What can we learn from empty shelves?
Nothing sticks in your mind like disappointment! This is basic psychology and it also applies to customers standing in front of an empty supermarket shelf. The new mySAP Retail Supply Chain Planning solution helps retailers develop effective value-add chains to avoid empty shelves and keep their customers happy.
We're in the supermarket, and a customer is looking forward to a pleasant evening and a good bottle of his favorite wine. But when he gets to the wine aisle, there are huge gaps on the shelves! He's very disappointed – perhaps even disappointed enough to go and do his shopping in another supermarket. Retailers suffer out-of-stock situations like this every day, sometimes with dramatic – and undesirable – consequences. A study conducted by Ayhan Akkaya has shown that 60 % of all out-of-stock situations lead to massive sales losses because customers are disappointed and change to a different supplier. So what could be more natural for retailers than to use the easiest method of avoiding out-of-stock situations, which is simply to keep a few more – or maybe even a lot more – reserve stocks than they need in the supply chain for purposes of security? Having more goods in the supply chain means faster responses to current needs, no out-of-stock situations and therefore satisfied customers, or so retailers often argue. It may be simple, but it's also very costly, which means it's not a good solution at all!
Holding too much reserve stock ties up capital and storage capacity. According to a study by the ERP Consultant Group, holding excess reserve stock costs retailers in the USA alone an annual US$ 1.1 billion. Today's retailers are performing a balancing act; they have to try to avoid getting out-of-stock at all costs while at the same time keeping the cost of inventory management under control.
Good planning means good business
mySAP Retail Supply Chain Planning helps retailers to cope with the challenges of optimizing their reserve stocks and avoiding out-of-stock situations. To do this, the system offers modules called POS Data Warehouse, Forecast & Replenishment and Merchandise and Assortment Planning.
Forecasts for replenishment
POS Data Warehouse also supports the Forecast & Replenishment module. This
module uses the verified POS data to produce detailed forecasts for
supplying goods to branches and distribution centers. Special offers,
seasonal events such as Christmas and one-off events such as the soccer
World Cup can also be worked into the forecasts. The forecasts are used as
the basis for replenishment planning for distribution centers, individual
branches and the company’s branches as a whole.
Getting the right goods is vital!
task of getting the right goods onto the shelves in the retailer’s shops
is handled by the Merchandise and Assortment Planning module. This is an
integrated planning tool which makes use of data from the SAP Business
Information Warehouse and the accounts system in mySAP Retail. The
Merchandise and Assortment Planning module allows both top-down planning
and bottom-up planning.
Bottom-up planning starts with the individual branches or a selected group
of branches, and incorporates planning of assortments, goods and sales
levels. The system uses various criteria, such as the purchasing habits of
customers in a certain region, for example, to decide how to put together
the individual assortments.
Planning means progress!
retail business can significantly optimize its logistics by using these
three modules of the mySAP Retail Supply Chain Planning solution to
improve its planning. The solution has been specially developed with the
needs of retailers in mind. The cutting-edge retail system architecture of
the solution reflects the fact that users have particularly high
performance expectations when it comes to trading solutions because of the
complex requirements that need to be met. A benchmark test conducted in
April 2002 by Hewlett-Packard managed to load over 500 million POS entries
(pure sales data) in one hour. The same test carried out planning for over
44 million branch/article combinations, producing 2.8 million lines in
In future, it will be possible to use mySAP Retail Supply Chain
Planning to optimize the planning of resources including transport,
warehousing facilities and staff. Comprehensive simulation options will
allow a wide range of scenarios to be planned and assessed for efficiency,
thereby identifying bottlenecks at an early stage and avoiding them. The
interplay between the two planning modules Forecast & Replenishment and
Merchandise and Assortment Planning will play a particularly important
role in this. These modules will ensure that, as soon as new articles are
introduced, it will be possible using data on similar articles to carry
out sales simulations and to perform simulations of how new articles will
behave in the supply chain.
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