Project Report On
³Impact of SAP Implementation On Retail Sector´
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Introduction Objective/s Nature and scope of the study. Library research 4.1. ERP 4.1.1. Problems with Enterprise Applications in the Retail sector 4.1.2. Advantages of Using a Retail ERP Suite 4.1.3. SWOT Analysis of Retail ERP Systems 4.2. SAP 4.3. SAP Implementation Methodologies 4.3.1. Basic essentials 4.3.2. Big Versus small approach 4.3.3. Conventional methodology 4.3.4. ASAP methodology 5. Research methodology 6. Data collection 6.1. Case study 1- Pantaloon (Big Bazaar) 6.2. Case study 2-Shoppre Stop 6.3. Case study 3- ITC retail 6.4. Case study 4- Tata Trent 7. Analysis. 7.1. Features of SAP solutions. 7.2. Benefits of SAP solutions 8. Business Implication 9. Conclusion 10. Strength and limitations of the study. 11. Bibliography - systematic and complete list of References.
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Introduction Information technology is a critical success factor for retail companies. Sluggish sales markets and increasing competition in retailing make it essential for retail companies to optimize their internal processes. In times of e-business and t-business, as well as global and inter organizational requirements of supply chains and customer relationship management; companies are regularly forced to redesign their business processes. 3
E-business refers to online shopping, that is, sales on the Internet. End customers can browse electronic catalogs on the Internet, select products, place an order, and pay immediately online. A lesser known term is t-business, which denotes sales through the medium of television. Tbusiness is often subsumed by e-business. The most recent development is m-business: sales through mobile telephones. To keep up with the constantly growing demands of the market, every company must pay attention to the fundamental principles for success and take action accordingly. These fundamental principles for success are:
The customer is only happy if goods are available in the right place at the right time and for the right price.
A company must be able to respond flexibly to changes in demand patterns to retain its customer base and win new customers.
It is only possible to respond promptly to delivery delays if they are known of in good time.
Working capital can only be freed up for important investments if stock levels can be reduced through shorter lead times and procurement cycles.
SAP helps to meet all of these challenges with innovative technology so they can operate as
part of a complex economic network and respond effectively to market demands. Modern systems in retail respond to changing demands, which means they can do more than just control the flow of goods and report sales figures to the head office; they are also capable of the following:
Complex processes that forecast consumer demand while taking into account information about space and capacity in the supply chain and automatic item planning
Price optimization, markdown management, assortment planning, procurement and distribution processes, goods control processes such as promotions or price reductions, and accounting for special forms of management such as consignment
Integration of all possible distribution channels and decentralized workforce management, both of which help companies meet the significant challenge of customer retention and thereby contribute to increased consumer satisfaction.
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Increased transparency of current revenue, sales, and inventory information is crucial to the success of any retailer. After all, it is only possible to take appropriate action in a given situation with valid, up-to-date, and transparent information. The SAP supports the retail user, with the key challenges they face-not only in streamlining and accelerating processes, but also in tapping potential for expansion, analysis, and customer retention.
Research
objectives
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Study of SAP implementation methodologies.
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Study of how SAP implementation plays most important role in retail sector.
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Study of Business Processes in retail sector and its integration with information Technology (I.T.).
Nature and
Scope of the study 5
In this project I have made an attempt to study the ERP [SAP] and its implications on the operations of the retail companies. The Indian retail sector is the fifth largest in the world. Comprising of organized and unorganized sectors, India retail sector is one of the fastest growing sector in India, especially over the last few years. Though initially, the retail industry in India was mostly unorganized and the retail operations functionality such as merchandizing, supply chain management, in-store operations, seasonality and promotions planning are extremely complex. Entering of SAP solutions in the sector of retail it minimizes the complexities of retail Operational functionality for example advanced planning and scheduling systems, inventory management systems, promotional and seasonality management systems, data management and merchandizing systems. SAP helps retailer to get the better understanding of their business, anticipate their business needs, and inspire their customers, vendors, employees, and shareholders by delivering results. Two important areas where SAP solutions can reduce complexity and improve results: Merchandizing system
Merchandizing systems impact top-line revenues and need to be configured, customized and managed effectively for the retailer to improve its top line. To achieve this, retailers need to effectively extract large amounts of data and pull this data to carry out effective forecasting, assortment planning, and collaboration with its suppliers so that promotions and other merchandizing activities are effective and efficient. Supply chain systems are key from a bottom line point of view as they play a key role in getting the right product to the right place at the right time²which in turn impacts the inventory levels and the rate of flow of products through the retailer¶s stores, both of which are significant components of the retailer¶s cost of doing business. Data Management
Data management is important in the retail sector because so much decision-making is based on data. If the data not systematic, the effectiveness and efficiency of carrying out retail operations is hampered. First part in data management is data creation. In Data Creation the merchandise product registered in system, the nomenclature of this product is carried out by Brand name, product identifier (end use), unit of measurement, case lot, marketing company, vendor, manufacturing details etc. 6
The second part is data maintenance. In this Identifying data ambiguity, avoiding repetitions, identifying flagging non traded and slow moving products, every product have life cycle indentify which product in declined stage and remove that product from system, removing those products which not profitable for vendor. Maintaining customer loyalty, a priority for Indian retailers in ordinary circumstances, is now of prime importance in the current market situation. As a result retailers across the India are using SAP technology for greater visibility into consumer spending trends, enabling them to create shopping experience that motivates their customer to return again and again. SAP's comprehensive retail suite, designed with flexible deployment blocks, provides customers agility to adapt the changing market conditions and leverage newer opportunities.
Scope of project Geographical Scope
The locations to be covered for SAP implementation are the retail companies in Indian Markets. Functional Scope
The scope defined for implementation of SAP in the Retail sector organizations in India.
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Library research Enterprise Resource Planning (ERP) Enterprise resource planning is a business management system that integrates all aspects of the business, including planning, manufacturing, finance, HR, sales, and marketing. ERP attempts to integrate all departments and functions across a company onto a single computer system that can serve all those different departments' particular need. The typical ERP system will use multiple components of computer software and hardware to achieve the integration. ERP system has many advantages -both direct and indirect. The direct advantages include improved efficiency, information and business integration for better decision making, better analysis and planning capabilities, flexibility, faster response time to customer queries, etc. The indirect benefits include better corporate image, improved customer goodwill, customer satisfaction, and so on. Commercial
ERP Package s
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SAP
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Oracle
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BAAN
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J.D. Edwards
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People soft
Problems with Enterprise Applications in the Retail sector
Integration of the various business functions is an essential prerequisite for synchronization among the different business activities involved in a retail business. A number of large retail chains around the India have already invested in packaged software suites to integrate their core business activities. However, a lot of retailers are still using fragmented legacy software applications to manage their core business functions which results in somewhat lower levels of effectiveness and efficiency. Moreover, a majority of Chief Information Officers (CIO) in the retail
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sector believes that it is cumbersome to rip and replace their existing information systems handling the routine management of the retail operations. Most of the existing retail applications used by the businesses lack an all encompassing approach and require some degree of customization before they can be fully integrated with a business process. Major problem areas in the existing enterprise applications in Retail include: 1. Outdated architecture ± Most of the legacy enterprise applications in retail have an outdated architecture that is inflexible and rigid. This inflexibility and rigidity pose a challenge to the business efficiency. The lack of flexibility prevents the legacy software to be used with the contemporary products available in the market that may add muscle to the retail operations. Today¶s business environment demands real time adaptability from the software systems. 2. Limited scope ± Most of the legacy systems were designed to take care of specific problems tasks and as a result, lacked an enterprise wide approach to the problem solving process. This makes such systems unsuitable for use in the contemporary business environment that is highly competitive in nature. Modern businesses require an enterprise wide approach to retail management process and legacy systems fall short of such a requirement. 3. High maintenance co sts ± Legacy information systems are costly to maintain. The cost component is high because such systems are no longer used in the industry and require specialized personnel for maintenance purposes. Moreover, the maintenance cost of legacy systems keeps on increasing with the passage of time. The older an information system is, the higher are its associated maintenance costs to be borne by the retail business. 4. Integration and scalabilit y problems ± Legacy software does not allow addition and integration of new applications. This prevents such systems from scaling up or integrating with similar systems used by the associates or business partners. Such integration and scalability problems tend to multiply as the size and scope of retail operations increases. 5. Increased risk to the b usiness ± A combination of old and new information systems makes the whole system susceptible to failure or crash. The heterogeneity in the system is the primary cause of risk. The solution lies in a close knit, homogeneous information system that can integrate seamlessly with other such systems in real time while imparting the much-needed stability to the whole system. 9
Advantages of Using a Retail ERP S uite
Primary advantages: 1. Retail specific components ± Unlike a general ERP package, retail ERP suite offers retail centric components that are customized to meet the specific requirements of a retail organization in an effective and efficient manner. This makes a retail ERP suite much more suitable to meet the specific requirements of a retail organization. 2. Segment specific expandabilit y option ± Within the retail sector, there is a wide variety of different segments that vary in their nature and scope of operations. A retail ERP package has provisions to meet the varying needs of the different segments within the retail sector. 3. Support for the store system ± Retail ERP suite offers support for the store systems that form the pivot of a retail business. The critical functions include keeping track of the inventory, ordering and replenishment, loss prevention and task management. This makes retail ERP system suited to the specific needs of a retail organization. Secondary advantages: 1.
Configuration
and scalability ± A good retail ERP system allows a high degree of
customization and is easily scalable to attune itself to the size of the organization and its level and scope of operations. Such configuration and scalability prove to be a boon in managing the retail operations across an enterprise. This allows a retail ERP system to grow with the organization. 2. Phased implementation support ± Modern retail ERP systems provide support for phased implementation. This feature allows the software package to be implemented in a step-by-step incremental manner rather than in one go. This makes the transition to an ERP package a lot easier. This feature allows the users to acclimatize themselves to an ERP package that may initially seem complicated to use. 3. Support for advanced f unctionalit y ± Modern retail ERP systems provide support for advanced functionalities that is helpful in the decision making process such as formulating pricing strategies, merchandise planning, inventory optimization and store execution. The advanced functionalities help the users formulate business strategies to introduce efficiencies in the critical business processes. The top management uses this feature to set the benchmarks and achieve the desired results.
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4.
Workflow
automation and enterprise process management ± Modern day retail ERP
packages offer workflow automation and enterprise process management to make the workflow smooth and seamless across the entire enterprise. This allows the management to monitor and keep track of the workflow while also undertaking the enterprise process management leading to the identification and removal of any inconsistencies in the business process. 5. Technology and application integration ± A good retail ERP system allows technology and application integration to allow a platform independent, seamless transfer of processes across different modules running on different technologies in an enterprise wide environment that may include interaction with legacy systems and external entities such as the suppliers and the customers. Such integration provides the critical enterprise-wide view to the management. SWOT Analysis of Retail ERP S ystems
STRENGTHS Provides an enterprise wide view of the workflow Allows integration with systems of associates and business partners
WEAKNESS Expensive to procure Requires significant employee training Compatibility issues with other/legacy systems
Helps in routine decision making Security concerns Allows streamlining of business processes
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OPPORTUNITIES
THREATS
Booming retail sector in the emerging Indian markets
Opposition to globalization and transnational movement of goods
The retail sector is overlooked by the major ERP solution providers
Increasing complexity of such systems Divided opinion over the ReturnOn-Investment (ROI) from such tools
High efficiencies becoming critical in the retail sector due to the cut-throat competition and paper-thin margins
Security concerns regarding sharing of data over a network
Sy stem Application and Product ( S AP) Sap is the leading Enterprise information and management package worldwide. Uses of this package make it possible to track and manage, in real time, sales, production, finance, accounting and human resources in enterprise. A typical company has many separate systems to manage different processes; each of these systems has its own databases and seldom passes information to other systems in a timely manner. SAP takes a different approach. There is only one information system in an enterprise. All applications access common data. Real events in the business initiate transactions. SAP Application Modules
SAP has several application modules. These modules may not all be implemented in a typical company but they are all related and are listed below:
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Figure 1: SAP mod ules SAP FI Module - where FI means Financial Accounting ± essentially this SAP module delivers
your regulatory µbooks of record¶, including General ledger ,Book close ,Tax, Accounts receivable, Accounts payable, Asset Management (SAP AM) ,Consolidation, Special ledgers. SAP
CO
Module - The CO stands for Controlling ± basically the SAP Module which allows you
to manage your internal cost/management accounting, including Cost elements, Cost centers ,Profit centers, Internal orders ,Activity based costing ,Product costing . SAP PS Module - and PS is Project Systems ± this SAP Module is where you can manage your
projects, large and small, including Make to order ,Plant shut downs (as a project) ,Third party billing (on the back of a project). SAP HR Module - ah yes, the HR is for Human Resources ... people are the important part of
this SAP module, including Employment history, Payroll Training ,Career management, Succession planning . SAP PM Module - where Plant Maintenance is the PM ± this SAP module is where you
maintain your equipment (e.g. a machine, an oil rig, an aircraft etc), including Labor, Material Down time and outages. SAP MM Module - one of the most important SAP Modules where MM is Materials
Management - underpins the supply chain, including Requisitions, Purchase orders, Goods receipts, Accounts payable Inventory management, BOM¶s ,finished goods etc. SAP QM Module - and QM stands for Quality Management in this SAP module ± improves the
quality of your goods, including Planning, Execution, Inspections, and Certificates. SAP PP Module - one of the really big SAP modules is Production Planning ± manages your
production process, including Capacity planning, Master production scheduling, Material requirements planning, and Shop floor. 13
SAP SD Module - another one of the large SAP modules is Sales and Distribution ± from order
to delivery, including RFQ, Sales orders ,Pricing, Picking (and other warehouse processes), Packing, Shipping . SAP BW Module - where BW stands for Business (Data) Warehouse which includes the
following main functions: Data extraction from source systems, some technical and functional transformation of the data, Storage of the data in what are called Info providers, reporting (which uses Info providers). SAP ABAP - is not really a module - it stands for Advanced Business Application Programming
and this is the structured programming language for custom development including reports.
S AP Implementation Methodologies How SAP project are implemented? Basic essentials
The basic steps required to implement SAP as follows: y
Determine that company ready for implementation: an organization need to be ready for change and its management has to be fully behind the project.
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Develop an implementation plan: Without it, there will be either a slow and grinding project or a disaster.
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Develop the budget: This is the very critical factor that drives many elements including scope and scheduled: depending on the methodology and type of cost structure, the overall implementation cost and budget can vary considerably.
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Select the implementation partners: This determine the quality and level of skills and experience that will be available for project.
Big Ver sus small approach
There are two implementation approaches that are generally followed for SAP projects. These are Big bang approach:
In this approach, full-blown Sap system is implemented. The entire modules required by the company are configured and implemented. All legacy systems that can be replaced by SAP are targeted for retirement. All divisions and/or subsidiaries of company are included into single phase project. Advantages y
Few or even no interfaces between legacy systems and the new application are needed because all modules go live at the same time.
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There is a short throughput time.
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The project members¶ motivation is high.
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It is highly efficient, because redundant customizing is avoided.
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There is optimal integration of all components under consideration of the integrated business processes.
Disadvantages y
The implementation is complex due to the increased need for coordination and integration.
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It is resource intensive over a short period of time.
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All employees are subject to higher stress levels at the same time.
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A high degree of consulting support is required.
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Organizational changes must be limited in order to overcome resistance to change among employees.
Phased Approach:
In this approach, which is the modest in nature, a step by step implementation is undertaken. The overall project is implemented in a number of phases. The objective is to avoided risk and 15
work on smaller, and more manageable, project. A number of options are existing within the phase approach method. Advantages y
The complexity for coordinating, controlling, and organizing the project and resources is reduced.
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A minimal amount of human resource is required for the project team and user community.
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The quality of the projects improves because the project members increase their knowledge and skills.
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A team of internal consultants can be established over time, reducing the cost of the project.
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There is a smoother changeover throughout the company: people have time to adapt to changes.
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Costs are spread over a longer period of time.
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Modest organizational changes can be considered during the implementation.
Disadvantages y
There is a longer project throughput time.
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Interfaces must be developed to maintain existing systems.
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Integration advantages of the project can only be used step by step.
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Customizing may not be optimally set because integrating components have not yet been implemented.
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Return on investment is generally delayed.
Implementation Methodologie s Conventional
methodolog y:
There are two methodologies used to implement SAP project: ASAP methodologies and conventional methodologies. The conventional methodology is known as SAP procedure model, was initially widely used to implement SAP. In the past few years, it has been overshadow by the rapid ASPS methodology. However it is still preferred methodology for implementing SAP at very large companies, especially for those with revenue with millions dollars. ASP procedure model can be divided into 4 major phases: y
Organization and conceptual design
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y
Detailed design and system setup
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Go-live preparations
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Productive operations
This methodology required very detailed analysis of the existing system, current functionality and business processes to be conducted. A significant amount of time in spent on matching ³asis´ and ³to-be´ system. A decision making is very slow as it is based on consensus, which takes time to achieve. A drawback of procedure model is even though it did not dictate it, too many implementation tried to mirror existing system within SAP. Another negative of this methodology is that it uses a company¶s existing process, instead of SAP processes, as the starting point of the mapping processes.
Figure 2:
Comparison
of ASAP methodology and conventional methodolog y 17
ASAP methodology
In an effort to speed up SAP project and keep cost under control SAP introduce to ASAP methodology, which has been quite successful till- date. With the ASAP methodology, an implementation period as short as five month has been achieved. It contains the Roadmap, a step-by-step guide that incorporates experience from many years of implementing R/3. Along with that, Accelerated SAP contains a multitude of tools, accelerators and useful information to assist all team members in implementing R/3. Quality checks are incorporated at the end of each phase to easily monitor deliverables and critical success factors. ASAP is delivered as a PC-based package, so that - if required - an implementation project can begin prior to having an R/3 System installed. What
SAP can do
ASAP has been design with the objective of standardizing and streamlining SAP implementation the following list of SAP characteristics: y
Optimizes time quality and resources
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Leverages best business practices
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Delivers a process oriented project map (ASAP road map) that provides step by step direction
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Determine the implementation cost and scheduled, cost implementation cost and time
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Provides process, tools, training and services
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Provides detailed help through various implementation phases
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Provides checklist, questionnaires, and technical guide.
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Supports continuous improvement
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Figure 3: ASAP road map
Phases of ASAP implementation, 1. Phase 1: Project Preparation 2. Phase 2: Business Blueprint 3. Phase 3: Realization 4. Phase 4: Final Preparation 5. Phase 5: Go live & support The implementation time required for each phase depend on the total project implementation time that, typically, ranges between 6 and 18 months for ASAP projects .for example ,at a mid cap company project, for which the total implementation time was one year, the approximate time spent on each phase was as follows, 1. Project Preparation: 1 months 2. Business Blueprint: 2 months 3. Realization: 6 months (2 months for simulation + 4 months for validations) 4. Final Preparation: 3 months In another project at a 2 billion dollar company, which lasted 18 months, the breakdown follows, 1. Project Preparation: 1 months 2. Business Blueprint: 5 months 3. Realization: 9 months (4 months for simulation + 5 months for validations) 6. Final Preparation: 3 months ASAP- fir st phase-Project Preparation: Decisions, decisions « start planning
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Phase one initiates with a retrieval of information and resources. It is an important time to assemble the necessary components for the implementation. Some important milestones that need to be accomplished for phase one include, 1) Obtaining senior-level management/stakeholder support. 2) Identifying clear project objectives. 3) Architect an efficient decision-making process 4) creating an environment suitable for change and re-engineering 5) building a qualified and capable project team. Senior level management support
One of the most important milestones with phase 1 of ASAP is the full agreement and cooperation of the important company decision-makers - key stake holders and o thers. Their backing and support is crucial for a successful implementation. Clear
project objective s
be concise in defining what your objectives and expectations are for this venture. Vague or unclear notions of what you hope to obtain with SAP will handicap the implementation process. Also make sure that your expectations are reasonable considering your company's resources. It is essential to have clearly defined ideas, goals and project plans devised before moving forward. An efficient decision making proce ss
One obstacle that often stalls implementation is a poorly constructed decision-making process. Before embarking on this venture, individuals need to be clearly identified. Decide now who is responsible for different decisions along the way. From day one, the implementation decision makers and project leaders from each area must be aware of the onus placed on them to return good decisions quickly. Environment suitable for change and re engineering
Your team must be willing to accept that, along with new SAP software, things are going to change, the business will change, and information technology enabling the business will change as well. By implementing SAP, you will essentially redesign your current practices to model more efficient or predefined best business practices as espoused by SAP. Resistance to this change will impede the progress of your implementation.
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ASAP- Second Pha se- Business Blueprint: What we are doing and what we need «
SAP has defined a business blueprint phase to help extract pertinent information about your company that is necessary for implementation. These bluep rints are in the form of questionnaires that are designed to probe for information that uncovers how your company does business. As such, they also serve to document the implementation. Each business blueprint document essentially outlines your future business processes and business requirements. The kinds of questions asked are germane to the particular business function, as seen in the following sample questions: 1) What information do you capture on a purchase order? 2) What information is required to complete a purchase order? Accelerated SAP q uestion and answer database
The question and answer database (QADB) is a simple although aging tool designed to facilitate the creation and maintenance of your business blueprint. This database stores the questions and the answers and serves as the heart of your blue print. Customers are provided with a customer input template for each application that collects the data. The question and answer format is standard across applications to facilitate ea sier use by the project team. Issues database
Another tool used in the blueprinting phase is the issues database. This database stores any open concerns and pending issues that relate to the implementation. Centrally storing this information assists in gathering and then managing issues to resolution, so that important matters do not fall through the cracks. You can then track the issues in database, assign them to team members, and update the database accordingly. ASAP Phase- 3 - Realization: Just do it!
With the completion of the business in phase 2, "functional" experts are now ready to begin configuring SAP. The Realization phase is broken in to two parts, 1) Your SAP consulting team helps you configure your baseline system, called the baseline configuration. 2) Your implementation project team fine-tunes that system to meet all your business and process requirements as part of the fine tuning configuration. The initial configuration completed during the base line configuration is based on the information that you provided in your blueprint document. The remaining approximately 20% of your 21
configuration that was not tackled during the baseline configuration is completed during the fine tuning configuration. Fine tuning usually deals with the exceptions that are not covered in baseline configuration. This final bit of tweaking represents the work necessary to fit your special needs. Configuration
testing
With the help of your SAP consulting team, you segregate your business processes into cycles of related business flows. The cycles serve as independent units that enable you to test specific parts of the business process. You can also work through configuring the SAP implementation guide (IMG). A tool used to assist you in configuring your SAP system in a step by step manner. Knowledge Transfer
As the configuration phase comes to a close, it becomes necessary for the Project team to be self-sufficient in their knowledge of the configuration of your SAP system. Knowledge transfer to the configuration team tasked with system maintenance (that is, maintenance of the business processes after Go-live) needs to be completed at this time. In addition, the end users tasked with actually using the system for day-to-day business purposes must be trained. ASAP Methodology - Phase 4 - Final Preparation: Just checking « Ever ything all right?
As phase 3 merges into phase 4, you should find yourselves not only in the midst of SAP training, but also in the midst of rigorous functional and stress testing. Phase 4 also concentrates on the fine tuning of your configuration before Go-live and more importantly, the migration of data from your old system or systems to SAP. Workload testing (including peak volume, daily load, and other forms of stress testing), and integration or functional testing are conducted to ensure the accuracy of your data and the stability of your SAP system. Because you should have begun testing back in phase 2, you do not have too far to go until Go-live. Now is an important time to perform preventative maintenance checks to ensure optimal performance at your SAP system. At the conclusion of phase 4, take time to plan and document a Go-live strategy. Preparation for Go-live means preparing for your end-users questions as they start actively working on the new SAP system.
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ASAP - Pha se 5 - Go-live and S upport: It is a tough world out there « Sure ever ything is all right?
The Go-live milestone is itself is easy to achieve; a smooth and uneventful Go-live is another matter altogether. Preparation is the key, including attention to what-if scenarios related not only to the individual business processes deployed but also to the functioning of technology underpinning these business processes and preparation for ongoing support, including maintenance contracts and documented processes and pro cedures are essential.
Figure 4: Key deliverable s
Research
Methodology
The research is based on a literature review. The research data includes books, articles and studies related to SAP implementation. This secondary data covers the case studies of retail giant companies in India. Research literature was based on case methods in order to capture 23
the reality of the phenomenon. The preliminary explanations were reflected during the analysis of industry related examples.
Dat a
collection
Data is collected from various retail industries who are implemented SAP in their systems; I have collected the secondary data from companies website and customers success stories from the website of SAP.
C ase stud y 1: Pantaloon Pantaloon Retail is the flagship enterprise of the Future Group, with a presence across multiple lines of business. The company owns and manages multiple retail formats such as Big Bazaar, Food bazaar etc. That caters to a wide cross-section of Indian society. The company operates through four million square feet of retail space, has over 140 stores across 32 cities in India and employs over 14,000 people. Aim
Store operations have never been as important to retailers as they are now. Successful retailers are those who know that the battle for customers is only won at the frontline, which in the case of a retail chain is at its stores. Pantaloon was regularly opening stores in the metros and there was an urgent need for a reliable enterprise wide application to help run its business effectively. The basic need was to have a robust transaction management system and an enterprise wide
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platform to run the operations. The company was looking for a solution that would bring all of its businesses and processes together. Solution
The management of pantaloon decided to implement SAP retail solution. Some of the qualities of SAP retail solutions are that it supports product development, which includes ideation, trend analysis, and collaboration with partners in the supply chain; sourcing and procurement, which involves working with manufacturers to fulfill orders according to strategic merchandising plans and optimize cost, quality, and speed±variables that must be weighted differently as business needs, buying plans, and market demand patterns change; managing the supply chain, which involves handling the logistics of moving finished goods from the source into stores and overseeing global trade and procurement requirements; selling goods across a variety of channels to customers, which requires marketing and brand management; managing markdowns and capturing customer reactions, analyzing data, and using it to optimize the next phase of the design process. The implementation
The implementation was done by the SAP team with help of Nova soft which is based out of Singapore. Some people from Pantaloon also assisted in the project. About 24 qualified people worked on this SAP implementation. SAP was chosen as the outsourcing party on a turnkey basis. Three Phases of implementation
SAP implementation is not a single phase process. The project was divided into three phases. The first phase involved blueprinting existing processes and mapping them to the desired state. In this phase, the entire project team worked on current processes within the structure of the organization, analyzed and drafted them. This blueprint was later used in the formation of new states of the solution. Since the SAP would combine all the processes, each and every one of these had to be evaluated. In the second phase, the SAP platform was developed with the help of Nova soft¶s template which was predefined by SAP after evaluation of Pantaloon¶s needs and expertise in retail solutions. The last phase in this project was for stores to switch over to the new system and for current data to be ported. Before the SAP implementation, all the data was unorganized. This data had to be migrated to the new SAP application.
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The project was flagged off on 15th June 2005 and took about six months to finish. It went live at the head office on 1st January 2006. The stores went live on SAP from 1st January 2006 to 30th June 2006. Benefits and Challenge s
The key challenges in this project were not in the implementation. Rather, the difficulties were faced during the data migration and in managing the interim period when the project was underway for about six months. Migrating unorganized data to an organized format is a challenging task. Pantaloon has not been able to see immediate benefits from this implementation. This application certainly has long term benefits which will be seen when the performance of various aspects will be analyzed. They have already started working on MAP (Merchandise Assortment Planning), Auto-Replenishment and Purchase Orders. Maintenance & Hardware
This application is currently being used by around 1,200 employees across the organization. For maintaining this implementation and its related applications, Pantaloon has an in-house team and it has outsourced ABAP resources. They are also in the process of setting up a SAP Competency Centre. The system runs on a HP Superdome server on HP UNIX 11i and the database is from Oracle. The cost of this project was about $10 million.
C ase stud y 2:
Shoppers Stop
The organization aiming to position itself as a global retailer, Shopper's Stop is a family store delivering a complete shopping experience. It is a retail venture of the K. Raheja Corporation with operations in Bangalore, Hyderabad, Jaipur, Delhi, Chennai, Mumbai, Pune, Gurgaon and Kolkata. About 50,000 customers¶ visit a Shopper's Stop every day. The company has a national presence of over 6, 00,000 square feet of retail space and stocks over 250 brands of garments and accessories. Aim
Make shopping a delight by understanding the customer's needs, provide better products and reduce operational cost and boost revenues. The solution
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Shopper stop management decided to use a SAP BI solution from Business Objects as well as the SAS analytical application. It uses the Business Objects solution for reporting and some advanced analysis. They use a combination of Business Objects and the SAS solution for trend analysis, promotion management, and customer behavior, segmentation, buying basket analysis, profitability and lifecycle analysis. They also use it to understand the effectiveness of marketing efforts. This Business intelligence is integrated to SAP SCM and CRM. The benefits
BI has helped the company craft focused campaigns and offer incentives to its high-value customers. It has helped the organization study the demographics of target markets and position appropriate merchandise in its retail stores.
C ase stud y 3:
IT C Retail
ITC is one of India¶s biggest and most successful diversified corporate with an annual turnover of more than Rs16, 000 Corers (USD 3.5 Billion). The Foods Division, one of its youngest and fastest growing arms, was the client for this specific project. Aim
Make an enterprise-class system that would support the end-to-end supply chain of ITC¶s Consumer Good¶s division¶s raw food material procurement operation. Given the poor infrastructure and socio-economic realities of the Indian rural hinterland, the task was a multidimensional and complex challenge. The Solution
ITC retail domain management decided to implement SAP IS retail in their system. Two Phases of Implementation
ITC InfoTech set up µe-Choupals¶ (Virtual Village Marketplaces) - enabled through Internet kiosks and µSaagar-choupals¶ (Physical Village Hyper Malls) - comprising of retail mega stores, procurement centers, pharmacies, food courts and farmer advisory centers. In this way, ITC InfoTech creatively leveraged Information Technology (IT) in favor of India`s small and poor farmers. The technology implementation roadmap comprised of Two Phases, aligning it fully with the business goals. Phase -1
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Connectivity - Managing environmental aspects such as positioning computer and other equipment in villages and enabling connectivity IT Skills - Imparting skills to the first time IT users in remote areas of Rural India. Phase - 2 Personalization - Personalization of product and content range for the very fragmented and heterogeneous farmer groups Supply Chain Alignment ± Effective IT architecture for ³Choupal Sagar´ to ensure efficient delivery of goods & services to every remote retail location, including integration with the ERP / backend systems of participating farmers, distributors, service providers. The benefits y
Superior retail experience to Rural Customers ± right range, greater availability, freshness, right price and genuine branded quality.
y
Highly efficient supply chain ± quicker turns, lower costs and active supply channels.
y
Agile retail operations ± quick introduction of promotions and price changes through integration with POS.
y
Creation of a local language portal providing information to farmers on varied topics such as local weather, market prices and best practices and personalizing of content & product range.
C ase stud y 4:
Tata Trent
Established in 1998, Trent, a Tata Group company, is engaged in the retail business of readymade garments, household items and gift articles, cosmetics and perfumes. Trent runs the business under two formats: Format-I, a lifestyle retail chain, and Format-II, a hypermarket with a large assortment of products available at very low prices. The company has around 25 stores under Format-I and a central warehouse in Pune. It also has one store under Format-II and a warehouse in Ahmadabad. Aim
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For every product purchased, a Goods Receipt Note (GRN) was generated. Every month, at the central warehouse, approximately 2,000 GRNs were generated, while at each individual store 300 GRNs were generated in the same time. Each GRN was also accompanied with other documents, making the set of documents for one purchased good four-five pages long. After receiving the original set of documents consisting of invoice, lorry receipt, quality inspection report at the head office, the bills were passed by recording the purchases and crediting the vendor. There for the current system having many drawbacks, y
Existing process was time consuming, cost intensive and demanded dedicated resources
y
The report generation was cumbersome and distributed
y
The expansion plans anticipated hurdles in scaling-up operations
The solution
The management of Tata Trent decided that to implement cross application of SAP that is document management system (DMS). Implementation phases y
Plain vanilla implementation of DMS: This benefited by way of fast and easy retrieval of required documents and easy information management.
y
Integration of DMS with SAP: The users can now view the images from the SAP screens, thereby ensuring easy data entry and transaction management.
The benefits y
Digitization of records
y
Easy retrieval of documents in SAP
y
Faster invoice processing
y
Cost reduction
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Analysis By studying this cases I have find out that SAP solutions has made a strong mark in the growing Indian retail sector. SAP provides an integrated technology platform for retailers and a one point solution for supporting and managing different business models such as owned stores, franchise stores, shop n shop, super market, and hyper market concepts. Strong business decision and analytical capabilities have enabled retailers of all sizes the power to make the right decisions quickly and profitably. The SAP solution portfolio combines the SAP Business Suite family of business applications with a broad set of integrated retail applications to help companies profitably serve consumer demand across multiple channels. Some of the most common SAP solutions features used in the retail industry, y
Merchandise and Master Data Management: Harmonized, synchronized and optimal
workflow controlled master data across the different lines of business Merchandise and Category Management ensures that assortments meet the expectations of customers within specific micro markets, determines optimal product mix, prices and promotions ± supporting step-by-step cooperation and coordination in development, implementation, and monitoring of business plans. y
Foreca sting and Replenishment: solution that enables retailers to dramatically
improve on-shelf availability, reduce inventory, and optimize the supply chain. y
Workforce
Management - A centrally managed, Web-enabled workforce management
solution gives retailers improved flexibility and control over their business processes. It allows corporate management to take more ownership of schedule planning and execution, giving managers more time to assist customers and coach employees. y
Store Management: Store management systems need to cater to the fast-changing
needs of customers today. These systems must quickly gain fast and reliable, accurate, and insightful customer information in many ways. y
POS Data Management - enables you to examine all your key issues ± events and
promotions, prices and margins, and reason codes for returns ± as well as a host of other parameters. 30
y
Strategic planning ± SAP helps you develop your rolling three-year strategic plans by
providing historic data analysis capabilities as the basis of forward projections, and enabling you to build financial models of various potential plan scenarios. With SAP solutions, you can analyze prior financial performance, customer trends, get B.I on your competition, and develop alternative forward plans. y
Price and reven ue management ± SAP helps you manage prices throughout the
product life cycle, including initial pricing as well as promotional, markdown, and clearance pricing. You can change prices individually or via automatic mass maintenance based on pre-specified dates, by item, store, zone, or region. Prices can be downloaded to stores with start and end dates and times for automatic management of the complete pricing cycle. y
Promotion planning and management ± SAP solutions enable you to plan, execute,
and evaluate the success of promotions. With SAP solutions, you can plan individual promotions, determine promotional order quantities, place promotional orders based on historical information, allocate promotional inventory, and evaluate the success of your promotions. y
Transportation planning ± With SAP solutions, you can plan effectively for incoming
and outgoing shipments. y
Vendor relationship management ± SAP solutions support you in a variety of ways
that you use to select suppliers, capture supplier information, and track supplier performance against key metrics. y
Vendor collaboration ± With SAP, you and your vendors can work more effectively
together developing products, forecasting and replenishing items, and planning and executing promotions. y
Purchase order management ± SAP helps you manage purchase orders through their
entire life cycle ± from initial creation to supplier payment and dispute resolution. y
Customer
loyalty management ± Using a database of customer purchasing history,
demographic details, and planned promotions, you can provide the right incentives to keep customers buying and generate their loyalty. y
Document management- SAP helps you to create and manage your electronic
documents and retrieve easily when you want. The retailers are reaping the benefits of SAP solutions, including
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y
Increased sales ± With customer relationship management and business warehouse
capabilities, basket analysis helps you maximize the number and frequency of customer visits, and increase spend per visit. y
Increased profits ± With price optimization across the product life cycle, including
regular prices, promotional prices, and clearance or markdown prices, you can increase profits while building customer loyalty and maintaining a desired competitive position. y
Reduced cost of products ± You can tighten supplier management and reduce the
cost of goods with the integrated vendor scorecard, reporting, and vendor portal solution of SAP. y
Reduced labor costs ± You can reduce labor costs and improve productivity with
human capital and workforce management solutions, which provide centralized control of store personnel. y
Better product flow-through ± Merchandise and assortment planning, forecasting, and
replenishment solutions ensure that the right products are planned, procured, allocated, replenished, and reordered to maximize product flow-through and inventory productivity. y
Increased productivity and improved decision-making ± The underlying workflow
management tools in all SAP solutions make it easier to focus on the important parts of the job by automating basic, repetitive tasks and highlighting only exceptions for action. y
Simplified operating proce sses and common standards ± SAP uses one integrated
database to ensure one version of the truth and support the companywide adoption of standard best practices. y
Lower total cost of owner ship ± SAP integrated solutions reduce total cost of
ownership by providing best-of-breed business-process support right out of the box, along with adherence to retail industry standards (ARTS and VICS) and IT industry standards (XML). y
Sarbanes-Oxley compliance ± SAP's financial solution, the market leader worldwide,
ensures that you will be able to integrate your financials seamlessly ± even if you have made a number of acquisitions, or operate in different countries and across different channels. y
Reconciliation of financial , merchandise, and assortment plans ± By using one
integrated database to develop all plans, you can achieve plan reconciliation and ensure improved merchandise offers for the customer.
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y
Improved efficienc y ± You and your partners can operate more profitably by using
embedded workflow management tools, ensuring that corrective action is taken before critical situations become crises. y
Reduce erroneous data entry.
y
Should be able to effect efficient, smooth and easy bar coding.
Business
Implications
The Business implications of a retail SAP system are immense indeed. In the contemporary business environment where liberalization, privatization and globalization are the order of the day, most of the retail businesses around the world operate under the fiercely competitive market conditions. Such competition has led to the paper-thin margins in this sector. In order to remain competitive, the retail organizations surviving on thin margins cannot afford the luxuries of systemic inefficiencies or delayed decision-making. Both the activities, be it increasing efficiencies in the business process or the ability to take prudent decisions quickly requires an inside out awareness of the business process. A retailer ought to know the µcomplete picture¶ that can indicate the true state of a retail business. A retail organization may comprise of a small chain of retail stores confined to a small town or city or may include a mammoth organization having its presence around the world in the form of thousands of stores scattered across the different parts of the world. Wal-Mart is one example of a retail business with its operations spanning across different continents around the world. Management of such a distributed network of retail chains is a Herculean task indeed. The retail (SAP) packages help the retailers in better management of their enterprise wide operations spanning the entire globe. 33
The retail SAP systems provide one-stop solution for most retail information processing challenges by providing a comprehensive solution to managing a complex retail business. An (SAP) system helps the retailers manage their businesses in an effective and efficient manner by providing integrated and consistent information flow. It makes the task of keeping track of all the transactions so much easier. A retail ERP system allows automatic recording of the transactions in real-time environment. They have become indispensable tools to survive and increase profitability in the retail sector for large retail organizations. The major competitive benefits of using the SAP system in the modern day retail include: 1. Graphical User Interface (GUI) support ± The retail SAP systems extend a Graphical User Interface (GUI) to the users that make it very easy to interact with the software suite. The GUI is critical to make the retail SAP systems popular with the non-technical users. 2. Allows optimum utilization of the resources ± A retail SAP systems allows an organization to utilize its resources in an optimum manner. This optimization subsequently translates into reduced costs and correspondingly high profits. 3. Reduction in the overhead and Inventor y ± A retail SAP system allows the organization to considerably reduce the overhead and excess inventory thereby reducing the unnecessary costs to the company. 4. Timely responsiveness ± Retail SAP systems allow the organizations to respond to any challenges or constraints in the real time and thereby extend timely response to any customer demands. 5. Enterprise wide solution ± The retail SAP systems offer an enterprise wide integration of the various Information Systems (IS) that allows the users to have an enterprise wide view of the problems and implement the appropriate solutions. 6. Integrated work environment ± A retail SAP system offers an integrated work environment throughout the organization that can be easily monitored and managed. 7. Easy scalabilit y and adaptabilit y ± A retail SAP system offers easy scalability options as per the size and scope of an organization while it also allows integration with the different technologies as well as the legacy systems running at the business associates or partners¶ end. 8. Knowledge transfer between industries ± A retail SAP system facilitates transfer of knowledge between related industries and this process stimulates innovation and subsequent growth.
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Conclu sion A retail SAP system makes management of a retail business a lot easier by utilizing the computing power offered by the modern day Information Systems (IS) in an integrated and consistent manner. The SAP Information Systems facilitates faster and better management decisions by providing crucial information in a timely manner. Because of its integrated structure, it also eliminates errors caused by multiple input of the same data required in disparate legacy systems. When implemented properly, Retail SAP Systems have been found to deliver high ROI despite their high initial and maintenance costs.
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Limit ation s Every project has some limitations even the researcher came across some limitations while working on the project which made the analysis a little inappropriate at times. Some of the basic limitations faced during the research are listed below: y
Companies denied disclosing the facts and figures regarding the operations and implementation process.
y
The study is based on company¶s secondary data sources.
y
At the time of research most of the officials did not sincerely respond to the researcher.
Bibliography
http://www.sap.com/industries/retail/customers
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