SAP Functions in Detail

SAP APPAREL
AND FOOTWEAR
(SAP AFS)

 Copyright 2002 SAP AG. All rights reserved.

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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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9
10
11
13
13
14
14

Key Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Style/Color/Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Style/Color/Size Master Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Categories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seasonal Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16
16
16
16
18

Generic Key Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Integration of Logistics and Financial Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fine-Tuning Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Multi-Company, Multilingual, Multicurrency Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Triangle Processing Intercompany Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18
18
18
18
18
18

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19
19
19
19
19
19
21
21
21
21
22
22
22
22

Sales Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Availability Checking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit Limit Check . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Price Flexibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Special Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Value-Added Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bulk Order Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23
23
24
24
24
24
24

Order Scheduling and Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Order Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allocation of Customer Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allocation Preview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allocation against Quantity Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

24
24
25
26
27

Shipping and Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Delivery Creation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shipping Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shipping and Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

Request for Quotation (RFQ) and Quotation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Purchase Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MultiLevel Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock Transfer and Transfer Posting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

35
35
35
36
37
37

Logistical Invoice Verification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Special Business Processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subcontracting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vendor Collaboration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third-Party Order Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Procurement of Consignment Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

43
43
44
45
45
45

Materials Requirements Planning (MRP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Bill of Materials (BOM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Routing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Material Requirements Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Parallel Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Automatic Planning Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Evaluation of Planning Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

46
46
47
47
48
48
48

Capacity Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Production Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Apparel and Footwear Specifics in the Production Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Combined Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

48
49
49
50

Product Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Split Valuation with AFS Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Split Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation of SKUs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Grouping with Valuation Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

51
51
51
51
51
52

Product Costing for AFS Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Product Costing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Costing of Valuation Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Product Characteristic-Dependent Quantity Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Special Production Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

52
52
52
52
52
52

Cost Object Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Make-to-Stock Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Variance Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer Make-to-Order Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

53
53
53
53

Profitability Analysis for AFS Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Apparel and Footwear Specific Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Profitability Analysis at Product Characteristic Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Customer Service and Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SAP AFS Quality Assurance Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Future Focus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

SAP APPAREL AND FOOTWEAR (SAP AFS)

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

CHARACTERISTICS OF THE APPAREL AND

FOOTWEAR INDUSTRY
The apparel and footwear business is highly demanding, forcing companies to contend with constant challenges in a global
business environment: there is relentless pressure on price,
cost, and lead times. Trends are created overnight, and the
industry has to rapidly adjust. Contract domestic and offshore
production combined with global procurement processes create complex value chains that can be inefficient and difficult to
monitor. Fashions often change quickly and without warning.
In the apparel and footwear industry, companies must cope
with seasonal fluctuation, proliferation of design variations,
scant information about volatile demand that results in forecast uncertainty, stock shortages, and costly markdowns.

Areas such as product development, raw material and finished

goods requirements planning, production planning, coordination and control, transport optimization and monitoring, and
quality assurance are taking on more and more importance
and therefore tend to remain at headquarters. As a result, the
information flow and collaboration among partners in the textile supply chain (logistics service providers, textile manufacturers, contractors, agents, and so on) are increasingly more
critical to the success of apparel and footwear companies. Fundamental changes and restructuring are taking place in the
apparel and footwear market.

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, controlling, and
monitoring textiles in the value chain.
Multilevel division of labor and outsourcing have long been
common practice in this industry. In the past, companies
achieved their greatest cost-cutting potential by optimizing
their production processes. However, the production of clothing and shoes can only be automated to a certain degree, causing the savings potential by these means to quickly reach its
limit. The next step was to transfer production to low-wage
countries, which in turn meant sacrificing high quality and
transparency in the production process. Having production
sites spread out around the globe has made supervision and
monitoring of the production process more difficult, the
transport routes longer and more expensive, and meeting
confirmed delivery dates a perpetual challenge.

Globalization
Domestic as well as foreign company-owned and contract
manufacturing have brought an increase in international trading; as a result, business is now transacted in many different
countries with various cultures and currencies. This has given
rise to software solutions and information technology that
support enterprises in their ability to move goods and information expediently and reliably across any distance.

As manufacturing does not always take place in the same country as the final customer, additional requirements regarding customs and quotas are involved, and country of origin restrictions
may arise. Sourcing entails both internal and external considerations. It becomes necessary to track production in order to plan
or confirm exact product delivery dates and quantities.
The improvement in logistics capability and the increasing
demand for textile products in the less traditional apparel and
footwear consumer markets (such as China, the Far East, India,
and Eastern Europe) have led to a truly global marketplace. It is
critical for companies wanting to capture and service this
demand to be able to operate in all corners of the world. Companies can best profit from this potentially huge market if they
are able to transact business efficiently on an international
scale, internally as well as externally. They also have to manage
the vagaries of fluctuating exchange rates.

The increasing threat of cheap imports and tougher competition have forced companies to adopt a more flexible
approach to their manufacturing capabilities. This includes the
integration of global sourcing and contract manufacturing as
part of a comprehensive sourcing strategy. This strategy has to
support a variety of capabilities such as in-house production at
domestic or foreign sites, contract manufacturing at domestic
or foreign sites, or a combination thereof.

PURCHASE
ORDER
Vendor
Product
Price
Quantity
Delivery Date
etc.

Vendor Performance
Tooling Amortization
Production Complexity
Production Capacity

WHAT

WHERE
Shortest ETD
Lowest FOB Costs

Factory Status

WHICH QUALITY

VENDOR

Figure 1: Decision Support for Global Sourcing

10

VENDOR

Enterprise Demand

Lowest Landed Costs

VENDOR

WHICH PRICE

VENDOR

OUTSOURCE

INTERNAL

PURCHASING

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

...

...

...

Figure 2: Product Structure: SKU Style/Color/Size

Product Life Cycles and Seasonality

Seasonality influences the entire product life cyle. It impacts
planning styles, the procurement of raw materials, warehousing capacities, production, delivery, and the orchestration of
selling and marketing activities. Product development cycles
are shortening and overlapping as customers demand shorter
time-to-market cycles. The need for reacting flexibly and
promptly to market trends and changing consumer needs has
resulted in a proliferation of design variations. The issue of
style/color/size and other product characteristics affect the
entire supply chain. Only investment in new, advanced technologies can facilitate the handling of large numbers of styles
and stock keeping units (SKUs) and the storage of potentially
large volumes of data.

The product structure of apparel and footwear companies

varies from one to several levels. Not only style, but also color,
size and other dimensions need to be stored including the
information relevant for the respective level. In addition, the
seasonality of the products leads to short life cycles and multiple new styles on a regular basis. In some cases, variations
of the same product such as different grades of quality or
countries of origin require additional stock segregation and
valuation. The number of stock keeping units (SKUs) that
needs to be stored can therefore be very large.
Continued investment in new technology is essential for staying ahead of competitors, especially when it comes to design
capability. This includes investment in sophisticated computeraided-design (CAD) systems as well as technological innovations in the use of fabrics and fibers. In this way, a company can
manufacture products whose design sets them apart from
cheaper imports.

11

Apparel and footwear companies promote a variety of product

groups. Each of these groups may reflect some of the following
aspects:
They can be restricted to certain sales channels.
They can be offered through sales programs, deals, or
promotions to encourage future business.
They can provide opportunities for cross-selling.
They can entail sales commission or licensing charges
due to a third party, the retailer, or the manufacturer.
Standard designs and carryovers remain in the production line
from season to season with possible minor changes to color or
detail. Fashion products are sold for a particular season and can
have a very short lifetime with new products entering the marketplace four or more times a year. Standard designs and fashion products can be merchandised as a collection or assort-

ment, packaged in different combinations, or sold separately.

A fashion company may also supply store fixtures and point of
sale materials. Special items might be produced solely for a specific customer. This can involve tailoring an existing product,
creating totally new designs, or supplying private labels. Accessories such as hats, gloves, belts, and bags may each use unique
size scales (often different from country to country), stocking
and ordering policies.
The seasonality of the apparel and footwear business means
that fashion items are highly perishable. Certain items must
be available for corresponding seasons or events, with special
needs to mark down or move inventory that will soon be out
of season. Price lists, reports, and inventory displays must be
available by seasons or events rather than the usual calendar
periods.

RELATES PRODUCT, SIZES, AND PRICES TO SEASONS

Region: North America

Season: Spring
Valid: March to May

Region: Australia
Season: Spring
Valid: October to January

Figure 3: Seasonality A Business Parameter

12

Transfer
Vendor

Transfer
Manufacturing

Sophisticated
Planning and
Forecasting

Sophisticated
Order
Allocation

Shared
Information

Flexible
Manufacturing

Transfer
Distribution

Systems
Integration

Transfer
Retail Outlet

Consumer

Point of Sales,
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, low-priced goods, speed,
and quality of service must be addressed as follows:
Raw material prices became an issue in the mid-1990s when
the price of cotton started to rise significantly, having been
on a downward trend at the beginning of the decade. Larger
apparel and footwear companies have the option of reducing
costs for raw materials by putting pressure on textile manufacturers due to the size of their orders. The smaller companies, however, have to compensate by reducing labor costs.
The highest labor costs are concentrated in assembly phases,
especially in the sewing room. Traditionally, apparel manufacturers focused on minimizing direct labor costs by implementing the bundle system. The increase in inventory costs
and risks has also made production throughput times more
important. If assembly cycle times are reduced, the inventory
level has to meet the immediate replenishment demand
decreases.
With consumers looking for bargains, retailers were not, in
the past, inclined to accept increased costs. Suppliers therefore had to explore other ways of maintaining margins. This
led them to reconsider their business activities, pursue more
cost-effective manufacturing, and develop innovative product ideas.

Increase in Customer Service Requirements

Customer service has become a very important issue due to
complex and demanding customer requirements and diminishing customer loyalty. Consumers today are more educated
and conscious of what they buy so that their expectations are
rising steadily. Apparel and footwear companies are therefore
putting their efforts into creating strong brands and focusing
on marketing:
Changing practices in the retail industry are shifting more
responsibility to upstream manufacturers, who in turn are
seeking stronger partnerships with their suppliers. In order
to meet customer service requirements both in terms of
order fulfillment and on-time delivery, a high degree of
shared information supported by advanced systems integration, flexible manufacturing strategies, and more efficient
planning systems are necessary.
Cycle times for satisfying customer orders can range from
priority delivery within 24 hours to bulk and single delivery,
or vendor-managed inventory with just-in-time replenishment to seasonal planning months in advance. In addition,
apparel and footwear suppliers must invest in technology to
package, label, route, and move the floor-ready merchandise
rapidly from the production site directly to the retailer
(direct shipments).

13

Retailers are demanding more and more services including

drop and cross-dock shipments, vendor managed inventory
(VMI), rapid replenishment, exchanging information on the
current status of ordered products, boxing, and bar coding.
Apparel and footwear suppliers are under pressure to fulfill
retailers orders flexibly, rapidly, precisely, and efficiently.
They are forced to keep more finished goods in stock, risking
over-inventories or to innovating production processes to
reduce that risk.

Multiple Distribution Channels

Multiple distribution channels exist that are typical for sales in
the apparel and footwear industry, which all require different
processing. Different practices, methods of transportation,
distribution systems, pricing conditions, and policies may apply
to each of these channels. Distribution channels can include
company-owned retail stores, retail franchises, and shop-inshop, but the most common channels of distribution include
wholesale, retail stores, mass merchandisers, department
stores, specialty retailers, distributors, and licensees. Consumers can purchase in a variety of ways such as by catalog,
the Internet, electronic kiosks, direct mail, and telemarketing.
Information Technology
Information technology advancements significantly improve
trade throughout the world by enabling the electronic processing of customer orders in real time, even over long distances.

Companies, partners, and customers are using the Internet to

a greater extent to conduct business-to-business processes such
as sourcing, demand planning, replenishment, and collaborative design, marketing, and selling products.
Successful performance in the apparel and footwear business
includes quick response to retailer replenishment requests,
achieving a high level of order completeness, short lead times
for new products and a quick go-to market. However, this does
not necessarily provide a direct financial return. Financial
performance is not only affected by increases in labor and raw
material costs, inefficient sourcing, punishment for late deliveries, and a lack of transparency regarding contract manufacturers. It is also affected by the risk of holding high inventories
of finished goods or work-in-process inventories that go along
with planning insecurities. The resulting greater need for
mark-downs and write-offs reduces profits.
To thrive in this fiercely competitive environment and to
address the continuing problem of effectiveness across the
apparel and footwear supply chain, well-advised companies
develop strong relationships with vendors, retailers, partners,
and consumers. By collaborating with one another and
exchanging real-time information, apparel and footwear companies are able to minimize competition whilst maximizing
their opportunity for identifying and fulfilling customer needs.
SAP AFS is the SAP e-business solution that helps you manage
the transition from traditional enterprise-centric business
processes to adaptive supply chain networks. With SAP AFS,
suppliers, manufacturers, distributors, and customers all work
together towards a common goal.

14

CONSUMER

DECISIONS

Internet buying
CONSUMER
DEMAND

Shop-in-shop

Practices,
Policies, and
Procedures

Catalogue
Direct

Pricing
Conditions

Franchisees

DEMAND
PLANNING
Distribution
System

CUSTOMER
Telesales
CUSTOMER
DEMAND

Wholesale

Method of
Transportation

EDI

Figure 5: Multiple Channels of Distribution

15

KEY CAPABILITIES
SAP Apparel and Footwear is the best-of-breed e-business solution for the apparel and footwear industry. It not only addresses the logistical needs of apparel and footwear companies
worldwide (such as sales and distribution, materials management, and production planning and execution). It also seamlessly integrates financials, controlling, and all supply chain
elements to guarantee your management and staff up-to-date
information at the push of a button anywhere, anytime.
This document presents in detail the following key capabilities
specific to SAP AFS:
Style/color/size
Generic key capabilities
Order management and fulfillment
Sales order processing
Sales capabilities
Order scheduling and allocation
Shipping and transportation
Billing capabilities
SAP AFS Logistics Information System
Sourcing, inventories, and supplier Relations
Overview
Purchase rrequisition
Source allocation
Request for quotation, quotation, and purchase order
Multi-level contracts
Inventory management
Invoice verification
Special business processes
Warehouse management
Production planning
Production planning and control
Sales and operations planning
Production demand management
Material requirements planning (MRP)
Bill of materials (BOM) and routing
Capacity planning production orders and combined
orders

16

Product controlling
Overview
Split valuation with AFS materials
Product costing of AFS products
Cost object controlling
Profitability analysis for AFS products

STYLE/COLOR/SIZE

Style/Color/Size Master Data

SAP AFS has enhanced standard SAP R/3 data structures to
facilitate the handling of potentially very large volumes of data.
These enhancements derive largely from the size and seasonal
requirements of the industry and relate to the building of product levels based on style/color/size as used throughout the
logistical cycle.
A grid has been developed to support these specific enhancements and safeguard high levels of performance. This tool
ensures that as styles change from season to season, the enormous number of stock keeping units (SKUs) can still be maintained quickly and easily. Copy and referencing functions also
support volume changes due to seasonal influences. The product characteristics are represented as AFS dimensions. Dimensions can be flagged as being relevant to certain applications in
SAP AFS (for example, for material requirements planning,
seasons, or pricing) and thereby increase the flexibility of grid
processing. Dimensions are individually definable for every
customer and product.
Categories
In addition to grid dimensions, you can further specify product
characteristics by categories. Categories provide an additional
layer of detail, allowing you to segregate levels of quality, customer segments, country of origin, and so on. The SAP AFS
management of categories has been further enhanced so that
category fields can be flagged as being relevant to certain applications in SAP AFS (for example, for planned requirements
consumption, bill of material maintenance, or sales status). It
is therefore no longer mandatory to maintain all the possible
combinations of valid categories.

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

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. This means you have full
control over customer orders, articles, and time frames within
order processing. Pricing can be carried-out depending on special events and seasons. For example, during an end-of-season
sale, you can decrease the price for an article depending on
how sales progress. Furthermore, you can define delivery programs for seasons, collections, and themes and assign the
delivery program a delivery date.
GENERIC KEY CAPABILITIES

Integration of Logistics and Financial Applications

Standard logistics and financial applications are integrated with
SAP AFS. Logistical business processes automatically lead to
corresponding real-time postings in accounting. For example,
as a result of a direct shipment request from a customer in
sales, a purchase requisition is handed to the purchasing department. Customer-relevant data is then transferred to the purchase order. Purchased products can then be shipped directly
to the customer. As soon as an incoming vendor invoice is
received, it is automatically visible in the accounts payable
department.
Fine-Tuning Techniques
Customizing can be used to adapt the system to suit the individual operating needs of your company. By fine-tuning order
types for example, systems can be quickly matched to everchanging business demands without affecting turnover figures.
Constant change is the norm. With SAP AFS, you can define
new business processes and adapt existing ones as and when
needed, and not just during initial implementation.

18

Multi-Company, Multilingual, Multicurrency Processing

Despite multi-company, multilingual, and multicurrency sales
order processing, international business must still be able to
place orders in only one language. Business transactions with
partners in other countries can be converted automatically
into other languages and currencies. Each partner is able to
process transactions in the appropriate local language and
local currency, thus simplifying cross-border trading and supporting a global market. The same applies to country-specific
size scales.
Foreign Trade
The global nature of the apparel and footwear industry also
involves continuous changes in foreign trade and customs regulations, which can be formidable obstacles for any organization operating internationally. These affect the entire supply
chain from raw materials to finished goods, from inventory to
financial accounting. The foreign trade capabilities of SAP
overcome such barriers and include support for EDI interfaces
for foreign trade information, flexible management of export
licenses, automatic declarations to authorities, and representation of preference agreements. SAP ensures that international
borders are not trade barriers.
Triangle Processing Intercompany Transactions
Large international companies transact business with several
different companies and in numerous countries. It is therefore
important to introduce processes to support such transactions.
In triangle processing, an order is taken by one country for a
customer, owned by a second country, and delivered by a third.
The second country invoices the customer and pays commission to the country in which the order was placed. Grid processing in SAP AFS caters specially to all of these requirements.

ORDER MANAGEMENT AND FULFILLMENT

SALES ORDER PROCESSING

Standard and AFS Materials

SAP Apparel and Footwear offers a variety of order entry methods and screens, which have been developed together with our
customers. All order screens in SAP AFS can be used to order
both non-sized and style/color/size materials, regardless of
whether orders are entered manually or received through EDI
or the Internet.

Payment

Sales Order
Processing

Inventory
Sourcing

Invoicing

Delivery

Figure 7: Sales Order Cycle

EDI
Electronic data interchange (EDI) plays a critical role in sales,
since business information must be transferred as quickly as
possible. EDI accelerates and integrates sales operations, ensuring that data transmitted electronically is immediately available
to SAP AFS users and applications. In particular, EDI translates
customer information into AFS system information, such as
dimensions, and can even trigger a workflow process. For
example, a workflow event could be automatically initiated for
a sales order on the basis of an invalid article number, credit
hold, or other user-defined criteria. An added benefit is that
work activities can be prompted by the system, should exception messages need to be processed, and users are otherwise free
to concentrate on their regular activities.

Internet and Intranet

Internet and intranet application components provide apparel
and footwear companies with a variety of ready-to-use and
highly configurable business-to-business, consumer-to-business, and intranet applications. Such applications are specifically designed for business transactions and not just for information access. Standard Business Application Programming
Interfaces (BAPIs) have been amended to satisfy the SAP AFS
style/color/size requirements. The ability to share and exchange
information with suppliers and buyers in real time through
the Internet allows companies to implement integrated global
supply chain management.
mySAPTM Customer Relationship Management
for the Apparel and Footwear Industry
In response to ever increasing profit pressures, organizations
have become more efficient, driving costs out of their operations. Furthermore, they have also focused on the quality of
their products and services, such that quality is no longer as
great a distinguishing factor among different companies.
The result of these efforts is that price and quality have converged, shifting the focus of corporate efforts to the customer.
Organizations have recognized that they must therefore provide more value in different forms to their customers, and set
their key corporate goal to achieve customer value leadership. To accomplish this goal, organizations must create a customer-centric e-business by making the customer the center of
all their activities.
mySAPTM Customer Relations Management (mySAPTM CRM)
connects customers to the knowledge, people, and processes of
a company's entire value network, creating customer value
leadership through:
Superior customer relationships
Innovative customer-focused products and services
Excellent customer-centric processes

19

Order 1

Telesales
Tele-Sales
Order 1

KEYED

Order 2

Order 3

EDI
EDI
Sales
Sales
Order 2

Internet
Internet
Sales
Sales
Order 3

AUTOMATIC

SPECIAL FEATURES:
Fast and user friendly
Customer product grids
No repetition of style numbers
Subtotals
Hierarchical overview
Copy quantities
Customer service reason codes

Order 4

Mobile
Mobile
Sales
Sales
Order 4

Order 5

Faxed
Faxed
Sales
Sales
Order 5

KEYED

SAP AFS

Figure 8: Multiple Methods of Order Entry

mySAP CRM includes capabilities that are interwoven within

the entire customer interaction cycle. These capabilities are
discussed in detail below.
The mySAP CRM Interaction Center facilitates inbound and
outbound communications mainly in the areas of telesales,
telemarketing, and service. With SAP AFS 3.0, apparel and
footwear companies can utilize the mySAP CRM Interaction
Center. Interactions can be blended across all remote channels
including telephone, Web, chat, and e-mail. Customer contacts are tracked, monitored, and enhanced for multichannel
communication.
Inbound calls from your customers (for example, retailers)
enable you to automatically identify the customer through the
calling phone number. All relevant customer information is
available for your call-center agent at a glance. After identifying
your customers needs, you can branch to any SAP AFS transaction without keying in redundant information, such as the
customer number. With mySAP CRM for the Apparel and

20

Footwear Industry, you can take advantage of solid expertise

SAP has in customer relationship management.
The customer care and help desk supports all types of questions, complaints, and returns, with escalation and workflow
processing plus many other activities.
In the near future, e-selling, e-services, and mobile sales will be
available for apparel and footwear companies. E-selling provides comprehensive capabilities for selling apparel and footwear
articles through the Internet, while creating a new, strategic
sales channel. It covers all phases of the sales cycle, sophisticated product selection, multimedia product catalogs, advanced
personalization, convenient shopping-basket management,
secure transactions, complete order status checking, as well as
supporting payment processing and fulfillment. Intelligent
Web analyses and a flexible Web design based on state-of-theart technology top off the solution. E-service offers your customers (retailer and end-consumers), prospects, and business
partners access to specific information (such as product catalogs, content, and pricing) and self-service functions (such as
order entry and tracking requests) through the Internet.

Furthermore, there are plans to support mySAP CRM Field

Sales. That means you can deliver key customer and prospect
information to your sales personnel in the field. This facilitates
the planning and maintenance of sales activities (such as
appointments, visits, and calls), and provides activity reports.
This also includes capabilities to create clearance sales and take
orders. With mySAP CRM Mobile Sales, your field sales force
will be supported using mostly autonomous mobile devices.
Fast Order Entry
Screens designed specifically for SAP AFS have helped speed
up manual order entry. Status data such as Sales area and
Customer ship-to are displayed on each screen. You are not
restricted to using the SAP AFS fast order entry screens; you
can create your own screens to suit your individual requirements. This can be particularly useful in a telesales environment.
Credit Card Processing
The system automates credit card processing by prompting for
credit card details (such as number, expiration date, and so on)
and auto-dialing for authorization. On receipt of authorization,
it captures the details needed for later settlement.
Reference Capabilities
Cross-reference capabilities allow appropriate product numbers to be found based on different criteria, such as customer
product number, UPC/EAN codes (Universal Product Code/
International Article Number), or by referencing a discontinued product to a new product. Appropriate products may also
be determined from a list based on pack-code selection rules.
For example, a customer may not want articles with coupons
to be included in the packaging of any product. The appropriate pack codes can be filtered out of a selection list before the
system performs the substitution.

Mass Order Management

The apparel and footwear industry has many customers and
therefore a large volume of orders. As a result, when your
customer service department is compelled to make a general
change affecting many orders, considerable time and effort is
involved.
Two tools are available with SAP AFS to assist productivity:
Stock display/mass order display a where-used inquiry on
stock consumed/required by orders
Mass document change enables users to select many orders
and change certain agreed fields in a single process
For fast changes to schedule lines in sales orders, SAP AFS
enables you to enter data and change entries for selected items
or schedule lines.

SELECTION SCREEN

CHANGE SCREEN

Customer
Requested
delivery date
Material

Requested style
From:
1475
To:
1476

Execute
selection

1475

SELECTION FOUND LIST

Sel
E
E
E

Order
543
556
610
851

Customer PO No
1000
47355
1131
4600
41899
3299
AB_12

CUSTOMER
ORDERS

Material
1475
1475
1475
1475

Execute change

Qty
10
18
12
50

Rq Dlv
12/06/00
15/06/00
15/06/00
20/06/00

UPDATE
REPORT

Figure 9: Mass Order Management

21

Multi-Store Orders
To service key accounts with multiple outlets or stores using
the best possible method, SAP AFS features a new order type
known as the multi-store order. This method allows users to
accept orders for multiple locations but treat them as a single
logistical component. Many stores transmit articles, delivery
quantities, and dates for many stores simultaneously. Order
maintenance and allocation can be carried out either for each
individual store or the whole group of stores together. Delivery
can be made directly to the stores or a customer distribution
center. When delivery is made to a customer distribution center, articles can be labeled mark for onward delivery to a specific store to facilitate easy cross-docking for the distribution
center. The system proposes which stores delivery should be
made to on the basis of a predefined customer store hierarchy.
A critical marker indicates stores with high delivery priority,
due to store openings, fashion shows, or other reasons.
In stock shortage situations, the system can determine the
quantities to be distributed to the individual stores by means
of distribution rules. For instance, using equal distribution, the
system assigns an equal quantity of pieces to all stores, whereas
with the first-in, first-out (FIFO) logic, the system takes the
delivery priority into account and may disregard stores with a
low priority.
Mark For Feature
SAP AFS mark for information helps direct deliveries to particular points within a customer organization. This feature is
often used when a large retail chain requests an order to be
shipped to a distribution center and marked for a store or
department for cross-docking. Mark for information such as
department names and details can be automatically copied
into the sales orders as a new partner function. Customer-run
loading points information may also be copied from the customer master record.

22

Rush Orders
SAP AFS is equipped to handle rush orders if stock needs to be
shipped immediately. Sales order entry, allocation, and delivery
creation are all carried out at the same time, so that the order
can be given to picking without delay.
Assortments and Prepacks
Assortments and prepacks can be defined using the SAP AFS
bill of material (BOM) structure. Assortments are a group of
finished goods, whose pricing and processing are done not as a
unit, but at the level of the individual components. For example, an assortment could be a golfing outfit consisting of ten
golf balls, a golf shirt, and golf pants. The assortment can consist of non-sized and sized products. Sizes for the finished
goods, if needed, are specified per item in the assortment during the order-taking process. 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.
Prepacks are again logical combinations of finished goods;
however the pricing and processing of prepacks are performed
for the unit and not on the basis of their individual components. Prepacks have a single size associated with them. For
instance, a golfing outfit medium consists of ten golf balls,
golf shirt (medium), and golf pants (waist 32, length 33).
If you want to combine colors and sizes of one article, such as
shoes, in a particular quantity, you can use a quantity distribution profile instead of using an assortment or prepack. This
way, the system automatically inserts the respective quantities
for the grid values. Using a factor, you can also increase these
quantities accordingly. Once you have defined a quantity distribution profile, you can use it again for other products.

Other SAP AFS features in Sales Order Processing include the

following:
Threshold dates for order cancellation: Some apparel and
footwear customers carry over unfulfilled sales order requirements into their next purchase order. In this case, a new
cancellation date can be entered on a sales order to establish
the last date on which an order can be delivered. If the
scheduled delivery date is later than the cancellation date,
the order can be canceled using the mass document change
feature, or rejected from allocation.
Item independence: SAP AFS enables you to treat each item
in a sales order as a separate order.
Cross-divisional sales: Even different product families (for
example, divisions such as shoes, apparel, and accessories)
can be handled within the same sales order.
Customer service reason codes: Should customers decide to
change the terms of an order, customer sales representatives
can enter a reason code. Time, user, change, and reason are
then recorded and always accessible.
SALES CAPABILITIES

Availability Checking
The SAP AFS available-to-promise (ATP) check is an optional
feature to determine whether or not the quantities and delivery dates requested by a customer can be met. When an order
is entered, the check verifies whether sufficient stock is available to fulfill the order. If the order cannot be shipped right
away, the availability check determines in real time when sufficient stock will be available and proposes a delivery date for the
future. The system can be configured to perform a check based
on physically available stock or against planned receipts.
Replenishment lead times can also be taken into account.

The fill rate risplay enables order-taking staff to inform customers immediately of fill-rate options based on available
delivery dates and quantities. By drawing the customers attention to the order cancellation date if exceeded, staff can suggest
that orders be put back to achieve a better fill rate. A warning
or error is displayed if an order no longer falls within a given
season.
Material

Scheduled Scheduled Cumulative Day after

Delivery
Quantity Order
Required
Date
Quantity Delivery
Date

Line %
Order %
Complete Complete

1475
1475

Jan. 01
Jan. 15

50
25

50
75

0
14

150%
175%

33%
50%

1475

Jan. 30

25

25

30

100%

67%

Figure 10: Example of Proposed User Fill-Rate Information

This enables companies to make decisions during sales order

processing based on real-time information about potential
delivery bottlenecks. It helps to complete business processes on
schedule and, at the same time, promotes greater customer satisfaction.
With back order orocessing, SAP AFS also offers a report to list all
sales orders that have only been partially delivered or not delivered at all. Using the rescheduling tool, you may execute the ATP
again upon goods receipt and have the system adjust the delivery dates.

To optimize procurement and production, ATP may only be

checked within the SKU-level horizon. Beyond this horizon a
more global check is carried out at product/style level to see if
there is enough time to specify exact size distribution in a later
stage of procurement.

23

Credit Limit Check

SAP AFS features a variety of flexible options for credit checking, such as credit rating data, planning level, open limit, and
open items. You can set credit limit checks at any point in the
sales cycle between order receipt and actual shipping. A total
limit and/or limits for specific credit control areas may be
defined for a given customer. There are also customizable
options for system response when credit limits have been
exceeded. SAP AFS also features an additional credit check at
the time of order allocation.
Price Flexibility
SAP AFS incorporates strengths such as pricing flexibility and a
pricing functionality specifically designed for the needs of the
apparel and footwear industry:
Pricing at different levels: by style, color, size, category,
and so on
Seasonal pricing by reference to the season tables
Two-date pricing to motivate customers to keep to defined
order and delivery windows
Price maintenance optimization by creating grid value
groups, which reduces the effort involved in maintaining
pricing records
Associated taxes by size where a material is priced by size
(such as tax exemption for childrens shoes)
Royalty agreements built into pricing
Special Operations
SAP AFS allows items to be marked for special processing. For
example, an article can be marked to indicate that a generic
product such as a polo shirt or overalls is to be customized by
the addition of embroidery, badging, cresting, or striping, thus
making it exclusive to that customer.

Value-Added Services
Many retailers require services, usually done in the distribution
center, which change or improve the appearance of their goods
before accepting delivery. Such services (such as packing, ticketing, hanging, hemming, and so on) ensure that goods can be
put on display immediately upon arrival. A new value-added
service (VAS) database has been developed for SAP AFS, which
records these requirements and incorporates them for the
particular customer at the time of order entry or delivery.
Alternatively, such requirements can be entered manually. If
desired, these services can influence the sales price accordingly.
Bulk Order Processing
SAP AFS allows entry of a customers promise-to-buy.
The source of the promise-to-buy may be an internal ordergenerating system, such as a vendor-managed inventory, where
it is not immediately necessary to know the ship-to points or
delivery quantities. At a future date, the customer sends actual
orders and instructions with ship-to points and quantities.
These quantities are offset against promise to buy quantities.
It is therefore possible to compare the customers expected
take-up with the actual take-up at any stage in the order
process.
ORDER SCHEDULING AND ALLOCATION

Order Scheduling
Order scheduling is an optional process in which order lines
are automatically grouped or split into deliveries that suit the
customer and manufacturer. This guarantees optimal deliveries and the highest of customer satisfaction. It takes specific
customer and global business rules into account in order to
calculate optimal delivery schedules.
Order scheduling is parameter driven. Applicable rules and
the sequence in which they are applied can be customized.
The order scheduling architecture is designed to enable the
addition of new user and customer rules. A typical example
of order scheduling is: all order lines that are scheduled to be
shipped within a few days of each other are grouped on one
shipping date to make an efficient delivery.

24

ARun Functions
SAP AFS
Optional Process
WMS Warehouse Management System
(external system)
GI
Goods Issue

Selection

Order
Scheduling

Order
Entry

ATP
Check

Backorders

Check

Grouping

Sorting

Allocation

Release

Allocation
Preview

Save
Order

Allocation
Run

Allocate
Rush
Order

Delivery
Changes/
Post GI

Delivery
Creation

Management
Tool

Invoice

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).
SAP AFS can be user-configured to sequence certain customer
orders so that they are given preference when stock is allocated. The orders are then only released for shipping when the
order meets customer or business rules on order fulfillment
and/or available credit. This way, you only make deliveries you
know the customer will accept and pay for and you can avoid
potentially costly charge backs. You can specify checks to
ensure the deliveries contain enough core sizes (heart sizes)
and not just fringe sizes. In the case of stock shortage, you can
decide how you allocate stock to orders. For example, by filling
orders up to their agreed minimum release quantities, you can
increase the number of acceptable deliveries, and therefore
increase customer satisfaction.

Depending on your business requirements, you may give high

priorities to the orders of important customers and distribute
the remaining stock equally among the other customers, rather
than not being able to fulfill a sales order at all.
The system may check a customers credit limit upon allocation and either exclude the customer from further allocation
completely or exclude the sales order items that exceed the
credit limit.
With SAP AFS, your customer service department can concentrate on managing the exceptions for example, by calling
customers and releasing agreed orders using the management
tool. Alternatively, the order exceptions can automatically
enter subsequent allocation runs to accumulate more stock

25

until the release rules are met, or you can use the Management Tool to de-allocate the stock for allocation to other
orders. By setting the allocation run to reject or report orders
that are close to or past the cancellation date, you further
enhance delivery acceptance.
The allocation run can operate on your orders in simulation
mode, and you can save the simulation results. Then, you can
examine the results to determine the optimum order allocation settings (such as customer allocation priority), thus maximizing customer satisfaction.
Allocation Preview
The allocation run can also run in preview mode with future
planned receipts instead of stock. Allocation preview determines which orders can be delivered and when, should the

ATP (available to promise) situation change. It can also take

into account which release rules and customer delivery priorities you would normally use in your allocation process. For
example, the purchase order delivery date for sales orders taken
six months in advance may change. The customer can be
informed of the shift in dates or the change in expected delivery quantities. In preview mode, the results are saved in detail
for reporting. This means you can see from a complete order
perspective how purchase orders that are late or whose quantity has changed impact your orders. You can also see which
customer orders would therefore be late or have problems being
delivered because, for example, their release rules cannot be met.
Concepts for fixed allocation against future goods receipts are
under review, and this functionality is to be included soon in
the SAP AFS Allocation Run.

Order Release Planning

Product

CUSTOMER
PARAMETERS

ORDER RELEASE
PRIORITY
PRIORITIZATION

CUSTOMER
SALES ORDER #

Customer Type
Partial Shipment

Price
Fill Percentage

Customer Order 5
Customer Order 3
Customer Order 2

Quality

Style/Color/Size

Core Sizes

Customer Order 1

Order/Delivery Dates

Customer Order 4

Improved Customer
Responsiveness

Figure 12: Allocation Run Process Flow

26

CUSTOMER
DELIVERIES

WILL A DELIVERY ON MONDAY

BE SOON ENOUGH FOR YOU?

PRODUCTION,
DETAILED
SCHEDULING,
PLANT LEVEL

FORECAST,
DISTRIBUTION
PLANNING,
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. For allocated contracts, the system automatically assigns incoming goods receipts to open
contract release orders to ensure smooth and on-time delivery.
The benefit of order allocation is that available stock is optimally distributed among customer orders. Customer orders
are fixed and released to the shipping department, which
denotes the end of the order allocation process. You can run
preview, simulation, and allocation online or in the background.
SHIPPING AND TRANSPORTATION

Delivery Creation
SAP AFS provides flexible options for creating delivery notes
(for example, by mode of transport, carrier, date, route, and so
on). This is the first step to trigger the actual picking of the
goods.

Shipping Capabilities
SAP AFS enhances shipping capabilities by integrating grid
value settings, as well as introducing and transmitting valueadded services (VAS) to a warehouse through standardized
interface.
Shipping and Transportation
Shipping and transportation management in SAP AFS tightly
integrates materials management and financial accounting.
Consequently, up-to-date shipping information is always available. The shipping module provides comprehensive support
for foreign trade processing, deadline monitoring of shipments
in process, and flexible delivery processing. Picking, packing,
loading, and flexible shipping output are also supported.

27

BILLING CAPABILITIES

mySAP BUSINESS INTELLIGENCE FOR THE APPAREL

Billing Facilities
SAP AFS provides best-of-breed billing and pricing capabilities.
The material grid structure is reflected in the billing document
so that sizes and associated prices/taxes can also be displayed.

AND FOOTWEAR INDUSTRY

Other highlights of the billing capabilities include:

Automatic invoice creation using data from the sales order
and delivery notes to accelerate processing
A full set of billing services to process invoices, credit and
debit memos, and rebates
The ability to reference original invoice data in credit and
debit memos, which saves time and simplifies 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.
SAP AFS LOGISTICS INFORMATION SYSTEM

Logistics Information System

The Logistics Information System is a flexible tool for collecting, compressing, and evaluating data (information) from
other applications. The central elements form self-defined
information structures, which in turn can be filled with customer-specific data using various tools. The information systems have been enhanced to allow analysis and reporting right
down to size level. As a consequence, other areas of your company can also access sales information at the required level. For
example, production planning and control can break down
planning requirement data to a lower level, such as size.
Although the Internet has changed the way business is carried
out today, interpreting information and translating it into
action remains critical to the success of a company. With
mySAPTM Business Intelligence (mySAPTM BI), SAP offers integrated, fully Web-enabled capabilities for enterprise performance management.

28

mySAP Business Intelligence

Interpreting information is critical to the success of companies
in the apparel and footwear industry. mySAP Business Intelligence (mySAP BI) combines data warehousing with comprehensive analyses delivered through an enterprise portal. With
mySAP BI, you can measure the effectiveness of business operations and take immediate corrective action when needed to
ensure continuous improvement.
mySAP BI enables apparel and footwear companies to access
the vast supply of information available in the Internet economy, and rapidly turn it into real knowledge on which to base
decisions and actions. SAP offers an innovative and sophisticated solution that helps apparel and footwear companies
implement industry-leading measurement technologies.
mySAP BI offers apparel and footwear companies access to both
internal and external information resources, including data
from business partners. It also enables them to take advantage
of leading industry-specific and cross-industry benchmarks,
providing a framework for key performance metrics and optimizing operations. Analytical applications give you control
over supply chains, customer relationships, and other enterprise activities. This lets you streamline operations, reduce
costs, and promote a strong customer orientation. In fact,
mySAP BI promotes a closed-loop approach to managing corporate information. It comprises the most comprehensive set
of solutions to gather information, turn that information into
knowledge, and navigate the business successfully anywhere,
anytime.
Data Warehousing
Data warehousing delivers a common view of enterprise data,
enables analysis and interpretation of integrated, consistent
information, and empowers organizations to turn insight into
action. The tools and technologies used for designing and managing a data warehouse enable the extraction, integration, and

ADMINISTRATOR WORKBENCH

ENTERPRISE PORTAL
BUSINESS EXPLORER

Scheduling

Monitoring

Third-Party
Tools

Administration

Web Reporting
and Publishing

Multidimensional
Analysis

ODBC

API

XML

SAP BW SERVER
OLAP PROCESSOR
Metadata Repository
METADATA MANAGER

Master Data

Interfaces

Feeding Services

Data Source

DATA MANAGER

STAGING ENGINE

BAPI

PSA

FILE

Extraction Engine

DB Connect

SAP Applications
SAP BW

ODS

XML

ETL Tools

Non-SAP Applications
File

Data Provider

EXTRACTION, TRANSFORMATION, AND LOADING

Figure 14: Data Warehousing

transformation of data from multiple sources to support decision-making processes in the enterprise. The data warehouse
infrastructure serves both as a collector and provider of data
and information (for instance, by populating data marts and
the Operational data store (ODS)). mySAP BI comes with a

pre-configured, extendable metadata repository to ensure integrated, consistent, and accurate data. It provides users with a
better understanding of the information they are analyzing,
and enables the integration of different applications and tools
within an enterprise.

29

Reporting and Analysis

Reporting and analysis provides decision-support tools such as
query, reporting, and multidimensional online analytical processing (OLAP) analyses for collaborative decision making.
Users can access data on different levels (detailed or summarized), and share and analyze business information within their
Web browser (PC or mobile). mySAP BI contains tools for
query design, Web application design, and data visualization.
These tools allow users to create analytical applications, represent data graphically, visualize relationships between business
information and spatial information (geographical analyses),
and easily build comprehensive information cockpits that users
can access through an enterprise portal. mySAP BI includes
predefined templates for OLAP queries, and formatted reports
enabling users to easily define new ones:
Winners and losers
Sales per style, color and size, product group, and so on
Sales per country, region, sales representative, key account,
and so on
Returns statistics

Order fulfillment statistics

ABC analysis
Seasons/collections/themes
Supplier loyalty
Invoice verification
Inventory management (material movements, material
revaluation)
Stock statistics
Material consumption statistics
Target and actual comparisons: Production quantities,
delivery dates, scrap, and so on

Business Content
mySAP BI is shipped with information models, and the entire
data flow in business content is pre-configured. The models
contain predefined templates for reports and analyses with
corresponding technical definitions, such as extraction and
transformation rules or data models such as InfoCubes,
queries, or Web applications.

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

Figure 15: Comprehensive Business Content

30

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

SAP BUSINESS INFORMATION WAREHOUSE

MATERIAL

SIZE

COLOR

QUALITY

COUNTRY

SALES VALUE

T-Shirt 4711

XL

BLK

1st

DE

10.00 USD

T-Shirt 4711

Red

1st

DE

15.00 USD

Shoes 0815

44

BLK

2nd

US

25.00 USD

Coat 666

56

BLK

DE

15.00 USD

...

...

...

...

...

WHAT IS THE SALES VALUE

OF ALL MATERIALS
IN COLOR BLACK?

...

WHAT IS THE SALES VALUE OF ALL

MATERIALS WE MANUFACTURED
IN GERMANY?

EXTRACTION

SAP R/3
MATERIAL

GRID VALUE

CATEGORY

SALES VALUE

T-Shirt 4711

XL BLK

1st DE

10.00 USD

T-Shirt 4711

L Red

1st DE

15.00 USD

Shoes 0815

BLK 44

US narrow

25.00 USD

Coat 666

56 BLK

DE

15.00 USD

...

...

...

...

Figure 16: The Elementary Field Concept

With mySAP BI's data warehousing component, SAP Business

Information Warehouse (SAP BW 3.0B), SAP has, for the first
time, delivered business content tailored to the needs and
requirements of the apparel and footwear industry. SAP BW
3.0B includes extraction routines and information models that
can transform data from materials management, sales and distribution, production planning, and more into real information and knowledge. 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).
Therefore, SAP AFS has introduced the concept of elementary
fields. Elementary fields contain information about material
characteristics such as color, size, or quality. These fields can be
mapped with grid dimensions, category fields, and additional
material master fields.

31

SAP BUSINESS INFORMATION WAREHOUSE

INFOCUBE

INFOCUBE

INFOCUBE

COLOR

SIZE

QUALITY

COUNTRY

BLK

3132

1st

EU

3132

1st

EU

ELEMENTARY
FIELDS

1st

EU

CHARACTERISTICS

TRANSFER STRUCTURE

BAPI

DATA
SOURCE
REPLICATION

DATA
SOURCE

TRANSFER STRUCTURE

BLK

LIS

MAPPING

BLK

31

32

BLK3132

COMMUNICATION STRUCTURE

SAP AFS

INFOOBJECTS FOR
ELEMENTARY
FIELD

Color

1stEU

Waist

Length

GRID VALUE

Quality

SKUs

Country

CATEGORY

Figure 17: Extraction of AFS-Specific Data into SAP BW

SAP delivers a best practice set of elementary fields: size, color,

country, stock quality, and required quality. The range of
elementary fields can be easily extended to meet your specific
requirements. SAP AFS content includes the following objects
to gain information from other mySAP.com business applications:
Data extraction: AFS extractors, AFS DataSources,
AFS transfer rules, and AFS InfoSources
Data storage and enrichment/movement: AFS update rules
and AFS InfoCubes

32

Data retrieval and presentation: AFS queries, AFS workbooks, and AFS Roles

The predefined data models can be extended very easily without modification. The apparel and footwear-specific content
enables you to implement an information system out-of-thebox. You can also very easily perform ad hoc querying by using
drag-and-drop characteristics and key figures. Furthermore,
you can integrate the business content into mySAPTM Enterprise Portal for convenient user access anytime, anywhere.

SOURCING, INVENTORIES, AND SUPPLIER RELATIONS

OVERVIEW

PURCHASE REQUISITION

Procurement Cycle
SAP AFS covers industry-specific raw material and component
procurement processes, sourcing of finished products, inventory management, subcontracting, and invoice verification.
The SAP AFS procurement cycle is illustrated in the diagram
below.

The purchase requisition is a request to the purchasing department to procure a certain amount of materials or services by
a particular date. Purchase requisitions are created manually by
the department making the request, or generated automatically by material requirements planning (MRP). The processing of purchase requisitions has been extended to include
dimensions and categories. You can distribute the purchase
requisition quantity by percentage across dimensions. The
distribution can be based on historical data or definable standard distributions.

The great advantage of procurement using SAP AFS is that all

routine jobs, from purchase requisition creation through purchase order generation, can take place automatically without
any significant help from the purchasing department. They
need only intervene in exceptional cases.
Because purchasing, warehousing, accounting, and other
departments all have access to the same data, no additional
effort is necessary for creating and processing purchase orders.
You can generate all documents with reference to the data
available in the system. In this way, time and effort as well as
data entry errors are kept to a minimum.
The integration of style/color/size and category definitions to
meet the requirements of the apparel and footwear industry
has enhanced materials management processes and capabilities.

Using SAP AFS source allocation, you can find and assign the
most suitable vendors for a requested material to the purchase
requisition. Once a supply source has been assigned, the purchase requisition can be marked for request for quotation
(RFQ) processing.
SOURCE ALLOCATION

As a result of todays trend towards globalization, the importance of procurement has increased. A module for optimum
vendor selection has been developed for SAP AFS. This is an
optimized tool you can use to evaluate the most effective
channels for procurement. During a source allocation run,

1
Handling of
Payments

Determination of
Requirements

2
Determine Source
of Supply/
Source Allocation

Invoice
Verification

PROCUREMENT
6

3
Vendor
Selection

Goods
Receipt
4

5
Purchase Order
Monitoring

Order
Processing

Figure 18: SAP AFS Procurement Cycle

33

various suggestions for procurement are generated, proposing

the most suitable vendor. This can be either an internal production site or an external vendor. The source allocation sets
fixed parameters to determine the ideal vendor, and facilitates
the addition of company-specific parameters by the customer.
The vendor determined is then assigned to the appropriate
purchase requisition.
Political Restrictions and Quotas
Political restrictions on foreign trade play a special role in the
apparel and footwear industry. During vendor selection, SAP
AFS takes the import restrictions stipulated by the government
or by your companys policies into consideration. You can
choose to completely exclude certain countries and companies
from your possible vendors or regulate the delivery quantity of
certain vendor countries by setting a quota arrangement. If
you restrict the import quantity of certain products or product
groups, vendors from the specified countries will no longer be

considered by the system if their delivery quantities surpass

your limit. In order that two production sites within one company do not exhaust the quota at the same time, only a portion
of the total quota for a particular product or product group is
allocated to each site. The total quota and the portion consumed by the order are displayed in a list.
Vendor Capacity Planning
In business practice, you may source the same product from
several vendors. You agree with each vendor on the quantity
that they are able to supply. Vendor capacities can be determined in different ways, such as according to vendor and
material or material group. The capacity is defined as basic
capacity, overload capacity, and maximum capacity. If a vendor
has reached the maximum capacity for a particular material
or material group, the user is informed accordingly. Thus the
user can optimize capacity distribution for internal and external production across all vendors.

VENDOR 1000
LEVEL 0
VENDORS
TOTAL CAPACITY

LEVEL 1

Tooling Capacity
Tooling Set A
50,000 hours

LEVEL 2

LEVEL 3

Model Capacity
Model A
50,000 hours

Material
70 white
1 pair = 5 hours

Figure 19: Source Allocation Vendor Capacity

34

Total Capacity
Overload Capacity
Per Period

100,000 hours
10,000 hours

Total Capacity
Tooling Set B
80,000 hours

Model Capacity
Model B
20,000 hours

Material
80 black
1 pair = 2 hours

CAPACITY
BY PRODUCT

ELEMENTARY
FIELDS

TOTAL CAPACITY
Overload Capacity
Consumed Capacity
Consumption
Overload Capacity

Further user-defined criteria for source allocation are:

Vendor rating: The user can specify and weight the main
criteria for evaluating a vendor.
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.
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

A request for quotation (RFQ) is sent to various vendors asking

them to submit a quotation. The quotation contains a vendors
prices and conditions for the materials needed. Data from the
quotations received is maintained with the respective request
for quotation. The request for quotation and quotation are
therefore seen as one.
In addition, the request for quotation and quotation contain
information at dimension and category level. Quantities can
be automatically distributed among dimensions and categories.
Prices can be defined using the SAP condition technique at
SKU level. Using a price comparison list, you can carry out a
quotation comparison at the SKU level to establish the best
quotation.

PURCHASE ORDER

You can automatically generate purchase orders from the list

of purchase requisitions to be processed by the buyer, and to
which a source of supply has been allocated. If the vendor for a
material is already fixed, you can create the purchase orders
straight away without first creating a purchase requisition.
Order quantity entry for various items in the purchase order
can be created at dimension and category level. Distribution
profile features and rounding functions are also available in the
purchase order.
If certain dimensions of a material cannot be supplied or delivered by a particular vendor, the system allows you to define
a purchase grid with the valid dimensions for this material/
vendor relationship. These are automatically taken into consideration in the purchase order.
MULTILEVEL CONTRACTS

It is quite common in the apparel and footwear industry to

draw up long-term purchase agreements with external vendors, who deliver materials or supply services under certain
conditions. SAP AFS can process these agreements without yet
having to define precise information at material or SKU level.
Using these functions, the customer can issue a purchase
agreement for an undefined quantity for a future date. With
the approach of the scheduled delivery date, the contract takes
on a more concrete form as a new scheduling agreement to
the original contract. Additional information is determined,
such as raw material color. Exact quantities and destination are
confirmed when the delivery date is established. By using this
function, your company has greater flexibility when planning
the purchase of materials and can react more quickly to
changes in the market.

35

PRODUCTION PLANNING

VENDOR

PROCUREMENT OF
RAW MATERIAL

MANUFACTURING

DETAILED
PLANNING

ROUGH
PLANNING

Release
Order

LEVEL 3
Validity Period of
LEVEL 3
Contract

Material A-Size: 38 L
Quantity:
1,500 pieces
Validity Period: July 1st
August 1st
LEVEL 2
CREATION DATE

Validity Period of
LEVEL 2
Contract

Material A
Quantity:
7,000 pieces
Validity Period: July 1st
September 1st
LEVEL 1

Validity Period of
LEVEL 1
Contract

Target Quantity: 100,000 pieces

Material Group: T-Shirts
Material A
Material B
Validity Period: July 1st December 1st
December

January

April

July

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 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. Users can view the current stock situation of a material any time. Whenever there is a change to the stock, the data
is immediately updated and made available to upstream and
downstream departments. Stock value is also updated when a
goods movement is posted, and value updates are triggered in

36

other business applications, such as G/L accounting. Single

items are generated for any account assignment objects
involved.
The amounts posted are created automatically by the system
based on data from the purchase order and material master
record. Consequently, when creating a goods movement you
only have to enter the quantity to be moved. During goods
movement, documents are created that form the basis for the
quantity and value updates and (at the same time) record the
movement. All relevant features in inventory management
(such as goods receipt to purchase order, reservations, goods
issue, transfer posting, and stock transfer) have been enhanced
to show data at SKU level. The stock requirements list, all
goods movement documents, and the most important evaluations include information at SKU level.

Inventory
When balancing stock accounts, a company must carry out
a physical inventory count of warehouse stock at least once
every fiscal year. Various procedures can be used. The SAP
system supports the following inventory procedures:
Periodic inventory
Continuous inventory
Cycle counting
Inventory sampling procedure

Stock Transfer and Transfer Posting

In addition to posting goods receipts and goods issues, SAP
AFS enables you to enter internal goods movements at the
SKU level by using transfer posting and stock transfers.
With transfer postings, you change the material number,
the stock type, or the batch of a material. In SAP AFS, you
can also transfer post the grid values and category values of
the output material to other SKU values of the receiving
material.
With stock transfers, you enter the physical goods movements between different production sites or company locations.

It is possible to include freely available stock, stock in quality

inspection, and blocked stock. Inventory processing for warehouse stock and special stock is also supported.
SAP has extended the inventory sampling procedure; it can
now be carried out at the dimension and category levels. Information at SKU level is available in all relevant processes such as
physical inventory document creation, creation of payment
results in the system, and posting results.

The receiving production site makes a request for a product

using a stock transport order, whilst the issuing production site
posts a goods issue with reference to the stock transport order.
You can create the goods issue as a goods movement in inventory management or using delivery note processing. The withdrawn quantity is recorded as stock in transit of the receiving
production site.

Stock
Transport
Order

RECEIVING PLANT A

ISSUING PLANT B
B

B
B

UNRESTRICTED
USE STOCK
Goods Receipt

STOCK IN
TRANSIT

B
A

C
UNRESTRICTED
USE STOCK

Goods Issue

Figure 21: Stock Transfer

37

The receiving production site posts a goods receipt with reference to the stock transport order. This reduces the stock in
transit and the open purchase order quantity. It is also possible
to post the goods receipt in the receiving production site as one
step. At the same time, the issuing production site posts a goods
issue so there is a no-stock-in-transit situation.
Even if the respective production sites belong to different
company codes, you can still create a stock transfer as follows:
Stock transfer from one production site to another using a
one- or two-step procedure
Stock transport order with or without a delivery note

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.

To enable invoice verification to check invoices for content,
price, and calculation accuracy, all information has been
enhanced to include dimension and category level. This information is now available, for example, at the time of invoice
creation.
SPECIAL BUSINESS PROCESSES

LOGISTICAL INVOICE VERIFICATION

Logistical invoice verification is part of materials management.

At the end of the logistical chain after planning, purchasing,
and inventory management, invoices must be checked for
accuracy as regards content, price, and calculation. When
an invoice is posted, all data from the invoice is stored in the
system and updated in materials management and other
applications in real time.
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, services, travel expenses, and seminar costs)
Processing credit notes, either in the form of invoice cancellation or discount
The payment or evaluation of invoices is not part of invoice
verification. This information is forwarded to the financial
department. Invoice verification establishes the connection
between materials management and accounting (financial
accounting, asset accounting, and cost accounting), and
includes the following:
Creation of incoming invoices and credit notes
Checking of invoices resulting from account movements
for content, price, and calculation accuracy

38

Special business processes characterize the apparel and footwear

industry. Such processes include outsourcing of production,
in-house production in domestic or foreign plants, subcontracting, full-package sourcing, and purchasing of semifinished
and finished products.
Subcontracting
Material procurement through subcontracting is processed in
SAP AFS using subcontracting orders. 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 companys 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. A subcontracting order is then generated including
the provided components

PURCHASING

INVENTORY MANAGEMENT

PURCHASING

PURCHASE
ORDER
Subcontract
Item
Components

STORAGE
LOCATION

STORAGE
LOCATION

PROVISION OF
COMPONENTS

GOODS RECEIPT
FOR FINISHED
MATERIAL

TRANSPORT

SUBCONTRACTING
VENDOR

INVOICE VERIFICATION

INVOICE
VERIFICATION

INVOICE
Production
Costs

COMPONENT
CONSUMPTION

SUBCONTRACTING
VENDOR PRODUCTION

SUBCONTRACTING
VENDOR

Figure 22: Subcontracting Overview

Sales Order

Allocation
Run

Procurement

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

Stock of provided materials stored at the subcontractor site is

treated as special stock of the respective vendor. This is because
it is neither available nor does it exist in the total stock of the
production site, although it is your companys property.
Vendor Collaboration
External vendors can be integrated into the purchasing process
by Web Access, even if they do not have an ERP system. Confirmation processes are defined and assigned to the purchase
orders. Vendors can access their purchase orders through the
Internet and can enter the confirmation steps. When the confirmation steps are saved, the information is transferred back
to the purchase order in the backend system of the ordering
party. This ensures direct and prompt feedback from your vendors, and allows you to precisely plan further processing. You
can use vendor collaboration to monitor subcontracting, raw
material procurement, and full-package sourcing.

Figure 24: Vendor Collaboration

Third-Party Order Processing

Another important business process in the apparel and footwear industry is third-party order processing, also known as
direct shipment. Here, your company does not carry out the
delivery of products to the customer. Rather, the goods are
commissioned to an external vendor, who sends them directly
to the customer and invoices you accordingly. You can choose
how to handle certain items. For example, if a large quantity of
a product you would normally deliver yourself is ordered, you
can decide to handle it as a third-party item. Furthermore you
can determine that certain products, such as accessories procured from a private label manufacturer, are always handled
through third-party order.
This process is supported throughout the system at the SKU
level. This means that all relevant information is available at
the SKU level, from sales order creation to the automatic generation of a purchase requisition and the conversion to a purchase order. In addition, the process is fully transparent in the
purchasing and sales departments, and in the planning department (MRP).
Procurement of Consignment Material
Consignment material is a material that is stored at your production site but remains the property of the vendor. A binding
material valuation using the predefined vendor price is not
carried out until the material is withdrawn or transferred to
your own stock. The price can be established at the SKU level
and unused material can be returned. The settlement statement is sent to the vendor, for example, each month, quarter,
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.

40

MASTER DATA
Consignment
Info Record

PROCUREMENT PROCESS

Consignment
Stock Record

Vendor
Purchase
Order
Consignment
Item

Goods
Receipt

Invoice

Warehouse
Companys
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,

companies are dependent on computerized organization and
management of their warehouses. Apparel and footwear companies in particular need to be able to manage highly complex
warehouse structures and a multiplicity of warehousing facilities.

For SAP AFS, 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. This also includes
general data such as volume, gross weight, and capacity consumption.

Put-away strategy/picking strategy: It is possible to determine strategies at the SKU level (style/color/size/categories),
by which the system establishes storage bins for stock to be
put away or picked. With SAP AFS, you can make the best
use of the available warehouse capacity and assign optimum
storage locations to the stock received. Similarly, 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. For
example, you might store common sizes in storage section 1,
and less frequent sizes in storage section 2.
General storage strategy: It is also possible to maintain
general storage strategies (bulk storage indicator, special
movement indicator, and 2-step picking) at the SKU level.
Palletization data: Palletization data is maintained at the
SKU level. Various quantities and pallet types can be maintained, depending on the SKU.

41

42

Fixed space: Should a material be allocated to a fixed space,

it is possible to assign various storage locations, quantities,
control, and replenishment quantities.
Selection screens: You can enter the SKU as a selection
criterion to display just one grid value category per material,
for example, or warehouse internal documents, depending
on the selection.
Inventory count result: You can create count results right
down to SKU level, irrespective of whether you are dealing
with a material which should be stored at that location or
was found there. The count result is created for each location at SKU level.
Replenishment: With a transfer requirement, the production supply area in the warehouse is replenished based on a
released production order. The system creates the transfer
requirement item at SKU level, based on the demands of the
production order.

Decentralized WM: In the ERP system, all partial processes

are processed that are a preparation of the activities in the
warehouse. Inventory management, valuation, ATP, and
credit checks are processed in the ERP system, for example.
In the Warehouse Management system (WM) all functions
are provided that serve the handling of warehouse processes.
BAPIs: Communication between ERP and the WMS system
is processed through a BAPI. All BAPIs, as well as master data
IDocs, are enhanced with SKU Data.
Radio Frequency (RF): Internal warehouse and combined
processes are covered by RF functions, which have been
enhanced with SKU Data. The necessary SAP Console also
displays all SKU information on a character-based RF device.

PRODUCTION AND MANUFACTURING

OVERVIEW

In mySAP.com, you can comprehensively plan your demand

program (product type and quantity) and production. Production encompasses procurement, storage, and transport of
materials and intermediate products, and material requirements planning (MRP) for all bill-of-material (BOM) levels.
Production planning and control in SAP AFS has been designed
for the special needs of the apparel and footwear industry. In
particular, demand management, material requirements planning (MRP), planned orders and production orders include a
product structure (style/color/size) and categories specific to
this industry sector.
The logistical cycle begins either with sales and operations
planning (SOP) and forecasting, or with sales and production
demand management. The sales department receives customer
requirements from the market and demand management fore-

FORECAST/PLANNED
REQUIREMENTS

PURCHASE
PURCHASE
REQUISITION
REQUISITION

PURCHASE
PURCHASE
ORDER
ORDER

MRP

External

casts sales. The resulting independent requirements (in particular, requirements for finished products and trading goods)
trigger material requirements planning. Order quantities and
delivery dates must be determined and the respective procurement activities must be launched to ensure requirement coverage.
Ordering transactions or subcontracting are initiated for outsourced products. Appropriate vendors must be selected or
outline agreements made. Quantities resulting from production or outsourced procurement are put on stock and administered by inventory management.
The following diagram illustrates the logistical cycle between
sales and procurement. The system comprehensively plans,
monitors, and coordinates all functions.

SALES
Sales
ORDER
Order

Internal

CUSTOMER
REQUIREMENTS

PLANNED
PLANNED
ORDER/
ORDER/
Secondary
Secondary
Requirement
Requirement

PRODUCTION
PRODUCTION
ORDER
ORDER

PLANT
PRODUCTION
SITE

Figure 26: Materials Requirements Planning

43

In addition, SAP AFS supports various procurement processes

relevant to the apparel and footwear industry such as private
label and make-to-order production (for example, custommade products).
SALES AND OPERATIONS PLANNING (SOP)

Sales and operations planning (SOP) is a flexible forecasting

and planning tool that determines not only sales and production targets, but targets from other areas throughout the logistical cycle. Forecasting and planning can be based on historical
data, current data, and/or estimated future figures. Capacities
and resources imperative for reaching these targets can also be
determined using SOP.

SOP builds on information structures a statistical file containing operational data. This can either be planned future
data or actual historical data, containing characteristics, key
figures and a time base. Information structures are used for
evaluation, projection, and analysis of data in all logistical
information systems.
SOP is especially useful for long-term and mid-term planning.
In the apparel and footwear industry, long-term and mid-term
planning are generally carried out at the product group and
style levels. 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, sales order, purchase order, and production order).

QUANTITY

SOP provides a method for:

Sales planning
Production planning
Feasibility estimates

Sales plan
Production plan
Capacity estimate

TIME
MAY

Figure 27: Sales and Operations Planning

44

JUNE

JULY

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. mySAP SCM combines distribution and transportation capabilities to support demanddriven replenishment for maximum profitability. Retailers and
carriers can be seamlessly integrated into the supply chain
processes.

Production demand management determines requirement

quantities and delivery dates for finished products. Demand
management uses planned independent requirements and
customer requirements, which are created in order processing,
to create a demand program.

The SAP Advanced Planner and Optimizer (SAP APO) is one

of the key functional areas of mySAP SCM. SAP APO enables
supply chain partners to forecast and plan demand while considering historical buying and selling behavior, market intelligence, and sales objectives. The demand is optimally matched
to supply so as to maximize the return on assets with consideration of operational constraints. 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.

The input from SOP can be copied to the planned independent

requirements as default data. It is possible to break this data
down to the level of style/color/size (pre-sizing).
Pre-sizing
SAP AFS pre-sizing distributes aggregate planned independent
requirements to detailed planned figures at the SKU level using
distribution profiles. Distribution to a more detailed period
split is also possible, from annually planned figures to weekly
planned figures, for example. Furthermore, seasonal influences
can be taken into account in the distribution profiles, for
example, so that an annual planning value can be distributed
to periods throughout the year. Planning values would then be
increased for certain seasons (for example,
back-to-school, Christmas, and so on).

With SAP AFS 3.0B you can execute demand planning in SAP
APO and then transfer the demand plan as planned independent requirements to demand management. Demand planning can thus be executed in two different ways:
At the material level without additional dimension values
(style/color/size).
At the material dimension level (style/color/size)
When the demand plan is transferred to demand management,
the planned independent requirements are created. In the event
that not all of the dimensions were considered in the first planning phase, the pre-sizing profile is then used to distribute the
planned independent requirements among all the material
characteristics.

45

You can calculate distribution profiles from statistical historical values stored in the logistical information system.
SAP AFS pre-sizing includes:
Manual determination of percentage distribution values per
size or period.
Calculation of percentage distribution values based on
historical data from the logistical information system.
Calculation of distribution profiles for new products with
no historical data based on the historical data of reference
products.
Aggregation and disaggregation of historical data that can be
used to calculate distribution curves (for example, historical
data per product group, per season, per a combination of a
number of seasons, or for individually selected reference
products).
Simulation option based on user-defined criteria.

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. Pattern making, grading, and pattern engineering
form the production structure of a new product waiting to be
produced. The result is a number of sketches, a list of all necessary components and their size-specific consumption, and
technical and product costing conversion the BOM and
routing.
The BOM has been enhanced so that all size-specific dependencies on material consumption, selection of certain components, and cost accounting are included in one BOM. You can
also maintain dependencies for other product characteristics in
the BOM (such as color, shade, quality, 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)

GRID B

GRID C

BUTTON
(Standard Material)

MRP
BLK

WHT

RED .

44 46 48 50
BLU
RED
GRN

Figure 28: SAP AFS Bill of Materials

46

extras, and so on). It is possible to set up different locations for

procurement of components, which are selected depending on
the time interval for which the locations are defined.
Often, you must make changes to a large portion of the product range due to alterations in style or seasonal characteristics.
You can easily achieve this in SAP AFS by using the mass
change and referencing functions.
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. You can thus specify
in the routing how various product characteristics affect lead
times and each production operation. 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.
Material Requirements Planning
The main task of material requirements planning is to ensure
material availability (for example, to procure the necessary
material requirements on schedule for sales and manufacturing). This task includes monitoring stock and, in particular,
making suggestions for procurement, purchasing, and production.
MRP is triggered by independent requirements from sales and
demand management forecasting (such as requirements for
finished products and trading goods). MRP determines order
quantities and delivery dates and the respective procurement
documents created to ensure coverage (planned orders for
internally produced goods, and purchase requisitions for outsourced production). Both documents are planned internally
and can be changed, rescheduled, or deleted at any time.

In addition, secondary requirements, the quantity of material

components (for example, leather, fabric, or lining) or assemblies (for example, shoe sole or bootleg) are determined for
internally produced goods using BOM explosion. Secondary
requirements are necessary for the production of the finished
product or assembly. Planned orders and purchase requisitions
are created at each BOM level if there is a material shortage.
Once MRP has completed quantity planning and scheduling,
the planned documents are converted into fixed procurement
documents (planned order to production order, purchase
requisition to purchase order).
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. Lot-sizing procedures enable planning results that show only certain size
groups in one order, or that a particular relationship between
size quantities are calculated for each order. It is also possible
to distribute order quantities across the different sizes automatically using predefined distribution profiles. The most
common lot-sizing procedures are available, but it is also possible to integrate individually customized ones.
By using planning parameters for the SKU level, you can
define, for example, minimum order quantities, rounding
values, and safety stock for each size or size group.
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. This ensures that planning only occurs
at the necessary level of detail.

47

Products labeled as AFS-specific are processed by SAP AFS

MRP (such as products with more logistically relevant characteristics that might include size, color, shade, and quality).

SKU LEVEL

MATERIAL LEVEL

MRP PLANS
REQUIREMENTS AT
SKU LEVEL

MRP GROUPS
REQUIREMENTS
TOGETHER AT
MATERIAL LEVEL

SIZE-LEVEL HORIZON

BEYOND SIZE-LEVEL HORIZON

Current
Date

30 Days

Automatic Planning Run

The automatic planning run in MRP determines material
shortage and generates the respective procurement document.
The system informs you of critical areas and exceptions, allowing you to modify planning results accordingly.
Evaluation of Planning Results
Planning results can be reviewed and evaluated by a series of
different methods (for example, stock requirements list, MRP
list, planning results per MRP controller, product group, order
report, and so on). Evaluation capabilities allow your MRP
controller to process planning results from an aggregated level
to the most detailed SKU level, with the help of diverse selection criteria. SAP AFS points to critical areas without delay. All
relevant features are accessible through one single, user-friendly, and easy-to-handle window, the AFS MRP Cockpit.
CAPACITY PLANNING

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.

SERVER 01
MRP
DISPATCHER

Planning
File Entry

Material 01

SERVER 02

DB SERVER

Material 02

DB Changes

SERVER 03
Material 03

Figure 30: Paralell Processing

48

Economic resource planning is present in various areas of a

company. Capacity planning with SAP AFS supports all phases
of planning: long-term estimated planning, mid-term planning, and short-term detailed planning. Capacity planning
comprises three components:
Capacity analysis: Available capacities and capacity requirements are determined and illustrated in lists and graphics.
Capacity leveling: Optimum reservation of capacity and
selection of appropriate resources. Planning boards in graphic and table form are available to illustrate the capacity situation and process capacity leveling.
Capacity planning: Capacity loading for AFS-specific products is based on routings that are selected according to the
above-mentioned criteria. 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.

PRODUCTION ORDER

Production orders determine which product or assembly is produced, as well as the work center, activity, delivery date, and
production costs. The production order also includes details of
the resources (personnel, materials, production resources and
tools, and so on) required to calculate the order cost.
You can use the production order to monitor the order status
for goods produced in-house. The order includes scheduling,
capacity planning, and status management. The order process
report has been enhanced by adding the operations. This
process enables you to monitor the individual production steps
within one single report. Cost accounting is carried out in the
same way for each production order.
When a production order is created, the following actions are
carried out:
Routing selection: Routing operations and sequence are
transferred to the production order.
BOM explosion: BOM items are transferred to the production order.
Reservations: Reservations are generated for BOM items
in stock.
Planned costs are established for the production order.
Capacity requirements are generated for the work centers.
Purchase requisitions are generated for non-stock components and externally processed operations.
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. For
example, production in bundles is typical in the apparel industry. In the footwear industry, shoes can be grouped according
to size, for instance, and shipped in large cartons. All specific
information contained in BOMs and routings reappears in
the production order. It is also possible to assign component
batches to a production order to control different shadings or
dye lots.

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, such as bundles
Central transactions such as confirmations, monitoring production status, and goods receipt can also be processed for
individual bundles/cartons, individual sizes, or a combination
of the two.
In addition, you can integrate markers into the production
order and planned 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. If necessary, planned quantities in the order are adapted
accordingly.

SAP AFS PLANNED

ORDER
BLU

EXTERNAL
MARKER LIBRARY

BLK

Waist
Inseam 28 30 32 34
28
50 50
30
32

30

50 50

TOTAL: 230 PIECES

Marker 1: 32 x 30
32 x 32
34 x 32

50
50
50

Marker 2: 30 x 30
28 x 32

50
50

TOTAL: 250 PRIECES

Figure 31: Markers Quantity Adjustment

49

An available-to-promise check (ATP check) for production

orders displays all competing requirements for a particular
component. It enables your MRP controller to decide in stock
shortage situations, for instance, whether a certain component
needed for several production orders can be consumed by
another time-critical production order.
Combined Orders
In the apparel and footwear industry, production orders are
often combined, especially in production phases such as cutting and pattern engineering. This might be the case, for example, when the same fabric is used for different products. By
combining several production orders, cutting and use of fabric
are rationalized. However, settlement, costs, and logistics of
each production order remain separate for each finished
product.

In SAP AFS, several production orders can be logically grouped

in a combined order. Transactions such as roll selection, confirmations, goods receipt, and goods issue can either be processed
together for the combined orders, or separately for each individual production order.
Selection of suitable rolls of fabric and leather for a production
order based on criteria, such as shade and leather quality, plays
an important role in production for the apparel and footwear
industry. SAP AFS uses roll-selection features where the
optimum choice of material input for a production order (for
example, fabric or leather) is selected. 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.

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

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.
These special structures, known as grid values, dimensions,
and categories, facilitate the processing of logistical business
processes at the levels below the material master. At the same
time, these structures influence product controlling in SAP
R/3 and mySAP.com. Additional industry-specific capabilities
are available in the areas of product and material valuation,
product cost planning, cost object controlling, and profitability analysis to accommodate the characteristic levels listed
above. Nearly all other mySAP.com accounting components
are supported at the SKU level (financial accounting, overhead
costs controlling, and so on).

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. Procurement costs, raw material expenditure,
and production costs can vary tremendously, making flexible
material valuation of stock keeping units essential.
Valuation of SKUs
SAP AFS takes valuation differences at product characteristic
level into account by managing SKUs separately. You can
assign a separate valuation price to each stock keeping unit,
which can either be a standard price or a moving average
price.

VALUATION

Jeans

Material:
Plant:

DIMENSIONS

0001

PRODUCT
COST
PLANNING

COST OBJECT
CONTROLLING

GRID VALUE:
30/30

GRID VALUE:
32/32

GRID VALUE:
33/33

CATEGORY:
BLUE/
STONEWASHED

CATEGORY:
BLUE/
STONEWASHED

CATEGORY:
BLUE/
STONEWASHED

CATEGORIES

Figure 34: Split Valuation of SAP AFS materials

PROFITABILITY
ANALYSIS
1

Quality

Figure 33: Product Controlling

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Grouping with Valuation Types

As costs for sizes, colors, or categories of a material do not
always significantly differ, and to avoid numerous single valuations impairing performance unnecessarily, SAP AFS can combine separate grid and category material characteristics in what
is known as a valuation type. By using valuation types the
common valuation of any number of stock keeping units for a
particular material is simplified.
PRODUCT COSTING FOR AFS PRODUCTS

Product Costing
In the apparel and footwear industry, material usage and production processes generally depend on information such as
sizes, colors, and so on to be produced. Consequently, manufacturing costs of the produced SKU can differ enormously.
With SAP AFS, it is possible to calculate the manufacturing
costs of a product at the level of the produced SKU.
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). You can create
separate costings for valuation types of a product and use these

AFS VALUATION VIEW

0001

Plant:
Material:
Grid
30/30
30/31
32/31
32/32
34/32

Jeans
Pref. SKU

Val. Typ
Small
Small
Large
Large
Large

Figure 35: Costing of Valuation Types

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COSTING
SMALL
$10

COSTING
LARGE
$12

for stock valuation and product cost controlling. The system

carries out valuation type costings based on one determinable
preference SKU for each valuation type.
Product Characteristic-Dependent Quantity Structure
The basis of product costing is the respective quantity structure (bill of material and routing). A products quantity structure can be defined according to grid and category. Product
costing in SAP AFS examines this grid or category-dependent
determination. In the costing of a particular SKU, the system
explodes the bill of material according to the grid values/categories to be calculated, and determines the relevant routing
together with its operations.
Cost Elements
The most important costing elements of a product are material and production costs. The system determines a products
material costs based on the prices and quantities of the components used. At the same time, the system looks at grid- or
category-dependent component prices and quantities over the
entire cost roll up (and all production steps). Production costs
are planned based on the respective routing and the operations
defined therein. In addition, material and production costs can
be debited with an overhead rate.
Special Production Scenarios
When determining the quantity structure, product costing
considers production scenarios typical to the apparel and
footwear industry, such as cross-plant production or subcontracting of materials. In the case of subcontracting, the system
automatically determines the relevant costing information
from the purchasing info record of the subcontractor.
In the case of externally procured materials, you can create
raw material costings with a respective cost component split.
You can refer to the conditions of the purchasing info record,
for example. In this way, delivery costs such as freight or customs can be included in the material valuation.

Cost object controlling within mySAP.com facilitates the controlling of planned costs and actual costs with reference to cost
objects. Depending on the production scenario, the system
uses various objects for the collective cost.

Variance Determination
Following final delivery of an order, you can separately determine and settle the resulting costing variances (planned, target, actual) according to variance categories (scrap variance,
input variance, lot size variance, and so on).

Make-to-Stock Production
The production order is at the center of product controlling
during make-to-stock production. Cost object controlling for
production orders allows the target costs to be analyzed and
compared with the actual costs of a production order. Cost
object controlling in the system takes the entire controlling

Customer Make-to-Order Production

In general, the sales order is the relevant controlling document
in make-to-order production processes. Therefore, all sales
order costs are collected across the entire production spectrum,
and updated in the controlling object Sales Order for evaluation.

COST OBJECT CONTROLLING

TARGET COSTING

SETTLEMENT

GOODS ISSUE
Production
Production
Order
Order

GOODS
RECEIPT

P+L

CONFIRMED
OPERATIONS

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.
The target costs are the planned costs of the finished product
based on the lot size in the production order. However, the product costing planned costs are different they are based on a
(planned) costing lot size.
The actual costs arise from the actual consumption of
resources by the production order for example, component
withdrawal and material movements.

At the same time, logistical make-to-order production can

also be carried out without processing sales order controlling.
In this case, the cost object controlling results in a production
order as in make-to-stock production.
PROFITABILITY ANALYSIS FOR AFS PRODUCTS

Profitability analysis in mySAP.com enables you to evaluate

market segments or strategic business units with respect to
your companys profit or contribution margin. The market segments are classified according to products, customers, orders, or
any combination of these, whereas the business units include
company codes, business areas, or profit centers.

53

The main goal is to provide the areas of sales, marketing, product management, and corporate planning with information to
support internal accounting and decision making.

SAP AFS

North
Prod1
Snowboard
Cust1
Wholesale

Season
Valuation Type
Category
Grid Value

Wi2001
L
FD
164

Valuation Type

Se
as
on

Sales Region
Product
Product Group
Customer
Customer Group

Grid Value

CHARACTERISTICS

Apparel and Footwear Specific Characteristics

Master data or basic structures can be freely defined for profitability analysis. You determine the analysis objects (characteristics) and the analysis value fields for your profitability analysis. The system creates a multidimensional analysis object from
the combination of characteristics, from which an analysis
can be planned and identified by the comparison of costs and
revenues.

VALUE FIELDS

In addition to the characteristics region, customer, and so on, you

can also integrate a series of other industry-specific information. In this way, you can establish the profit that is issued with
certain seasonal products. You can also ascertain how a particular grid value or grid-value group contributed
to or affected this profit.

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. You can perform the costing valuation
using the respective product/SKU plan costing or with the
help of defined conditions.
SAP AFS takes valuations and conditions at SKU level into consideration with regard to both the revenue and costs.

54

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. Our experts are on hand to
assist with implementation problems and provide ongoing support.
Together with SAP partners, 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. We will help you realize a significant
increase on investment returns for your implementation project by reviewing critical decision requirements, determining
high-risk elements in the program, and defining an implementation approach to maximize return and minimize risk.
SAP AFS Consulting encompasses training and support, presales events, detailed workshops, spot consulting and remote
support, feasibility studies, and QA reviews.

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. It consists of
several reviews before and throughout the project as well as
services after go live. Over the last few years, we have received
very positive feedback from our SAP AFS customers and prospects about the QA program, which confirms that it is an integral part of a successful implementation. 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.
Project start-up check after kickoff to review the project
charter and business scope.
Business blueprint review upon completion of
the blueprint phase to examine the customers intended
implementation of the business processes in the system.
Solution review prior to going live to verify the detail designs
and possibly the system configuration.

55

FUTURE FOCUS
SAP has been helping its customers create value since 1972
profitability, return on investment, productivity, time-to-market, and customer satisfaction. And having fully embraced the
Internet with mySAP.com, SAP is in a unique position to forge
ahead of its competitors and take today's economy by the horns.
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, specifically those suited to the needs and demands of the
wide world of e-business. This is due to the fact that the core
values personified by SAP productivity, customer satisfaction,
and bottom-line results are once again the top priorities for
businesses worldwide.
The SAP AFS strategic direction is mySAP.com. The mySAP.com
e-business platform is a family of solutions and services that
empowers customers, partners, and employees to collaborate
successfully anywhere, anytime. The latest release of SAP AFS
already offers the first mySAP.com scenarios (including SAP
Business Information Warehouse, collaboration with vendors
and contract manufacturers, Demand Planning with SAP APO,
mySAP CRM Interaction Center, and so on).

56

Following this strategic direction, SAP AFS ensures the smooth

transition to the mySAP.com e-business platform for all its customers. This approach guarantees investment security and will
help our customers to choose the right mySAP.com solution
and the right time to upgrade.
SAP continues to provide new or enhanced industry-specific
features and functions to meet the specific business needs of its
customers. SAP AFS and mySAPTM Retail, the e-business solution from SAP tailored to meet the requirements of the retail
industry, cover the entire fashion supply chain from suppliers and manufacturers to wholesalers and retailers to the
consumer. 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.
The apparel and footwear-specific combination of the
mySAP.com solutions will put SAP customers on the competitive edge, enabling collaboration across the entire fashion
supply chain from sheep to shop.

GLOSSARY
A

ARun
ATP

Allocation run
Available-to-promise

BAPI
BOM

Bundle

Business Application Programming Interface

Bill of material
A complete, structured list of the components
that make up a product or assembly. The list
contains the object number of each component,
the quantity, and unit of measure. The components are known as BOM items. You can create
the following BOM categories in the SAP System.
Material BOM, Document structure, Equipment
BOM, Functional Location BOM, 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, multiplied by the number
of fabric plies in a stack. The information on
bundles is maintained in the planned orders and
production orders.

CAD
Category

CO
Company
Code

Delivery
Program

A delivery program is defined by one of the

following combinations: Season; Season Collection; Season Collection Theme. You specify
dates so that the delivery program is delivered
during a certain period.
Dimensions Product characteristics usually referred to in the
apparel and footwear industry as style/color/size.
A freely definable element of an AFS grid. An
AFS grid is composed of up to three dimensions.
Dimensions are, for example, length, color, size,
or width. Each dimension is composed of dimension values that are all valid entries for a particular dimension.
E

EAN
EDI
ETA

International Article Number

Electronic data exchange
Estimated time of arrival

FOB

Free on board

A data processing system for computer-aided

design and drawing.
Characteristic of an AFS product that allows a
division into different qualities or countries of
origin, for example.
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. This includes recording of all
relevant transactions and generating all supporting documents required for financial statements.

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,
size, length). The use of master, purchase, and
sales grids facilitate the valuation, procurement,
and sale of AFS materials at SKU level.

57

Heart Grid
Value
(heart size)

Description for the grid values of a material

that you sell or purchase very frequently.
When maintaining the grid control data for a
material, you can flag these grid values as heart
grid values.

InfoCube

InfoSource

A central object on which reports and analyses in

SAP BW are based. An InfoCube describes a selfcontained data set (from the reporting view), for
example, for a business-oriented area.
An InfoSource describes a quantity of all available
data for a business event, or type of business
event (for example, Cost Center Accounting). 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.
InfoSources can either contain transaction data
or master data (attributes, texts, and hierarchies).

LIS

58

Marker

The optimal placement of pattern pieces to

achieve the best fabric utilization for the cutting
process. Unique markers are defined by the name
and repetition of the size or dimension they contain. They can be plotted on paper or stored in a
file that is used to drive a numerically controlled
cutter. 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.com SAPs e-business platform.
A family of solutions and services that empower
employees, customers, and business partners to
collaborate successfully anywhere, anytime.
O

Logistics Information System

ODS

Operational Data Store

Object used to store consolidated and cleaned-up
transaction data at document level (basic level).
An ODS object describes a consolidated data set
comprising one or more InfoSources.

OLAP

Online analytical processing

Analytical, multidimensional reporting based on
multidimensional data sources. OLAP reporting
allows several dimensions to be analyzed simultaneously (such as time, place, product, and so on).
The aim of OLAP reporting is to analyze key figures, such as for an analysis of the sales figures
for a certain product in a particular time period.

Plant
PP

A place where materials are produced, or goods

and services are provided.
Production planning

UPC
V

VAS
R

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.

Universal Product Code

Value-added-services.
Services that improve the appearance, attractiveness and processing of a product, for example,
packing, ticketing and special service.

WM

Warehouse Management

Seasons/
In the apparel and footwear industry, several
Collections/ materials that share certain traits such as color
Themes
or texture can be combined to form a theme.
Themes can be part of a collection, which in
turn can belong to a season. The combination
of the theme, collection, and season forms a
delivery program. You can define dates for the
delivery period for this delivery program.
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).
SKU
Period in which the AFS MRP carries out planLevel
ning at SKU level. Requirements outside of the
Horizon
SKU horizon are planned only at material level.
Planning at material level and at SKU level in the
SKU horizon is carried out separately. That
means that requirements at material level cannot
be satisfied by procurement at SKU level.
SOP
Sales and Operations Planning

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