Heike Rawe

SAP for Retail

®

Bonn � Boston

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 Contents at a Glance

1 Introduction  ................................................................. 17

2 SAP for Retail – An Overview  . ..................................... 25

3 Master Data, Forecasts, Analyses, and Connecting

Applications  ................................................................. 41

4 Planning  ....................................................................... 93

5 Purchasing  . .................................................................. 133

6 Order Processing – Supply Chain Management  .......... 171

7 Multichannel Retailing and Customer Service  . ........... 231

8 Enterprise SOA in SAP for Retail  ................................. 295

9 Summary  ...................................................................... 315

A Glossary  . ...................................................................... 323

B The Author  ................................................................... 333

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 Contents

Acknowledgment  . ........................................................................ 13
Preface  ......................................................................................... 15

1 Introduction  .................................................................. 17

1.1 Subject of This Book  ...................................................... 17

1.2 Aim of This Book  ........................................................... 19
1.3 Target Groups of This Book  ............................................ 19
1.4 Structure of the Book  . ................................................... 20

2 SAP for Retail – An Overview  . ...................................... 25

2.1 Anything Is Possible – The Success Story of Harrods Ltd. 

26
2.2 SAP for Retail – Greater Than the Sum of Its Parts  .......... 28
2.3 System Architecture – SAP ERP and SAP for Retail  ......... 33
2.3.1 Architecture and Content of SAP ERP – A Brief
Overview  ............................................................ 34
2.3.2 In Perfect Harmony – SAP ERP and the Industry
Solutions  ............................................................. 36
2.3.3 Implementing New Functions at the Flick of a
Switch – Enhancement Packages and the SAP
Switch Framework  . ............................................. 37

3 Master Data, Forecasts, Analyses, and Connecting

Applications  .................................................................. 41

3.1 Master Data Solution – SAP Retail  ................................. 41

3.1.1 Motives for Master Data Administration  . ............ 43
3.1.2 The Most Important Master Data in SAP Retail  .... 45
3.1.3 A Word About Mass Processing  . ......................... 55
3.1.4 Data Retention Levels for Article Master Data  ..... 56
3.2 Possibilities of Master Data Administration  .................... 57
3.2.1 What Is the Task of SAP NetWeaver Master Data
Management?  ..................................................... 57

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Contents

3.2.2 Global Data Synchronization with SAP NetWeaver

MDM  . ................................................................ 59
3.3 The Architecture of the Master Data Solution – SAP
NetWeaver MDM and SAP Retail  .................................. 62
3.3.1 SAP NetWeaver MDM  ........................................ 62
3.3.2 SAP Retail Operating with SAP NetWeaver
MDM  . ................................................................ 65
3.4 Software in Action  ......................................................... 66
3.5 The Forecasting Solution  . .............................................. 68
3.5.1 The Right Article at the Right Place at the Right
Time at the Right Price  ........................................ 69
3.5.2 What If...?  ........................................................... 71
3.6 The Analysis Solution – SAP NetWeaver Business
Intelligence  . .................................................................. 72
3.7 The Architecture of SAP NetWeaver BI  .......................... 74
3.7.1 How Can the Requirements of Mass Storage
Methods and Administration Be Met?  ................. 77
3.7.2 PIPE – An Application of SAP NetWeaver BI for
the Retail Sector  . ................................................ 79
3.7.3 Analytical Applications for the Retail Sector  ........ 80
3.7.4 Examples of Real Analytical Applications  ............. 81
3.8 SAP NetWeaver Process Integration  . ............................. 84
3.8.1 Implementation Phases and Architecture  . ........... 86
3.8.2 Shipment of Central Integration Knowledge  ........ 90
3.8.3 Using SAP NetWeaver PI in SAP Retail  ................ 91

4 Planning  ........................................................................ 93

4.1 What Is Planned and How  ............................................. 93

4.1.1 Strategic Planning  . .............................................. 94
4.1.2 Store Planning  ..................................................... 96
4.1.3 Merchandise and Assortment Planning  ................ 97
4.2 The Solution – SAP Merchandise and Assortment
Planning   ....................................................................... 104
4.2.1 NetWeaver BI Integrated Planning – Background
Knowledge   . ....................................................... 106
4.2.2 SAP MAP – Functions   . ....................................... 108

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 Contents

4.2.3 Slow Seller Management – Price Planning

Workbench  ......................................................... 116
4.3 SAP MAP Architecture  ................................................... 119
4.4 Software in Action – SAP MAP  ...................................... 121
4.5 The Solution – SAP Demand Management  ..................... 122
4.5.1 SAP Price Optimization  ....................................... 122
4.5.2 SAP Promotion Optimization  . ............................. 125
4.5.3 SAP Markdown Optimization  .............................. 126
4.5.4 Optimization Procedure  ...................................... 127
4.6 SAP Demand Management Architecture  ........................ 129
4.7 Software in Action – SAP Demand Management  ............ 131

5 Purchasing  . ................................................................... 133

5.1 The Solution – SAP Retail  . ............................................. 133

5.1.1 Normal Purchase Order  ....................................... 137
5.1.2 Supply Source Determination  .............................. 138
5.1.3 Order Optimizing  ................................................ 139
5.1.4 Collective Purchase Orders  .................................. 142
5.1.5 Perishables Planning  ............................................ 143
5.1.6 Seasonal Procurement – Fashion Industry  ............ 145
5.1.7 Invoice Verification  . ............................................ 150
5.1.8 Subsequent Settlement  ....................................... 153
5.1.9 Vendor Evaluation  ............................................... 156
5.2 The Architecture of Purchasing  ...................................... 156
5.2.1 Integration View  ................................................. 157
5.2.2 Seasonal Procurement – Process Flow  . ................ 160
5.3 Software in Action  ......................................................... 162
5.4 The Solution for Global Trade – SAP Global Trade
Services  ......................................................................... 163
5.4.1 Import and Export Control (SAP Compliance
Management)  . .................................................... 164
5.4.2 Customs Processing (SAP Customs
Management)  . .................................................... 166
5.4.3 Risk Management (SAP Risk Management)  . ........ 167
5.4.4 SAP Electronic Compliance Reporting  . ................ 167
5.5 The Architecture – SAP GTS  ........................................... 168
5.6 Software in Action  ......................................................... 170

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Contents

6 Order Processing – Supply Chain Management  ........... 171

6.1 Today’s Logistics Requirements  ...................................... 171

6.2 The Solution – SAP Retail  . ............................................. 173
6.2.1 Requirements Planning  . ...................................... 174
6.2.2 Requirements Planning Type and Requirements
Planning Procedure  ............................................. 175
6.2.3 Replenishment Planning  ...................................... 176
6.2.4 Merchandise Distribution  .................................... 177
6.2.5 Warehouse Processing  ......................................... 184
6.2.6 Inventory Management  ....................................... 192
6.2.7 Foreign Trade  ...................................................... 196
6.2.8 Physical Inventory  ............................................... 197
6.3 Supply Chain Management in SAP Retail – The
Architecture  . ................................................................. 198
6.4 Software in Action  ......................................................... 200
6.5 The Solution – SAP Extended Warehouse
Management   ................................................................ 201
6.5.1 Goods Receipt in SAP EWM  ................................ 202
6.5.2 Goods Issue in SAP EWM  .................................... 204
6.5.3 Bin Management and Optimization  ..................... 205
6.5.4 Higher-Level Processes  ........................................ 206
6.5.5 Reporting  ............................................................ 209
6.5.6 SAP EWM for Retail  ............................................ 210
6.6 The Architecture – SAP EWM  ........................................ 211
6.7 Software in Action  ......................................................... 213
6.8 Other SAP Supply Chain Management Applications
for the Retail Sector  ....................................................... 214
6.8.1 SAP Transportation Management  ........................ 214
6.8.2 SAP Event Management  ...................................... 215
6.8.3 SAP Supply Network Collaboration  . .................... 216
6.9 The Solution – SAP Forecasting and Replenishment  ....... 219
6.9.1 Benefits of SAP Forecasting and Replenishment   .... 220
6.9.2 Two Main Processes – Automated Replenishment
and Tactical Control  . ........................................... 223
6.10 The Architecture – SAP Forecasting and Replenishment  . 225
6.11 Software in Action  ......................................................... 229

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 Contents

7 Multichannel Retailing and Customer Service  ............. 231

7.1 Today’s Customer Service Requirements  ........................ 231

7.2 The Sales Channel of Retail Stores  . ................................ 234
7.3 Interface to the Consumer – SAP POS and SAP
Enterprise POS  .............................................................. 235
7.3.1 What Data Is Sent to POS Systems and What
Data Is Returned to the Retailing System?  ........... 237
7.3.2 The Latest Generation of POS Solutions  . ............. 240
7.3.3 Integration with SAP NetWeaver BI  ..................... 244
7.4 The Architecture – SAP POS  . ......................................... 245
7.4.1 Downtime Security  . ............................................ 247
7.4.2 The Special Case of Mobile Devices – Enhanced
Customer Service with Mobile POS  ..................... 248
7.5 Software in Action – SAP POS  . ...................................... 249
7.6 The Architecture – SAP Enterprise POS  .......................... 250
7.6.1 Central System Management  ............................... 251
7.6.2 What Happens When Someone Makes a
Standard Purchase?  ............................................. 255
7.6.3 Downtime Security – High Available Store  ........... 256
7.7 Software in Action – SAP Enterprise POS  ....................... 258
7.8 The Solution – SAP Retail Store  . .................................... 259
7.8.1 SAP ERP in the Store  ........................................... 259
7.8.2 Central Maintenance and Administration  . ........... 260
7.9 The Architecture – SAP Retail Store  ............................... 265
7.10 Software in Action – SAP Retail Store  ............................ 267
7.11 The Solution – SAP Workforce Management  .................. 270
7.12 The Architecture – SAP Workforce Management  ............ 274
7.13 Software in Action – SAP Workforce Management  ......... 278
7.14 The Solution – Multichannel Retailing with SAP
Customer Relationship Management  ............................. 279
7.14.1 Order Entry   ........................................................ 279
7.14.2 Order Processing  ................................................. 280
7.14.3 Evaluating Customer Relationships  ...................... 281
7.14.4 Multichannel Marketing  ...................................... 285
7.14.5 Customer Cards for Customer Retention
in the Store  ......................................................... 285
7.14.6 The Internet as a Distribution Channel  ................ 287

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Contents

7.14.7 Distribution Channels – Catalog, Direct

Mail-Order, and Traditional Mail-Order  ............... 292
7.15 Software in Action – SAP CRM Web Shop  . .................... 293

8 Enterprise SOA in SAP for Retail  .................................. 295

8.1 The Concept of Service-Oriented Architecture  ............... 295

8.1.1 The Status Quo and the Challenges  ..................... 295
8.1.2 SOA – A New Paradigm  ....................................... 297
8.1.3 What Is the Difference Between Enterprise SOA
and SOA?  ............................................................ 299
8.1.4 Enterprise SOA – A New Architecture for New
Business Models  . ................................................ 301
8.2 Business Process Platform   ............................................. 304
8.2.1 Composition  . ...................................................... 305
8.2.2 Enterprise Services Repository and Control
Processes  ............................................................ 305
8.2.3 Process Components  ........................................... 306
8.2.4 Integration Platform  ............................................ 306
8.3 Where Do Enterprise Services Come From?  . .................. 306
8.3.1 Enterprise Service Bundles   . ................................ 307
8.3.2 Connectivity Kits  ................................................. 307
8.3.3 Service Enablement of Existing Applications  ........ 308
8.4 Examples of Beneficial Uses of Enterprise SOA  ............... 309
8.4.1 Connecting Processes in Innovative Ways  ............ 309
8.4.2 Redesigning Processes  ......................................... 311
8.4.3 Simple Design and Execution of Processes  ........... 311
8.4.4 The Latest Enterprise Services and Additional
Information  ......................................................... 312

9 Summary  ....................................................................... 315

Appendices

A Glossary  .................................................................................. 323

B The Author  ............................................................................. 333

Index.............................................................................................. 335

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 It was trade that lifted the world—both the old and the new—
out of barbarism.
(Karl-Julius Weber)

1 Introduction

The SAP offering for retail companies can take on different forms depend-
ing on the company’s needs. At its heart lies the SAP Retail retailing sys-
tem, which is accompanied by a range of software solutions, each with
its own, retail-specific purpose. The aim of this book is to illustrate how
these retail solutions interact with each other to give the reader a better
understanding of the solution offering.

SAP for Retail and SAP Retail

This book is called SAP for Retail, but SAP Retail will also be referred to
regularly. SAP for Retail covers the entire SAP solution offering for the re-
tail sector, whereas SAP Retail relates specifically to SAP Enterprise Resource
Planning (ERP) system. A more detailed explanation can be found in Section
2.3 System Architecture – SAP ERP and SAP for Retail.

1.1 Subject of This Book

Information technology is a critical success factor for retail companies. Information

Sluggish sales markets and increasing competition in retailing make it technology as a
success factor
essential for retail companies to optimize their internal processes. In
times of e-business and t-business, as well as global and interorganiza-
tional requirements of supply chains and customer relationship man-
agement, companies are regularly forced to redesign their business
processes.

E-business refers to online shopping, that is, sales on the Internet. End
customers can browse electronic catalogs on the Internet, select prod-
ucts, place an order, and pay immediately online. A lesser known term is

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 1    Introduction

t-business, which denotes sales through the medium of television. T-busi-

ness is often subsumed by e-business. The most recent development is
m-business: sales through mobile telephones.

Principles for To keep up with the constantly growing demands of the market, every
success company must pay attention to the fundamental principles for success
and take action accordingly. These fundamental principles for success
are:

EE The customer is only happy if goods are available in the right place at
the right time and for the right price.
EE A company must be able to respond flexibly to changes in demand
patterns to retain its customer base and win new customers.
EE It is only possible to respond promptly to delivery delays if they are
known of in good time.
EE Working capital can only be freed up for important investments if
stock levels can be reduced through shorter lead times and procure-
ment cycles.

SAP AG helps its customers meet all of these challenges with innovative
technology so they can operate as part of a complex economic network
and respond effectively to market demands.

Capabilities of Modern systems in retail respond to changing demands, which means

modern retail they can do more than just control the flow of goods and report sales
systems
figures to the head office; they are also capable of the following:

EE Complex processes that forecast consumer demand while taking into

account information about space and capacity in the supply chain and
automatic item planning
EE Price optimization, markdown management, assortment planning,
procurement and distribution processes, goods control processes such
as promotions or price reductions, and accounting for special forms
of management such as consignment
EE Integration of all possible distribution channels and decentralized
workforce management, both of which help companies meet the sig-
nificant challenge of customer retention and thereby contribute to
increased consumer satisfaction

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 Target Groups of This Book    1.3

Increased transparency of current revenue, sales, and inventory informa-

tion is crucial to the success of any retailer. After all, it is only possible
to take appropriate action in a given situation with valid, up-to-date, and
transparent information. The SAP software supports you, the user, with
the key challenges you face—not only in streamlining and accelerating
processes, but also in tapping potential for expansion, analysis, and cus-
tomer retention.

1.2 Aim of This Book

The aim of this book is to provide you with a comprehensive overview of Overall
SAP software for the retail sector by presenting the existing components understanding of
SAP for Retail
and their architecture and examining how they interact from a technical
perspective. This book will explain the most important business pro-
cesses in each of the components.

After reading this book, you should have a fundamental understanding

of the architecture and concepts behind each component developed by
SAP AG for the retail sector. In addition to retailing, wholesale is the
other major part of the trading industry. SAP AG also offers solutions for
wholesale, but these are not discussed in this book.

Special attention is given to the concept of enterprise service-oriented

architecture (enterprise SOA), to which an entire chapter is devoted. The
book relates to the status of developments in 2008, but different releases
are discussed depending on the component. The releases are identified
in each chapter.

This book does not contain information about installing, administering,

or using the components described. These aspects are described in fur-
ther publications and SAP standard documentation.

1.3 Target Groups of This Book

We have a particular image of you, the readers, in mind. This image has
helped us write this book, and we hope it will make it easier for you to
read.

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 1    Introduction

IT employees in We assume that you work in either an IT company or an IT department

the retail sector of a retail company. You have bought this book or been given a copy by
a colleague or manager to answer your questions about the SAP product
portfolio for the retail industry.

We also assume that you already use SAP software or are currently decid-
ing whether to use SAP solutions. Regardless of whether you are using
our software already or are still at the assessment stage, this book will
assist you in understanding the software offering.

You would like to obtain an overview of the SAP offering for the retail
sector and discover new concepts and technologies. In this respect, this
book is also ideally suited to IT decision-makers, project managers, and
any other interested parties.

SAP partner Another important target group is our partners, who want an overview
companies of the offering to help identify any niches and develop products that
complement the portfolio.

To make sense of the content of the book, you need to have a basic tech-
nical understanding; knowledge of SAP products such as SAP ERP, the
Business Suite, or SAP NetWeaver® is an advantage.

1.4 Structure of the Book

Modular structure You can read the book chapter by chapter or skip over certain chapters
depending on your preference. If you read chapter by chapter, you will
experience a journey through the components of the SAP software offer-
ing for the retail sector. To establish a link to the real world of business,
we have included typical questions from both the consumer and retailer
perspectives in each chapter.

These questions constitute a guide to the book and enable readers to skip
over certain chapters and focus on the parts that are particularly relevant
for them. In this sense, the book is—to the greatest possible extent—
modular in structure to allow you to choose the parts you read according
to your preferences and needs.

The chapters are as follows:

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 Structure of the Book    1.4

EE Chapter 1 Introduction
What is the object of the book and who is it aimed at?
EE Chapter 2 SAP for Retail – An Overview
How do the components relate to each other? This chapter takes a
broad look at the architecture of the SAP software for the retail sec-
tor. It presents the ways in which SAP NetWeaver, SAP ERP, and SAP
Retail are interrelated, offers a brief outline of the history of SAP for
Retail, and provides some initial insight into the capabilities of the
components.
EE Chapter 3 Master Data, Forecasts, Analyses, and Connecting Appli-
cations
How do manufacturers and retailers know that they are dealing with
the same article? How do retailers know which articles they have to
offer, how many, when, and at what price? How can retailers analyze
and increase their operational efficiency and speed of response to
consumer behavior?
This chapter introduces you to the features of master data administra-
tion that are particular to the retail sector. The emphasis here is on the
apparel segment, whose master data presents specific requirements.
Furthermore, the chapter explains the foundations for determining
requirements and forecasting. In Section 3.6 The Analysis Solution –
SAP NetWeaver Business Intelligence, you become acquainted with
SAP NetWeaver BI and the possibilities presented by analytical appli-
cations. We also explain something that is essential to the understand-
ing of data flows, namely, SAP NetWeaver Process Integration, which
plays a pivotal part in connecting systems.
EE Chapter 4 Planning
How can you plan in order to satisfy demand as accurately as possi-
ble? How do you set prices that guarantee a decent margin but remain
affordable for consumers? How do you plan sales promotions and
assortments that will win you new retail customers and satisfy exist-
ing customers? How do you plan price reductions for articles?
This chapter presents the most important planning options, from
strategic planning and store planning to merchandise and assortment
planning.

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 1    Introduction

EE Chapter 5 Purchasing
How can you best map relationships with vendors in the system?
How do you handle order proposals created automatically by the sys-
tem? When do you accept them, and when do you have to modify
them? What logistical factors must be taken into account in purchas-
ing? SAP Retail provides special functions tailored to the needs of the
retail industry that are not available in other SAP ERP components
(for example for durable goods, foodstuffs, fresh produce, and fash-
ion articles). Pricing, including free-goods discount and other forms
of discount, is also dealt with here.
EE Chapter 6 Order Processing – Supply Chain Management
Which factors contribute to optimal order processing with on-time,
complete, and error-free deliveries of goods to the consumer? How
do you arrive at the ideal requirement quantity? How can you keep
costs to a minimum?
Costs in the supply chain might, for instance, arise from logistics costs
such as those incurred for procurement and transportation, but also
from storage, aging, wear and tear, and breakage. Stock inventory also
result in costs such as interest on capital, depreciation, and insurance.
Logistics is a particularly important point for fast-moving consumer
goods. This chapter describes the functions that are significant for the
retail sector, in particular, when managing supply chains.
EE Chapter 7 Multichannel Retailing and Customer Service
What happens to purchasing data? Despite the large number of retail-
ers that operate online only, the traditional store still has a consider-
able part to play in multichannel retailing. Today’s consumers still
want to see, touch, and try goods in the real world. That said, as
consumers become increasingly familiar with the Internet, they will
use it more regularly for purchases in the future. The Internet has
changed not only the way in which consumers make purchase deci-
sions but also their expectations in terms of personalized information
and services. Nowadays, consumers want to decide themselves where
and when they shop. This is the very reason e-business has taken off
so quickly—with no end to the growth in sight. This chapter also
addresses the subject of managing customer relationships and dem-
onstrates how software can be used to improve customer retention.

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 Structure of the Book    1.4

EE Chapter 8 Enterprise SOA in SAP for Retail

How can a retailer keep IT costs down in spite of continually chang-
ing business processes and requirements? How can a retailer mini-
mize the cost of maintaining the different systems in a heterogeneous
system landscape? How can a retailer become integrated in a supply
chain network with little effort and collaborate with manufacturers
and vendors?
Enterprise SOA supports the retail sector with all of these questions
and shows the way to the future.
EE Chapter 9 Summary
What should you take with you? This chapter provides a brief and
concise summary of the contents of the book.

The appendix provides an extensive reference resource. It contains the

required technical terms, some SAP acronyms, and much more quick
reference information, all presented in a clearly laid-out format.

Enjoy!

Heike Rawe

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 3    Master Data, Forecasts, Analyses, and Connecting Applications

pricing and marketing strategies to be tailored to the needs of consumers

with purchasing power. Customer Loyalty Marketing also ensures that
sales promotions hit the spot in terms of the interests of the respective
target groups.

Other analytical applications are concerned with SAP MAP (see Chapter
4 Planning) and supply chain analytics. Supply chain analytics provides BI
Content for SAP Forecasting and Replenishment. The analytical applica-
tions for inventory management and stock ledger analytics supply data
for store profitability statements (for example, ending inventory and cost
of goods sold), for management reporting (for example, sales, margins,
ending inventory), and for other business processes such as open-to-buy
or pricing.

Analytical CRM Analytical CRM links customer information with information about mate-
and data mining rial groups and articles. Analytical CRM on the basis of SAP CRM offers
retail companies increased clarity of the degree of customer retention
and customer lifetime value, for example, with ABC loyalty analyses.
Furthermore, the methods of analytical CRM can be used to tap cross-
selling potential with assortment and sales analyses; customers and store
comparisons are possible with cluster analyses, and campaigns can be
measured in terms of their success.

3.8 SAP NetWeaver Process Integration

Decentral system Many retail companies have IT landscapes that consist of isolated sys-
landscapes tems and datasets: POS systems are linked to back office solutions, which
are interlinked themselves. Such disparate system landscapes impede
cross-system business processes. Financial management, inventory track-
ing, and tracing in logistics and analyses are often associated with consid-
erable investment and personnel costs. It is not unusual for connections
between systems to be so inflexible that any adjustments to company-
specific requirements lead to long-lasting cost increases.

SAP NetWeaver PI This is where SAP NetWeaver Process Integration (SAP NetWeaver PI, also
known as SAP Exchange Infrastructure or SAP NetWeaver XI) comes
into play. This application acts as a central storage point for integration
knowledge from all connected systems. It removes the need to search

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 SAP NetWeaver Process Integration    3.8

through different systems; relevant information can be accessed cen-

trally. The following explanations relate to releases XI 3.0 Exchange
Infrastructure, XI 7.0 SAP NetWeaver Usage Type Process Integration,
and XI 7.10 SAP NetWeaver PI.

With SAP NetWeaver PI, integration knowledge allows cross-system

business processes to be put into practice with ease by connecting sys-
tems that were implemented by different manufacturers (SAP and non-
SAP) in different versions and programming languages (Java, ABAP, and
so on). Its foundation is an open architecture based on open standards,
for example:

EE XML (Extensible Markup Language)

EE SOAP (Simple Object Access Protocol)
EE XSD (XML Schema)
EE WSDL (Web Service Description Language)
EE XSLT (Extensible Stylesheet Language for Transformation)
EE XPath (XML Path Language)
EE BPEL (Business Process Execution Language)

SAP NetWeaver PI drastically reduces the number of interfaces to be Covering the

maintained, because all connected systems only identify the Integration lifecycle of an
integration
Server as a partner system. With SAP NetWeaver PI, the entire lifecycle
of an integration is covered: designing cross-system business processes
and the associated interfaces and mappings, configuring the distribu-
tion rules for messages, executing the integrated business processes, and
monitoring the message flow.

SAP NetWeaver PI offers the following basic services:

EE Modeling and design of messages, transformations (mappings), and

cross-system integration processes
EE Configuration and control of collaborative processes (processes in the
business world that require a cross-system implementation) and the
underlying message flow
EE Runtime for message and process control
EE Adapter Engine for integrating heterogeneous system components

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 3    Master Data, Forecasts, Analyses, and Connecting Applications

EE Central monitoring of message flow and processes

Both A2A (application-to-application) and B2B (business-to-business) sce-

narios are supported.

3.8.1 Implementation Phases and Architecture

Three phases are involved in implementing a collaborative, cross-sys-
tem process, each of which is reflected in the key components of the
architecture.

Figure 3.16 will help you gain a clearer understanding of the architecture
of SAP NetWeaver PI.

Integration Builder (IB) Central Monitoring

SAP
Systems

3rd Party
Integration Integration Integration Systems
Repository Directory Server
(IR) (ID) (IS) 3rd Party
Middleware
Component

Marketplace/
Business
Partner

System Landscape Directory (SLD)

Design Configuration Runtime

Figure 3.16  Architecture of SAP NetWeaver PI

Design
Interfaces and The first step is to draft the design in the Integration Repository of the
mappings Integration Builder, which includes the required interfaces and map-
pings. The interfaces can either be described as new, system-indepen-
dent interfaces and then be implemented as proxies (outside-in devel-
opment) or be based on existing functionality (inside-out development).

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 SAP NetWeaver Process Integration    3.8

Alternatively, both of these approaches can be combined. During the

design time, the message exchange between application components is
described in a purely logical manner, that is, independently of actual,
installed systems.

Configuration
The next step is the configuration of the Integration Builder in the Inte-
gration Directory, which involves setting up the collaborative process for
an actual system landscape. Design-time objects can be used as templates
for this purpose. In addition, conditions for selecting recipients (routing)
and mappings to the recipient interfaces can be defined.

The message flow in the Integration Server is then managed during run-
time on the basis of the configuration. The message flows themselves can
be monitored centrally.

The central storage locations for the design time (Integration Repository)
and the configuration time (Integration Directory) are processed in a
single tool, the Integration Builder.

Content from the System Landscape Directory serves as a basis for the
design, configuration, and runtime of SAP NetWeaver PI. This SAP prod-
uct is a central directory of descriptions of products, their software com-
ponents, logical and technical systems, and the product versions installed
on these systems.

Runtime
The SAP NetWeaver PI runtime consists of several components, which
are shown in Figure 3.17.

The central component is the Integration Server, which receives messages Integration Server
from the application systems (Integration Engine and Adapter Engine)
and forwards them on the basis of the central configuration (Integration
Engine). The message format used by the Integration Server is based
on XML, which has become an established exchange format, not only
on the Internet. Other standards and tools build on the XML standard
and make it easier to use, for example, XSD, XSLT, and Xpath. XSLT, for
instance, can be used to define mappings that are needed because two

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 3    Master Data, Forecasts, Analyses, and Connecting Applications

communication partners have different message structures. Mappings

can be realized graphically in Java, ABAP, or XSLT.

Central Monitoring

Integration Server
Integration
Business Process Engine
Directory

Integration Engine

System
Landscape
Adapter Engine
Directory

XI XI
RosettaNet, … Protocol
Protocol

Local Partner
IDocs Connectivity
Integration Engine RFCs
File Kit
Proxy Runtime Apps of
DB 3rd Party
Business
JMS Apps Apps of
Proxy Partner
(small)
SAP Business
SAP Web AS 6.20 System Partner

Figure 3.17  Runtime Environment of SAP NetWeaver PI

As a standard format, XML also facilitates the process of connecting to

other systems and applications. If data from the external system can be
converted into XML with an adapter, conversion into other XML formats
and thereby also for other recipients is just another small step away.

All applications and systems exchange messages with each other by way
of the Integration Server because defining mappings in pairs (system to
system) would not be effective.

Three engines work hand in hand on the Integration Server:

Integration Engine The Integration Engine receives messages by means of the message pro-
tocol and executes central services such as routing and mapping for the
messages it receives. The Integration Engine is also used for messaging
in application systems (Local Integration Engine) with the proxy runtime
(outside-in development).

Adapter Engine Adapters are used to connect other systems to the Integration Server.
With the exception of the IDoc adapter and plain HTTP adapter, all

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 SAP NetWeaver Process Integration    3.8

adapters use the Adapter Engine, which provides the central services for
messaging, queuing, and security handling. Each adapter converts calls
or messages from a sender into the message format for the Integration
Engine. Conversely, the adapter also receives messages from the Integra-
tion Engine and converts them for the recipient. Therefore, instead of
having separate communication options for every combination of appli-
cation systems, one conversion into the respective message protocol is
all that is needed to enable communication with the Integration Server.

Expressed simply, the adapters and the Integration Engine restrict them- Business Process
selves to forwarding messages to the recipient(s) and, if necessary, per- Engine

forming mapping. As soon as a message has been sent successfully to the

recipient, processing of that message is complete. The Business Process
Engine now enhances the functionality of the Integration Server with
stateful message processing; the engine executes a process model and
awaits any further messages before continuing. Figure 3.17 also provides
an overview of all of the components that can communicate with the
Integration Server.

As part of SAP NetWeaver PI, SAP ships adapters for communication

within companies (A2A) and between companies (B2B).

EE A2A
For A2A integration, the standard shipment comes with adapters to
connect SAP systems (both by means of proxies and with RFC and
IDocs) and non-SAP systems, referred to as third-party applications
(for example, File, DB, JMS, SOAP, HTTP).
EE B2B
For B2B connections to business partners, the standard shipment
comes with adapters such as the RNIF adapter (RosettaNet) and the
CIDX adapter (Chem eStandards). In addition, smaller business part-
ners can be connected using what are known as partner connectivity
kits. These enable smaller business partners that do not have SAP
NetWeaver PI to exchange data with a business partner that uses SAP
NetWeaver PI.
EE Third party
SAP also works with partners that develop adapters for third-party
applications

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 3    Master Data, Forecasts, Analyses, and Connecting Applications

EE Custom developments and enhancements

SAP customers also have the option of developing or enhancing adapt-
ers. This is supported by supplementary modules.

3.8.2 Shipment of Central Integration Knowledge

PI Content The content of the Integration Repository, the central store for integra-
tion knowledge that is needed to describe collaborative processes, can be
shipped in its entirety. Together, these objects are referred to as Process
Integration Content, or PI Content.

A software component version from the System Landscape Directory is

used to define a cohesive collection of objects in the Integration Reposi-
tory as the smallest possible software component. SAP software com-
ponent versions are also the basis for software components containing
application objects in SAP systems, which means that PI Content and
application content can be assigned to a mutual software component
version in the SAP system.

In addition to the technical infrastructure, SAP provides predefined PI

Content to help customers achieve efficient process integration at as low
a cost as possible.

Out-of-the-box In many cases, this enables out-of-the-box integration without any need
integration for complex developments. All Integration Repository objects are pro-
vided as part of the PI Content. In addition to interfaces, these objects
also include mappings, configuration templates for message flow, and
templates for specific adapter configurations that can be used to config-
ure customer-specific system landscapes with the support of a wizard.

As a result, after implementing new PI Content directly on the basis of

their systems as described in the System Landscape Directory, SAP cus-
tomers can start using the delivered integration.

SAP partners can also develop and offer PI Content. An overview of the
PI Content currently offered by SAP can be found in the SAP Developer
Network (SDN) at https://www.sdn.sap.com/irj/sdn.

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 SAP NetWeaver Process Integration    3.8

3.8.3 Using SAP NetWeaver PI in SAP Retail

SAP NetWeaver PI is the central connection channel between all SAP for Main connection
Retail applications, connecting the retailing system to SAP NetWeaver channel

BI, SAP NetWeaver MDM, and SAP Forecasting & Replenishment. SAP
NetWeaver PI always comes into play when data is exchanged in different
formats and when large amounts of POS data are to be processed in a cost-
effective way together with the PIPE, as demonstrated by volume tests.

This section offers only a brief explanation of two integrations of retail

applications on the basis of SAP NetWeaver PI. For further integrations
on the basis of enterprise SOA, information about enterprise services
bundles is provided in Chapter 8 Enterprise SOA in SAP for Retail.

On the basis of PI Content alone, POS integration allows the SAP POS Point of sale
solution, SAP POS and SAP Enterprise POS, to be connected to an SAP integration

Retail system and the PIPE (see Figure 3.18).

SAP 3rd Party 3rd Party

SAP BI SAP ERP /
SAP POS Enterprise POS ERP
(PIPE ) SAP Retail
POS System System

R R R R R
R

SAP NetWeaver Process Integration (PI)

File JMS RFC IDOC

ARTS XML Adapter
Adapter Adapter Adapter Adapter
Integration
Directory
System Integration
Landscape Adapter Engine Engine
Directory

Business Process Engine

System
Integration Data
Landscape Data
Integration Server

Figure 3.18  POS Integration in SAP NetWeaver PI

Master data is sent from SAP Retail to the POS solution, and transaction
data flows back into the PIPE, which is part of SAP POS Data Management.
In addition, the PIPE and SAP Retail are still linked so that data that is not
aggregated and not based on SAP NetWeaver PI can be transferred.

In addition to the integration of SAP solutions, PI Content enables third-

party POS solutions and third-party ERP systems to be connected, pro-
vided they support the ARTS XML industry standard.

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 3    Master Data, Forecasts, Analyses, and Connecting Applications

Master data PI Content allows master data systems to be integrated with SAP
management NetWeaver Master Data Management Release 5.5 so that master data can
integration
be consolidated, harmonized, and managed centrally (see Figure 3.19).

SAP Master Data Management (MDM)

File System Management

File
Storage
Legacy
SAP ERP SAP SRM SAP CRM SAP Retail SAP BI
System

R R R R R R
R

SAP NetWeaver PI

Figure 3.19  MDM Integration

First, reference data (fixed values and Customizing values) are sent once
to the SAP NetWeaver MDM server. After this initialization has taken
place, master data can be sent continuously from connected systems cen-
trally by means of SAP NetWeaver PI to the MDM server, where it can be
consolidated and harmonized. The cleaned master data then passes back
through SAP NetWeaver PI to the connected systems and into an SAP
NetWeaver BI system so that central analyses can be performed.

The PI Content provided contains interfaces and their mappings as well

as the supported scenarios as configuration templates, and therefore
enables rapid integration.

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 5    Purchasing

dates confirmed (for example, the vendor’s staging date) are compared
with the planned target dates.

If the target and actual dates differ to such an extent that a predefined
tolerance is exceeded, actions can be triggered automatically (for exam-
ple, a cancellation threat can be issued to the vendor) or the need for
manual intervention can be flagged. In the latter case, the user can make
adjustments to the order in a workbench provided especially for this
purpose.

This calculation of dates, referred to as scheduling, is triggered in the pur-

chase order transactions (order list, grouped purchase order document,
and seasonal purchase order). Its purpose is to provide items with dates
that can be monitored. We can distinguish between backward scheduling
and forward scheduling.

When documents are generated in seasonal purchase order processing,

this is confirmed in the upstream shop-price report—provided the docu-
ments originate there. This means the buyer always has an overview of
the document flow in seasonal purchase order processing.

If a buyer wants to order an article that is new to the company (for

instance, when a vendor has a special offer or the buyer wants to intro-
duce a new seasonal article into the assortment), he can create a basic arti-
cle in seasonal purchase order processing that contains only the master
data relating to this particular purchase order. This enables the buyer to
order the article without it first being created in full as an item of master
data. It is always possible to complete the remaining master data later.

5.1.7 Invoice Verification

Entering vendor Invoices must be entered and verified efficiently. Logistics invoice veri-
invoices fication allows vendor invoices to be entered automatically by means
automatically
of EDI or XML or manually with reference to preceding documents.
The invoices can be verified automatically in dialog mode or in the
background. Errors identified during verification can be corrected in a
number of ways. The system forwards accepted invoices to financial
accounting. Figure 5.6 provides an illustration of the invoice verification
procedure.

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 The Solution – SAP Retail    5.1

Logistics Invoice
Verification

Check Basedon
Assignment Test
Goods Receipt
no Goods Receipt

Goods Receipt Supplier

Supplier
Repeated Checks
until Goods Receipt
Target Actual Cost
Invoice Settlement

Target ActualCost
Invoice Settlement
?
Payment ?
Payment

Figure 5.6  Invoice Verification Procedure

In logistics invoice verification, the system creates a target invoice based

on the articles and quantities entered in the goods receipt. This target
invoice is checked against the actual invoice issued by the vendor before
payment is made. Therefore, this process takes the actual goods receipt
as its basis.

The assignment test function can still be used as a background process Assignment test
step prior to invoice verification. This function is used to ensure that the
system only starts invoice verification if open goods receipts exist for an
invoice. An assignment test is quicker than a complete invoice check in
the background, because the system is required to process less data from
the database (for example, no article data is required) and perform fewer
checks and evaluations.

Another option presented by logistics invoice verification is based on the Evaluated receipt
concept of evaluated receipt settlement (ERS). Here, the system creates a settlement (ERS)

target invoice based on the articles and quantities entered in the goods
receipt, and the amount determined is paid to the vendor. The extent

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 5    Purchasing

to which a vendor agrees to the use of ERS—for all purchase items or

only return items—is defined in the vendor’s master record (purchasing
data).

The prepayment function allows invoices to be paid before they have

been checked. This is especially appropriate if a cash discount agreement
has been negotiated. In this case, the invoice is entered regardless of
whether a goods receipt exists. Payment to the vendor is then triggered.
To use this function, settings must be made in both Customizing and the
vendor master record.

Invoice Verification Process – Rough Outline

The vendor invoice is entered and assigned to the purchase orders or
goods receipts. This can take place in two ways:

EE Online in the system

EE Via EDI or XML, in which case the invoice data and numbers of the
corresponding reference documents are imported into the system
automatically in IDocs

When it comes to verifying the invoice, the actual invoice amount is

checked against the target invoice amount. On the basis of a tolerance
group, excessive invoices can be reduced automatically up to a fixed
limit. The vendor is automatically informed of any such reductions.
Incorrect invoices must be processed by the user, who must revise the
assignments, correct the conditions, and so on. The invoice is then sent
for verification again.

Revising and Posting Invoices in Financial Accounting

Incorrect invoices can be rectified in different ways:

EE By adapting conditions, for example, if a vendor discount has been

incorrectly maintained in the system
EE By excluding purchase orders or articles from an invoice, for example,
if an error was made when a vendor invoice was assigned to purchase
orders

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 The Solution – SAP Retail    5.1

EE By adjusting quantities or prices, for example, if the vendor issues an

invoice for a greater delivery quantity than was entered in the goods
receipt
EE By changing the tax code, for example, if the vendor invoice is based
on too high a tax rate

If the invoice is incorrect as a result of inaccurate data in the system

(for example, incorrectly maintained vendor conditions or tax code), the
buyer responsible is automatically notified when the error is corrected—
provided the relevant Customizing setting has been made.

Invoices that are identified as correct are transferred to financial account- Correct invoices
ing in the form of a posting record, where they are then posted. If finan-
cial accounting is run in another SAP system or an external system, the
posting records are transferred by remote function call (RFC).

5.1.8 Subsequent Settlement

Subsequent settlement, also known as vendor relationship, enables one- One-time or
time or periodic settlement of conditions to be deferred to a later time. periodic
settlement
The system automatically updates the relevant sales and settles the con-
ditions at times defined by the user.

Retailers and their business partners meet at regular intervals (for exam- Volume-rebate
ple, at the start of each year) to negotiate rebate arrangements for the arrangements with
validity period
forthcoming period (usually that year). The prices for individual articles
can be set directly, or end-of-period rebates can be agreed for one or
more articles. The results of these negotiations are entered in the system.
It is possible to backdate the commencement of a rebate arrangement,
which means sales in the past can be assigned to a new arrangement by
performing a retrospective compilation of statistics.

Throughout the validity period of the arrangement, orders are placed

with the respective goods suppliers, corresponding goods receipts are
posted, and all received vendor invoices are entered and verified. If the
respective Customizing settings have been made for the condition types
that appear in an arrangement, provisions are created for the conditions
concerned when the goods receipt is posted. Furthermore, sales subject

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 Index

A Business process engine, 89

Buying patterns, 282
Adapter Engine, 89
Affinity, 101
Aggregated Long-Term Forecast, 114 C
Aggregation, 78
Allocation of warehouse stock, 182 Call center, 279
Allocation table, 178 Category, 51
Processing, 178 Centralized procurement strategy, 174
Allocation with direct delivery (third- Change in Stock, 187
party processing), 182 CIF Technology, 211
Analytical applications, 80 Cleansing, 62
Analytical CRM, 84, 282 Closed loop, 106
Analytic Engine, 76 Collaborative planning, forecasting and
Article category, 47 replenishment (CPFR), 212, 221
Article grouping, 49 Collective purchase order, 181
Article hierarchy, 50 Items, 181
Article Master Data, 42, 46, 56, 66 Collective purchase orders, 142
Article type, 47 Composite Applications, 34
Article valuation, 194 Configuration, 36
Assortment Management, 102 Configurator, 246, 253
Automated replenishment, 224 Connectivity kits, 307
Automatic allocation table creation, 179 Consumption-based planning, 174
Cross-docking, 173, 183, 203
Customer cards, 285
B Customer data, 235
Customer loyalty marketing, 83, 287
Back office, 242 Customer Master Record, 53
Bar code, 207, 236 Customer relationship management, 279
Benefits of enterprise SOA, 302 Customer retention, 231
BI Content, 81, 109 Customs processing, 166
Billing, 192
Bin management, 171
Bottom-Up planning, 100, 102 D
Bullwhip effect, 220
Business explorer, 76 Data mining, 76, 84
Business function, 38 Data pool organizations, 59
Retail, 38 Data Warehousing functionality, 74
Business Intelligence Platform, 74 Data Warehousing workbench, 76
Business network transformation, 297 Default service schedule, 274
Business Package, 275 Demand group, 124
Business Partner Data, 53 Demand influencing factors (DIF), 225

335

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 Index

Demand reality, 68 In SAP EWM, 202

Distribution chain category, 52 Processing with a reference document,
Document flow, 150 185
Downtime security, 247, 256 Without reference to a document
stored in the system, 186
Governance, 300
E Grouped purchase order document, 149

e-business, 17
E-commerce, 290 H
E-marketing, 289
Embargo check, 165 Handling unit management, 205
Employee data, 272 Handling units, 189, 205
Enhancement Package, 38 Head office, 252
Enterprise service bundles, 307 Server, 246, 251
E-service, 291
ES Workplace, 312
European Union, 167 I
Evaluated receipt settlement, 151
Extensible Markup Language (XML), 87 Identification standard, 42
Extensible Stylesheet Language for Import and export control, 165
Transformation (XSLT), 87 Inbound interface, 243
Indirect purchase requisition, 174
Industry extension, 38
F In-store inventory management, 269
In-store processor, 257
Finding storage bins, 203 Integrated warning system, 229
Flow-through, 173 Integrating handhelds, 264
Merchandise-driven, 183 Integrating POS data, 261
Recipient-driven, 183 Integration directory, 87
Forecast-based planning, 176 Integration engine, 88
Forecast optimization, 127 Integration knowledge, 84
Forecasts, 69, 123, 272 Integration repository, 86
Foreign trade, 196 Integration server, 87
Franchise, 264 Intra-European-Union flows of goods,
167
Intranet, 260
G Inventory management, 192
Investment buying, 140
Generic article, 47 Invoice verification, 150
Global Data Synchronization, 59
Global transport management, 172
Goods issue, 188 J
In SAP EWM, 204
Posting, 190 J2EE, 250
Goods movements, 188 Just in time, 172
Goods receipt, 184

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K Order entry, 279
Knowledge management, 281
L
Layout workbench, 118
Listing, 55
Load building, 140
M
Markdowns, 108, 126
Mass processing, 55
Master Data administration, 43, 57
Master Data retrieval, 44
Material group, 49
Material group Hierarchy, 49
Merchandise and Assortment Planning,
97, 111
Merchandise distribution, 173, 177, 183
Merchandise plan, 111
Mobile sales devices, 248
Model-driven development, 300
Model-View-Controller approach, 266
Multichannel retailing, 232
Multiformat retailer, 242
Multimedia product catalog, 292
N Pull process, 135, 177
Networks, 256
Normal purchase order, 137
O
Offline capability, 257
OLAP, 76
Operational Assortment Planning and
Control (OAPC), 118, 136
Optimization procedure, 127
Orchestration, 298
213_5242_Book.indb 337
Index
Order list items, 149
Order optimizing, 139
OTB check, 160
OTB Planning, 112
Outbound interface, 243
P
Payment transaction, 236
PCI DSS, 239
Perishables planning, 143
Physical inventory, 197, 206
Pick-handling unit, 189
Picking, 189
PI Content, 90
PIPE, 79
Planning scenarios, 108
Planning tools, 74
Point of sale, 226, 237
POS client, 247, 254
POS Integration, 91
POS Manager, 253
Price elasticity, 122
Price image, 122
Price management, 234
Price planning workbench, 118
Price reduction, 126, 128
Price-shop report, 147
Procurement optimization, 156
Procurement strategy, 174
Promotion management, 234
Purchase order monitoring, 160
Push process, 136, 177
Putaway and picking strategies, 203
Putting articles away, 185
Q
Quality management, 204
Quantity optimizing, 140
Quants, 205
337
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 Index

R SAP Forecasting and Replenishment,

219
Radio data transmission integration, 207 F&R Processor, 228
Radio frequency handhelds, 248 SAP Global Trade Services, 168
Reference article, 50 SAP MAP, 104, 108, 119
Release procedure, 141 SAP Markdown Optimization, 126
Reorder point planning, 175 SAP NetWeaver BI, 72, 106
Replenishable basics, 103 SAP NetWeaver BI Accelerator, 78
Replenishment control, 204 SAP NetWeaver Developer Studio, 308
Replenishment parameter, 225 SAP NetWeaver MDM, 57, 62, 64, 92
Replenishment planning, 176 SAP NetWeaver PI, 84, 91
Requirement quantity optimization, 224 SAP POS DM, 82, 244
Requirements calculation, 224 SAP Price Optimization, 122
Requirements planning, 174 SAP Promotion Optimization, 125
Resource management, 208 SAP Retail, 17
Retail method of accounting (RMA), 196 SAP Risk Management, 167
Retail store, 234 SAP Transportation Management, 214
Return on investment (ROI), 141 SAP Workforce Management, 270
RFID, 207 ABAP component, 277
Risk management, 167 Java component, 277
Scheduling, 150
Scoring system, 156
Seasonal goods, 103
S
Seasonal procurement, 145, 161
Sales audit, 244 Self checkout, 241
Sales channels, 232 Semantics, 300
Sales data, 222, 227 Service, 240
Sales figures, 80 Service-oriented architecture (SOA), 297
Sales history, 123 Shift planning, 270
Sales order, 262 Shipping procedure, 166
Sales promotion effectiveness, 125 Single article, 47
Sanctioned party list screening, 165 Site, 52
SAP Auto-ID Enterprise, 208 Category, 52
SAP Auto-ID Infrastructure, 208 Master Data, 52
SAP Community Network, 312 Slotting, 206
SAP Compliance Management, 164 Slow seller management, 116
SAP Customs Management, 166 Solution Map, 29
SAP Demand Management, 129 Special forms of distribution, 182
SAP Developer Network, 90 Split valuation, 195
SAP Electronic Compliance Reporting, Spreadsheet, 107
167 Stability criteria, 300
SAP Event Management, 215 Stable upgrade, 39
SAP Event Manager, 160 Standard price procedure, 194
SAP Extended Warehouse Management, Stock transfer, 188
201 Storage Bins, 187

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Storage Types, 187
Store group, 98
Store Manager, 247
Store operations, 240
Store planning, 96, 110
Store server, 245, 251, 254
Strategic planning, 94, 95
Structured Article, 48
Subsequent settlement, 153
Suite of Business Intelligence tools, 74
Supply chain lifecycle, 225
Supply chain management, 171
Supply source determination, 138
Switch framework, 38
T Warehouse automation, 209
Tactical control, 224
t-business, 18
Time-phased planning, 175
Time recording, 273
Top-down planning, 99, 102
Trade BI foundation, 120
Transaction logs, 246
Transfer posting, 188
Transportation cross-docking, 203
Two-step picking, 189
U
Usability of the article, 193
213_5242_Book.indb 339
Index
V
Valuating at cost price, 195
Valuation at retail, 195
Valuation procedure, 194
Value-added services, 204
Value chain, 28
Value-Only Article, 49, 50
Variations of perishables processing, 143
Vendor evaluation, 156
Vendor-managed inventory, 217
Vendor Master Record, 53
W
Warehouse control units, 209
Warehouse management monitor, 207
Warehouse processing, 184
Warehouse structure, 205
Wave pick management, 204
Web browser, 265
Web channel analytics, 291
Web channel platform, 292
Web crawler enablement, 293
Web shop, 280, 287
Y
Yard management, 202
339
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