER SERVICE AND SUPPORT


A network of highly qualified experts has been set up throughout the world to provide an excellent standard of support for SAP AFS customers and partners. Our experts are on hand to assist with implementation problems and provide ongoing support. Together with SAP partners, SAP Apparel and Footwear Consulting offers best-in-class experience and knowledge to ensure that all issues will be considered and integrated into a feasible implementation strategy. We will help you realize a significant increase on investment returns for your implementation project by reviewing critical decision requirements, determining high-risk elements in the program, and defining an implementation approach to maximize return and minimize risk. SAP AFS Consulting encompasses training and support, presales events, detailed workshops, spot consulting and remote support, feasibility studies, and QA reviews.
SAP AFS QUALITY ASSURANCE PROGRAM

The SAP Apparel and Footwear Quality Assurance Program has been established to ensure a smooth and successful implementation project for our SAP AFS customers. It consists of several reviews before and throughout the project as well as services after go live. Over the last few years, we have received very positive feedback from our SAP AFS customers and prospects about the QA program, which confirms that it is an integral part of a successful implementation. The SAP AFS Quality Assurance Program comprises the following: Evaluation prior to signing the contract that verifies whether SAP AFS is a good fit for the prospect's business requirements. Project start-up check after kickoff to review the project charter and business scope. Business blueprint review upon completion of the blueprint phase to examine the customers intended implementation of the business processes in the system. Solution review prior to going live to verify the detail designs and possibly the system configuration.

55

FUTURE FOCUS
SAP has been helping its customers create value since 1972 profitability, return on investment, productivity, time-to-market, and customer satisfaction. And having fully embraced the Internet with mySAP.com, SAP is in a unique position to forge ahead of its competitors and take today's economy by the horns. Not only will SAP provide the solutions its customers need to increase their revenue and reduce costs but SAP will also in our role as trusted advisor identify new business opportunities, specifically those suited to the needs and demands of the wide world of e-business. This is due to the fact that the core values personified by SAP productivity, customer satisfaction, and bottom-line results are once again the top priorities for businesses worldwide. The SAP AFS strategic direction is mySAP.com. The mySAP.com e-business platform is a family of solutions and services that empowers customers, partners, and employees to collaborate successfully anywhere, anytime. The latest release of SAP AFS already offers the first mySAP.com scenarios (including SAP Business Information Warehouse, collaboration with vendors and contract manufacturers, Demand Planning with SAP APO, mySAP CRM Interaction Center, and so on). Following this strategic direction, SAP AFS ensures the smooth transition to the mySAP.com e-business platform for all its customers. This approach guarantees investment security and will help our customers to choose the right mySAP.com solution and the right time to upgrade. SAP continues to provide new or enhanced industry-specific features and functions to meet the specific business needs of its customers. SAP AFS and mySAPTM Retail, the e-business solution from SAP tailored to meet the requirements of the retail industry, cover the entire fashion supply chain from suppliers and manufacturers to wholesalers and retailers to the consumer. The first integrated scenarios connecting SAP Apparel and Footwear and mySAP Retail are available and will be enhanced in the future to combine both solutions in mySAP.com. The apparel and footwear-specific combination of the mySAP.com solutions will put SAP customers on the competitive edge, enabling collaboration across the entire fashion supply chain from sheep to shop.

56

GLOSSARY
A D

ARun ATP
B

Allocation run Available-to-promise

Delivery Program

BAPI BOM

Bundle

Business Application Programming Interface Bill of material A complete, structured list of the components that make up a product or assembly. The list contains the object number of each component, the quantity, and unit of measure. The components are known as BOM items. You can create the following BOM categories in the SAP System. Material BOM, Document structure, Equipment BOM, Functional Location BOM, and Sales Order BOM Apparel industry term for all pattern pieces in a marker that will be sewn together to form a garment in a certain size, multiplied by the number of fabric plies in a stack. The information on bundles is maintained in the planned orders and production orders.

A delivery program is defined by one of the following combinations: Season; Season Collection; Season Collection Theme. You specify dates so that the delivery program is delivered during a certain period. Dimensions Product characteristics usually referred to in the apparel and footwear industry as style/color/size. A freely definable element of an AFS grid. An AFS grid is composed of up to three dimensions. Dimensions are, for example, length, color, size, or width. Each dimension is composed of dimension values that are all valid entries for a particular dimension.
E

EAN EDI ETA


F

International Article Number Electronic data exchange Estimated time of arrival

FOB
G

Free on board

CAD Category

CO Company Code

A data processing system for computer-aided design and drawing. Characteristic of an AFS product that allows a division into different qualities or countries of origin, for example. Product Controlling The smallest organizational unit of financial accounting for which a complete self-contained set of accounts can be drawn up for purposes of external reporting. This includes recording of all relevant transactions and generating all supporting documents required for financial statements.

Grid

Important element of the AFS basic data that maps the characteristic values of an AFS material in grid values and permits combinations consisting of up to three dimensions (for example color, size, length). The use of master, purchase, and sales grids facilitate the valuation, procurement, and sale of AFS materials at SKU level.

57

Heart Grid Value (heart size)

Description for the grid values of a material that you sell or purchase very frequently. When maintaining the grid control data for a material, you can flag these grid values as heart grid values. A central object on which reports and analyses in SAP BW are based. An InfoCube describes a selfcontained data set (from the reporting view), for example, for a business-oriented area. An InfoSource describes a quantity of all available data for a business event, or type of business event (for example, Cost Center Accounting). An InfoSource is a quantity of information that has been grouped together and can be said to belong together logically from a business point of view. InfoSources can either contain transaction data or master data (attributes, texts, and hierarchies). Logistics Information System

Marker

InfoCube

InfoSource

The optimal placement of pattern pieces to achieve the best fabric utilization for the cutting process. Unique markers are defined by the name and repetition of the size or dimension they contain. They can be plotted on paper or stored in a file that is used to drive a numerically controlled cutter. SAP AFS uses marker data to: Adjust quantities in a planned or production order Identify unique bundle numbers Material Product/Article MM Materials Management MRP Material requirements planning mySAP.com SAPs e-business platform. A family of solutions and services that empower employees, customers, and business partners to collaborate successfully anywhere, anytime.
O

LIS

ODS

Operational Data Store Object used to store consolidated and cleaned-up transaction data at document level (basic level). An ODS object describes a consolidated data set comprising one or more InfoSources. Online analytical processing Analytical, multidimensional reporting based on multidimensional data sources. OLAP reporting allows several dimensions to be analyzed simultaneously (such as time, place, product, and so on). The aim of OLAP reporting is to analyze key figures, such as for an analysis of the sales figures for a certain product in a particular time period.

OLAP

58

Plant PP
R

A place where materials are produced, or goods and services are provided. Production planning

UPC
V

Universal Product Code

VAS RFQ Request for quotation A request from a purchasing organization to a vendor (external supplier) to submit a quotation for the supply of materials or the performance of services.

Value-added-services. Services that improve the appearance, attractiveness and processing of a product, for example, packing, ticketing and special service.

WM

Warehouse Management

Seasons/ In the apparel and footwear industry, several Collections/ materials that share certain traits such as color Themes or texture can be combined to form a theme. Themes can be part of a collection, which in turn can belong to a season. The combination of the theme, collection, and season forms a delivery program. You can define dates for the delivery period for this delivery program. SD Sales and Distribution SKU Stock keeping unit The most detailed schedule line of an AFS product with its grid value (for example 38/yellow) and category values (for example quality A/ country of origin D). SKU Period in which the AFS MRP carries out planLevel ning at SKU level. Requirements outside of the Horizon SKU horizon are planned only at material level. Planning at material level and at SKU level in the SKU horizon is carried out separately. That means that requirements at material level cannot be satisfied by procurement at SKU level. SOP Sales and Operations Planning

59

SAP AG Neurottstrae 16 69190 Walldorf Germany T +49/18 05 /34 34 24 * F +49/18 05 /34 34 20 *


* Subject to charge

www.sap.com

50 058 600 (02/11/13) Printed on environmentally friendly paper.

Potrebbero piacerti anche