SAP
®APPAREL
AND FOOTWEAR
(SAP
®AFS)
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SAP®Apparel and Footwear (SAP®AFS) . . . 7
Characteristics of the Apparel and Footwear Industry . . . 9
– Globalization . . . 10
– Product Life Cycles and Seasonality . . . 11
– Pressure on Costs . . . 13
– Increase in Customer Service Requirements . . . 13
– Multiple Distribution Channels . . . 14
– Information Technology . . . 14
Key Capabilities . . . 16
Style/Color/Size . . . 16
– Style/Color/Size Master Data . . . 16
– Categories . . . 16
– Seasonal Processing . . . 18
Generic Key Capabilities . . . 18
– Integration of Logistics and Financial Applications . . . 18
– Fine-Tuning Techniques . . . 18
– Multi-Company, Multilingual, Multicurrency Processing . . . 18
– Foreign Trade . . . 18
– Triangle Processing – Intercompany Transactions . . . 18
Order Management and Fulfillment . . . 19
Sales Order Processing . . . 19
– Standard and AFS Materials . . . 19
– EDI . . . 19
– Internet and Intranet . . . 19
– mySAPTMCustomer Relationship Management for the Apparel and Footwear Industry . . . 19
– Fast Order Entry . . . 21
– Credit Card Processing . . . 21
– Reference Capabilities . . . 21
– Mass Order Management . . . 21
– Multi-Store Orders . . . 22
– “Mark For” Feature . . . 22
– Rush Orders . . . 22
– Assortments and Prepacks . . . 22
Sales Capabilities . . . 23
– Availability Checking . . . 23
– Credit Limit Check . . . 24
– Price Flexibility . . . 24
– Special Operations . . . 24
– Value-Added Services . . . 24
– Bulk Order Processing . . . 24
Order Scheduling and Allocation . . . 24
– Order Scheduling . . . 24
– Allocation of Customer Orders . . . 25
– Allocation Preview . . . 26
– Allocation against Quantity Contracts . . . 27
Shipping and Transportation . . . 27
– Delivery Creation . . . 27
– Shipping Capabilities . . . 27
– Shipping and Transportation . . . 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 . . . 28
mySAP Business Intelligence . . . 28
Data Warehousing . . . 28
Reporting and Analysis . . . 30
Business Content . . . 30
Sourcing, Inventories, and Supplier Relations . . . 33
Overview . . . 33
– Procurement Cycle . . . 33
Purchase Requisition . . . 33
Source Allocation . . . 33
– Political Restrictions and Quotas . . . 34
Request for Quotation (RFQ) and Quotation . . . 35
Purchase Order . . . 35
MultiLevel Contracts . . . 35
Inventory Management . . . 36
– Inventory . . . 37
– Stock Transfer and Transfer Posting . . . 37
Logistical Invoice Verification . . . 38
Special Business Processes . . . 38
– Subcontracting . . . 38
– Vendor Collaboration . . . 40
– Third-Party Order Processing . . . 40
– Procurement of Consignment Material . . . 40
Warehouse Management . . . 41
Production and Manufacturing . . . 43
Overview . . . 43
Sales and Operations Planning (SOP) . . . 44
Demand Planning with SAP®APO . . . 45
Production Demand Management . . . 45
– Pre-sizing . . . 45
Materials Requirements Planning (MRP) . . . 46
– Bill of Materials (BOM) . . . 46
– Routing . . . 47
– Material Requirements Planning . . . 47
– Parallel Processing . . . 48
– Automatic Planning Run . . . 48
– Evaluation of Planning Results . . . 48
Capacity Planning . . . 48
Production Order . . . 49
– Apparel and Footwear Specifics in the Production Process . . . 49
Product Controlling . . . 51
Overview . . . 51
Split Valuation with AFS Materials . . . 51
– Split Valuation . . . 51
– Valuation of SKUs . . . 51
– Grouping with Valuation Types . . . 52
Product Costing for AFS Products . . . 52
– Product Costing . . . 52
– Costing of Valuation Types . . . 52
– Product Characteristic-Dependent Quantity Structure . . . 52
– Cost Elements . . . 52
– Special Production Scenarios . . . 52
Cost Object Controlling . . . 53
– Make-to-Stock Production . . . 53
– Variance Determination . . . 53
– Customer Make-to-Order Production . . . 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
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 foot-wear 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 logis-tical supply chain.
• Key capabilities of SAP AFS.
SAP
®APPAREL AND FOOTWEAR (SAP
®The apparel and footwear business is highly demanding, forc-ing 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 cre-ate 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 fore-cast uncertainty, stock shortages, and costly markdowns. Apparel and footwear companies today are increasingly assum-ing the role of coordinator for both internal and intercompany processes as their core competencies shift away from produc-tion 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 cloth-ing and shoes can only be automated to a certain degree, caus-ing the savcaus-ings 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, coordina-tion and control, transport optimizacoordina-tion 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 tex-tile supply chain (logistics service providers, textex-tile manufac-turers, contractors, agents, and so on) are increasingly more critical to the success of apparel and footwear companies. Fun-damental changes and restructuring are taking place in the apparel and footwear market.
CHARACTERISTICS OF THE APPAREL AND
FOOTWEAR INDUSTRY
?
GlobalizationDomestic as well as foreign company-owned and contract manufacturing have brought an increase in international trad-ing; 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 informa-tion expediently and reliably across any distance.
The increasing threat of cheap imports and tougher com-petition 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 coun-try as the final customer, additional requirements regarding cus-toms and quotas are involved, and country of origin restrictions may arise. Sourcing entails both internal and external considera-tions. 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. Com-panies 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.
Figure 1: Decision Support for Global Sourcing
Vendor Performance
WHICH QUALITY
Tooling Amortization
Production Complexity
Production Capacity Shortest ETD
Factory Status PURCHASE ORDER Vendor Product Price Quantity Delivery Date etc. WHICH PRICE WHERE WHAT PURCHASING
VENDOR VENDOR VENDOR VENDOR OUTSOURCE INTERNAL
Lowest FOB Costs
Lowest Landed Costs
Enterprise Demand
?
Product Life Cycles and Seasonality
Seasonality influences the entire product life cyle. It impacts planning styles, the procurement of raw materials, warehous-ing 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 tech-nologies 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 multi-ple 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 stay-ing ahead of competitors, especially when it comes to design capability. This includes investment in sophisticated computer-aided-design (CAD) systems as well as technological innova-tions in the use of fabrics and fibers. In this way, a company can manufacture products whose design sets them apart from cheaper imports. TYPE OF SHOE STYLE COLOR (WAY) SIZE Running Style 4711 WHT/RED/GRN WHT/RED/BLK W-8 R-8 N-8 W-9 R-9 N-9 ... ... ... Basketball Style 4712 WHT/BLU/BLK
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 mar-ketplace four or more times a year. Standard designs and fash-ion products can be merchandised as a collectfash-ion 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 spe-cific customer. This can involve tailoring an existing product, creating totally new designs, or supplying private labels. Acces-sories 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
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 manu-facturers due to the size of their orders. The smaller com-panies, however, have to compensate by reducing labor costs. The highest labor costs are concentrated in assembly phases, especially in the sewing room. Traditionally, apparel manu-facturers focused on minimizing direct labor costs by imple-menting 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 there-fore had to explore other ways of maintaining margins. This
Increase in Customer Service Requirements
Customer service has become a very important issue due to complex and demanding customer requirements and dimin-ishing 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 integra-tion, 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 replenish-ment 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
Transfer Transfer Transfer Transfer Flexible Manufacturing Shared Information Sophisticated Order Allocation Sophisticated Planning and Forecasting Point of Sales, Vendor-Managed Inventory
Vendor Manufacturing Distribution Retail Outlet Consumer
Systems Integration
More and More Demands
•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.
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-in-shop, but the most common channels of distribution include wholesale, retail stores, mass merchandisers, department stores, specialty retailers, distributors, and licensees. Con-sumers 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 process-ing of customer orders in real time, even over long distances.
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 collabora-tive 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 deliv-eries, and a lack of transparency regarding contract manufac-turers. 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 com-panies 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.
Figure 5: Multiple Channels of Distribution CONSUMER CONSUMER DEMAND CUSTOMER DEMAND Internet buying Shop-in-shop Catalogue Direct Franchisees DECISIONS Practices, Policies, and Procedures Pricing Conditions Distribution System Method of Transportation CUSTOMER Telesales Wholesale EDI
DEMAND
PLANNING
SAP Apparel and Footwear is the best-of-breed e-business solu-tion for the apparel and footwear industry. It not only address-es the logistical needs of apparel and footwear companiaddress-es worldwide (such as sales and distribution, materials manage-ment, and production planning and execution). It also seam-lessly 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 prod-uct levels based on style/color/size as used throughout the logistical cycle.
A grid has been developed to support these specific enhance-ments and safeguard high levels of performance. This tool ensures that as styles change from season to season, the enor-mous number of stock keeping units (SKUs) can still be main-tained quickly and easily. Copy and referencing functions also support volume changes due to seasonal influences. The prod-uct characteristics are represented as AFS dimensions. Dimen-sions 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, cus-tomer 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 appli-cations 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.
Figure 6: Style/Color/Size Master Data in Product Grid Format and Grid Processing
Valid Sizes for Color BLACK Dimension 1: Color
Dimension 2: Waist
Seasonal Processing
The apparel and footwear industry is a highly seasonal business that calls for tight control over product sales and delivery avail-ability. SAP AFS features a season function to define and con-trol 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 spe-cial 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 pro-grams for seasons, collections, and themes and assign the delivery program a delivery date.
GENERIC KEY CAPABILITIES
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 depart-ment. Customer-relevant data is then transferred to the pur-chase order. Purpur-chased 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 indi-vidual operating needs of your company. By fine-tuning order types for example, systems can be quickly matched to ever-changing 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.
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 sup-porting 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 reg-ulations, which can be formidable obstacles for any organiza-tion operating internaorganiza-tionally. 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 representa-tion of preference agreements. SAP ensures that internarepresenta-tional 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 commis-sion to the country in which the order was placed. Grid pro-cessing in SAP AFS caters specially to all of these requirements.
SALES ORDER PROCESSING Standard and AFS Materials
SAP Apparel and Footwear offers a variety of order entry meth-ods 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.
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-busi-ness, and intranet applications. Such applications are specifi-cally designed for business transactions and not just for infor-mation 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.
mySAPTMCustomer 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 opera-tions. 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 con-verged, shifting the focus of corporate efforts to the customer. Organizations have recognized that they must therefore pro-vide more value in different forms to their customers, and set their key corporate goal to achieve “customer value leader-ship.” To accomplish this goal, organizations must create a cus-tomer-centric e-business by making the customer the center of all their activities.
mySAPTMCustomer Relations Management (mySAPTMCRM) 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
ORDER MANAGEMENT AND FULFILLMENT
Figure 7: Sales Order Cycle
Inventory Sourcing
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, ensur-ing 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 excep-tion messages need to be processed, and users are otherwise free
Sales Order Processing
Payment
Invoicing
Tele-Sales Order 1 EDI Sales Order 2 Internet Sales Order 3 Mobile Sales Order 4 Faxed Sales Order 5
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 con-tacts 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 customer’s needs, you can branch to any SAP AFS trans-action 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 ques-tions, 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 pro-vides 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, sophisticat-ed product selection, multimsophisticat-edia product catalogs, advancsophisticat-ed 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-the-art technology top off the solution. E-service offers your cus-tomers (retailer and end-consumers), prospects, and business partners access to specific information (such as product cata-logs, content, and pricing) and self-service functions (such as order entry and tracking requests) through the Internet. Telesales
SPECIAL FEATURES:
• Fast and user friendly • Customer product grids • No repetition of style numbers • Subtotals
• Hierarchical overview • Copy quantities
• Customer service reason codes
EDI
Sales InternetSales Mobile Sales FaxedSales
SAP AFS
KEYED AUTOMATIC KEYED
Figure 8: Multiple Methods of Order Entry
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 areaand
Customer ship-toare 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 require-ments. This can be particularly useful in a telesales environ-ment.
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 num-bers 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 discontin-ued 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 appropri-ate 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.
Figure 9: Mass Order Management
Customer Requested delivery date Material SELECTION SCREEN 1475 Requested style From: To: CHANGE SCREEN 1476 1475 Execute selection
Sel Order Customer PO No Material Qty Rq Dlv
SELECTION FOUND LIST
E E E 543 556 610 851 1000 1131 4600 3299 47355 41899 AB_12 1475 1475 1475 1475 10 18 12 50 12/06/00 15/06/00 15/06/00 20/06/00 Execute change CUSTOMER ORDERS UPDATE REPORT
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 cen-ter, articles can be labeled “mark for” onward delivery to a spe-cific 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 par-ticular 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 cus-tomer 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 exam-ple, an assortment could be a golfing outfit consisting of ten golf balls, a golf shirt, and golf pants. The assortment can con-sist of non-sized and sized products. Sizes for the finished goods, if needed, are specified per item in the assortment dur-ing the order-takdur-ing process. The system may adjust the quan-tities for each component of the assortments in case of stock shortage so that they are always based on complete combina-tions.
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 compo-nents. 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 distribu-tion 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 distri-bution profile, you can use it again for other products.
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 require-ments 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 Availability Checking
The SAP AFS available-to-promise (ATP) check is an optional feature to determine whether or not the quantities and deliv-ery dates requested by a customer can be met. When an order is entered, the check verifies whether sufficient stock is avail-able to fulfill the order. If the order cannot be shipped right away, the availability check determines in real time when suffi-cient 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.
The fill rate risplayenables order-taking staff to inform
cus-tomers immediately of fill-rate options based on available delivery dates and quantities. By drawing the customer’s atten-tion to the order cancellaatten-tion 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.
Figure 10: Example of Proposed User Fill-Rate Information
1475 1475 1475 Jan. 01 Jan. 15 Jan. 30 50 25 25 50 75 25 0 14 30 150% 175% 100% 33% 50% 67% Material Scheduled Delivery Date Scheduled Quantity Cumulative Order Quantity Day after Required Delivery Date Line % Complete Order % Complete
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 sat-isfaction.
With back order orocessing, SAP AFS also offers a report to list all sales orders that have only been partially delivered or not deliv-ered at all. Using the rescheduling tool,you may execute the ATP again upon goods receipt and have the system adjust the deliv-ery dates.
Credit Limit Check
SAP AFS features a variety of flexible options for credit check-ing, 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 children’s 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, tick-eting, 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 customer’s “promise-to-buy.” The source of the promise-to-buy may be an internal order-generating 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 customer’s 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 deliv-eries 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.
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 allocat-ed. 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
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 customer’s credit limit upon alloca-tion and either exclude the customer from further allocaalloca-tion completely or exclude the sales order items that exceed the credit limit.
With SAP AFS, your customer service department can concen-trate on managing the exceptions – for example, by calling customers and releasing agreed orders using the management tool. Alternatively, the order exceptions can automatically
Figure 11: Sales Order Process Flow
ARun Functions SAP AFS Optional Process
WMS Warehouse Management System (external system)
GI Goods Issue
Order
Entry CheckATP OrderSave AllocationRun CreationDelivery Invoice
Delivery Changes/ Post GI Allocate Rush Order Management Tool WMS Order
Scheduling AllocationPreview
Selection Grouping Sorting Allocation Release
Back-until the release rules are met, or you can use the Manage-ment 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 alloca-tion settings (such as customer allocaalloca-tion priority), thus maxi-mizing customer satisfaction.
Allocation Preview
The allocation run can also run in preview mode with future planned receipts instead of stock. Allocation preview deter-mines 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 priori-ties 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 deliv-ery 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 quan-tity 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.
CUSTOMER SALES ORDER # Product Price Quality Style/Color/Size CUSTOMER PARAMETERS Customer Type Partial Shipment Fill Percentage Core Sizes Order/Delivery Dates ORDER RELEASE PRIORITY Customer Order 5 Customer Order 3 Customer Order 2 Customer Order 1 Customer Order 4 PRIORITIZA TION Improved Customer Responsiveness Order Release Planning
CUSTOMER DELIVERIES
Allocation against Quantity Contracts
The allocation run may also take quantity contracts signed with customers into account. For allocated contracts, the sys-tem 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 opti-mally 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 back-ground.
SHIPPING AND TRANSPORTATION Delivery Creation
SAP AFS provides flexible options for creating delivery notes (for example, by mode of transport, carrier, date, route, and so
Shipping Capabilities
SAP AFS enhances shipping capabilities by integrating grid value settings, as well as introducing and transmitting value-added 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 avail-able. 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.
Figure 13: Enhancement of Transportation Tracking and Real-Time ATP Check
“WILL A DELIVERY ON MONDAY BE SOON ENOUGH FOR YOU?”
FORECAST, DISTRIBUTION PLANNING, PER MARKET PRODUCTION, DETAILED SCHEDULING, PLANT LEVEL
BILLING CAPABILITIES 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 communica-tions
•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 account-ing for immediate analysis.
SAP AFS LOGISTICS INFORMATION SYSTEM Logistics Information System
The Logistics Information System is a flexible tool for collect-ing, compresscollect-ing, and evaluating data (information) from other applications. The central elements form self-defined information structures, which in turn can be filled with cus-tomer-specific data using various tools. The information sys-tems have been enhanced to allow analysis and reporting right down to size level. As a consequence, other areas of your com-pany 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 mySAPTMBusiness Intelligence (mySAPTMBI), SAP offers inte-grated, fully Web-enabled capabilities for enterprise perform-ance management.
mySAP BUSINESS INTELLIGENCE FOR THE APPAREL AND FOOTWEAR INDUSTRY
mySAP Business Intelligence
Interpreting information is critical to the success of companies in the apparel and footwear industry. mySAP Business Intelli-gence (mySAP BI) combines data warehousing with compre-hensive analyses delivered through an enterprise portal. With mySAP BI, you can measure the effectiveness of business opera-tions 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 econ-omy, and rapidly turn it into real knowledge on which to base decisions and actions. SAP offers an innovative and sophisti-cated 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 opti-mizing operations. Analytical applications give you control over supply chains, customer relationships, and other enter-prise 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 cor-porate 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 man-aging a data warehouse enable the extraction, integration, and
transformation of data from multiple sources to support deci-sion-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
pre-configured, extendable metadata repository to ensure inte-grated, 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
Figure 14: Data Warehousing
XML ODBC PSA ODS Master Data API ENTERPRISE PORTAL BUSINESS EXPLORER Web Reporting and Publishing Third-Party Tools Multidimensional Analysis ADMINISTRATOR WORKBENCH SAP BW SERVER Monitoring Scheduling Administration OLAP PROCESSOR
METADATA MANAGER DATA MANAGER
STAGING ENGINE
Metadata Repository
BAPI FILE XML
EXTRACTION, TRANSFORMATION, AND LOADING
Interfaces
Feeding Services Extraction Engine DB Connect ETL Tools
Data Source SAP Applications Non-SAP Applications
Reporting and Analysis
Reporting and analysis provides decision-support tools such as query, reporting, and multidimensional online analytical pro-cessing (OLAP) analyses for collaborative decision making. Users can access data on different levels (detailed or summa-rized), 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, repre-sent 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.
Figure 15: Comprehensive Business Content
CUSTOMER-SPECIFIC BUSINESS CONTENT
BEST PRACTICE MODELS
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
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
dis-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
Figure 16: The Elementary Field Concept
SAP BUSINESS INFORMATION WAREHOUSE
MATERIAL SIZE COLOR QUALITY COUNTRY SALES VALUE
T-Shirt 4711 XL BLK 1st DE 10.00 USD
T-Shirt 4711 L Red 1st DE 15.00 USD
Shoes 0815 44 BLK 2nd US 25.00 USD
Coat 666 56 BLK DE 15.00 USD
. . . .
SAP R/3
MATERIAL SALES VALUE
T-Shirt 4711 10.00 USD T-Shirt 4711 15.00 USD Shoes 0815 25.00 USD Coat 666 15.00 USD . . . GRID VALUE XL BLK L Red BLK 44 56 BLK . . . CATEGORY 1st – DE 1st – DE US – narrow DE . . . . EXTRACTION
WHAT IS THE SALES VALUE OF ALL MATERIALS IN COLOR BLACK?
WHAT IS THE SALES VALUE OF ALL MATERIALS WE MANUFACTURED
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 applica-tions:
•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
work-books, and AFS Roles
The predefined data models can be extended very easily with-out modification. The apparel and footwear-specific content enables you to implement an information system out-of-the-box. 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 Enter-prise Portal for convenient user access anytime, anywhere.
Figure 17: Extraction of AFS-Specific Data into SAP BW
SAP BUSINESS INFORMATION WAREHOUSE
COLOR SIZE QUALITY COUNTRY
BLK 3132 1st EU BLK 3132 1st EU BLK 31 32 1st EU BAPI TRANSFER STRUCTURE TRANSFER STRUCTURE MAPPING
INFOCUBE INFOCUBE INFOCUBE
LIS INFO-OBJECTS FOR ELEMENTARY FIELD ELEMENTARY FIELDS CHARACTER-ISTICS DATA SOURCE BLK3132 1stEU
COMMUNICATION STRUCTURE SKUs
DATA SOURCE REPLICATION
Color Waist Length Quality Country
GRID VALUE CATEGORY
OVERVIEW
Procurement Cycle
SAP AFS covers industry-specific raw material and component procurement processes, sourcing of finished products, inven-tory 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 pur-chase 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.
PURCHASE REQUISITION
The purchase requisition is a request to the purchasing depart-ment 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 automati-cally by material requirements planning (MRP). The process-ing 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 stan-dard 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 pur-chase requisition can be marked for request for quotation (RFQ) processing.
SOURCE ALLOCATION
As a result of today’s trend towards globalization, the impor-tance 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,
SOURCING, INVENTORIES, AND SUPPLIER RELATIONS
PROCUREMENT Determination of Requirements Determine Source of Supply/ Source Allocation Vendor Selection Order Purchase Order Goods Receipt Invoice Verification Handling of Payments 1 2 3 4 5 6 7 8
various suggestions for procurement are generated, proposing the most suitable vendor. This can be either an internal pro-duction 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 company’s 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 com-pany 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 con-sumed 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 deter-mined 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 exter-nal production across all vendors.
Total Capacity 100,000 hours Overload Capacity 10,000 hours Per Period VENDOR’S TOTAL CAPACITY ELEMENTARY FIELDS LEVEL 0 LEVEL 1 LEVEL 2 LEVEL 3 VENDOR 1000 Tooling Capacity Tooling Set A 50,000 hours Total Capacity Tooling Set B 80,000 hours Model Capacity Model A 50,000 hours Model Capacity Model B 20,000 hours Material 80 black 1 pair = 2 hours Material 70 white 1 pair = 5 hours TOTAL CAPACITY • Overload Capacity • Consumed Capacity • Consumption Overload Capacity CAPACITY BY PRODUCT
