#S4HANA 1709 use case series: 4b – Industry to Core – Fashion and vertical business (tech view)
Welcome to our next stop of our use case series. It is designed to offer a closer look at business value acceleration – driven by the design principles of SAP S/4HANA. The technology-induced implications of the digital economy are huge, though the technology itself is only a catalyst to achieve a fundamentally different business outcome.
The selected use cases, related to SAP S/4HANA Release 1709 are designed to emphasize and visualize the value behind this technological shift, that can be activated by you.
In my previous blog, I wrote about SAP S/4HANA for the fashion and vertical business industry and how it enables fashion companies to transform their existing business into a data-driven and intelligent enterprise. The SAP S/4HANA value framework provides the foundation for fashion companies with multiple sales channels to act as an integrated unit and to develop continuously attractive concepts for their customers. Let’s take a closer look at what is new in the SAP S/4HANA digital core for fashion and vertical business.
The latest SAP S/4HANA release includes for the fashion and vertical business many new functional enhancements, for instance in:
- Master Data Management,
- Demand and Supply Planning,
- Inventory and Logistics, Sales and Distribution, and
- Supply Assignment (ARun)
In this blog, I want exemplary highlight the innovation features provided for Demand and Supply Segmentation, Stock Protection via Product Allocation (PAL) and Supply Assignment (ARun). You can find the comprehensive feature list and what is in for S/4HANA for fashion and vertical business in the Feature Scope Description of the SAP S/4HANA 1709 release on the SAP Help Portal.
Demand and Supply Segmentation
Businesses compete today in an increasingly customer-oriented market. Therefore, it becomes necessary to streamline internal processes and logistics around the needs of each market and its unique requirements through appropriate sourcing, planning, and supply of goods to meet market demands.
Some articles are expected to support large volumes of data. Segmentation can be used to order such articles by logically categorizing them based on certain criteria or characteristics.
For example, in the fashion industry, you can distinguish a fashion article such as a t-shirt which is based on the size and the color. This t-shirt in a particular size and color is called an article variant. You can enter a specific item line for an article variant. Using segmentation, you can also order article variants of different quality levels, for different customer channels, and from different countries of origin, just to name some examples for segmentation.
The segments influence the entire logistics chain. Here are the segmentation capabilities provided by the latest SAP S/4HANA release are as such:
- Logical Segmentation: e.g. by channel or market
- Physical Segmentation: e.g. by quality or country of origin
- There are two types of segments:
- Requirement segments
- Stock segments
What are requirement segments?
The segment you assign to the materials in the requirements (for example, Sales Order, Planned Independent Requirement, Stock Transport Order) is called requirement segment. This allows you to subdivide your requirements based on certain criteria.
And what are stock segments?
Stock segments are used for logical distribution of existing and planned stock. Therefore, stock segments are assigned to both the physical stock and procurement proposals such as planned orders, production orders, purchase requisitions, and purchase orders
Pic 1: Segmentation categorizes demand and supply based on logical and/or physical aspects of a product
Stock Protection in vertical fashion
Stock Protection is a vital capability for the vertical business when it comes to the competition of channels and the optimization of supply. In S/4HANA, Stock Protection becomes more powerful and available also for other industries.
Compared to the SAP Fashion Management concept of Stock Protection with Planned Independent Requirements (PIRs), the SAP S/4HANA 1709 release supports Stock Protection for Sales and Stock Transport Order with advanced Available-to-Promise (aATP) and Product Allocation.
The S/4HANA Stock Protection via PAL feature provides two concepts, the Horizontal and Vertical Stock Protection.
The Horizontal concept protects channels from cannibalizing each other in order to ensure planning safety for equally important channels, and keep the possibility of balancing stock for more successful ones. Whereas, the Vertical concept protects the stock for high priority channels. This is useful if you want to guarantee the success of a critical sales channel, even so if less important channels are repressed. Both can be achieved using Product Allocation along with the aATP in Sales and Stock Transport Orders.
Although Stock Protection is now decoupled from Segmentation, the requirement segment field is enhanced in the Field Catalog of Product Allocation, so the Stock Protection with Segmentation is still possible.
At a glance, with Stock Protection in SAP S/4HANA you can:
- like SAP Fashion Management, Horizontal and Vertical Stock Protection
- Apply Stock Protection Rules at aggregated levels; e.g. generic article
- Promise orders based on available factory capacity
- Protect precious materials for most valued clients
We continue our flourishing UI strategy in the SAP S/4HANA 1709 release also with providing dedicated Fiori UIs for the retail business. All Fashion-specific transactions are available in the visual harmonized design and can be integrated into the Fiori Launchpad (FLP); e.g. for the Product Allocation (Stock Protection Scenarios).
Supply Assignment (ARun)
With SAP S/4HANA for fashion and vertical business we provide an optimized assignment of existing stock to open requirements in order to support the fascinating unique situation in the fashion industry. For example, when there is a stock shortage the Supply Assignment (ARun) ensures an automatic assignment of the available stock to open requirements (Sales Orders/Stock Transport Orders) per your business requirements.
Pic 2: Supply Assignment high-level process overview
The Supply Assignment (ARun) is a rule-based process. You can use settings for the stock/requirements sorting or release of the allocation in order to decide when each individual requirement should be processed and to define also the priority. Consequently, this guarantees that orders from the most important customers are prioritized according to their business demands.
What is the business value?
The flexibility in processing optimized assignments improves customer satisfaction overall, because in an intelligent, data-driven enterprise the order handling is processed in real-time and seamlessly across all channels. Automated assignment rules help to increase the efficiency of your sales force. The optimal matching of demand with the supply reduces dramatically the days of goods in inventory and therefore investments for inventory decline in total.
The visibility to downstream demand and supply offers increasing revenue growth, and at the same time, ensures reduced loss due to impending stock-outs. Particularly worth mentioning here is the automated release process which improves the on-time delivery performance in your vertical business.
The salient features provided by the latest SAP S/4HANA release are as such:
- The Supply Assignment (ARun) becomes a SAP S/4HANA core solution and is available now to every customer
- Back Order Processing (BOP) and The Supply Assignment (ARun) are merged into one common solutions based on advanced Available-to-Promise (aATP)
- Advanced ATP (aATP) and MRP live to understand and work with existing assignments
- The Supply Assignment creates a fixed assignment between the requirements and supply elements that remain till outbound delivery is created
- The Fiori based application provides multiple execution modes in Supply Assignment (ARun) such as normal and simulation
- The powerful Insight-to-Action (ITA) Workbench helps users to assess the assignment situation in the system and intimate the responsible person about the exceptions, and also enables users to take several actions like assign, de-assign and create deliveries
- Supply assignments are done for confirmed quantities and confirmed dates
- The stock/requirements pegging List (MD04P) is enhanced with Supply Assignment (ARun) status details
- The Supply Assignment (ARun) has a simplified Release Rule Determination procedure and includes a report to drop/reject open requirements (unassigned quantities)
- Moreover, customers benefit from these flexible features:
- The Supply Assignment (ARun) is not mandatory and can be switched-on/-off at article/site level
- The assignment of batches is an optional procedure and can be decided on article/site level
- The release procedure is decoupled from Supply Assignment execution and can run independently
Industry to Core – Summary
With SAP S/4HANA for fashion and vertical business, we have made significant progress towards the new digital core with retail as a function: The co-existence of retail with selected industries provides process excellence for retailers as well as non-retail companies. Designed to help fashion and vertical businesses, the solution is at the core of a comprehensive suite of retail offerings. It is the market-leading fashion and vertical business solution from SAP and fully leverages the benefits of SAP HANA.
Looking forward meeting you at our next blog talking about the business view of Transportation Management for SAP S/4HANA 1709.
All blog posts of this series can be found here.
For more information on SAP S/4HANA, check out the following links:
SAP S/4HANA release info: www.sap.com/s4hana
And follow us via @SAP and #S4HANA or myself via @BeSchulze