SAP Functions in Detail

SAP APPAREL ®

AND FOOTWEAR
(SAP AFS) ®
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®
2
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CONTENTS
SAP ® Apparel and Footwear (SAP ® AFS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Characteristics of the Apparel and Footwear Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

– Globalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
– Product Life Cycles and Seasonality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
– Pressure on Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
– Increase in Customer Service Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
– Multiple Distribution Channels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
– Information Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Key Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Style/Color/Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
– Style/Color/Size Master Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
– Categories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
– Seasonal Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Generic Key Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
– Integration of Logistics and Financial Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
– Fine-Tuning Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
– Multi-Company, Multilingual, Multicurrency Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
– Foreign Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
– Triangle Processing – Intercompany Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Order Management and Fulfillment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Sales Order Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
– Standard and AFS Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
– EDI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
– Internet and Intranet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
– mySAP TM Customer Relationship Management for the Apparel and Footwear Industry . . . . . 19
– Fast Order Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
– Credit Card Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
– Reference Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
– Mass Order Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
– Multi-Store Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
– “Mark For” Feature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
– Rush Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
– Assortments and Prepacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

3
Sales Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
– Availability Checking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
– Credit Limit Check . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
– Price Flexibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
– Special Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
– Value-Added Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
– Bulk Order Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Order Scheduling and Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
– Order Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
– Allocation of Customer Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
– Allocation Preview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
– Allocation against Quantity Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Shipping and Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
– Delivery Creation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
– Shipping Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
– Shipping and Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . 28
mySAP Business Intelligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Data Warehousing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Reporting and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Business Content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Sourcing, Inventories, and Supplier Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
– Procurement Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Purchase Requisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Source Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
– Political Restrictions and Quotas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
– Vendor Capacity Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

4
Request for Quotation (RFQ) and Quotation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Purchase Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
MultiLevel Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Inventory Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
– Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
– Stock Transfer and Transfer Posting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Logistical Invoice Verification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Special Business Processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
– Subcontracting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
– Vendor Collaboration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
– Third-Party Order Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
– Procurement of Consignment Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Warehouse Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Production and Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

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

5
Product Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Split Valuation with AFS Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
– Split Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
– Valuation of SKUs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
– Grouping with Valuation Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Product Costing for AFS Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
– Product Costing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
– Costing of Valuation Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
– Product Characteristic-Dependent Quantity Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
– Cost Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
– Special Production Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Cost Object Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
– Make-to-Stock Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
– Variance Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
– Customer Make-to-Order Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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

6
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 foot-
wear 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 logis-
tical supply chain.
• Key capabilities of SAP AFS.

7
CHARACTERISTICS OF THE APPAREL AND
FOOTWEAR INDUSTRY
The apparel and footwear business is highly demanding, forc-
ing 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 cre-
ate 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 fore-
cast uncertainty, stock shortages, and costly markdowns.
Areas such as product development, raw material and finished
goods requirements planning, production planning, coordina-
tion 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 tex-
tile supply chain (logistics service providers, textile manufac-
turers, contractors, agents, and so on) are increasingly more
critical to the success of apparel and footwear companies. Fun-
damental changes and restructuring are taking place in the
apparel and footwear market.

Apparel and footwear companies today are increasingly assum-

ing the role of coordinator for both internal and intercompany
processes as their core competencies shift away from produc-
tion 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 cloth-
ing and shoes can only be automated to a certain degree, caus-
ing 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.

9
Globalization
Domestic as well as foreign company-owned and contract
manufacturing have brought an increase in international trad-
ing; 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 informa-
tion expediently and reliably across any distance.
The increasing threat of cheap imports and tougher com-
petition 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.
As manufacturing does not always take place in the same coun-
try as the final customer, additional requirements regarding cus-
toms and quotas are involved, and country of origin restrictions
may arise. Sourcing entails both internal and external considera-
tions. 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. Com-
panies 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.

PURCHASE
ORDER
Vendor
Product
Vendor Performance Price
Quantity

?
Delivery Date
Tooling Amortization WHAT etc.

Production Complexity WHERE

Production Capacity

Factory Status
Shortest ETD

Lowest FOB Costs

WHICH PRICE

?
Enterprise Demand PURCHASING

Lowest Landed Costs

WHICH QUALITY
?
VENDOR VENDOR VENDOR VENDOR OUTSOURCE INTERNAL

Figure 1: Decision Support for Global Sourcing

10
 TYPE OF SHOE
STYLE
Style 4711
COLOR (WAY)
WHT/BLU/BLK
SIZE
W-8 R-8 N-8 W-9 R-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, warehous-
ing 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 tech-
nologies can facilitate the handling of large numbers of styles
and stock keeping units (SKUs) and the storage of potentially
large volumes of data.
Running Basketball
Style 4712
WHT/RED/BLK WHT/RED/GRN
N-9 ... ... ...
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 multi-
ple 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 stay-
ing ahead of competitors, especially when it comes to design
capability. This includes investment in sophisticated computer-
aided-design (CAD) systems as well as technological innova-
tions 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 mar-
ketplace four or more times a year. Standard designs and fash-
ion products can be merchandised as a collection or assort-
RELATES PRODUCT, SIZES, AND PRICES TO SEASONS
Region: North America
Season: Spring
Valid: March to May
Figure 3: Seasonality – A Business Parameter
12
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 spe-
cific customer. This can involve tailoring an existing product,
creating totally new designs, or supplying private labels. Acces-
sories 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.
Region: Australia
Season: Spring
Valid: October to January
 Flexible
Manufacturing
Transfer Transfer
Vendor Manufacturing
Sophisticated
Systems
Planning and
Integration
Forecasting
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 manu-
facturers due to the size of their orders. The smaller com-
panies, however, have to compensate by reducing labor costs.
The highest labor costs are concentrated in assembly phases,
especially in the sewing room. Traditionally, apparel manu-
facturers focused on minimizing direct labor costs by imple-
menting 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 there-
fore had to explore other ways of maintaining margins. This
led them to reconsider their business activities, pursue more
cost-effective manufacturing, and develop innovative prod-
uct ideas.
Shared Sophisticated
Information Order
Allocation
Transfer Transfer
Distribution Retail Outlet Consumer
Point of Sales,
More and More
Vendor-Managed
Demands
Inventory
Increase in Customer Service Requirements
Customer service has become a very important issue due to
complex and demanding customer requirements and dimin-
ishing 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 integra-
tion, 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 replenish-
ment 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-in-
shop, but the most common channels of distribution include
wholesale, retail stores, mass merchandisers, department
stores, specialty retailers, distributors, and licensees. Con-
sumers 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 process-
ing of customer orders in real time, even over long distances.
14
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 collabora-
tive 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 deliv-
eries, and a lack of transparency regarding contract manufac-
turers. 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 com-
panies 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.
 CONSUMER DECISIONS

Internet buying
CONSUMER Practices,
DEMAND Shop-in-shop Policies, and
Procedures
Catalogue

Direct
Pricing
Conditions
Franchisees
DEMAND
PLANNING
Distribution
System
CUSTOMER

Telesales
CUSTOMER Method of
DEMAND Wholesale Transportation

EDI

Figure 5: Multiple Channels of Distribution

15
KEY CAPABILITIES
SAP Apparel and Footwear is the best-of-breed e-business solu- • Product controlling
tion for the apparel and footwear industry. It not only address- – Overview
es the logistical needs of apparel and footwear companies – Split valuation with AFS materials
worldwide (such as sales and distribution, materials manage- – Product costing of AFS products
ment, and production planning and execution). It also seam- – Cost object controlling
lessly integrates financials, controlling, and all supply chain – Profitability analysis for AFS products
elements to guarantee your management and staff up-to-date
information at the push of a button – anywhere, anytime. STYLE/COLOR/SIZE
Style/Color/Size Master Data
This document presents in detail the following key capabilities SAP AFS has enhanced standard SAP® R/3® data structures to
specific to SAP AFS: facilitate the handling of potentially very large volumes of data.
• Style/color/size These enhancements derive largely from the size and seasonal
• Generic key capabilities requirements of the industry and relate to the building of prod-
• Order management and fulfillment uct levels based on style/color/size as used throughout the
– Sales order processing logistical cycle.
– Sales capabilities
– Order scheduling and allocation A grid has been developed to support these specific enhance-
– Shipping and transportation ments and safeguard high levels of performance. This tool
– Billing capabilities ensures that as styles change from season to season, the enor-
– SAP AFS Logistics Information System mous number of stock keeping units (SKUs) can still be main-
• Sourcing, inventories, and supplier Relations tained quickly and easily. Copy and referencing functions also
– Overview support volume changes due to seasonal influences. The prod-
– Purchase rrequisition uct characteristics are represented as AFS dimensions. Dimen-
– Source allocation sions can be flagged as being relevant to certain applications in
– Request for quotation, quotation, and purchase order SAP AFS (for example, for material requirements planning,
– Multi-level contracts seasons, or pricing) and thereby increase the flexibility of grid
– Inventory management processing. Dimensions are individually definable for every
– Invoice verification customer and product.
– Special business processes
– Warehouse management Categories
• Production planning In addition to grid dimensions, you can further specify product
– Production planning and control characteristics by categories. Categories provide an additional
– Sales and operations planning layer of detail, allowing you to segregate levels of quality, cus-
– Production demand management tomer segments, country of origin, and so on. The SAP AFS
– Material requirements planning (MRP) management of categories has been further enhanced so that
– Bill of materials (BOM) and routing category fields can be flagged as being relevant to certain appli-
– Capacity planning – production orders and combined cations in SAP AFS (for example, for planned requirements
orders consumption, bill of material maintenance, or sales status). It
is therefore no longer mandatory to maintain all the possible
combinations of valid categories.

16
 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 avail-
ability. SAP AFS features a season function to define and con-
trol 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 spe-
cial 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 pro-
grams 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 depart-
ment. Customer-relevant data is then transferred to the pur-
chase 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 indi-
vidual operating needs of your company. By fine-tuning order
types for example, systems can be quickly matched to ever-
changing 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 sup-
porting 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 reg-
ulations, which can be formidable obstacles for any organiza-
tion 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 representa-
tion 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 commis-
sion to the country in which the order was placed. Grid pro-
cessing 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 meth-
ods 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
Invoicing
Processing
Inventory
Delivery
Sourcing
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, ensur-
ing 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 excep-
tion 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-busi-
ness, and intranet applications. Such applications are specifi-
cally designed for business transactions and not just for infor-
mation 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 opera-
tions. 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 con-
verged, shifting the focus of corporate efforts to the customer.
Organizations have recognized that they must therefore pro-
vide more value in different forms to their customers, and set
their key corporate goal to achieve “customer value leader-
ship.” To accomplish this goal, organizations must create a cus-
tomer-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 Order 2 Order 3 Order 4 Order 5

Telesales EDI
EDI Internet
Internet Mobile
Mobile Faxed
Faxed
Tele-Sales Sales
Sales Sales
Sales Sales
Sales Sales
Sales
Order 1 Order 2 Order 3 Order 4 Order 5

KEYED AUTOMATIC KEYED

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

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 con-
tacts 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 customer’s needs, you can branch to any SAP AFS trans-
action without keying in redundant information, such as the
customer number. With mySAP CRM for the Apparel and
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 ques-
tions, 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 pro-
vides 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, sophisticat-
ed 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-the-
art technology top off the solution. E-service offers your cus-
tomers (retailer and end-consumers), prospects, and business
partners access to specific information (such as product cata-
logs, content, and pricing) and self-service functions (such as
order entry and tracking requests) through the Internet.

20
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 require-
ments. This can be particularly useful in a telesales environ-
ment.
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.

Credit Card Processing

SELECTION SCREEN CHANGE SCREEN
The system automates credit card processing by prompting for
Customer Requested style
credit card details (such as number, expiration date, and so on) Requested From: 1475
and auto-dialing for authorization. On receipt of authorization, delivery date Execute
selection To: 1476
Material 1475
it captures the details needed for later settlement.

Reference Capabilities SELECTION FOUND LIST

Cross-reference capabilities allow appropriate product num- Sel Order Customer PO No Material Qty Rq Dlv
E 543 1000 47355 1475 10 12/06/00
bers to be found based on different criteria, such as customer
E 556 1131 1475 18 15/06/00
product number, UPC/EAN codes (Universal Product Code/ 610 4600 41899 1475 12 15/06/00
International Article Number), or by referencing a discontin- E 851 3299 AB_12 1475 50 20/06/00

ued 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 UPDATE
CUSTOMER REPORT
ORDERS Execute change
to be included in the packaging of any product. The appropri-
ate pack codes can be filtered out of a selection list before the
system performs the substitution.
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 cen-
ter, articles can be labeled “mark for” onward delivery to a spe-
cific 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 par-
ticular 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 cus-
tomer 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 exam-
ple, an assortment could be a golfing outfit consisting of ten
golf balls, a golf shirt, and golf pants. The assortment can con-
sist of non-sized and sized products. Sizes for the finished
goods, if needed, are specified per item in the assortment dur-
ing the order-taking process. The system may adjust the quan-
tities for each component of the assortments in case of stock
shortage so that they are always based on complete combina-
tions.
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 compo-
nents. 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 distribu-
tion 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 distri-
bution profile, you can use it again for other products.
Other SAP AFS features in Sales Order Processing include the The fill rate risplay enables order-taking staff to inform cus-
following: tomers immediately of fill-rate options based on available
• Threshold dates for order cancellation: Some apparel and delivery dates and quantities. By drawing the customer’s atten-
footwear customers carry over unfulfilled sales order require- tion to the order cancellation date if exceeded, staff can suggest
ments into their next purchase order. In this case, a new that orders be put back to achieve a better fill rate. A warning
cancellation date can be entered on a sales order to establish or error is displayed if an order no longer falls within a given
the last date on which an order can be delivered. If the season.
scheduled delivery date is later than the cancellation date,
the order can be canceled using the mass document change Material Scheduled Scheduled Cumulative Day after Line % Order %
feature, or rejected from allocation. Delivery Quantity Order Required Complete Complete
Date Quantity Delivery
• Item independence: SAP AFS enables you to treat each item Date

in a sales order as a separate order. 1475 Jan. 01 50 50 0 150% 33%

• Cross-divisional sales: Even different product families (for 1475 Jan. 15 25 75 14 175% 50%

example, divisions such as shoes, apparel, and accessories) 1475 Jan. 30 25 25 30 100% 67%
can be handled within the same sales order.
• Customer service reason codes: Should customers decide to Figure 10: Example of Proposed User Fill-Rate Information
change the terms of an order, customer sales representatives
can enter a reason code. Time, user, change, and reason are This enables companies to make decisions during sales order
then recorded and always accessible. processing based on real-time information about potential
delivery bottlenecks. It helps to complete business processes on
SALES CAPABILITIES schedule and, at the same time, promotes greater customer sat-
Availability Checking isfaction.
The SAP AFS available-to-promise (ATP) check is an optional
feature to determine whether or not the quantities and deliv- With back order orocessing, SAP AFS also offers a report to list all
ery dates requested by a customer can be met. When an order sales orders that have only been partially delivered or not deliv-
is entered, the check verifies whether sufficient stock is avail- ered at all. Using the rescheduling tool, you may execute the ATP
able to fulfill the order. If the order cannot be shipped right again upon goods receipt and have the system adjust the deliv-
away, the availability check determines in real time when suffi- ery dates.
cient 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.

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 check-
ing, 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 children’s 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.
24
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, tick-
eting, 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 customer’s “promise-to-buy.”
The source of the promise-to-buy may be an internal order-
generating 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 customer’s 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 deliv-
eries 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.
 ARun Functions
SAP AFS Back-
Check orders
Optional Process
WMS Warehouse Management System
(external system)
GI Goods Issue

Selection Grouping Sorting Allocation Release

Order Allocation
Scheduling Preview

Allocation Delivery
Order ATP Save Delivery
Run Changes/ Invoice
Entry Check Order Creation Post GI

Allocate Management
Rush WMS
Tool
Order

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 allocat-
ed. 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 customer’s credit limit upon alloca-
tion 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 concen-
trate 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 Manage-
ment 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 alloca-
tion settings (such as customer allocation priority), thus maxi-
mizing customer satisfaction.
Allocation Preview
The allocation run can also run in preview mode with future
planned receipts instead of stock. Allocation preview deter-
mines 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 priori-
ties 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 deliv-
ery 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 quan-
tity 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

CUSTOMER CUSTOMER ORDER RELEASE

SALES ORDER # PARAMETERS PRIORITY
PRIORITIZATION

Product Customer Type Customer Order 5

Partial Shipment Customer Order 3

Price
Fill Percentage Customer Order 2 CUSTOMER
DELIVERIES
Quality
Core Sizes Customer Order 1

Style/Color/Size Order/Delivery Dates Customer Order 4

Improved Customer
Responsiveness

Figure 12: Allocation Run Process Flow

26
 “WILL A DELIVERY ON MONDAY
BE SOON ENOUGH FOR YOU?”
PRODUCTION,
DETAILED
SCHEDULING,
PLANT LEVEL
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 sys-
tem 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 opti-
mally 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 back-
ground.
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.
FORECAST,
DISTRIBUTION
PLANNING,
PER MARKET
Shipping Capabilities
SAP AFS enhances shipping capabilities by integrating grid
value settings, as well as introducing and transmitting value-
added 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 avail-
able. 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
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.
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 communica-
tions
• 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 account-
ing for immediate analysis.
SAP AFS LOGISTICS INFORMATION SYSTEM
Logistics Information System
The Logistics Information System is a flexible tool for collect-
ing, compressing, and evaluating data (information) from
other applications. The central elements form self-defined
information structures, which in turn can be filled with cus-
tomer-specific data using various tools. The information sys-
tems have been enhanced to allow analysis and reporting right
down to size level. As a consequence, other areas of your com-
pany 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 inte-
grated, fully Web-enabled capabilities for enterprise perform-
ance management.
28
mySAP BUSINESS INTELLIGENCE FOR THE APPAREL
AND FOOTWEAR INDUSTRY
mySAP Business Intelligence
Interpreting information is critical to the success of companies
in the apparel and footwear industry. mySAP Business Intelli-
gence (mySAP BI) combines data warehousing with compre-
hensive analyses delivered through an enterprise portal. With
mySAP BI, you can measure the effectiveness of business opera-
tions 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 econ-
omy, and rapidly turn it into real knowledge on which to base
decisions and actions. SAP offers an innovative and sophisti-
cated 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 opti-
mizing operations. Analytical applications give you control
over supply chains, customer relationships, and other enter-
prise 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 cor-
porate 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 man-
aging a data warehouse enable the extraction, integration, and
 ADMINISTRATOR WORKBENCH ENTERPRISE PORTAL

BUSINESS EXPLORER

Scheduling Monitoring Administration Third-Party Web Reporting Multidimensional

Tools and Publishing Analysis

XML ODBC API

SAP BW SERVER
OLAP PROCESSOR
Metadata Repository

METADATA MANAGER DATA MANAGER

Master Data STAGING ENGINE PSA ODS

Interfaces BAPI FILE XML

Feeding Services Extraction Engine DB Connect ETL Tools

Data Source SAP Applications Non-SAP Applications

SAP BW File Data Provider

EXTRACTION, TRANSFORMATION, AND LOADING

Figure 14: Data Warehousing

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

BEST PRACTICE MODELS

CUSTOMER-SPECIFIC
BUSINESS CONTENT

INDUSTRY-SPECIFIC
BUSINESS CONTENT
(APPAREL AND FOOTWEAR-SPECIFIC CONTENT)

GENERAL BUSINESS CONTENT

Financial Accounting Controlling Logistics Human Resources

• Accounts receivable • Profitability accounting • Sales and distribution • Personnel management
• Accounts payable • Cost accounting • Purchasing • Time management
• Special ledger • Overhead cost controlling • Inventory management • Payroll
• General ledger • Profit-center accounting • Warehouse management
• Manufacturing

Figure 15: Comprehensive Business Content

30
 SAP BUSINESS INFORMATION WAREHOUSE

MATERIAL SIZE COLOR QUALITY COUNTRY SALES VALUE

T-Shirt 4711 XL BLK 1st DE 10.00 USD

T-Shirt 4711 L 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 WHAT IS THE SALES VALUE OF ALL

OF ALL MATERIALS MATERIALS WE MANUFACTURED
IN COLOR BLACK? EXTRACTION IN GERMANY?

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 dis-
tribution, production planning, and more into real informa-
tion 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

INFO-
OBJECTS FOR
ELEMENTARY
COLOR SIZE QUALITY COUNTRY FIELD

TRANSFER STRUCTURE BLK 3132 1st EU

DATA
BAPI SOURCE
REPLICATION

DATA ELEMENTARY
TRANSFER STRUCTURE BLK 3132 1st EU
SOURCE FIELDS

CHARACTER-
LIS MAPPING BLK 31 32 1st EU
ISTICS

COMMUNICATION STRUCTURE BLK3132 1stEU SKUs

Color Waist Length Quality Country

SAP AFS
GRID VALUE 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 applica-
tions:
• Data extraction: AFS extractors, AFS DataSources,
AFS transfer rules, and AFS InfoSources
• Data storage and enrichment/movement: AFS update rules
and AFS InfoCubes
• Data retrieval and presentation: AFS queries, AFS work-
books, and AFS Roles
The predefined data models can be extended very easily with-
out modification. The apparel and footwear-specific content
enables you to implement an information system out-of-the-
box. 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 Enter-
prise Portal for convenient user access anytime, anywhere.

32
SOURCING, INVENTORIES, AND SUPPLIER RELATIONS
OVERVIEW
Procurement Cycle
SAP AFS covers industry-specific raw material and component
procurement processes, sourcing of finished products, inven-
tory management, subcontracting, and invoice verification.
The SAP AFS procurement cycle is illustrated in the diagram
below.
The great advantage of procurement using SAP AFS is that all
routine jobs, from purchase requisition creation through pur-
chase 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.
PURCHASE REQUISITION
The purchase requisition is a request to the purchasing depart-
ment 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 automati-
cally by material requirements planning (MRP). The process-
ing 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 stan-
dard distributions.
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 pur-
chase requisition can be marked for request for quotation
(RFQ) processing.
SOURCE ALLOCATION
As a result of today’s trend towards globalization, the impor-
tance 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,

8 1
Handling of Determination of
Payments Requirements
7 2
Determine Source
Invoice of Supply/
Verification Source Allocation

PROCUREMENT
6 3
Goods Vendor
Receipt Selection

5 4
Purchase Order Order
Monitoring 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 pro-
duction 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 company’s 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 com-
pany 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 con-
sumed 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 deter-
mined 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 exter-
nal production across all vendors.

VENDOR 1000

LEVEL 0 ELEMENTARY
Total Capacity 100,000 hours
FIELDS
VENDOR’S Overload Capacity 10,000 hours
TOTAL CAPACITY
Per Period

LEVEL 1 Tooling Capacity Total Capacity

Tooling Set A Tooling Set B
TOTAL CAPACITY
50,000 hours 80,000 hours • Overload Capacity
• Consumed Capacity
• Consumption
Overload Capacity
LEVEL 2 Model Capacity Model Capacity
Model A Model B
50,000 hours 20,000 hours

LEVEL 3 Material Material

70 white 80 black CAPACITY
1 pair = 5 hours 1 pair = 2 hours BY PRODUCT

Figure 19: Source Allocation Vendor Capacity

34
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 pro-
duce 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 vendor’s
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 deliv-
ered 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 con-
sideration 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 ven-
dors, 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 ROUGH DETAILED MANUFACTURING

RAW MATERIAL PLANNING PLANNING

Release
Order
LEVEL 3
Validity Period of
Material A-Size: 38 L LEVEL 3
Quantity: 1,500 pieces Contract
Validity Period: July 1st –
August 1st

LEVEL 2
CREATION DATE
Validity Period of
Material A
Quantity: 7,000 pieces LEVEL 2
Validity Period: July 1st – Contract
September 1st

LEVEL 1
Validity Period of
Target Quantity: 100,000 pieces
Material Group: T-Shirts LEVEL 1
Material A Contract
Material B
Validity Period: July 1st – December 1st

December January April July October

Figure 20: Multilevel Contracts Logistic Background

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

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 mate-
rial 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
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 evalua-
tions include information at SKU level.

36
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
It is possible to include freely available stock, stock in quality
inspection, and blocked stock. Inventory processing for ware-
house 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. Infor-
mation 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.
RECEIVING PLANT A
B B
B B C B
UNRESTRICTED
A USE STOCK
Goods Receipt
Figure 21: Stock Transfer
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 move-
ments between different production sites or company loca-
tions.
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 inven-
tory management or using delivery note processing. The with-
drawn quantity is recorded as stock in transit of the receiving
production site.
Stock
Transport ISSUING PLANT B
Order
B C
UNRESTRICTED
STOCK IN A USE STOCK
TRANSIT
Goods Issue
37
The receiving production site posts a goods receipt with refer-
ence 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
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 cancel-
lation 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
• 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 infor-
mation is now available, for example, at the time of invoice
creation.
SPECIAL BUSINESS PROCESSES
Special business processes characterize the apparel and footwear
industry. Such processes include outsourcing of production,
in-house production in domestic or foreign plants, subcon-
tracting, 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 embel-
lishment
• Available-to-promise check for components to be provided
• Material withdrawal from company’s own stock or delivery
by third-party vendor
• Monitoring of subcontracting stock at SKU level
• Creation of delivery notes for components to be provided
• Post product as consumption using goods receipt posting
and handling of consumption deviations
• Post finished product as goods receipt
• Outsourcing certain operations of an in-house production
process. A subcontracting order is then generated including
the provided components
 PURCHASING INVENTORY MANAGEMENT INVOICE VERIFICATION

PURCHASING STORAGE STORAGE

LOCATION LOCATION INVOICE
VERIFI-
CATION

GOODS RECEIPT
PROVISION OF
PURCHASE FOR FINISHED
COMPONENTS
ORDER MATERIAL
Subcontract
Item INVOICE
Components Production
TRANSPORT COMPONENT Costs
CONSUMPTION

SUBCONTRACTING SUBCONTRACTING SUBCONTRACTING

VENDOR VENDOR PRODUCTION VENDOR

Figure 22: Subcontracting Overview

Delivery Invoice and

Allocation Picking and
Sales Order Procurement Financial
Run Post Goods Accounting
Issue

ATP

Post Goods Invoice

Create Monitor Provision Receipt for Receipt for
MRP Subcontract Stock of of Purchase Purchase
Order Material Components Order 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 company’s property.
Vendor Collaboration
External vendors can be integrated into the purchasing process
by Web Access, even if they do not have an ERP system. Con-
firmation 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 con-
firmation 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 ven-
dors, 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
40
Third-Party Order Processing
Another important business process in the apparel and foot-
wear 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 pro-
cured 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 gen-
eration of a purchase requisition and the conversion to a pur-
chase order. In addition, the process is fully transparent in the
purchasing and sales departments, and in the planning depart-
ment (MRP).
Procurement of Consignment Material
Consignment material is a material that is stored at your pro-
duction 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 state-
ment 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.
 MASTER DATA
Consignment Consignment
Info Record Stock Record

PROCUREMENT PROCESS Vendor

Purchase
Order Goods Invoice
Consignment Receipt
Item

Warehouse

Company’s Vendor Consignment

Own Stock Stock Goods Production
• Available for MRP Issue Site
• Not valuated
• Belongs to vendor

Figure 25: Procurement of Consignment Material

WAREHOUSE MANAGEMENT • Put-away strategy/picking strategy: It is possible to deter-

For the timely and efficient processing of logistic requirements,
companies are dependent on computerized organization and
management of their warehouses. Apparel and footwear com-
panies in particular need to be able to manage highly complex
warehouse structures and a multiplicity of warehousing facili-
ties.
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 con-
sumption.
mine 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 main-
tained, depending on the SKU.

41
• 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 loca-
tion at SKU level.
• Replenishment: With a transfer requirement, the produc-
tion 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.
42
• 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. Pro-
duction encompasses procurement, storage, and transport of
materials and intermediate products, and material require-
ments 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 plan-
ning (MRP), planned orders and production orders include a
product structure (style/color/size) and categories specific to
this industry sector.
casts sales. The resulting independent requirements (in partic-
ular, requirements for finished products and trading goods)
trigger material requirements planning. Order quantities and
delivery dates must be determined and the respective procure-
ment activities must be launched to ensure requirement cover-
age.
Ordering transactions or subcontracting are initiated for out-
sourced products. Appropriate vendors must be selected or
outline agreements made. Quantities resulting from produc-
tion or outsourced procurement are put on stock and admin-
istered by inventory management.

The logistical cycle begins either with sales and operations The following diagram illustrates the logistical cycle between
planning (SOP) and forecasting, or with sales and production sales and procurement. The system comprehensively plans,
demand management. The sales department receives customer monitors, and coordinates all functions.
requirements from the market and demand management fore-

SALES
Sales CUSTOMER
FORECAST/PLANNED ORDER
REQUIREMENTS MRP Order REQUIREMENTS

PURCHASE External Internal PLANNED

PURCHASE PLANNED
REQUISITION
REQUISITION ORDER/
ORDER/
Secondary
Secondary
Requirement
Requirement

PURCHASE
PURCHASE PRODUCTION
PRODUCTION
ORDER
ORDER 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, custom-
made products).
SALES AND OPERATIONS PLANNING (SOP)
Sales and operations planning (SOP) is a flexible forecasting
and planning tool that determines not only sales and produc-
tion targets, but targets from other areas throughout the logis-
tical 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 con-
taining 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, pur-
chase order, and production order).

SOP provides a method for:

• Sales planning
• Production planning
• Feasibility estimates
QUANTITY

Sales plan

Production plan

Capacity estimate TIME

MAY JUNE JULY

Figure 27: Sales and Operations Planning

44
DEMAND PLANNING WITH SAP® APO
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 dis-
tribution and transportation capabilities to support demand-
driven replenishment for maximum profitability. Retailers and
carriers can be seamlessly integrated into the supply chain
processes.
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 con-
sidering historical buying and selling behavior, market intelli-
gence, and sales objectives. The demand is optimally matched
to supply so as to maximize the return on assets with consider-
ation of operational constraints. SAP APO updates and syn-
chronizes plans based on the dynamic exchange of information
and allows you to derive total supply chain production require-
ments and make results available to all members of a supply
chain.
With SAP AFS 3.0B you can execute demand planning in SAP
APO and then transfer the demand plan as planned indepen-
dent requirements to demand management. Demand plan-
ning 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)
PRODUCTION DEMAND MANAGEMENT
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 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).

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 plan-
ning 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 histori-
cal 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 nec-
essary 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 depen-
dencies on material consumption, selection of certain compo-
nents, 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
BLK
JACKET
(SAP AFS Material) WHT
RED

MRP

FABRIC ZIPPER BUTTON

(SAP AFS Material) (SAP AFS Material) (Standard Material)

GRID B GRID C
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 prod-
uct 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 manufactur-
ing). This task includes monitoring stock and, in particular,
making suggestions for procurement, purchasing, and produc-
tion.
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 out-
sourced 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 assem-
blies (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 pro-
cedures 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 auto-
matically using predefined distribution profiles. The most
common lot-sizing procedures are available, but it is also possi-
ble 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 Automatic Planning Run
MRP (such as products with more logistically relevant charac- The automatic planning run in MRP determines material
teristics that might include size, color, shade, and quality). shortage and generates the respective procurement document.
The system informs you of critical areas and exceptions, allow-
ing you to modify planning results accordingly.
SKU LEVEL MATERIAL LEVEL
Evaluation of Planning Results
Planning results can be reviewed and evaluated by a series of
different methods (for example, stock requirements list, MRP
MRP PLANS
MRP GROUPS list, planning results per MRP controller, product group, order
REQUIREMENTS
REQUIREMENTS AT
TOGETHER AT report, and so on). Evaluation capabilities allow your MRP
SKU LEVEL
MATERIAL LEVEL controller to process planning results from an aggregated level
to the most detailed SKU level, with the help of diverse selec-
tion criteria. SAP AFS points to critical areas without delay. All
SIZE-LEVEL HORIZON BEYOND SIZE-LEVEL HORIZON
relevant features are accessible through one single, user-friend-
ly, and easy-to-handle window, the AFS MRP Cockpit.
Current 30 Days
Date
CAPACITY PLANNING
Figure 29: SKU Level Horizon in SAP AFS MRP Economic resource planning is present in various areas of a
company. Capacity planning with SAP AFS supports all phases
Parallel Processing of planning: long-term estimated planning, mid-term plan-
The total planning run time is improved considerably by using ning, and short-term detailed planning. Capacity planning
parallel processing. It can run either on different servers or in comprises three components:
different server modes to further speed up processing. • Capacity analysis: Available capacities and capacity require-
ments are determined and illustrated in lists and graphics.
• Capacity leveling: Optimum reservation of capacity and

SERVER 01
selection of appropriate resources. Planning boards in graph-
ic and table form are available to illustrate the capacity situa-
MRP Material 01
DISPATCHER tion and process capacity leveling.
• Capacity planning: Capacity loading for AFS-specific prod-
SERVER 02 DB SERVER
ucts is based on routings that are selected according to the
Material 02 DB Changes
above-mentioned criteria. The influence of different product
characteristics in the individual production operations and
Planning SERVER 03
File Entry lead times can be established in the routing for AFS-specific
Material 03
products. Routings for lead-time scheduling and production
order processing are selected according to these criteria.
Figure 30: Paralell Processing

48
PRODUCTION ORDER
Production orders determine which product or assembly is pro-
duced, 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.
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

You can use the production order to monitor the order status Central transactions such as confirmations, monitoring pro-
for goods produced in-house. The order includes scheduling, duction status, and goods receipt can also be processed for
capacity planning, and status management. The order process individual bundles/cartons, individual sizes, or a combination
report has been enhanced by adding the operations. This of the two.
process enables you to monitor the individual production steps
within one single report. Cost accounting is carried out in the In addition, you can integrate markers into the production
same way for each production order. order and planned order. The production order sizes resulting
from a marker and the quantities derived from the fabric ply
When a production order is created, the following actions are height form the rates for sizes and quantities received from
carried out: MRP. If necessary, planned quantities in the order are adapted
• Routing selection: Routing operations and sequence are accordingly.
transferred to the production order.
• BOM explosion: BOM items are transferred to the pro-
duction order. SAP AFS PLANNED
• Reservations: Reservations are generated for BOM items ORDER
EXTERNAL
in stock. BLU BLK MARKER LIBRARY
• Planned costs are established for the production order. Waist
Inseam 28 30 32 34
• Capacity requirements are generated for the work centers. Marker 1: 32 x 30 50
28 32 x 32 50
• Purchase requisitions are generated for non-stock compo- 30 50 50 34 x 32 50
32 30 50 50 Marker 2: 30 x 30 50
nents and externally processed operations. 28 x 32 50

Apparel and Footwear Specifics in the Production Process TOTAL: 230 PIECES TOTAL: 250 PRIECES

The specific characteristics of the production process in the

apparel and footwear industry have prompted SAP to make Figure 31: Markers – Quantity Adjustment
further developments for this step in the supply chain. For
example, production in bundles is typical in the apparel indus-
try. 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.

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 cut-
ting and pattern engineering. This might be the case, for exam-
ple, 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, con-
firmations, goods receipt, and goods issue can either be processed
together for the combined orders, or separately for each indi-
vidual 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 10023 10024 Production
Production
order
order order
order
10023
10023 10024
10023
Routing
Routing11 Routing
Routing21

Cutting

Embroidery

Sewing Sewing

Quality Check Quality Check

Figure 32: Combined Orders

50
PRODUCT CONTROLLING
OVERVIEW
Special structures are available in SAP AFS to illustrate prod-
ucts 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 profitabili-
ty 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 WITH AFS MATERIALS
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 Material: Jeans

Plant: 0001
DIMENSIONS PRODUCT
COST
PLANNING

GRID VALUE: GRID VALUE: GRID VALUE:

30/30 32/32 33/33

CATEGORY: CATEGORY: CATEGORY:

COST OBJECT BLUE/ BLUE/ BLUE/
CONTROLLING STONEWASHED STONEWASHED STONEWASHED

CATEGORIES

Figure 34: Split Valuation of SAP AFS materials

PROFITABILITY
ANALYSIS

1 2 3

Quality

Figure 33: Product Controlling

51
Grouping with Valuation Types
As costs for sizes, colors, or categories of a material do not
always significantly differ, and to avoid numerous single valua-
tions impairing performance unnecessarily, SAP AFS can com-
bine 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 pro-
duction processes generally depend on information such as
sizes, colors, and so on to be produced. Consequently, manu-
facturing 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
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 struc-
ture (bill of material and routing). A product’s quantity struc-
ture 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/cate-
gories to be calculated, and determines the relevant routing
together with its operations.
Cost Elements
The most important costing elements of a product are mate-
rial and production costs. The system determines a product’s
material costs based on the prices and quantities of the com-
ponents 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

AFS VALUATION VIEW When determining the quantity structure, product costing
Plant: 0001 considers production scenarios typical to the apparel and
COSTING
Material: Jeans SMALL footwear industry, such as cross-plant production or subcon-
$10
tracting of materials. In the case of subcontracting, the system
Grid Pref. SKU Val. Typ
30/30 Small automatically determines the relevant costing information
30/31 • Small from the purchasing info record of the subcontractor.
32/31 Large
32/32 Large COSTING
34/32 • Large
LARGE
$12
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 cus-
toms can be included in the material valuation.
Figure 35: Costing of Valuation Types

52
COST OBJECT CONTROLLING
Cost object controlling within mySAP.com facilitates the con-
trolling 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.
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
TARGET COSTING
GOODS ISSUE
Production
Production
Order
Order
CONFIRMED
OPERATIONS
VALUATION AT DIMENSION OR CATEGORY LEVEL
Figure 36: Production Order Processing
process into consideration as well as target and actual charac-
teristic-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 pro-
duct 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.
Variance Determination
Following final delivery of an order, you can separately deter-
mine and settle the resulting costing variances (planned, tar-
get, actual) according to variance categories (scrap variance,
input variance, lot size variance, and so on).
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 evalu-
ation.
SETTLEMENT
GOODS P+L
RECEIPT
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 company’s profit or contribution margin. The market seg-
ments 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, prod-
uct management, and corporate planning with information to
SAP AFS
support internal accounting and decision making.
CHARACTERISTICS
Apparel and Footwear Specific Characteristics Sales Region North
Master data or basic structures can be freely defined for prof- Product Prod1

Grid Value
Product Group Snowboard
itability analysis. You determine the analysis objects (character- Customer Cust1
Customer Group Wholesale
istics) and the analysis value fields for your profitability analy-

on
sis. The system creates a multidimensional analysis object from Season Wi2001

as
Se
Valuation Type L Valuation Type
the combination of characteristics, from which an analysis Category FD
Grid Value 164
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 Revenue 980 PROFITABILITY
Sales Deduction 100 SEGMENT
can also integrate a series of other industry-specific informa- Planned Freight Costs 150
tion. In this way, you can establish the profit that is issued with Cost of Sales 550 Revenue
Revenue
Sales Deduction
Sales Deduction
certain seasonal products. You can also ascertain how a partic- Cost of
Cost of Goods
Goods Sold
Sold
ular grid value or grid-value group contributed
to or affected this profit.

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 con-
sideration with regard to both the revenue and costs.

54
CUSTOMER SERVICE AND SUPPORT
A network of highly qualified experts has been set up through-
out 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 sup-
port.
Together with SAP partners, SAP Apparel and Footwear Con-
sulting 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 proj-
ect by reviewing critical decision requirements, determining
high-risk elements in the program, and defining an implemen-
tation approach to maximize return and minimize risk.
SAP AFS Consulting encompasses training and support, pre-
sales 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 imple-
mentation 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 pros-
pects about the QA program, which confirms that it is an inte-
gral 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 require-
ments.
• 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 customer’s 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-mar-
ket, 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 opportu-
nities, 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 cus-
tomers. 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 solu-
tion from SAP tailored to meet the requirements of the retail
industry, cover the entire fashion supply chain – from sup-
pliers 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 com-
petitive edge, enabling collaboration across the entire fashion
supply chain – from sheep to shop.
GLOSSARY
A D
ARun Allocation run Delivery A delivery program is defined by one of the
ATP Available-to-promise Program following combinations: Season; Season – Collec-
tion; Season – Collection – Theme. You specify
B dates so that the delivery program is delivered
BAPI Business Application Programming Interface during a certain period.
BOM Bill of material Dimensions Product characteristics usually referred to in the
A complete, structured list of the components apparel and footwear industry as style/color/size.
that make up a product or assembly. The list A freely definable element of an AFS grid. An
contains the object number of each component, AFS grid is composed of up to three dimensions.
the quantity, and unit of measure. The compo- Dimensions are, for example, length, color, size,
nents are known as BOM items. You can create or width. Each dimension is composed of dimen-
the following BOM categories in the SAP System. sion values that are all valid entries for a particu-
Material BOM, Document structure, Equipment lar dimension.
BOM, Functional Location BOM, and Sales Order
BOM E
Bundle Apparel industry term for all pattern pieces in a EAN International Article Number
marker that will be sewn together to form a gar- EDI Electronic data exchange
ment in a certain size, multiplied by the number ETA Estimated time of arrival
of fabric plies in a stack. The information on
bundles is maintained in the planned orders and F
production orders. FOB Free on board

C G
CAD A data processing system for computer-aided Grid Important element of the AFS basic data that
design and drawing. maps the characteristic values of an AFS material
Category Characteristic of an AFS product that allows a in grid values and permits combinations consist-
division into different qualities or countries of ing of up to three dimensions (for example color,
origin, for example. size, length). The use of master, purchase, and
CO Product Controlling sales grids facilitate the valuation, procurement,
Company The smallest organizational unit of financial and sale of AFS materials at SKU level.
Code 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 support-
ing documents required for financial statements.

57
H M
Heart Grid Description for the grid values of a material Marker The optimal placement of pattern pieces to
Value that you sell or purchase very frequently. achieve the best fabric utilization for the cutting
(heart size) When maintaining the grid control data for a process. Unique markers are defined by the name
material, you can flag these grid values as heart and repetition of the size or dimension they con-
grid values. tain. They can be plotted on paper or stored in a
I file that is used to drive a numerically controlled
InfoCube A central object on which reports and analyses in cutter. SAP AFS uses marker data to:
SAP BW are based. An InfoCube describes a self- – Adjust quantities in a planned or production
contained data set (from the reporting view), for order
example, for a business-oriented area. – Identify unique bundle numbers
InfoSource An InfoSource describes a quantity of all available Material Product/Article
data for a business event, or type of business MM Materials Management
event (for example, Cost Center Accounting). An MRP Material requirements planning
InfoSource is a quantity of information that has mySAP.com SAP’s e-business platform.
been grouped together and can be said to belong A family of solutions and services that empower
together logically from a business point of view. employees, customers, and business partners to
InfoSources can either contain transaction data collaborate successfully – anywhere, anytime.
or master data (attributes, texts, and hierarchies).
L O
LIS 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 simulta-
neously (such as time, place, product, and so on).
The aim of OLAP reporting is to analyze key fig-
ures, such as for an analysis of the sales figures
for a certain product in a particular time period.

58
P U
Plant A place where materials are produced, or goods UPC Universal Product Code
and services are provided.
PP Production planning V
VAS Value-added-services.
R Services that improve the appearance, attractive-
RFQ Request for quotation ness and processing of a product, for example,
A request from a purchasing organization to a packing, ticketing and special service.
vendor (external supplier) to submit a quotation
for the supply of materials or the performance of W
services. WM Warehouse Management
S
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 prod-
uct 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 plan-
Level 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

59
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