Professional Documents
Culture Documents
Sap Afs
Sap Afs
APPAREL
AND FOOTWEAR
(SAP
AFS)
SAP Functions in Detail
Copyright 2002 SAP AG. All rights reserved.
No part of this publication may be reproduced or transmitted
in any form or for any purpose without the express permission
of SAP AG. The information contained herein may be changed
without prior notice.
Some software products marketed by SAP AG and its
distributors contain proprietary software components of
other software vendors.
Microsoft
, WINDOWS
, NT
, EXCEL
, Word
, PowerPoint
, DB2
, Parallel Sysplex
,
MVS/ESA, AIX
, S/390
, AS/400
, OS/390
, OS/400
, iSeries,
pSeries, xSeries, zSeries, z/OS, AFP, Intelligent Miner, Web-
Sphere
, Netfinity
, Tivoli
Dynamic
Server
TM
are trademarks of IBM Corporation in USA and/or
other countries.
ORACLE
, X/Open
, OSF/1
, and Motif
, Program Neighborhood
,
MetaFrame
, WinFrame
, VideoFrame
, MultiWin
and other
Citrix product names referenced herein are trademarks of Cit-
rix Systems, Inc.
HTML, DHTML, XML, XHTML are trademarks or registered
trademarks of W3C
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
CONTENTS
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
AFS)
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.
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.
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.
9
CHARACTERISTICS OF THE APPAREL AND
FOOTWEAR INDUSTRY
?
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.
10
Figure 1: Decision Support for Global Sourcing
Vendor Performance
WHICH QUALITY
Tooling Amortization
Production Complexity
Production Capacity Shortest ETD
Factory Status
PURCHASE
ORDER
Vendor
Product
Price
Quantity
Delivery Date
etc.
WHICH PRICE
WHERE
WHAT
PURCHASING
VENDOR VENDOR VENDOR VENDOR OUTSOURCE INTERNAL
Lowest FOB Costs
Lowest Landed Costs
Enterprise Demand
?
?
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.
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
TYPE OF SHOE
STYLE
COLOR (WAY)
SIZE
Running
Style 4711
WHT/RED/GRN WHT/RED/BLK
W-8 R-8 N-8 W-9 R-9 N-9 ... ... ...
Basketball
Style 4712
WHT/BLU/BLK
Figure 2: Product Structure: SKU Style/Color/Size
Apparel and footwear companies promote a variety of product
groups. Each of these groups may reflect some of the following
aspects:
Style/color/size
Production planning
Production planning and control
Sales and operations planning
Production demand management
Material requirements planning (MRP)
Bill of materials (BOM) and routing
Capacity planning production orders and combined
orders
Product controlling
Overview
Split valuation with AFS materials
Product costing of AFS products
Cost object controlling
Profitability analysis for AFS products
STYLE/COLOR/SIZE
Style/Color/Size Master Data
SAP AFS has enhanced standard SAP
R/3
data structures to
facilitate the handling of potentially very large volumes of data.
These enhancements derive largely from the size and seasonal
requirements of the industry and relate to the building of prod-
uct levels based on style/color/size as used throughout the
logistical cycle.
A grid has been developed to support these specific enhance-
ments and safeguard high levels of performance. This tool
ensures that as styles change from season to season, the enor-
mous number of stock keeping units (SKUs) can still be main-
tained quickly and easily. Copy and referencing functions also
support volume changes due to seasonal influences. The prod-
uct characteristics are represented as AFS dimensions. Dimen-
sions can be flagged as being relevant to certain applications in
SAP AFS (for example, for material requirements planning,
seasons, or pricing) and thereby increase the flexibility of grid
processing. Dimensions are individually definable for every
customer and product.
Categories
In addition to grid dimensions, you can further specify product
characteristics by categories. Categories provide an additional
layer of detail, allowing you to segregate levels of quality, cus-
tomer segments, country of origin, and so on. The SAP AFS
management of categories has been further enhanced so that
category fields can be flagged as being relevant to certain appli-
cations in SAP AFS (for example, for planned requirements
consumption, bill of material maintenance, or sales status). It
is therefore no longer mandatory to maintain all the possible
combinations of valid categories.
16
KEY CAPABILITIES
17
Figure 6: Style/Color/Size Master Data in Product Grid Format and Grid Processing
Valid Sizes for Color BLACK
Dimension 1: Color
Dimension 2: Waist
Dimension 3: Inseam
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.
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.
18
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.
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.
mySAP
TM
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.
mySAP
TM
Customer Relations Management (mySAP
TM
CRM)
connects customers to the knowledge, people, and processes of
a company's entire value network, creating customer value
leadership through:
Returns statistics
ABC analysis
Seasons/collections/themes
Supplier loyalty
Invoice verification
Stock statistics
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
Figure 16: The Elementary Field Concept
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
. . . . . . . . . . . . . . . . . .
SAP R/3
MATERIAL SALES VALUE
T-Shirt 4711 10.00 USD
T-Shirt 4711 15.00 USD
Shoes 0815 25.00 USD
Coat 666 15.00 USD
. . .
GRID VALUE
XL BLK
L Red
BLK 44
56 BLK
. . .
CATEGORY
1st DE
1st DE
US narrow
DE
. . . . . .
EXTRACTION
WHAT IS THE SALES VALUE
OF ALL MATERIALS
IN COLOR BLACK?
WHAT IS THE SALES VALUE OF ALL
MATERIALS WE MANUFACTURED
IN GERMANY?
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:
Vendor rating: The user can specify and weight the main
criteria for evaluating a vendor.
Periodic inventory
Continuous inventory
Cycle counting
APO
mySAP
TM
Supply Chain Management (mySAP
TM
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
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:
34/32 Large
COSTING
SMALL
$10
COSTING
LARGE
$12
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
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.
53
Figure 36: Production Order Processing
GOODS ISSUE
Production
Order
TARGET COSTING
GOODS
RECEIPT
SETTLEMENT
CONFIRMED
OPERATIONS
VALUATION AT DIMENSION OR CATEGORY LEVEL
P + L
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.
At the same time, logistical make-to-order production can
also be carried out without processing sales order controlling.
In this case, the cost object controlling results in a production
order as in make-to-stock production.
PROFITABILITY ANALYSIS FOR AFS PRODUCTS
Profitability analysis in mySAP.com enables you to evaluate
market segments or strategic business units with respect to
your companys profit or contribution margin. The market 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.
Production
Order
The main goal is to provide the areas of sales, marketing, prod-
uct management, and corporate planning with information to
support internal accounting and decision making.
Apparel and Footwear Specific Characteristics
Master data or basic structures can be freely defined for prof-
itability analysis. You determine the analysis objects (character-
istics) and the analysis value fields for your profitability analy-
sis. The system creates a multidimensional analysis object from
the combination of characteristics, from which an analysis
can be planned and identified by the comparison of costs and
revenues.
In addition to the characteristics region, customer, and so on, you
can also integrate a series of other industry-specific informa-
tion. In this way, you can establish the profit that is issued with
certain seasonal products. You can also ascertain how a partic-
ular grid value or grid-value group contributed
to or affected this profit.
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
CHARACTERISTICS
Sales Region North
Product Prod1
Product Group Snowboard
Customer Cust1
Customer Group Wholesale
Season Wi2001
Valuation Type L
Category FD
Grid Value 164
SAP AFS
VALUE FIELDS
Revenue 980
Sales Deduction 100
Planned Freight Costs 150
Cost of Sales 550
PROFITABILITY
SEGMENT
Revenue
Sales Deduction
Cost of Goods Sold
S
e
a
s
o
n
Valuation Type
G
r
i
d
V
a
l
u
e
Revenue
Sales Deduction
Cost of Goods Sold
Figure 37: Profitability Analysis for SAP AFS Products
55
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: