SAP Functions in Detail

SAP APPAREL AND FOOTWEAR (SAP AFS)
® ®

© Copyright 2002 SAP AG. All rights reserved. No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG. The information contained herein may be changed without prior notice. Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors. Microsoft ®, WINDOWS ®, NT ®, EXCEL®, Word®, PowerPoint ® and SQL Server® are registered trademarks of Microsoft Corporation. IBM , DB2 , DB2 Universal Database, OS/2 , Parallel Sysplex , MVS/ESA, AIX®, S/390 ®, AS/400 ®, OS/390 ®, OS/400 ®, iSeries, pSeries, xSeries, zSeries, z/OS, AFP, Intelligent Miner, WebSphere®, Netfinity®, Tivoli ®, Informix and Informix® Dynamic ServerTM are trademarks of IBM Corporation in USA and/or other countries.
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UNIX ®, X/Open®, OSF/1®, and Motif ® are registered trademarks of the Open Group. Citrix®, the Citrix logo, ICA®, Program Neighborhood®, MetaFrame®, WinFrame®, VideoFrame®, MultiWin® and other Citrix product names referenced herein are trademarks of Citrix Systems, Inc. HTML, DHTML, XML, XHTML are trademarks or registered trademarks of W3C ®, World Wide Web Consortium, Massachusetts Institute of Technology. JAVA® is a registered trademark of Sun Microsystems, Inc. JAVASCRIPT ® is a registered trademark of Sun Microsystems, Inc., used under license for technology invented and implemented by Netscape. MarketSet and Enterprise Buyer are jointly owned trademarks of SAP AG and Commerce One. SAP, SAP Logo, R/2, R/3, mySAP.com, and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and in several other countries all over the world. All other product and service names mentioned are the trademarks of their respective companies.

ORACLE is a registered trademark of ORACLE Corporation.
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CONTENTS
SAP ® Apparel and Footwear (SAP ® AFS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Characteristics of the Apparel and Footwear Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Globalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Product Life Cycles and Seasonality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Pressure on Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Increase in Customer Service Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Multiple Distribution Channels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Information Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Key Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Style/Color/Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Style/Color/Size Master Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Categories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Seasonal Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Generic Key Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Integration of Logistics and Financial Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Fine-Tuning Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Multi-Company, Multilingual, Multicurrency Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Foreign Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Triangle Processing – Intercompany Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Order Management and Fulfillment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sales Order Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Standard and AFS Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – EDI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Internet and Intranet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – mySAP TM Customer Relationship Management for the Apparel and Footwear Industry . . . . . – Fast Order Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Credit Card Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Reference Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Mass Order Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Multi-Store Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – “Mark For” Feature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Rush Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Assortments and Prepacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 10 11 13 13 14 14 16 16 16 16 18 18 18 18 18 18 18 19 19 19 19 19 19 21 21 21 21 22 22 22 22

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Sales Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Availability Checking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Credit Limit Check . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Price Flexibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Special Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Value-Added Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Bulk Order Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Order Scheduling and Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Order Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Allocation of Customer Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Allocation Preview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Allocation against Quantity Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shipping and Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Delivery Creation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Shipping Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Shipping and Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23 23 24 24 24 24 24 24 24 25 26 27 27 27 27 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 . . . . . . . . . . . . . . . . . . . . . . mySAP Business Intelligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Data Warehousing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reporting and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Business Content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 28 28 30 30

Sourcing, Inventories, and Supplier Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 – Procurement Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Purchase Requisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Source Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Political Restrictions and Quotas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Vendor Capacity Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 33 34 34

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Request for Quotation (RFQ) and Quotation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchase Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MultiLevel Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventory Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Stock Transfer and Transfer Posting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Logistical Invoice Verification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Special Business Processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Subcontracting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Vendor Collaboration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Third-Party Order Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Procurement of Consignment Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

35 35 35 36 37 37 38 38 38 40 40 40

Warehouse Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Production and Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sales and Operations Planning (SOP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Demand Planning with SAP® APO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Production Demand Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Pre-sizing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Materials Requirements Planning (MRP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Bill of Materials (BOM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Routing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Material Requirements Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Parallel Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Automatic Planning Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Evaluation of Planning Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capacity Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Production Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Apparel and Footwear Specifics in the Production Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Combined Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 43 44 45 45 45 46 46 47 47 48 48 48 48 49 49 50

5

. . . . . . . . . . . . . . . . . . – Product Costing . . . . . . . . . . . 54 Customer Service and Support . . . . . . – Valuation of SKUs . . . . . . . . . . . . . . . . . . – Variance Determination . . . . . – Costing of Valuation Types . . . . . .Product Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 SAP AFS Quality Assurance Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost Object Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Future Focus . . . . . . . . . . . . . . . . . . . . – Grouping with Valuation Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Product Costing for AFS Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Split Valuation . . . . . . . . . . 53 – Apparel and Footwear Specific Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Make-to-Stock Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Split Valuation with AFS Materials . . . . . . . . . . . . . . 51 51 51 51 51 52 52 52 52 52 52 52 53 53 53 53 Profitability Analysis for AFS Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Cost Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Customer Make-to-Order Production . . . . . . . – Special Production Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 – Profitability Analysis at Product Characteristic Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – Product Characteristic-Dependent Quantity Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

a family of solutions and services that empowers employees. It is the obvious choice for companies operating in the apparel and footwear sector. and business partners to collaborate successfully – anywhere. customers. • Key capabilities of SAP AFS. anytime. SAP AFS enables you to benefit from the latest SAP technology and infrastructure enhancements.com®. This document consists of two parts: • Characteristics of the apparel and footwear industry and a discussion of the issues facing executives in the entire logistical supply chain. SAP AFS was developed in collaboration with renowned industry leaders to address the particular requirements of the apparel and footwear industry. 7 .SAP ® APPAREL AND FOOTWEAR (SAP ® AFS) SAP ® Apparel and Footwear (SAP® AFS) is the SAP e-business solution for the apparel and footwear industry. The development of the solution was mainly focused on illustrating industry-specific processes based on the SAP e-business platform mySAP.

The next step was to transfer production to low-wage countries. and quality assurance are taking on more and more importance and therefore tend to remain at headquarters. proliferation of design variations. contractors. In the past. Contract domestic and offshore production combined with global procurement processes create complex value chains that can be inefficient and difficult to monitor. Multilevel division of labor and outsourcing have long been common practice in this industry. forcing companies to contend with constant challenges in a global business environment: there is relentless pressure on price. the transport routes longer and more expensive. Apparel and footwear companies today are increasingly assuming the role of coordinator for both internal and intercompany processes as their core competencies shift away from production and steadily move toward planning. Having production sites spread out around the globe has made supervision and monitoring of the production process more difficult. and meeting confirmed delivery dates a perpetual challenge. coordination and control. 9 . and monitoring textiles in the value chain. companies achieved their greatest cost-cutting potential by optimizing their production processes. stock shortages. raw material and finished goods requirements planning. controlling. companies must cope with seasonal fluctuation. and costly markdowns. and lead times. Fundamental changes and restructuring are taking place in the apparel and footwear market. transport optimization and monitoring. production planning. the production of clothing and shoes can only be automated to a certain degree. causing the savings potential by these means to quickly reach its limit. However. and so on) are increasingly more critical to the success of apparel and footwear companies. As a result. the information flow and collaboration among partners in the textile supply chain (logistics service providers. agents. cost. which in turn meant sacrificing high quality and transparency in the production process. scant information about volatile demand that results in forecast uncertainty. Trends are created overnight. In the apparel and footwear industry. and the industry has to rapidly adjust.CHARACTERISTICS OF THE APPAREL AND FOOTWEAR INDUSTRY The apparel and footwear business is highly demanding. textile manufacturers. Areas such as product development. Fashions often change quickly and without warning.

business is now transacted in many different countries with various cultures and currencies. India. This strategy has to support a variety of capabilities such as in-house production at domestic or foreign sites. The increasing threat of cheap imports and tougher competition have forced companies to adopt a more flexible approach to their manufacturing capabilities. The improvement in logistics capability and the increasing demand for textile products in the less traditional apparel and footwear consumer markets (such as China. As manufacturing does not always take place in the same country as the final customer. Vendor Performance Tooling Amortization Production Complexity Production Capacity Factory Status Lowest Landed Costs WHICH QUALITY Shortest ETD Lowest FOB Costs WHERE ? WHAT PURCHASE ORDER Vendor Product Price Quantity Delivery Date etc. This includes the integration of global sourcing and contract manufacturing as part of a comprehensive sourcing strategy. and Eastern Europe) have led to a truly global marketplace. This has given rise to software solutions and information technology that support enterprises in their ability to move goods and information expediently and reliably across any distance. and country of origin restrictions may arise. additional requirements regarding customs and quotas are involved. or a combination thereof.Globalization Domestic as well as foreign company-owned and contract manufacturing have brought an increase in international trading. They also have to manage the vagaries of fluctuating exchange rates. It is critical for companies wanting to capture and service this demand to be able to operate in all corners of the world. It becomes necessary to track production in order to plan or confirm exact product delivery dates and quantities. contract manufacturing at domestic or foreign sites. as a result. Companies can best profit from this potentially huge market if they are able to transact business efficiently on an international scale. WHICH PRICE Enterprise Demand ? INTERNAL PURCHASING ? OUTSOURCE VENDOR VENDOR VENDOR VENDOR Figure 1: Decision Support for Global Sourcing 10 . the Far East. internally as well as externally. Sourcing entails both internal and external considerations.

The need for reacting flexibly and promptly to market trends and changing consumer needs has resulted in a proliferation of design variations. the procurement of raw materials. production. the seasonality of the products leads to short life cycles and multiple new styles on a regular basis. In addition. The issue of style/color/size and other product characteristics affect the entire supply chain. .. In this way.. Not only style. variations of the same product such as different grades of quality or countries of origin require additional stock segregation and valuation. Only investment in new. advanced technologies can facilitate the handling of large numbers of styles and stock keeping units (SKUs) and the storage of potentially large volumes of data. 11 .TYPE OF SHOE Running Basketball STYLE Style 4711 Style 4712 COLOR (WAY) WHT/BLU/BLK WHT/RED/BLK WHT/RED/GRN SIZE W-8 R-8 N-8 W-9 R-9 N-9 .. delivery. but also color. It impacts planning styles. warehousing capacities. and the orchestration of selling and marketing activities.. Figure 2: Product Structure: SKU – Style/Color/Size Product Life Cycles and Seasonality Seasonality influences the entire product life cyle. size and other dimensions need to be stored including the information relevant for the respective level. especially when it comes to design capability. . Continued investment in new technology is essential for staying ahead of competitors. a company can manufacture products whose design sets them apart from cheaper imports.. The number of stock keeping units (SKUs) that needs to be stored can therefore be very large. The product structure of apparel and footwear companies varies from one to several levels. In some cases. This includes investment in sophisticated computeraided-design (CAD) systems as well as technological innovations in the use of fabrics and fibers.. Product development cycles are shortening and overlapping as customers demand shorter time-to-market cycles.

the retailer. or promotions to encourage future business. Standard designs and carryovers remain in the production line from season to season with possible minor changes to color or detail. or supplying private labels. This can involve tailoring an existing product.Apparel and footwear companies promote a variety of product groups. The seasonality of the apparel and footwear business means that fashion items are highly perishable. creating totally new designs. • They can be offered through sales programs. with special needs to mark down or move inventory that will soon be out of season. Price lists. Fashion products are sold for a particular season and can have a very short lifetime with new products entering the marketplace four or more times a year. gloves. SIZES. A fashion company may also supply store fixtures and point of sale materials. Special items might be produced solely for a specific customer. and bags may each use unique size scales (often different from country to country). Accessories such as hats. packaged in different combinations. AND PRICES TO SEASONS Region: North America Season: Spring Valid: March to May Region: Australia Season: Spring Valid: October to January Figure 3: Seasonality – A Business Parameter 12 . • They can provide opportunities for cross-selling. deals. reports. Certain items must be available for corresponding seasons or events. and inventory displays must be available by seasons or events rather than the usual calendar periods. RELATES PRODUCT. or sold separately. belts. • They can entail sales commission or licensing charges due to a third party. Standard designs and fashion products can be merchandised as a collection or assort- ment. Each of these groups may reflect some of the following aspects: • They can be restricted to certain sales channels. or the manufacturer. stocking and ordering policies.

having been on a downward trend at the beginning of the decade. Consumers today are more educated and conscious of what they buy so that their expectations are rising steadily. low-priced goods. label. in the past. 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. apparel manufacturers focused on minimizing direct labor costs by implementing the bundle system. The highest labor costs are concentrated in assembly phases. especially in the sewing room. In addition. flexible manufacturing strategies. Traditionally. and more efficient planning systems are necessary. route. Larger apparel and footwear companies have the option of reducing costs for raw materials by putting pressure on textile manufacturers due to the size of their orders. In order to meet customer service requirements both in terms of order fulfillment and on-time delivery. The smaller companies. inclined to accept increased costs. Suppliers therefore had to explore other ways of maintaining margins.Flexible Manufacturing Shared Information Sophisticated Order Allocation Transfer Vendor Manufacturing Transfer Distribution Transfer Retail Outlet Transfer Consumer Sophisticated Planning and Forecasting Systems Integration Point of Sales. • With consumers looking for bargains. The increase in inventory costs and risks has also made production throughput times more important. 13 . retailers were not. apparel and footwear suppliers must invest in technology to package. pursue more cost-effective manufacturing. • Cycle times for satisfying customer orders can range from priority delivery within 24 hours to bulk and single delivery. Increase in Customer Service Requirements Customer service has become a very important issue due to complex and demanding customer requirements and diminishing customer loyalty. who in turn are seeking stronger partnerships with their suppliers. have to compensate by reducing labor costs. 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. and develop innovative product ideas. This led them to reconsider their business activities. the inventory level has to meet the immediate replenishment demand decreases. speed. and move the floor-ready merchandise rapidly from the production site directly to the retailer (direct shipments). Vendor-Managed Inventory More and More Demands Figure 4: Enabling Core Business Processes and Meeting Customer Service Requirements Pressure on Costs Increases in raw material and labor costs that go hand in hand with retailers demanding high-quality. however. or vendor-managed inventory with just-in-time replenishment to seasonal planning months in advance. If assembly cycle times are reduced. a high degree of shared information supported by advanced systems integration.

and bar coding. Information Technology Information technology advancements significantly improve trade throughout the world by enabling the electronic processing of customer orders in real time. Financial performance is not only affected by increases in labor and raw material costs. and licensees. electronic kiosks. However. exchanging information on the current status of ordered products. and customers all work together towards a common goal. and telemarketing. direct mail. rapid replenishment. To thrive in this fiercely competitive environment and to address the continuing problem of effectiveness across the apparel and footwear supply chain. 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. 14 . which all require different processing. methods of transportation. partners. Distribution channels can include company-owned retail stores. and efficiently. Consumers can purchase in a variety of ways such as by catalog. and shop-inshop. and policies may apply to each of these channels. the Internet. but the most common channels of distribution include wholesale. Multiple Distribution Channels Multiple distribution channels exist that are typical for sales in the apparel and footwear industry. With SAP AFS. punishment for late deliveries. short lead times for new products and a quick go-to market. Successful performance in the apparel and footwear business includes quick response to retailer replenishment requests. The resulting greater need for mark-downs and write-offs reduces profits.• Retailers are demanding more and more services including drop and cross-dock shipments. 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. By collaborating with one another and exchanging real-time information. achieving a high level of order completeness. this does not necessarily provide a direct financial return. They are forced to keep more finished goods in stock. partners. marketing. and customers are using the Internet to a greater extent to conduct business-to-business processes such as sourcing. Different practices. mass merchandisers. retail franchises. precisely. specialty retailers. Apparel and footwear suppliers are under pressure to fulfill retailers’ orders flexibly. demand planning. and consumers. risking over-inventories or to innovating production processes to reduce that risk. well-advised companies develop strong relationships with vendors. distributors. and collaborative design. even over long distances. and a lack of transparency regarding contract manufacturers. Companies. vendor managed inventory (VMI). boxing. distribution systems. distributors. apparel and footwear companies are able to minimize competition whilst maximizing their opportunity for identifying and fulfilling customer needs. replenishment. rapidly. retail stores. inefficient sourcing. pricing conditions. and selling products. department stores. retailers. suppliers. manufacturers.

Policies. and Procedures Pricing Conditions DEMAND PLANNING Distribution System CUSTOMER Telesales CUSTOMER DEMAND Wholesale EDI Method of Transportation Figure 5: Multiple Channels of Distribution 15 .CONSUMER Internet buying CONSUMER DEMAND Shop-in-shop Catalogue Direct Franchisees DECISIONS Practices.

It is therefore no longer mandatory to maintain all the possible combinations of valid categories. Categories In addition to grid dimensions. anytime. A grid has been developed to support these specific enhancements and safeguard high levels of performance. materials management. allowing you to segregate levels of quality. inventories. for planned requirements consumption. 16 . you can further specify product characteristics by categories. Copy and referencing functions also support volume changes due to seasonal influences. and so on. or pricing) and thereby increase the flexibility of grid processing. for material requirements planning. quotation. Dimensions are individually definable for every customer and product. seasons. Dimensions can be flagged as being relevant to certain applications in SAP AFS (for example. and all supply chain elements to guarantee your management and staff up-to-date information at the push of a button – anywhere. 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. The SAP AFS management of categories has been further enhanced so that category fields can be flagged as being relevant to certain applications in SAP AFS (for example. country of origin.KEY CAPABILITIES SAP Apparel and Footwear is the best-of-breed e-business solution for the apparel and footwear industry. It also seamlessly integrates financials. These enhancements derive largely from the size and seasonal requirements of the industry and relate to the building of product levels based on style/color/size as used throughout the logistical cycle. and production planning and execution). Categories provide an additional layer of detail. customer segments. 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. It not only addresses the logistical needs of apparel and footwear companies worldwide (such as sales and distribution. This tool ensures that as styles change from season to season. controlling. bill of material maintenance. The product characteristics are represented as AFS dimensions. and supplier Relations – Overview – Purchase rrequisition – Source allocation – Request for quotation. the enormous number of stock keeping units (SKUs) can still be maintained quickly and easily. or sales status).

Dimension 1: Color Dimension 2: Waist Valid Sizes for Color BLACK Dimension 3: Inseam Figure 6: Style/Color/Size Master Data in Product Grid Format and Grid Processing 17 .

Fine-Tuning Techniques Customizing can be used to adapt the system to suit the individual operating needs of your company. It is therefore important to introduce processes to support such transactions. In triangle processing. Furthermore.Seasonal Processing The apparel and footwear industry is a highly seasonal business that calls for tight control over product sales and delivery availability. SAP AFS features a season function to define and control seasonal delivery periods and handle specific order periods honoring season-related deadlines. and themes and assign the delivery program a delivery date. systems can be quickly matched to everchanging business demands without affecting turnover figures. international business must still be able to place orders in only one language. Triangle Processing – Intercompany Transactions Large international companies transact business with several different companies and in numerous countries. collections. For example. and delivered by a third. As soon as an incoming vendor invoice is received. articles. it is automatically visible in the accounts payable department. Purchased products can then be shipped directly to the customer. you can define delivery programs for seasons. an order is taken by one country for a customer. Pricing can be carried-out depending on special events and seasons. By fine-tuning order types for example. and time frames within order processing. you can define new business processes and adapt existing ones as and when needed. and multicurrency sales order processing. Each partner is able to process transactions in the appropriate local language and local currency. Business transactions with partners in other countries can be converted automatically into other languages and currencies. For example. owned by a second country. Foreign Trade The global nature of the apparel and footwear industry also involves continuous changes in foreign trade and customs regulations. multilingual. These affect the entire supply chain from raw materials to finished goods. during an end-of-season sale. GENERIC KEY CAPABILITIES Multi-Company. Integration of Logistics and Financial Applications Standard logistics and financial applications are integrated with SAP AFS. flexible management of export licenses. from inventory to financial accounting. thus simplifying cross-border trading and supporting a global market. The foreign trade capabilities of SAP overcome such barriers and include support for EDI interfaces for foreign trade information. With SAP AFS. and not just during initial implementation. automatic declarations to authorities. Multicurrency Processing Despite multi-company. Logistical business processes automatically lead to corresponding real-time postings in accounting. The second country invoices the customer and pays commission to the country in which the order was placed. as a result of a direct shipment request from a customer in sales. a purchase requisition is handed to the purchasing department. and representation of preference agreements. Constant change is the norm. The same applies to country-specific size scales. which can be formidable obstacles for any organization operating internationally. Grid processing in SAP AFS caters specially to all of these requirements. 18 . Customer-relevant data is then transferred to the purchase order. This means you have full control over customer orders. Multilingual. SAP ensures that international borders are not trade barriers. you can decrease the price for an article depending on how sales progress.

ORDER MANAGEMENT AND FULFILLMENT SALES ORDER PROCESSING Standard and AFS Materials SAP Apparel and Footwear offers a variety of order entry methods and screens. driving costs out of their operations. credit hold. Organizations have recognized that they must therefore provide more value in different forms to their customers. such as dimensions. mySAPTM Customer Relations Management (mySAPTM CRM) connects customers to the knowledge. organizations have become more efficient. EDI translates customer information into AFS system information. EDI accelerates and integrates sales operations. consumer-to-business. people. Such applications are specifically designed for business transactions and not just for information access. An added benefit is that work activities can be prompted by the system. and set their key corporate goal to achieve “customer value leadership. 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. shifting the focus of corporate efforts to the customer. ensuring that data transmitted electronically is immediately available to SAP AFS users and applications. such that quality is no longer as great a distinguishing factor among different companies. and can even trigger a workflow process. All order screens in SAP AFS can be used to order both non-sized and style/color/size materials. and intranet applications. mySAPTM Customer Relationship Management for the Apparel and Footwear Industry In response to ever increasing profit pressures. The result of these efforts is that price and quality have converged. regardless of whether orders are entered manually or received through EDI or the Internet. which have been developed together with our customers. since business information must be transferred as quickly as possible. should exception messages need to be processed. 19 . In particular. Furthermore. a workflow event could be automatically initiated for a sales order on the basis of an invalid article number. or other user-defined criteria.” To accomplish this goal. Standard Business Application Programming Interfaces (BAPIs) have been amended to satisfy the SAP AFS style/color/size requirements. creating customer value leadership through: • Superior customer relationships • Innovative customer-focused products and services • Excellent customer-centric processes Sales Order Processing Invoicing Inventory Sourcing Delivery Figure 7: Sales Order Cycle EDI Electronic data interchange (EDI) plays a critical role in sales. and users are otherwise free to concentrate on their regular activities. and processes of a company's entire value network. they have also focused on the quality of their products and services. Payment 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. organizations must create a customer-centric e-business by making the customer the center of all their activities. For example.

Order 1 Order 2 Order 3 Order 4 Order 5 Telesales Tele-Sales Order 1 EDI EDI Sales Sales Order 2 Internet Internet Sales Sales Order 3 Mobile Mobile Sales Sales Order 4 Faxed Faxed Sales Sales Order 5 KEYED AUTOMATIC KEYED SPECIAL FEATURES: • Fast and user friendly • Customer product grids • No repetition of style numbers • Subtotals • Hierarchical overview • Copy quantities • Customer service reason codes SAP AFS Figure 8: Multiple Methods of Order Entry mySAP CRM includes capabilities that are interwoven within the entire customer interaction cycle. strategic sales channel. and service. All relevant customer information is available for your call-center agent at a glance. convenient shopping-basket management. and returns. monitored. and e-mail. The customer care and help desk supports all types of questions. sophisticated product selection. With mySAP CRM for the Apparel and Footwear Industry. prospects. Intelligent Web analyses and a flexible Web design based on state-of-theart technology top off the solution. multimedia product catalogs. telemarketing.0. complaints. After identifying your customer’s needs. secure transactions. Customer contacts are tracked. and business partners access to specific information (such as product catalogs. Inbound calls from your customers (for example. and mobile sales will be available for apparel and footwear companies. With SAP AFS 3. Web. e-selling. and pricing) and self-service functions (such as order entry and tracking requests) through the Internet. E-selling provides comprehensive capabilities for selling apparel and footwear articles through the Internet. complete order status checking. retailers) enable you to automatically identify the customer through the calling phone number. It covers all phases of the sales cycle. you can branch to any SAP AFS transaction without keying in redundant information. as well as supporting payment processing and fulfillment. e-services. you can take advantage of solid expertise SAP has in customer relationship management. In the near future. with escalation and workflow processing plus many other activities. The mySAP CRM Interaction Center facilitates inbound and outbound communications mainly in the areas of telesales. such as the customer number. E-service offers your customers (retailer and end-consumers). chat. Interactions can be blended across all remote channels including telephone. These capabilities are discussed in detail below. and enhanced for multichannel communication. 20 . apparel and footwear companies can utilize the mySAP CRM Interaction Center. advanced personalization. while creating a new. content.

Status data such as Sales area and Customer ship-to are displayed on each screen. UPC/EAN codes (Universal Product Code/ International Article Number). This can be particularly useful in a telesales environment. That means you can deliver key customer and prospect information to your sales personnel in the field. As a result. such as customer product number. For example. and so on) and auto-dialing for authorization. there are plans to support mySAP CRM Field Sales. it captures the details needed for later settlement. considerable time and effort is involved. and provides activity reports. SELECTION SCREEN Customer Requested delivery date Material Execute selection CHANGE SCREEN Requested style From: 1475 To: 1476 1475 SELECTION FOUND LIST Sel E E E Order 543 556 610 851 Customer PO No 1000 47355 1131 4600 41899 3299 AB_12 Material 1475 1475 1475 1475 Qty 10 18 12 50 Rq Dlv 12/06/00 15/06/00 15/06/00 20/06/00 CUSTOMER ORDERS Execute change UPDATE REPORT Figure 9: Mass Order Management 21 . Mass Order Management The apparel and footwear industry has many customers and therefore a large volume of orders. The appropriate pack codes can be filtered out of a selection list before the system performs the substitution. Reference Capabilities Cross-reference capabilities allow appropriate product numbers to be found based on different criteria. Credit Card Processing The system automates credit card processing by prompting for credit card details (such as number. Appropriate products may also be determined from a list based on pack-code selection rules. This facilitates the planning and maintenance of sales activities (such as appointments. This also includes capabilities to create clearance sales and take orders. or by referencing a discontinued product to a new product. SAP AFS enables you to enter data and change entries for selected items or schedule lines. 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. Fast Order Entry Screens designed specifically for SAP AFS have helped speed up manual order entry. a customer may not want articles with coupons to be included in the packaging of any product. and calls). You are not restricted to using the SAP AFS fast order entry screens.Furthermore. With mySAP CRM Mobile Sales. expiration date. you can create your own screens to suit your individual requirements. visits. your field sales force will be supported using mostly autonomous mobile devices. On receipt of authorization. when your customer service department is compelled to make a general change affecting many orders.

Multi-Store Orders To service key accounts with multiple outlets or stores using the best possible method. Rush Orders SAP AFS is equipped to handle rush orders if stock needs to be shipped immediately. If you want to combine colors and sizes of one article. Sizes for the finished goods. 22 . A critical marker indicates stores with high delivery priority. When delivery is made to a customer distribution center. Order maintenance and allocation can be carried out either for each individual store or the whole group of stores together. however the pricing and processing of prepacks are performed for the unit and not on the basis of their individual components. such as shoes. whereas with the first-in. and delivery creation are all carried out at the same time. a golfing outfit “medium” consists of ten golf balls. “Mark For” Feature SAP AFS “mark for” information helps direct deliveries to particular points within a customer organization. a golf shirt. golf shirt (medium). and dates for many stores simultaneously. In stock shortage situations. Prepacks have a single size associated with them. so that the order can be given to picking without delay. you can use it again for other products. The system may adjust the quantities for each component of the assortments in case of stock shortage so that they are always based on complete combinations. or other reasons. using equal distribution. This way. the system assigns an equal quantity of pieces to all stores. in a particular quantity. the system automatically inserts the respective quantities for the grid values. whose pricing and processing are done not as a unit. The assortment can consist of non-sized and sized products. Once you have defined a quantity distribution profile. “Mark for” information such as department names and details can be automatically copied into the sales orders as a new partner function. Delivery can be made directly to the stores or a customer distribution center. articles can be labeled “mark for” onward delivery to a specific store to facilitate easy cross-docking for the distribution center. but at the level of the individual components. For instance. if needed. Many stores transmit articles. you can also increase these quantities accordingly. 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. due to store openings. are specified per item in the assortment during the order-taking process. length 33). Assortments are a group of finished goods. and golf pants (waist 32. the system can determine the quantities to be distributed to the individual stores by means of distribution rules. SAP AFS features a new order type known as the multi-store order. Sales order entry. delivery quantities. Assortments and Prepacks Assortments and prepacks can be defined using the SAP AFS bill of material (BOM) structure. the system takes the delivery priority into account and may disregard stores with a low priority. and golf pants. Using a factor. allocation. Customer-run loading points information may also be copied from the customer master record. an assortment could be a golfing outfit consisting of ten golf balls. For example. fashion shows. This method allows users to accept orders for multiple locations but treat them as a single logistical component. first-out (FIFO) logic. The system proposes which stores delivery should be made to on the basis of a predefined customer store hierarchy. For instance. you can use a quantity distribution profile instead of using an assortment or prepack. Prepacks are again logical combinations of finished goods.

apparel. 30 50 25 25 50 75 25 0 14 30 Line % Order % Complete Complete 1475 1475 1475 150% 175% 100% 33% 50% 67% Figure 10: Example of Proposed User Fill-Rate Information Availability Checking The SAP AFS available-to-promise (ATP) check is an optional feature to determine whether or not the quantities and delivery dates requested by a customer can be met. 23 . divisions such as shoes. 15 Jan. SAP AFS also offers a report to list all sales orders that have only been partially delivered or not delivered at all. Time. you may execute the ATP again upon goods receipt and have the system adjust the delivery dates. If the scheduled delivery date is later than the cancellation date. • Item independence: SAP AFS enables you to treat each item in a sales order as a separate order. It helps to complete business processes on schedule and. By drawing the customer’s attention to the order cancellation date if exceeded. SALES CAPABILITIES The fill rate risplay enables order-taking staff to inform customers immediately of fill-rate options based on available delivery dates and quantities. When an order is entered. and accessories) can be handled within the same sales order. user. or rejected from allocation. the order can be canceled using the mass document change feature. 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 order cannot be shipped right away. Replenishment lead times can also be taken into account. the check verifies whether sufficient stock is available to fulfill the order. change.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 requirements into their next purchase order. and reason are then recorded and always accessible. promotes greater customer satisfaction. 01 Jan. 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 availability check determines in real time when sufficient stock will be available and proposes a delivery date for the future. With back order orocessing. A warning or error is displayed if an order no longer falls within a given season. To optimize procurement and production. staff can suggest that orders be put back to achieve a better fill rate. Material Scheduled Scheduled Cumulative Day after Delivery Quantity Order Required Date Quantity Delivery Date Jan. • Customer service reason codes: Should customers decide to change the terms of an order. This enables companies to make decisions during sales order processing based on real-time information about potential delivery bottlenecks. The system can be configured to perform a check based on physically available stock or against planned receipts. In this case. • Cross-divisional sales: Even different product families (for example. ATP may only be checked within the SKU-level horizon. Using the rescheduling tool. customer sales representatives can enter a reason code. at the same time.

hemming. Bulk Order Processing SAP AFS allows entry of a customer’s “promise-to-buy. and so on) ensure that goods can be put on display immediately upon arrival. A total limit and/or limits for specific credit control areas may be defined for a given customer. ticketing. A new value-added service (VAS) database has been developed for SAP AFS.Credit Limit Check SAP AFS features a variety of flexible options for credit checking. which change or improve the appearance of their goods before accepting delivery. thus making it exclusive to that customer. the customer sends actual orders and instructions with ship-to points and quantities. planning level. usually done in the distribution center. where it is not immediately necessary to know the ship-to points or delivery quantities. these services can influence the sales price accordingly. badging. It takes specific customer and global business rules into account in order to calculate optimal delivery schedules. SAP AFS also features an additional credit check at the time of order allocation. At a future date. For example. 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. Value-Added Services Many retailers require services. This guarantees optimal deliveries and the highest of customer satisfaction. size. 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. hanging. such as credit rating data. Such services (such as packing. The order scheduling architecture is designed to enable the addition of new user and customer rules. 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. such requirements can be entered manually. Applicable rules and the sequence in which they are applied can be customized. You can set credit limit checks at any point in the sales cycle between order receipt and actual shipping. Alternatively. 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. open limit. If desired. category. 24 . These quantities are offset against “promise to buy” quantities. and open items. 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. Order scheduling is parameter driven. It is therefore possible to compare the customer’s expected take-up with the actual take-up at any stage in the order process. such as a vendor-managed inventory. cresting. There are also customizable options for system response when credit limits have been exceeded.” The source of the promise-to-buy may be an internal ordergenerating system. 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. color. which records these requirements and incorporates them for the particular customer at the time of order entry or delivery. or striping.

rather than not being able to fulfill a sales order at all. For example. 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 decide how you allocate stock to orders. The system may check a customer’s credit limit upon allocation and either exclude the customer from further allocation completely or exclude the sales order items that exceed the credit limit.ARun Functions SAP AFS Optional Process WMS Warehouse Management System (external system) GI Goods Issue Check Backorders Selection Grouping Sorting Allocation Release Order Scheduling Allocation Preview Order Entry ATP Check Save Order Allocation Run Delivery Creation Delivery Changes/ Post GI Invoice Allocate Rush Order Management Tool WMS Figure 11: Sales Order Process Flow Allocation of Customer Orders Tremendous improvements in customer service are achieved through the use of customer order allocation (allocation run). With SAP AFS. In the case of stock shortage. You can specify checks to ensure the deliveries contain enough core sizes (“heart” sizes) and not just fringe sizes. and therefore increase customer satisfaction. Alternatively. you may give high priorities to the orders of important customers and distribute the remaining stock equally among the other customers. The orders are then only released for shipping when the order meets customer or business rules on order fulfillment and/or available credit. SAP AFS can be user-configured to sequence certain customer orders so that they are given preference when stock is allocated. Depending on your business requirements. by calling customers and releasing agreed orders using the management tool. you can increase the number of acceptable deliveries. by filling orders up to their agreed minimum release quantities. your customer service department can concentrate on managing the exceptions – for example. the order exceptions can automatically enter subsequent allocation runs to accumulate more stock 25 .

Then. the purchase order delivery date for sales orders taken six months in advance may change. For example. The customer can be informed of the shift in dates or the change in expected delivery quantities. their release rules cannot be met. Order Release Planning CUSTOMER SALES ORDER # CUSTOMER PARAMETERS PRIORITIZATION ORDER RELEASE PRIORITY Product Customer Type Partial Shipment Customer Order 5 Customer Order 3 Customer Order 2 Customer Order 1 Customer Order 4 CUSTOMER DELIVERIES Price Fill Percentage Quality Core Sizes Style/Color/Size Order/Delivery Dates Improved Customer Responsiveness Figure 12: Allocation Run Process Flow 26 . should the ATP (available to promise) situation change. Concepts for fixed allocation against future goods receipts are under review. The allocation run can operate on your orders in simulation mode. and this functionality is to be included soon in the SAP AFS Allocation Run. thus maximizing customer satisfaction. You can also see which customer orders would therefore be late or have problems being delivered because. Allocation Preview The allocation run can also run in preview mode with future planned receipts instead of stock. or you can use the Management Tool to de-allocate the stock for allocation to other orders. It can also take into account which release rules and customer delivery priorities you would normally use in your allocation process. you can examine the results to determine the optimum order allocation settings (such as customer allocation priority). In preview mode. you further enhance delivery acceptance. By setting the allocation run to reject or report orders that are close to or past the cancellation date. and you can save the simulation results. for example. Allocation preview determines which orders can be delivered and when.until the release rules are met. 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 quantity has changed impact your orders.

as well as introducing and transmitting valueadded services (VAS) to a warehouse through standardized interface. 27 . The benefit of order allocation is that available stock is optimally distributed among customer orders. and so on). the system automatically assigns incoming goods receipts to open contract release orders to ensure smooth and on-time delivery. For allocated contracts. up-to-date shipping information is always available. which denotes the end of the order allocation process. route. loading. deadline monitoring of shipments in process. and flexible delivery processing. PER MARKET Figure 13: Enhancement of Transportation Tracking and Real-Time ATP Check Allocation against Quantity Contracts The allocation run may also take quantity contracts signed with customers into account. simulation. You can run preview. and allocation online or in the background. Shipping and Transportation Shipping and transportation management in SAP AFS tightly integrates materials management and financial accounting. date. by mode of transport. The shipping module provides comprehensive support for foreign trade processing. This is the first step to trigger the actual picking of the goods. DISTRIBUTION PLANNING. and flexible shipping output are also supported. packing. DETAILED SCHEDULING. Delivery Creation SAP AFS provides flexible options for creating delivery notes (for example. SHIPPING AND TRANSPORTATION Shipping Capabilities SAP AFS enhances shipping capabilities by integrating grid value settings. carrier. Customer orders are fixed and released to the shipping department.“WILL A DELIVERY ON MONDAY BE SOON ENOUGH FOR YOU?” PRODUCTION. Picking. PLANT LEVEL FORECAST. Consequently.

mySAP Business Intelligence (mySAP BI) combines data warehousing with comprehensive analyses delivered through an enterprise portal. In fact. including data from business partners.BILLING CAPABILITIES mySAP BUSINESS INTELLIGENCE FOR THE APPAREL AND FOOTWEAR INDUSTRY Billing Facilities SAP AFS provides best-of-breed billing and pricing capabilities. interpreting information and translating it into action remains critical to the success of a company. It comprises the most comprehensive set of solutions to gather information. such as size. and promote a strong customer orientation. enables analysis and interpretation of integrated. The material grid structure is reflected in the billing document so that sizes and associated prices/taxes can also be displayed. compressing. mySAP BI promotes a closed-loop approach to managing corporate information. SAP offers integrated. It also enables them to take advantage of leading industry-specific and cross-industry benchmarks. you can measure the effectiveness of business operations and take immediate corrective action when needed to ensure continuous improvement. and Logistics Information System The Logistics Information System is a flexible tool for collecting. and rapidly turn it into real knowledge on which to base decisions and actions. anytime. reduce costs. Although the Internet has changed the way business is carried out today. With mySAPTM Business Intelligence (mySAPTM BI). consistent information. and empowers organizations to turn insight into action. With mySAP BI. providing a framework for key performance metrics and optimizing operations. The tools and technologies used for designing and managing a data warehouse enable the extraction. Analytical applications give you control over supply chains. and rebates • The ability to reference original invoice data in credit and debit memos. other areas of your company can also access sales information at the required level. production planning and control can break down planning requirement data to a lower level. mySAP BI enables apparel and footwear companies to access the vast supply of information available in the Internet economy. SAP offers an innovative and sophisticated solution that helps apparel and footwear companies implement industry-leading measurement technologies. For example. and evaluating data (information) from other applications. fully Web-enabled capabilities for enterprise performance management. Data Warehousing Data warehousing delivers a common view of enterprise data. and navigate the business successfully – anywhere. SAP AFS LOGISTICS INFORMATION SYSTEM mySAP Business Intelligence Interpreting information is critical to the success of companies in the apparel and footwear industry. turn that information into knowledge. This lets you streamline operations. As a consequence. The information systems have been enhanced to allow analysis and reporting right down to size level. credit and debit memos. which saves time and simplifies communications • 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 accounting for immediate analysis. mySAP BI offers apparel and footwear companies access to both internal and external information resources. The central elements form self-defined information structures. integration. 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. and other enterprise activities. which in turn can be filled with customer-specific data using various tools. customer relationships. 28 .

mySAP BI comes with a pre-configured. consistent. The data warehouse infrastructure serves both as a collector and provider of data and information (for instance.ADMINISTRATOR WORKBENCH ENTERPRISE PORTAL BUSINESS EXPLORER Scheduling Monitoring Administration Third-Party Tools Web Reporting and Publishing Multidimensional Analysis XML ODBC API SAP BW SERVER OLAP PROCESSOR Metadata Repository METADATA MANAGER DATA MANAGER Master Data STAGING ENGINE PSA ODS Interfaces BAPI FILE XML Feeding Services Extraction Engine DB Connect ETL Tools Data Source SAP Applications SAP BW File Non-SAP Applications Data Provider EXTRACTION. and enables the integration of different applications and tools within an enterprise. It provides users with a better understanding of the information they are analyzing. TRANSFORMATION. AND LOADING Figure 14: Data Warehousing transformation of data from multiple sources to support decision-making processes in the enterprise. and accurate data. extendable metadata repository to ensure integrated. 29 . by populating data marts and the Operational data store (ODS)).

delivery dates. such as extraction and transformation rules or data models such as InfoCubes. scrap. The models contain predefined templates for reports and analyses with corresponding technical definitions. mySAP BI contains tools for query design. mySAP BI includes predefined templates for OLAP queries. Users can access data on different levels (detailed or summarized). queries. material revaluation) Stock statistics Material consumption statistics Target and actual comparisons: Production quantities. and so on Business Content mySAP BI is shipped with information models. Web application design. and multidimensional online analytical processing (OLAP) analyses for collaborative decision making. reporting. and data visualization. and the entire data flow in business content is pre-configured. color and size. region. or Web applications. These tools allow users to create analytical applications. visualize relationships between business information and spatial information (geographical analyses). key account. and formatted reports enabling users to easily define new ones: • Winners and losers • Sales per style. BEST PRACTICE MODELS CUSTOMER-SPECIFIC BUSINESS CONTENT 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 Figure 15: Comprehensive Business Content 30 .Reporting and Analysis Reporting and analysis provides decision-support tools such as query. sales representative. and share and analyze business information within their Web browser (PC or mobile). product group. and so on • Sales per country. represent data graphically. and so on • Returns statistics • • • • • • • • • Order fulfillment statistics ABC analysis Seasons/collections/themes Supplier loyalty Invoice verification Inventory management (material movements. and easily build comprehensive information cockpits that users can access through an enterprise portal.

SAP AFS has introduced the concept of elementary fields. SAP BW 3... Figure 16: The Elementary Field Concept With mySAP BI's data warehousing component.. Therefore. delivered business content tailored to the needs and requirements of the apparel and footwear industry. COLOR BLK Red BLK BLK . SIZE XL L 44 56 . category fields. Elementary fields contain information about material characteristics such as color.. QUALITY 1st 1st 2nd COUNTRY DE DE US DE . CATEGORY 1st – DE 1st – DE US – narrow DE .. SALES VALUE 10.0B). SALES VALUE 10. sales and distribution... and more into real information and knowledge. and additional material master fields. SAP® Business Information Warehouse (SAP BW 3.SAP BUSINESS INFORMATION WAREHOUSE MATERIAL T-Shirt 4711 T-Shirt 4711 Shoes 0815 Coat 666 .0B includes extraction routines and information models that can transform data from materials management.00 USD . 31 ...00 USD 15... SAP has... mySAP BI for the Apparel and Footwear Industry delivers content enabling you to run analyses and reports right down to SKU level (dimensions and categories)..00 USD 15. WHAT IS THE SALES VALUE OF ALL MATERIALS IN COLOR BLACK? EXTRACTION WHAT IS THE SALES VALUE OF ALL MATERIALS WE MANUFACTURED IN GERMANY? SAP R/3 MATERIAL T-Shirt 4711 T-Shirt 4711 Shoes 0815 Coat 666 ...00 USD . These fields can be mapped with grid dimensions. or quality. for the first time..00 USD 25...00 USD 15. production planning. .00 USD 25. GRID VALUE XL BLK L Red BLK 44 56 BLK .00 USD 15.. size.

You can also very easily perform ad hoc querying by using drag-and-drop characteristics and key figures. The apparel and footwear-specific content enables you to implement an information system out-of-thebox. SAP AFS content includes the following objects to gain information from other mySAP. and AFS Roles The predefined data models can be extended very easily without modification. AFS transfer rules. anywhere. and required quality. you can integrate the business content into mySAPTM Enterprise Portal for convenient user access anytime. stock quality. AFS DataSources. color. 32 . AFS workbooks. The range of elementary fields can be easily extended to meet your specific requirements.SAP BUSINESS INFORMATION WAREHOUSE INFOCUBE INFOCUBE INFOCUBE INFOOBJECTS FOR ELEMENTARY FIELD COLOR TRANSFER STRUCTURE BLK SIZE 3132 QUALITY 1st COUNTRY EU BAPI DATA SOURCE REPLICATION DATA SOURCE TRANSFER STRUCTURE BLK 3132 1st EU ELEMENTARY FIELDS LIS MAPPING BLK 31 32 1st EU CHARACTERISTICS COMMUNICATION STRUCTURE BLK3132 1stEU SKUs SAP AFS Color Waist GRID VALUE Length Quality Country CATEGORY Figure 17: Extraction of AFS-Specific Data into SAP BW SAP delivers a best practice set of elementary fields: size. country.com business applications: • Data extraction: AFS extractors. and AFS InfoSources • Data storage and enrichment/movement: AFS update rules and AFS InfoCubes • Data retrieval and presentation: AFS queries. Furthermore.

and other departments all have access to the same data. and invoice verification. You can generate all documents with reference to the data available in the system. INVENTORIES. The SAP AFS procurement cycle is illustrated in the diagram below. time and effort as well as data entry errors are kept to a minimum. inventory management. sourcing of finished products. You can distribute the purchase requisition quantity by percentage across dimensions. the purchase requisition can be marked for request for quotation (RFQ) processing. subcontracting. 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. from purchase requisition creation through purchase order generation. 8 Handling of Payments 7 Invoice Verification 1 Determination of Requirements 2 Determine Source of Supply/ Source Allocation PROCUREMENT 6 Goods Receipt 5 Purchase Order Monitoring 4 Order Processing Vendor Selection 3 Figure 18: SAP AFS Procurement Cycle 33 . This is an optimized tool you can use to evaluate the most effective channels for procurement. In this way. warehousing. no additional effort is necessary for creating and processing purchase orders. Purchase requisitions are created manually by the department making the request. The processing of purchase requisitions has been extended to include dimensions and categories. The distribution can be based on historical data or definable standard distributions. They need only intervene in exceptional cases. AND SUPPLIER RELATIONS OVERVIEW PURCHASE REQUISITION Procurement Cycle SAP AFS covers industry-specific raw material and component procurement processes. can take place automatically without any significant help from the purchasing department. During a source allocation run. The great advantage of procurement using SAP AFS is that all routine jobs. or generated automatically by material requirements planning (MRP). A module for optimum vendor selection has been developed for SAP AFS. Once a supply source has been assigned. SOURCE ALLOCATION As a result of today’s trend towards globalization. the importance of procurement has increased.SOURCING. Because purchasing. accounting. you can find and assign the most suitable vendors for a requested material to the purchase requisition. Using SAP AFS source allocation. The purchase requisition is a request to the purchasing department to procure a certain amount of materials or services by a particular date.

various suggestions for procurement are generated. proposing the most suitable vendor.000 hours LEVEL 3 Material 70 white 1 pair = 5 hours Material 80 black 1 pair = 2 hours CAPACITY BY PRODUCT Figure 19: Source Allocation Vendor Capacity 34 . VENDOR 1000 LEVEL 0 VENDOR’S TOTAL CAPACITY ELEMENTARY FIELDS Total Capacity Overload Capacity Per Period 100. Political Restrictions and Quotas Political restrictions on foreign trade play a special role in the apparel and footwear industry. the user is informed accordingly. overload capacity. During vendor selection. 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. The vendor determined is then assigned to the appropriate purchase requisition. The source allocation sets fixed parameters to determine the ideal vendor. This can be either an internal production site or an external vendor. If you restrict the import quantity of certain products or product groups. Vendor capacities can be determined in different ways. The capacity is defined as basic capacity. Thus the user can optimize capacity distribution for internal and external production across all vendors. and maximum capacity.000 hours Model Capacity Model B 20. and facilitates the addition of company-specific parameters by the customer.000 hours LEVEL 2 TOTAL CAPACITY • Overload Capacity • Consumed Capacity • Consumption Overload Capacity Model Capacity Model A 50. you may source the same product from several vendors. If a vendor has reached the maximum capacity for a particular material or material group. SAP AFS takes the import restrictions stipulated by the government or by your company’s policies into consideration. The total quota and the portion consumed by the order are displayed in a list. You agree with each vendor on the quantity that they are able to supply. Vendor Capacity Planning In business practice.000 hours 10. In order that two production sites within one company do not exhaust the quota at the same time. such as according to vendor and material or material group.000 hours Total Capacity Tooling Set B 80. vendors from the specified countries will no longer be considered by the system if their delivery quantities surpass your limit. only a portion of the total quota for a particular product or product group is allocated to each site.000 hours LEVEL 1 Tooling Capacity Tooling Set A 50.

such as raw material color. By using this function. If certain dimensions of a material cannot be supplied or delivered by a particular vendor. • Amortization costs for tools: For equipment supported by the company • Smallest FOB (free on board): Costs excluding dispatch costs • Smallest landed costs: Costs including dispatch costs • Estimated time of arrival (ETA): Quickest possible delivery REQUEST FOR QUOTATION (RFQ) AND QUOTATION PURCHASE ORDER You can automatically generate purchase orders from the list of purchase requisitions to be processed by the buyer.Further user-defined criteria for source allocation are: • Vendor rating: The user can specify and weight the main criteria for evaluating a vendor. you can create the purchase orders straight away without first creating a purchase requisition. If the vendor for a material is already fixed. and to which a source of supply has been allocated. Using a price comparison list. Additional information is determined. Prices can be defined using the SAP condition technique at SKU level. MULTILEVEL CONTRACTS A request for quotation (RFQ) is sent to various vendors asking them to submit a quotation. the contract takes on a more concrete form as a new scheduling agreement to the original contract. you can carry out a quotation comparison at the SKU level to establish the best quotation. • Factory status: User-defined partner status for a vendor • Complexity factor: Evaluation criterion for the quality of production that indicates how well the vendor is able to produce a product with complex production phases. SAP AFS can process these agreements without yet having to define precise information at material or SKU level. Exact quantities and destination are confirmed when the delivery date is established. who deliver materials or supply services under certain conditions. In addition. your company has greater flexibility when planning the purchase of materials and can react more quickly to changes in the market. Data from the quotations received is maintained with the respective request for quotation. Order quantity entry for various items in the purchase order can be created at dimension and category level. It is quite common in the apparel and footwear industry to draw up long-term purchase agreements with external vendors. Using these functions. Distribution profile features and rounding functions are also available in the purchase order. 35 . the customer can issue a purchase agreement for an undefined quantity for a future date. the system allows you to define a purchase grid with the valid dimensions for this material/ vendor relationship. the request for quotation and quotation contain information at dimension and category level. The quotation contains a vendor’s prices and conditions for the materials needed. These are automatically taken into consideration in the purchase order. Quantities can be automatically distributed among dimensions and categories. With the approach of the scheduled delivery date. The request for quotation and quotation are therefore seen as one.

Whenever there is a change to the stock. The amounts posted are created automatically by the system based on data from the purchase order and material master record. and stock transfer) have been enhanced to show data at SKU level. All relevant features in inventory management (such as goods receipt to purchase order. 36 . Stock value is also updated when a goods movement is posted. reservations. the exact physical stock is always displayed using real-time processing for all cases in which stock has changed and the resulting inventory has been updated. such as G/L accounting.000 pieces Material Group: T-Shirts Material A Material B Validity Period: July 1st – December 1st December January April July Validity Period of LEVEL 1 Contract Validity Period of LEVEL 2 Contract Validity Period of LEVEL 3 Contract Release Order October Figure 20: Multilevel Contracts Logistic Background INVENTORY MANAGEMENT Inventory Management with SAP AFS offers you the following: • Management of on-hand stock based on quantity and value • Planning all stock movements • Inventory movement processing In the inventory management system. The stock requirements list. all goods movement documents. Consequently. when creating a goods movement you only have to enter the quantity to be moved. Users can view the current stock situation of a material any time. During goods movement. and value updates are triggered in other business applications.PRODUCTION PLANNING VENDOR PROCUREMENT OF RAW MATERIAL ROUGH PLANNING DETAILED PLANNING MANUFACTURING LEVEL 3 Material A-Size: 38 L Quantity: 1. documents are created that form the basis for the quantity and value updates and (at the same time) record the movement.500 pieces Validity Period: July 1st – August 1st LEVEL 2 CREATION DATE Material A Quantity: 7. the data is immediately updated and made available to upstream and downstream departments. and the most important evaluations include information at SKU level.000 pieces Validity Period: July 1st – September 1st LEVEL 1 Target Quantity: 100. goods issue. Single items are generated for any account assignment objects involved. transfer posting.

a company must carry out a physical inventory count of warehouse stock at least once every fiscal year. creation of payment results in the system. Stock Transfer and Transfer Posting In addition to posting goods receipts and goods issues. The receiving production site makes a request for a product using a stock transport order. The withdrawn quantity is recorded as stock in transit of the receiving production site. • With transfer postings. the stock type. stock in quality inspection. SAP AFS enables you to enter internal goods movements at the SKU level by using transfer posting and stock transfers. and blocked stock. The SAP system supports the following inventory procedures: • Periodic inventory • Continuous inventory • Cycle counting • Inventory sampling procedure It is possible to include freely available stock. Information at SKU level is available in all relevant processes such as physical inventory document creation.Inventory When balancing stock accounts. Various procedures can be used. or the batch of a material. Inventory processing for warehouse stock and special stock is also supported. you change the material number. In SAP AFS. • With stock transfers. you can also transfer post the grid values and category values of the output material to other SKU values of the receiving material. SAP has extended the inventory sampling procedure. You can create the goods issue as a goods movement in inventory management or using delivery note processing. you enter the physical goods movements between different production sites or company locations. it can now be carried out at the dimension and category levels. and posting results. RECEIVING PLANT A B B A B C UNRESTRICTED USE STOCK Goods Receipt Stock Transport Order ISSUING PLANT B B B B A Goods Issue C UNRESTRICTED USE STOCK STOCK IN TRANSIT Figure 21: Stock Transfer 37 . whilst the issuing production site posts a goods issue with reference to the stock transport order.

and calculation accuracy Special business processes characterize the apparel and footwear industry. A subcontracting order is then generated including the provided components 38 . Logistical invoice verification includes the following features: • Completing the procurement procedure: from purchase requisition through purchasing to goods receipt • Processing invoices that did not originate in procurement (for example. full-package sourcing. and calculation accuracy.or two-step procedure • Stock transport order with or without a delivery note LOGISTICAL INVOICE VERIFICATION • • • Posting of account movements resulting from invoices Updating of data such as open items and material costs Retrospective processing of invoices that were blocked due to substantial variances in the ordering transaction Logistical invoice verification has been enhanced in SAP AFS. This information is forwarded to the financial department. This reduces the stock in transit and the open purchase order quantity. services. The following functions are available: • Order of material or service with a vendor • Provision of material components for production or embellishment • Available-to-promise check for components to be provided • Material withdrawal from company’s own stock or delivery by third-party vendor • Monitoring of subcontracting stock at SKU level • Creation of delivery notes for components to be provided • Post product as consumption using goods receipt posting and handling of consumption deviations • Post finished product as goods receipt • Outsourcing certain operations of an in-house production process.The receiving production site posts a goods receipt with reference to the stock transport order. At the same time. at the time of invoice creation. To enable invoice verification to check invoices for content. subcontracting. This information is now available. asset accounting. either in the form of invoice cancellation or discount The payment or evaluation of invoices is not part of invoice verification. the issuing production site posts a goods issue so there is a “no-stock-in-transit” situation. It is also possible to post the goods receipt in the receiving production site as one step. price. for example. Subcontracting Material procurement through subcontracting is processed in SAP AFS using subcontracting orders. all data from the invoice is stored in the system and updated in materials management and other applications in real time. Invoice verification establishes the connection between materials management and accounting (financial accounting. purchasing. and includes the following: • Creation of incoming invoices and credit notes • Checking of invoices resulting from account movements for content. Even if the respective production sites belong to different company codes. Such processes include outsourcing of production. and calculation. and seminar costs) • Processing credit notes. travel expenses. all information has been enhanced to include dimension and category level. you can still create a stock transfer as follows: • Stock transfer from one production site to another using a one. SPECIAL BUSINESS PROCESSES Logistical invoice verification is part of materials management. in-house production in domestic or foreign plants. price. and inventory management. invoices must be checked for accuracy as regards content. and cost accounting). At the end of the logistical chain after planning. price. When an invoice is posted. and purchasing of semifinished and finished products.

PURCHASING INVENTORY MANAGEMENT INVOICE VERIFICATION PURCHASING STORAGE LOCATION STORAGE LOCATION INVOICE VERIFICATION PURCHASE ORDER Subcontract Item Components PROVISION OF COMPONENTS GOODS RECEIPT FOR FINISHED MATERIAL INVOICE Production Costs TRANSPORT COMPONENT CONSUMPTION SUBCONTRACTING VENDOR SUBCONTRACTING VENDOR PRODUCTION SUBCONTRACTING VENDOR Figure 22: Subcontracting Overview Sales Order Procurement Allocation Run Delivery Picking and Post Goods Issue Invoice and Financial Accounting ATP MRP Create Subcontract Order Monitor Stock of Material Provision of Components Post Goods Receipt for Purchase Order Invoice Receipt for Purchase Order Figure 23: Subcontracting Process Flow 39 .

Vendors can access their purchase orders through the Internet and can enter the confirmation steps. Confirmation processes are defined and assigned to the purchase orders. and so on. All movements for consignment materials are firmly allocated to consignment stock at the time of posting by setting the special stock indicator. You can choose how to handle certain items. also known as direct shipment. each month. for example. This means that all relevant information is available at the SKU level. and allows you to precisely plan further processing. The price can be established at the SKU level and unused material can be returned. Vendor Collaboration External vendors can be integrated into the purchasing process by Web Access. This is because it is neither available nor does it exist in the total stock of the production site. even if they do not have an ERP system. who sends them directly to the customer and invoices you accordingly. you can decide to handle it as a third-party item. A binding material valuation using the predefined vendor price is not carried out until the material is withdrawn or transferred to your own stock. Third-Party Order Processing Another important business process in the apparel and footwear industry is third-party order processing. Procurement of Consignment Material Consignment material is a material that is stored at your production site but remains the property of the vendor. This ensures direct and prompt feedback from your vendors. Rather. the goods are commissioned to an external vendor. are always handled through third-party order. if a large quantity of a product you would normally deliver yourself is ordered. This process is supported throughout the system at the SKU level. although it is your company’s property. Figure 24: Vendor Collaboration 40 . from sales order creation to the automatic generation of a purchase requisition and the conversion to a purchase order. The settlement statement is sent to the vendor. such as accessories procured from a private label manufacturer. the process is fully transparent in the purchasing and sales departments. For example. Here. your company does not carry out the delivery of products to the customer. When the confirmation steps are saved. quarter. and in the planning department (MRP). and full-package sourcing. the information is transferred back to the purchase order in the backend system of the ordering party.Stock of provided materials stored at the subcontractor site is treated as special stock of the respective vendor. raw material procurement. Furthermore you can determine that certain products. In addition. You can use vendor collaboration to monitor subcontracting.

General storage strategy: It is also possible to maintain general storage strategies (bulk storage indicator. Various quantities and pallet types can be maintained. SAP AFS allocates the optimum picking location to picked stock. Storage section determination: You can define in which storage section each material or SKU should be stored. With SAP AFS. • • Put-away strategy/picking strategy: It is possible to determine strategies at the SKU level (style/color/size/categories). gross weight. Palletization data: Palletization data is maintained at the SKU level. standard warehouse management business applications have been enhanced by integrating style/color/size definitions: • Material master maintenance: You can choose whether the warehouse management view and relevant features are maintained at the material or SKU level. special movement indicator. by which the system establishes storage bins for stock to be put away or picked. Similarly. and 2-step picking) at the SKU level. you might store common sizes in storage section 1. companies are dependent on computerized organization and management of their warehouses. and capacity consumption. • For SAP AFS. 41 . This also includes general data such as volume.MASTER DATA Consignment Info Record Consignment Stock Record PROCUREMENT PROCESS Vendor Purchase Order Consignment Item Goods Receipt Invoice Warehouse Company’s Own Stock Vendor Consignment Stock • Available for MRP • Not valuated • Belongs to vendor Goods Issue Production Site Figure 25: Procurement of Consignment Material WAREHOUSE MANAGEMENT • For the timely and efficient processing of logistic requirements. you can make the best use of the available warehouse capacity and assign optimum storage locations to the stock received. Apparel and footwear companies in particular need to be able to manage highly complex warehouse structures and a multiplicity of warehousing facilities. and less frequent sizes in storage section 2. For example. depending on the SKU.

The system creates the transfer requirement item at SKU level. • • • Decentralized WM: In the ERP system. The necessary SAP Console also displays all SKU information on a character-based RF device. based on the demands of the production order. irrespective of whether you are dealing with a material which should be stored at that location or was found there. Inventory count result: You can create count results right down to SKU level. ATP. control. The count result is created for each location at SKU level. and replenishment quantities. Radio Frequency (RF): Internal warehouse and combined processes are covered by RF functions. and credit checks are processed in the ERP system. as well as master data IDocs. for example. the production supply area in the warehouse is replenished based on a released production order. depending on the selection. valuation. all partial processes are processed that are a preparation of the activities in the warehouse. BAPIs: Communication between ERP and the WMS system is processed through a BAPI.• • • • Fixed space: Should a material be allocated to a fixed space. In the Warehouse Management system (WM) all functions are provided that serve the handling of warehouse processes. are enhanced with SKU Data. Selection screens: You can enter the SKU as a selection criterion to display just one grid value category per material. Replenishment: With a transfer requirement. or warehouse internal documents. for example. 42 . All BAPIs. quantities. it is possible to assign various storage locations. Inventory management. which have been enhanced with SKU Data.

Production planning and control in SAP AFS has been designed for the special needs of the apparel and footwear industry. Production encompasses procurement. The sales department receives customer requirements from the market and demand management fore- casts sales. FORECAST/PLANNED REQUIREMENTS MRP SALES Sales ORDER Order CUSTOMER REQUIREMENTS PURCHASE PURCHASE REQUISITION REQUISITION External Internal PLANNED PLANNED ORDER/ ORDER/ Secondary Secondary Requirement Requirement PURCHASE PURCHASE ORDER ORDER PRODUCTION PRODUCTION ORDER ORDER PLANT PRODUCTION SITE Figure 26: Materials Requirements Planning 43 . requirements for finished products and trading goods) trigger material requirements planning. you can comprehensively plan your demand program (product type and quantity) and production. Quantities resulting from production or outsourced procurement are put on stock and administered by inventory management. In particular. and coordinates all functions.com. planned orders and production orders include a product structure (style/color/size) and categories specific to this industry sector. material requirements planning (MRP). The system comprehensively plans. storage. Ordering transactions or subcontracting are initiated for outsourced products. or with sales and production demand management. The resulting independent requirements (in particular. demand management. Appropriate vendors must be selected or outline agreements made. and transport of materials and intermediate products. The logistical cycle begins either with sales and operations planning (SOP) and forecasting. The following diagram illustrates the logistical cycle between sales and procurement.PRODUCTION AND MANUFACTURING OVERVIEW In mySAP. monitors. Order quantities and delivery dates must be determined and the respective procurement activities must be launched to ensure requirement coverage. and material requirements planning (MRP) for all bill-of-material (BOM) levels.

current data. This can either be planned future data or actual historical data. SOP provides a method for: • Sales planning • Production planning • Feasibility estimates QUANTITY Sales plan Production plan Capacity estimate MAY JUNE JULY TIME Figure 27: Sales and Operations Planning 44 . but targets from other areas throughout the logistical cycle. Information structures are used for evaluation. SOP is especially useful for long-term and mid-term planning. key figures and a time base. Forecasting and planning can be based on historical data. SAP AFS supports various procurement processes relevant to the apparel and footwear industry such as private label and make-to-order production (for example. and/or estimated future figures. You can save the underlying statistical historical online in SAP BW as well as in the logistical information system with each logistical transaction (for example.In addition. containing characteristics. custommade products). and production order). sales order. Capacities and resources imperative for reaching these targets can also be determined using SOP. and analysis of data in all logistical information systems. projection. SALES AND OPERATIONS PLANNING (SOP) SOP builds on information structures – a statistical file containing operational data. In the apparel and footwear industry. purchase order. Sales and operations planning (SOP) is a flexible forecasting and planning tool that determines not only sales and production targets. long-term and mid-term planning are generally carried out at the product group and style levels.

Planning values would then be increased for certain seasons (for example. The SAP® Advanced Planner and Optimizer (SAP® APO) is one of the key functional areas of mySAP SCM. the planned independent requirements are created. 45 . Demand planning can thus be executed in two different ways: • At the material level without additional dimension values (style/color/size). to create a demand program. It is possible to break this data down to the level of style/color/size (pre-sizing).0B you can execute demand planning in SAP APO and then transfer the demand plan as planned independent requirements to demand management. back-to-school. for example. the pre-sizing profile is then used to distribute the planned independent requirements among all the material characteristics. In the event that not all of the dimensions were considered in the first planning phase. SAP APO updates and synchronizes plans based on the dynamic exchange of information and allows you to derive total supply chain production requirements and make results available to all members of a supply chain. Retailers and carriers can be seamlessly integrated into the supply chain processes. for example. seasonal influences can be taken into account in the distribution profiles. SAP APO enables supply chain partners to forecast and plan demand while considering historical buying and selling behavior. mySAP SCM combines distribution and transportation capabilities to support demanddriven replenishment for maximum profitability. Production demand management determines requirement quantities and delivery dates for finished products. The demand is optimally matched to supply so as to maximize the return on assets with consideration of operational constraints. Christmas.DEMAND PLANNING WITH SAP® APO PRODUCTION DEMAND MANAGEMENT mySAPTM Supply Chain Management (mySAPTM SCM) enables companies in the apparel and footwear industry to anticipate consumer behavior (including the impact of promotions) and forecast demand more accurately. and sales objectives. and so on). which are created in order processing. The input from SOP can be copied to the planned independent requirements as default data. market intelligence. With SAP AFS 3. Distribution to a more detailed period split is also possible. Pre-sizing SAP AFS pre-sizing distributes aggregate planned independent requirements to detailed planned figures at the SKU level using distribution profiles. so that an annual planning value can be distributed to periods throughout the year. Demand management uses planned independent requirements and customer requirements. from annually planned figures to weekly planned figures. • At the material dimension level (style/color/size) When the demand plan is transferred to demand management. Furthermore.

You can calculate distribution profiles from statistical historical values stored in the logistical information system. Pattern making. quality. • Calculation of percentage distribution values based on historical data from the logistical information system. or for individually selected reference products). SAP AFS pre-sizing includes: • Manual determination of percentage distribution values per size or period. per a combination of a number of seasons. • Aggregation and disaggregation of historical data that can be used to calculate distribution curves (for example. grading. The result is a number of sketches. and technical and product costing conversion – the BOM and routing. selection of certain components. • Calculation of distribution profiles for new products with no historical data based on the historical data of reference products. The BOM has been enhanced so that all size-specific dependencies on material consumption. • Simulation option based on user-defined criteria. per season. BLU RED GRN GRID C MRP 44 46 48 50 Figure 28: SAP AFS Bill of Materials 46 . customer-specific GRID A 6 8 10 12 14 JACKET (SAP AFS Material) BLK WHT RED MRP FABRIC (SAP AFS Material) ZIPPER (SAP AFS Material) BUTTON (Standard Material) GRID B BLK WHT RED . and cost accounting are included in one BOM. MATERIALS REQUIREMENTS PLANNING (MRP) Bill of Materials (BOM) Bills of materials (BOMs) and routings contain important data to ensure integrated materials management and production control. You can also maintain dependencies for other product characteristics in the BOM (such as color. shade. historical data per product group. a list of all necessary components and their size-specific consumption. and pattern engineering form the production structure of a new product waiting to be produced.

This task includes monitoring stock and. In addition. for example. 47 . Material Requirements Planning The main task of material requirements planning is to ensure material availability (for example. and production. purchase requisition to purchase order). Planned orders and purchase requisitions are created at each BOM level if there is a material shortage. rescheduled. which are selected depending on the time interval for which the locations are defined. the planned documents are converted into fixed procurement documents (planned order to production order. or lining) or assemblies (for example. fabric. It is possible to set up different locations for procurement of components. and so on). Often. By using planning parameters for the SKU level. MRP determines order quantities and delivery dates and the respective procurement documents created to ensure coverage (planned orders for internally produced goods. purchasing. but it is also possible to integrate individually customized ones. you can define. Routing A routing describes the operations (process steps) as well as the details about the work centers and production resources and tools required for producing a material. and purchase requisitions for outsourced production). Once MRP has completed quantity planning and scheduling. or deleted at any time. It is also possible to distribute order quantities across the different sizes automatically using predefined distribution profiles. MRP is triggered by independent requirements from sales and demand management forecasting (such as requirements for finished products and trading goods). Lot-sizing procedures enable planning results that show only certain size groups in one order. the quantity of material components (for example. making suggestions for procurement. Lot-sizing procedures and planning parameters are available to ensure an optimized calculation of the entire order quantity and each individual grid value in the order. rounding values. leather. The MRP enables you to plan in one time frame at size level for future periods and all requirements beyond that time frame at article level.extras. Routings are selected based on the different characteristics for lead-time scheduling and production order processing and then taken into account during lead-time scheduling and capacity planning. This ensures that planning only occurs at the necessary level of detail. or that a particular relationship between size quantities are calculated for each order. you must make changes to a large portion of the product range due to alterations in style or seasonal characteristics. in particular. The most common lot-sizing procedures are available. to procure the necessary material requirements on schedule for sales and manufacturing). Both documents are planned internally and can be changed. and safety stock for each size or size group. secondary requirements. You can easily achieve this in SAP AFS by using the mass change and referencing functions. You can thus specify in the routing how various product characteristics affect lead times and each production operation. Secondary requirements are necessary for the production of the finished product or assembly. minimum order quantities. shoe sole or bootleg) are determined for internally produced goods using BOM explosion.

Products labeled as ”AFS-specific” are processed by SAP AFS MRP (such as products with more logistically relevant characteristics that might include size. and short-term detailed planning. order report. and so on). and easy-to-handle window. The influence of different product characteristics in the individual production operations and lead times can be established in the routing for AFS-specific products. Routings for lead-time scheduling and production order processing are selected according to these criteria. with the help of diverse selection criteria. the AFS MRP Cockpit. Capacity planning comprises three components: • Capacity analysis: Available capacities and capacity requirements are determined and illustrated in lists and graphics. user-friendly. SERVER 01 MRP DISPATCHER Material 01 SERVER 02 Material 02 DB SERVER DB Changes Planning File Entry SERVER 03 Material 03 Economic resource planning is present in various areas of a company. shade. product group. MRP list. • Capacity leveling: Optimum reservation of capacity and selection of appropriate resources. planning results per MRP controller. CAPACITY PLANNING SKU LEVEL MATERIAL LEVEL MRP PLANS REQUIREMENTS AT SKU LEVEL MRP GROUPS REQUIREMENTS TOGETHER AT MATERIAL LEVEL SIZE-LEVEL HORIZON Current Date BEYOND SIZE-LEVEL HORIZON 30 Days Figure 29: SKU Level Horizon in SAP AFS MRP Parallel Processing The total planning run time is improved considerably by using parallel processing. It can run either on different servers or in different server modes to further speed up processing. The system informs you of critical areas and exceptions. SAP AFS points to critical areas without delay. Automatic Planning Run The automatic planning run in MRP determines material shortage and generates the respective procurement document. • Capacity planning: Capacity loading for AFS-specific products is based on routings that are selected according to the above-mentioned criteria. All relevant features are accessible through one single. stock requirements list. color. Capacity planning with SAP AFS supports all phases of planning: long-term estimated planning. Evaluation capabilities allow your MRP controller to process planning results from an aggregated level to the most detailed SKU level. and quality). mid-term planning. Evaluation of Planning Results Planning results can be reviewed and evaluated by a series of different methods (for example. Figure 30: Paralell Processing 48 . Planning boards in graphic and table form are available to illustrate the capacity situation and process capacity leveling. allowing you to modify planning results accordingly.

production resources and tools. • Capacity requirements are generated for the work centers. production in bundles is typical in the apparel industry. This process enables you to monitor the individual production steps within one single report.PRODUCTION ORDER Production orders determine which product or assembly is produced. The order includes scheduling. the following actions are carried out: • Routing selection: Routing operations and sequence are transferred to the production order. The production order also includes details of the resources (personnel. shoes can be grouped according to size. capacity planning. In addition. or a combination of the two. If necessary. and shipped in large cartons. The order process report has been enhanced by adding the operations. and goods receipt can also be processed for individual bundles/cartons. • BOM explosion: BOM items are transferred to the production order. Apparel and Footwear Specifics in the Production Process The specific characteristics of the production process in the apparel and footwear industry have prompted SAP to make further developments for this step in the supply chain. • Purchase requisitions are generated for non-stock components and externally processed operations. individual sizes. It is also possible to assign component batches to a production order to control different shadings or dye lots. monitoring production status. Production orders in the apparel and footwear industry usually consist of several logistical subdivisions: • Total quantity of the product to be produced • Different sizes (SKUs) with varying quantities • Grouping together of products in smaller logical production lots. and production costs. SAP AFS PLANNED ORDER BLU BLK EXTERNAL MARKER LIBRARY Marker 1: 32 x 30 32 x 32 34 x 32 Marker 2: 30 x 30 28 x 32 50 50 50 50 50 Waist Inseam 28 30 32 34 28 50 50 30 32 30 50 50 TOTAL: 230 PIECES TOTAL: 250 PRIECES Figure 31: Markers – Quantity Adjustment 49 . In the footwear industry. delivery date. Cost accounting is carried out in the same way for each production order. for instance. as well as the work center. and so on) required to calculate the order cost. materials. All specific information contained in BOMs and routings reappears in the production order. You can use the production order to monitor the order status for goods produced in-house. you can integrate markers into the production order and planned order. • Reservations: Reservations are generated for BOM items in stock. activity. planned quantities in the order are adapted accordingly. For example. • Planned costs are established for the production order. The production order sizes resulting from a marker and the quantities derived from the fabric ply height form the rates for sizes and quantities received from MRP. When a production order is created. such as bundles Central transactions such as confirmations. and status management.

production orders are often combined. for instance. goods receipt. COMBINED ORDER NUMBER 38 Production Production order order 10023 10023 Routing Routing11 10023 10024 Production Production order order 10024 10023 Routing Routing21 Cutting Embroidery Sewing Sewing Quality Check Quality Check Figure 32: Combined Orders 50 . Selection of suitable rolls of fabric and leather for a production order based on criteria. You can freely define criteria by which the system sorts and selects data to efficiently allocate a quantity of input material for a production order or combined order. especially in production phases such as cutting and pattern engineering. By combining several production orders. confirmations. when the same fabric is used for different products. costs. This might be the case. settlement. fabric or leather) is selected. plays an important role in production for the apparel and footwear industry. whether a certain component needed for several production orders can be consumed by another time-critical production order. It enables your MRP controller to decide in stock shortage situations. for example. such as shade and leather quality. In SAP AFS. or separately for each individual production order. SAP AFS uses roll-selection features where the optimum choice of material input for a production order (for example. and goods issue can either be processed together for the combined orders.An available-to-promise check (ATP check) for production orders displays all competing requirements for a particular component. Combined Orders In the apparel and footwear industry. and logistics of each production order remain separate for each finished product. several production orders can be logically grouped in a combined order. Transactions such as roll selection. However. cutting and use of fabric are rationalized.

product cost planning. known as grid values. overhead costs controlling. cost object controlling. At the same time. Nearly all other mySAP.com accounting components are supported at the SKU level (financial accounting. Valuation of SKUs SAP AFS takes valuation differences at product characteristic level into account by managing SKUs separately. These special structures. and profitability analysis to accommodate the characteristic levels listed above. these structures influence product controlling in SAP R/3 and mySAP. raw material expenditure. dimensions. Procurement costs. You can assign a separate valuation price to each stock keeping unit. Additional industry-specific capabilities are available in the areas of product and material valuation. Split Valuation Stock keeping units (grid values and categories) of a material or product generally do not have the same purchase price or production cost.com. and categories. VALUATION DIMENSIONS PRODUCT COST PLANNING Material: Plant: Jeans 0001 GRID VALUE: 30/30 COST OBJECT CONTROLLING CATEGORY: BLUE/ STONEWASHED GRID VALUE: 32/32 CATEGORY: BLUE/ STONEWASHED GRID VALUE: 33/33 CATEGORY: BLUE/ STONEWASHED CATEGORIES Figure 34: Split Valuation of SAP AFS materials PROFITABILITY ANALYSIS 1 2 3 Quality Figure 33: Product Controlling 51 .PRODUCT CONTROLLING OVERVIEW SPLIT VALUATION WITH AFS MATERIALS Special structures are available in SAP AFS to illustrate products or materials and their industry-specific characteristics. facilitate the processing of logistical business processes at the levels below the material master. making flexible material valuation of stock keeping units essential. and so on). and production costs can vary tremendously. which can either be a standard price or a moving average price.

the system looks at grid. the system explodes the bill of material according to the grid values/categories to be calculated. colors.or category-dependent component prices and quantities over the entire cost roll up (and all production steps). and to avoid numerous single valuations impairing performance unnecessarily. Cost Elements The most important costing elements of a product are material and production costs. it is possible to calculate the manufacturing costs of a product at the level of the produced SKU. SKU • 0001 Jeans Val. Product Costing In the apparel and footwear industry. Production costs are planned based on the respective routing and the operations defined therein. product costing considers production scenarios typical to the apparel and footwear industry. you can create raw material costings with a respective cost component split. Special Production Scenarios When determining the quantity structure. or categories of a material do not always significantly differ. In the case of subcontracting. SAP AFS can combine separate grid and category material characteristics in what is known as a valuation type. Costing of Valuation Types The stock valuation of products to be calculated is performed in the same manner as for raw materials or trading goods (by using split valuation for stock keeping units). A product’s quantity structure can be defined according to grid and category. In addition. Typ Small Small Large Large Large COSTING SMALL $10 • COSTING LARGE $12 Figure 35: Costing of Valuation Types 52 . material usage and production processes generally depend on information such as sizes. Product Characteristic-Dependent Quantity Structure The basis of product costing is the respective quantity structure (bill of material and routing). and so on to be produced. At the same time. Consequently. delivery costs such as freight or customs can be included in the material valuation. In this way. PRODUCT COSTING FOR AFS PRODUCTS for stock valuation and product cost controlling. The system carries out valuation type costings based on one determinable preference SKU for each valuation type.Grouping with Valuation Types As costs for sizes. You can refer to the conditions of the purchasing info record. material and production costs can be debited with an overhead rate. for example. Product costing in SAP AFS examines this grid or category-dependent determination. colors. In the case of externally procured materials. With SAP AFS. manufacturing costs of the produced SKU can differ enormously. In the costing of a particular SKU. such as cross-plant production or subcontracting of materials. and determines the relevant routing together with its operations. The system determines a product’s material costs based on the prices and quantities of the components used. You can create separate costings for valuation types of a product and use these AFS VALUATION VIEW Plant: Material: Grid 30/30 30/31 32/31 32/32 34/32 Pref. By using valuation types the common valuation of any number of stock keeping units for a particular material is simplified. the system automatically determines the relevant costing information from the purchasing info record of the subcontractor.

lot size variance. and updated in the controlling object Sales Order for evaluation. Make-to-Stock Production The production order is at the center of product controlling during make-to-stock production. the product costing planned costs are different – they are based on a (planned) costing lot size. business areas. input variance. orders.com facilitates the controlling of planned costs and actual costs with reference to cost objects. Cost object controlling for production orders allows the target costs to be analyzed and compared with the actual costs of a production order. all sales order costs are collected across the entire production spectrum. Customer Make-to-Order Production In general. the sales order is the relevant controlling document in make-to-order production processes. Cost object controlling in the system takes the entire controlling Variance Determination Following final delivery of an order. However. whereas the business units include company codes. component withdrawal and material movements. the cost object controlling results in a production order as in make-to-stock production. the system uses various objects for the collective cost. Therefore. 53 . you can separately determine and settle the resulting costing variances (planned. target. PROFITABILITY ANALYSIS FOR AFS PRODUCTS Profitability analysis in mySAP. The actual costs arise from the actual consumption of resources by the production order – for example. The market segments are classified according to products.com enables you to evaluate market segments or strategic business units with respect to your company’s profit or contribution margin. At the same time. Depending on the production scenario. TARGET COSTING GOODS ISSUE Production Production Order Order CONFIRMED OPERATIONS GOODS RECEIPT SETTLEMENT P+L VALUATION AT DIMENSION OR CATEGORY LEVEL Figure 36: Production Order Processing process into consideration as well as target and actual characteristic-dependent material valuations and manufacturing costs. and so on). In this case. customers. The target costs are the planned costs of the finished product based on the lot size in the production order. or any combination of these.COST OBJECT CONTROLLING Cost object controlling within mySAP. actual) according to variance categories (scrap variance. or profit centers. logistical make-to-order production can also be carried out without processing sales order controlling.

customer. SAP AFS CHARACTERISTICS Sales Region Product Product Group Customer Customer Group Season Valuation Type Category Grid Value North Prod1 Snowboard Cust1 Wholesale Wi2001 L FD 164 Grid Value Valuation Type VALUE FIELDS Revenue Sales Deduction Planned Freight Costs Cost of Sales 980 100 150 550 PROFITABILITY SEGMENT Revenue Revenue Sales Deduction Deduction Sales Cost of of Goods Goods Sold Sold Cost Figure 37: Profitability Analysis for SAP AFS Products Profitability Analysis at Product Characteristic Level SAP AFS supports the value flows by creating revenues and sales deductions from sales orders or billing documents with their sales conditions. In addition to the characteristics region. marketing. from which an analysis can be planned and identified by the comparison of costs and revenues. you can also integrate a series of other industry-specific information. product management. In this way. You can perform the costing valuation using the respective product/SKU plan costing or with the help of defined conditions. The system creates a multidimensional analysis object from the combination of characteristics. and so on. You can also ascertain how a particular grid value or grid-value group contributed to or affected this profit. SAP AFS takes valuations and conditions at SKU level into consideration with regard to both the revenue and costs. 54 Se as on . Apparel and Footwear Specific Characteristics Master data or basic structures can be freely defined for profitability analysis.The main goal is to provide the areas of sales. You determine the analysis objects (characteristics) and the analysis value fields for your profitability analysis. you can establish the profit that is issued with certain seasonal products. and corporate planning with information to support internal accounting and decision making.

we have received very positive feedback from our SAP AFS customers and prospects about the QA program. Our experts are on hand to assist with implementation problems and provide ongoing support. and QA reviews. 55 . • Solution review prior to going live to verify the detail designs and possibly the system configuration. Together with SAP partners. detailed workshops. and defining an implementation approach to maximize return and minimize risk. feasibility studies. presales events. Over the last few years. • Project start-up check after kickoff to review the project charter and business scope. SAP AFS QUALITY ASSURANCE PROGRAM The SAP Apparel and Footwear Quality Assurance Program has been established to ensure a smooth and successful implementation project for our SAP AFS customers. • Business blueprint review upon completion of the blueprint phase to examine the customer’s intended implementation of the business processes in the system. SAP Apparel and Footwear Consulting offers best-in-class experience and knowledge to ensure that all issues will be considered and integrated into a feasible implementation strategy. The SAP AFS Quality Assurance Program comprises the following: • Evaluation prior to signing the contract that verifies whether SAP AFS is a good fit for the prospect's business requirements. SAP AFS Consulting encompasses training and support. We will help you realize a significant increase on investment returns for your implementation project by reviewing critical decision requirements.CUSTOMER SERVICE AND SUPPORT A network of highly qualified experts has been set up throughout the world to provide an excellent standard of support for SAP AFS customers and partners. determining high-risk elements in the program. It consists of several reviews before and throughout the project as well as services after go live. which confirms that it is an integral part of a successful implementation. spot consulting and remote support.

and employees to collaborate successfully anywhere. enabling collaboration across the entire fashion supply chain – from sheep to shop.com scenarios (including SAP Business Information Warehouse. the e-business solution from SAP tailored to meet the requirements of the retail industry. and bottom-line results – are once again the top priorities for businesses worldwide. The mySAP. And having fully embraced the Internet with mySAP. mySAP CRM Interaction Center. Not only will SAP provide the solutions its customers need to increase their revenue and reduce costs but SAP will also – in our role as “trusted advisor” – identify new business opportunities. SAP is in a unique position to forge ahead of its competitors and take today's economy by the horns.com. SAP AFS and mySAPTM Retail. return on investment. customer satisfaction. cover the entire fashion supply chain – from suppliers and manufacturers to wholesalers and retailers to the consumer. anytime. The apparel and footwear-specific combination of the mySAP. productivity.com solution and the right time to upgrade. and customer satisfaction. SAP AFS ensures the smooth transition to the mySAP. Following this strategic direction. The latest release of SAP AFS already offers the first mySAP. Demand Planning with SAP APO. and so on). partners. time-to-market.com e-business platform is a family of solutions and services that empowers customers. This approach guarantees investment security and will help our customers to choose the right mySAP. This is due to the fact that the core values personified by SAP – productivity. The SAP AFS strategic direction is mySAP. SAP continues to provide new or enhanced industry-specific features and functions to meet the specific business needs of its customers. 56 . The first integrated scenarios connecting SAP Apparel and Footwear and mySAP Retail are available and will be enhanced in the future to combine both solutions in mySAP.com. specifically those suited to the needs and demands of the wide world of e-business. collaboration with vendors and contract manufacturers.com.FUTURE FOCUS SAP has been helping its customers create value since 1972 – profitability.com e-business platform for all its customers.com solutions will put SAP customers on the competitive edge.

The use of master. Product Controlling The smallest organizational unit of financial accounting for which a complete self-contained set of accounts can be drawn up for purposes of external reporting. structured list of the components that make up a product or assembly. You specify dates so that the delivery program is delivered during a certain period. Season – Collection. Grid Important element of the AFS basic data that maps the characteristic values of an AFS material in grid values and permits combinations consisting of up to three dimensions (for example color. Characteristic of an AFS product that allows a division into different qualities or countries of origin. A freely definable element of an AFS grid. The information on bundles is maintained in the planned orders and production orders. Functional Location BOM. for example. and sale of AFS materials at SKU level. A delivery program is defined by one of the following combinations: Season. 57 . size. and Sales Order BOM Apparel industry term for all pattern pieces in a marker that will be sewn together to form a garment in a certain size. This includes recording of all relevant transactions and generating all supporting documents required for financial statements. You can create the following BOM categories in the SAP System. length). and unit of measure. Material BOM. and sales grids facilitate the valuation. Dimensions Product characteristics usually referred to in the apparel and footwear industry as style/color/size. The list contains the object number of each component. Season – Collection – Theme. multiplied by the number of fabric plies in a stack. The components are known as BOM items. the quantity. for example. An AFS grid is composed of up to three dimensions. Equipment BOM. Each dimension is composed of dimension values that are all valid entries for a particular dimension. or width. length.GLOSSARY A D ARun ATP B Allocation run Available-to-promise Delivery Program BAPI BOM Bundle Business Application Programming Interface Bill of material A complete. E EAN EDI ETA F International Article Number Electronic data exchange Estimated time of arrival FOB G Free on board C CAD Category CO Company Code A data processing system for computer-aided design and drawing. Document structure. color. purchase. procurement. Dimensions are. size.

and hierarchies). Logistics Information System Marker I InfoCube InfoSource The optimal placement of pattern pieces to achieve the best fabric utilization for the cutting process. They can be plotted on paper or stored in a file that is used to drive a numerically controlled cutter. An InfoSource is a quantity of information that has been grouped together and can be said to belong together logically from a business point of view. O L LIS ODS Operational Data Store Object used to store consolidated and cleaned-up transaction data at document level (basic level). A central object on which reports and analyses in SAP BW are based. OLAP reporting allows several dimensions to be analyzed simultaneously (such as time. Unique markers are defined by the name and repetition of the size or dimension they contain. Cost Center Accounting). SAP AFS uses marker data to: – Adjust quantities in a planned or production order – Identify unique bundle numbers Material Product/Article MM Materials Management MRP Material requirements planning mySAP. you can flag these grid values as heart grid values. such as for an analysis of the sales figures for a certain product in a particular time period. Online analytical processing Analytical. product. An ODS object describes a consolidated data set comprising one or more InfoSources. anytime. InfoSources can either contain transaction data or master data (attributes. The aim of OLAP reporting is to analyze key figures. OLAP 58 .com SAP’s e-business platform. multidimensional reporting based on multidimensional data sources. for a business-oriented area. or type of business event (for example. An InfoCube describes a selfcontained data set (from the reporting view). customers. and so on). texts. for example.H M Heart Grid Value (heart size) Description for the grid values of a material that you sell or purchase very frequently. place. and business partners to collaborate successfully – anywhere. An InfoSource describes a quantity of all available data for a business event. When maintaining the grid control data for a material. A family of solutions and services that empower employees.

SD Sales and Distribution SKU Stock keeping unit The most detailed schedule line of an AFS product with its grid value (for example 38/yellow) and category values (for example quality A/ country of origin D). collection. packing. and season forms a delivery program. Themes can be part of a collection. W WM Warehouse Management S Seasons/ In the apparel and footwear industry. for example.P U Plant PP R A place where materials are produced. SKU Period in which the AFS MRP carries out planLevel ning at SKU level. Value-added-services. ticketing and special service. Services that improve the appearance. Production planning UPC V Universal Product Code VAS RFQ Request for quotation A request from a purchasing organization to a vendor (external supplier) to submit a quotation for the supply of materials or the performance of services. You can define dates for the delivery period for this delivery program. several Collections/ materials that share certain traits such as color Themes or texture can be combined to form a theme. The combination of the theme. That means that requirements at material level cannot be satisfied by procurement at SKU level. attractiveness and processing of a product. SOP Sales and Operations Planning 59 . Planning at material level and at SKU level in the SKU horizon is carried out separately. Requirements outside of the Horizon SKU horizon are planned only at material level. or goods and services are provided. which in turn can belong to a season.

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