SAP Nordic Retail Forum 2010

Achieving competitive advantage through integrated Category Management Dieter Becker September 17th, Stockholm

Definition

Category Management (CM)

is a strategic methodology for systematic assortment optimisation in retailing. Manufacturers and retailers strive in co-operation around a target group-fair definition and structuring of categories of merchandise categories (Categories). CM means thinking no longer in brands or products but in Categories. The individual product becomes a component for the optimisation of the merchandise category structure and the implementation of a collaborative defined Category strategy. Main target for CM is the creation of a Win-Win situation both for manufacturers and retailers.

SAP 2009 / Page 2

Classical 8 Step Process

Category Definition Category Role Category Review Category Assessment Performance Measures Category Strategies Category Tactics

8
SAP 2009 / Page 3

Plan Implementation

Questions to be answered in Category Management

How to reduce the manual work load of category managers?

How to stop the eruption of assortments? How to create assortments consumer oriented?

Which KPIs are relevant for efficient category analysis

Which actions support an enhanced process flow?

What can be done to avoid the inefficient space allocation of products?

What could be my vision of an integrated range & space process?

The Power of Integration

With todays disconnected processes, many retailers are limited to quarterly or seasonal reviews of their assortment and space decisions. Connected business processes and emerging technology provide retailers with more frequent reviews of the assortment and allocation of space at the store. These reviews keep the store more aligned with shopper desires and expectations.

SAP 2009 / Page 5

Category Management Levels of CM Capability

Level of advancement

Traditional Buying & Merchandising

Emerging Category Management

Category Management on project basis Pilot projects with basis analytics

Mature Category Management

First collaborative planning Semi automated Data collection, processing and analytics Web-based process support Linked with supply chain activities

Fully integrated Category Management

Category Management as established process

Focussing - Price, Marge, and Volume Almost none considering of consumer behaviour

Limited and divided system landscapes

Collaborative execution of all process steps: analytics, planning, supervision and revision Simulations / operative Planning Automated data integration for all reports und analytics Multiple Category Management projects

Category Management Stages of development

SAP 2009 / Page 6

Goals

Common integrated System for analytics, planning and operations

Common Maintenance of Master Data Common Reporting POS data and research data

CM
Common Process Design Decision Support and Mass Maintenance

Common company wide platform Collaboration

Increase of efficiency Decrease of manual work Decrease of interfaces

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Different Aspects of Category Management

Category Analytics
Collaboration POS data Market data Store CDT Space data Workflow ERP

Category Planning
Workflow
Space Management

Assortment Planning

Demand Management

CDT Market data POS dataPOS data Market data

CDT

No matter what your Category Operations process looks like.. Space Space
ERP
Management Management and Ranging Ranging and

Demand Planning Planning Management ERP Management

Demand

Customer Relationship Management

Store .we can build it!!!!

Store

Flexible
SAP 2009 / Page 8

Integrative

Business process-oriented

Category Management Sample Process Efficient Assortment

Category Performance Analysis Category Definition

Category Measurement

2 1
Performance Review

3
Store Clustering & Assortment Definition

Assortment Implementation

4
Assortment Operation Assortment Planning

7
SAP 2009 / Page 9

5 6

Category Management Article Hierarchy

SAP 2009 / Page 10

Category Management Sample Process Efficient Assortment

Category Performance Analysis Category Definition

Category Measurement

2 1
Performance Review

3
Store Clustering & Assortment Definition

Assortment Implementation

4
Assortment Operation Assortment Planning

7
SAP 2009 / Page 11

5 6

SAP POS Data Management

Sales Analysis of POS Data SAP NetWeaver BW

Statistics

InfoCubes

PIPE
POS Inbound Processing Engine

XML

Converter

Upload of non-aggregated POS Data

SAP 2009 / Page 12

BW-Reporting Templates

Store Contr.

Promo Analysis

Sales Audit: Duplicate Master Data Rule Gap Analysis Balancing

POS Analytics

Cashier

Integration of Market Research Data

Combined Analysis (Market versus Company)

Analysis of Market Research Data SAP NetWeaver BW

MD/ Hierarchies

Retail Panel

Household Panel

POS Data

InfoCubes

Market Research Providers

Sales Audit: Duplicate Master Data Rule Gap Analysis Balancing

XML
SAP 2009 / Page 13

Category Management Dashboards

SAP 2009 / Page 14

Category Management Sample Process Efficient Assortment

Category Performance Analysis Category Definition

Category Measurement

2 1
Performance Review

3
Store Clustering & Assortment Definition

Assortment Implementation

4
Assortment Operation Assortment Planning

7
SAP 2009 / Page 15

5 6

Category Measurement

SAP 2009 / Page 16

Category Management Sample Process Efficient Assortment

Category Performance Analysis Category Definition Category Measurement

2 1
Performance Review

3
Store Clustering & Assortment Definition

Assortment Implementation

4
Assortment Operation
Assortment Planning

7
SAP 2009 / Page 17

5 6

Assortment Definition (Store Clustering)

Sales Mix Relationships

Stores 101, 400, 324 Store Volume Bands

Stores 223, 567, 327

Store Capacities

Stores 376, 150, 241

Stores 111, 259, 112

Store Characteristics
Seasonality Curves

Geography Demographics

SAP 2009 / Page 18

Category Management Sample Process Efficient Assortment

Category Performance Analysis Category Definition Category Measurement

3
Store Clustering & Assortment Definition

1
Performance Review

Assortment Implementation

4
Assortment Operation
Assortment Planning

7
SAP 2009 / Page 19

5 6

SAP Merchandise and Assortment Planning

Strategic Plan

Merchandise Plan
Sales Plan Inventory Plan GM Plan

Store/Location Plan
Sales Plan Inventory Plan Comp- Non-comp

Assortment-Item Plan

Business Intelligence

Merchandising: Prod/Loc Hierarchy, Attribute, Eligibility

Execution: Allocation/Replenishment
SAP 2009 / Page 20

Non-Seasonal Assortment Planning Range Plan

Assignment of articles to the assortment version, plan sales value and unit

Category Management Sample Process Efficient Assortment

Category Performance Analysis Category Definition Category Measurement

2
1
Performance Review

3
Store Clustering & Assortment Definition

Assortment Implementation

4
Assortment Operation

Assortment Planning

7
SAP 2009 / Page 22

5
6

SAP for Retail <-> Shelf Optimization

Assortment Article Master- and Movement Data

Placement Data, Shelf Capacities, Label Information

SAP for Retail

Shelf Optimization

The integration of shelf optimization systems with SAP allows a most efficient optimization of shelf space based on actual data and a seamless integration of placement in consecutive processes such as forecast and replenishment and label printing.
SAP 2009 / Page 23

Category Management Sample Process Efficient Assortment

Category Performance Analysis Category Definition Category Measurement

2
1
Performance Review

3
Store Clustering & Assortment Definition

Assortment Implementation

4
Assortment Operation Assortment Planning

7
SAP 2009 / Page 24

5
6

Deployment of Planograms

SAP 2009 / Page 25

Category Management Sample Process Efficient Assortment

Category Performance Analysis Category Definition Category Measurement

2
1
Performance Review

3
Store Clustering & Assortment Definition

Assortment Implementation

4
Assortment Operation Assortment Planning

7
SAP 2009 / Page 26

5 6

Category Review - Plan versus Actual

SAP 2009 / Page 27

Think Big, Start Small Category Management Roadmap

Sophisticated CM Extended CM
CM Scorecard Assortment Optimization Extended CM analytics Market research)

CM Value

Assortment Planning Space Reporting

CM Basics
Master Data CM Definition CM Analytics (POS) Layout Workbench/Listing Pricing and Promotions Space Management

Collaboration Price Optimization Promotion Planning

Time

SAP 2009 / Page 28

SAP Nordic Retail Forum 2010

Thank you!