Sappress Sap for Retail

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 1.2 1.3 1.4

Subject of This Book  ...................................................... Aim of This Book  ........................................................... Target Groups of This Book  ............................................ Structure of the Book  . ...................................................

17 19 19 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  ................................. 3.1.1 Motives for Master Data Administration  . ............ 3.1.2 The Most Important Master Data in SAP Retail  .... 3.1.3 A Word About Mass Processing  . ......................... 3.1.4 Data Retention Levels for Article Master Data  ..... 3.2 Possibilities of Master Data Administration  .................... 3.2.1 What Is the Task of SAP NetWeaver Master Data Management?  .....................................................

41 43 45 55 56 57 57

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 Contents

3.3

3.4 3.5

3.6 3.7

3.8

3.2.2 Global Data Synchronization with SAP NetWeaver MDM  . ................................................................ The Architecture of the Master Data Solution – SAP NetWeaver MDM and SAP Retail  .................................. 3.3.1 SAP NetWeaver MDM  ........................................ 3.3.2 SAP Retail Operating with SAP NetWeaver MDM  . ................................................................ Software in Action  ......................................................... The Forecasting Solution  . .............................................. 3.5.1 The Right Article at the Right Place at the Right Time at the Right Price  ........................................ 3.5.2 What If...?  ........................................................... The Analysis Solution – SAP NetWeaver Business Intelligence  . .................................................................. The Architecture of SAP NetWeaver BI  .......................... 3.7.1 How Can the Requirements of Mass Storage Methods and Administration Be Met?  ................. 3.7.2 PIPE – An Application of SAP NetWeaver BI for the Retail Sector  . ................................................ 3.7.3 Analytical Applications for the Retail Sector  ........ 3.7.4 Examples of Real Analytical Applications  ............. SAP NetWeaver Process Integration  . ............................. 3.8.1 Implementation Phases and Architecture  . ........... 3.8.2 Shipment of Central Integration Knowledge  ........ 3.8.3 Using SAP NetWeaver PI in SAP Retail  ................

59 62 62 65 66 68 69 71 72 74 77 79 80 81 84 86 90 91

4 Planning  ........................................................................ 93 4.1

What Is Planned and How  ............................................. 4.1.1 Strategic Planning  . .............................................. 4.1.2 Store Planning  ..................................................... 4.1.3 Merchandise and Assortment Planning  ................ 4.2 The Solution – SAP Merchandise and Assortment Planning   ....................................................................... 4.2.1 NetWeaver BI Integrated Planning – Background Knowledge   . ....................................................... 4.2.2 SAP MAP – Functions   . .......................................

93 94 96 97 104 106 108

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Contents

4.3 4.4 4.5

4.6 4.7

4.2.3 Slow Seller Management – Price Planning Workbench  ......................................................... SAP MAP Architecture  ................................................... Software in Action – SAP MAP  ...................................... The Solution – SAP Demand Management  ..................... 4.5.1 SAP Price Optimization  ....................................... 4.5.2 SAP Promotion Optimization  . ............................. 4.5.3 SAP Markdown Optimization  .............................. 4.5.4 Optimization Procedure  ...................................... SAP Demand Management Architecture  ........................ Software in Action – SAP Demand Management  ............

116 119 121 122 122 125 126 127 129 131

5 Purchasing  . ................................................................... 133 5.1

5.2

5.3 5.4

5.5 5.6

The Solution – SAP Retail  . ............................................. 5.1.1 Normal Purchase Order  ....................................... 5.1.2 Supply Source Determination  .............................. 5.1.3 Order Optimizing  ................................................ 5.1.4 Collective Purchase Orders  .................................. 5.1.5 Perishables Planning  ............................................ 5.1.6 Seasonal Procurement – Fashion Industry  ............ 5.1.7 Invoice Verification  . ............................................ 5.1.8 Subsequent Settlement  ....................................... 5.1.9 Vendor Evaluation  ............................................... The Architecture of Purchasing  ...................................... 5.2.1 Integration View  ................................................. 5.2.2 Seasonal Procurement – Process Flow  . ................ Software in Action  ......................................................... The Solution for Global Trade – SAP Global Trade Services  ......................................................................... 5.4.1 Import and Export Control (SAP Compliance Management)  . .................................................... 5.4.2 Customs Processing (SAP Customs Management)  . .................................................... 5.4.3 Risk Management (SAP Risk Management)  . ........ 5.4.4 SAP Electronic Compliance Reporting  . ................ The Architecture – SAP GTS  ........................................... Software in Action  .........................................................

133 137 138 139 142 143 145 150 153 156 156 157 160 162 163 164 166 167 167 168 170

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 Contents

6 Order Processing – Supply Chain Management  ........... 171 6.1 Today’s Logistics Requirements  ...................................... 6.2 The Solution – SAP Retail  . ............................................. 6.2.1 Requirements Planning  . ...................................... 6.2.2 Requirements Planning Type and Requirements Planning Procedure  ............................................. 6.2.3 Replenishment Planning  ...................................... 6.2.4 Merchandise Distribution  .................................... 6.2.5 Warehouse Processing  ......................................... 6.2.6 Inventory Management  ....................................... 6.2.7 Foreign Trade  ...................................................... 6.2.8 Physical Inventory  ............................................... 6.3 Supply Chain Management in SAP Retail – The Architecture  . ................................................................. 6.4 Software in Action  ......................................................... 6.5 The Solution – SAP Extended Warehouse Management   ................................................................ 6.5.1 Goods Receipt in SAP EWM  ................................ 6.5.2 Goods Issue in SAP EWM  .................................... 6.5.3 Bin Management and Optimization  ..................... 6.5.4 Higher-Level Processes  ........................................ 6.5.5 Reporting  ............................................................ 6.5.6 SAP EWM for Retail  ............................................ 6.6 The Architecture – SAP EWM  ........................................ 6.7 Software in Action  ......................................................... 6.8 Other SAP Supply Chain Management Applications for the Retail Sector  ....................................................... 6.8.1 SAP Transportation Management  ........................ 6.8.2 SAP Event Management  ...................................... 6.8.3 SAP Supply Network Collaboration  . .................... 6.9 The Solution – SAP Forecasting and Replenishment  ....... 6.9.1 Benefits of SAP Forecasting and Replenishment   .... 6.9.2 Two Main Processes – Automated Replenishment and Tactical Control  . ........................................... 6.10 The Architecture – SAP Forecasting and Replenishment  . 6.11 Software in Action  .........................................................

171 173 174 175 176 177 184 192 196 197 198 200 201 202 204 205 206 209 210 211 213 214 214 215 216 219 220 223 225 229

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Contents

7 Multichannel Retailing and Customer Service  ............. 231 7.1 7.2 7.3

7.4

7.5 7.6

7.7 7.8

7.9 7.10 7.11 7.12 7.13 7.14

Today’s Customer Service Requirements  ........................ The Sales Channel of Retail Stores  . ................................ Interface to the Consumer – SAP POS and SAP Enterprise POS  .............................................................. 7.3.1 What Data Is Sent to POS Systems and What Data Is Returned to the Retailing System?  ........... 7.3.2 The Latest Generation of POS Solutions  . ............. 7.3.3 Integration with SAP NetWeaver BI  ..................... The Architecture – SAP POS  . ......................................... 7.4.1 Downtime Security  . ............................................ 7.4.2 The Special Case of Mobile Devices – Enhanced Customer Service with Mobile POS  ..................... Software in Action – SAP POS  . ...................................... The Architecture – SAP Enterprise POS  .......................... 7.6.1 Central System Management  ............................... 7.6.2 What Happens When Someone Makes a Standard Purchase?  ............................................. 7.6.3 Downtime Security – High Available Store  ........... Software in Action – SAP Enterprise POS  ....................... The Solution – SAP Retail Store  . .................................... 7.8.1 SAP ERP in the Store  ........................................... 7.8.2 Central Maintenance and Administration  . ........... The Architecture – SAP Retail Store  ............................... Software in Action – SAP Retail Store  ............................ The Solution – SAP Workforce Management  .................. The Architecture – SAP Workforce Management  ............ Software in Action – SAP Workforce Management  ......... The Solution – Multichannel Retailing with SAP Customer Relationship Management  ............................. 7.14.1 Order Entry   ........................................................ 7.14.2 Order Processing  ................................................. 7.14.3 Evaluating Customer Relationships  ...................... 7.14.4 Multichannel Marketing  ...................................... 7.14.5 Customer Cards for Customer Retention in the Store  ......................................................... 7.14.6 The Internet as a Distribution Channel  ................

231 234 235 237 240 244 245 247 248 249 250 251 255 256 258 259 259 260 265 267 270 274 278 279 279 280 281 285 285 287

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

295 295 297 299 301 304 305 305 306 306 306 307 307 308 309 309 311 311 312

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

Appendices A B

Glossary  .................................................................................. 323 The Author  ............................................................................. 333

Index.............................................................................................. 335 12

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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 depending on the company’s needs. At its heart lies the SAP Retail retailing system, 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 retail 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. Sluggish sales markets and increasing competition in retailing make it essential for retail companies to optimize their internal processes. In times of e-business and t-business, as well as global and interorganizational requirements of supply chains and customer relationship management, companies are regularly forced to redesign their business processes.

Information technology as a success factor

E-business refers to online shopping, that is, sales on the Internet. End customers can browse electronic catalogs on the Internet, select products, 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-business is often subsumed by e-business. The most recent development is m-business: sales through mobile telephones. Principles for success

To keep up with the constantly growing demands of the market, every 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 procurement 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 retail systems

Modern systems in retail respond to changing demands, which means they can do more than just control the flow of goods and report sales 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 significant 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 information 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 customer retention.

1.2

Aim of This Book

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

Overall understanding of SAP for Retail

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 further 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 the retail sector

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

Another important target group is our partners, who want an overview 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 technical understanding; knowledge of SAP products such as SAP ERP, the Business Suite, or SAP NetWeaver® is an advantage.

1.4 Modular structure

Structure of the Book

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 offering 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 sector. 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 Applications 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 administration 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 applications. We also explain something that is essential to the understanding 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 possible? 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 existing 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 system? When do you accept them, and when do you have to modify them? What logistical factors must be taken into account in purchasing? 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 fashion 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 retailers that operate online only, the traditional store still has a considerable 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 decisions 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 demonstrates 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 changing business processes and requirements? How can a retailer minimize 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 applications 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 and data mining

Analytical CRM links customer information with information about material 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 crossselling 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 landscapes

Many retail companies have IT landscapes that consist of isolated systems 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 tracking, and tracing in logistics and analyses are often associated with considerable investment and personnel costs. It is not unusual for connections between systems to be so inflexible that any adjustments to companyspecific 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 centrally. 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 systems that were implemented by different manufacturers (SAP and nonSAP) 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 maintained, because all connected systems only identify the 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 distribution rules for messages, executing the integrated business processes, and monitoring the message flow.

Covering the lifecycle of an integration

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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EE

Central monitoring of message flow and processes

Both A2A (application-to-application) and B2B (business-to-business) scenarios are supported.

3.8.1

Implementation Phases and Architecture

Three phases are involved in implementing a collaborative, cross-system 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

Integration Repository (IR)

Integration Directory (ID)

Integration Server (IS)

3rd Party Systems 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 mappings

The first step is to draft the design in the Integration Repository of the Integration Builder, which includes the required interfaces and mappings. The interfaces can either be described as new, system-independent interfaces and then be implemented as proxies (outside-in development) 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 Integration 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 runtime 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 product is a central directory of descriptions of products, their software components, 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 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

Integration Server

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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 Directory

Business Process Engine

Integration Engine System Landscape Directory

Adapter Engine XI Protocol

Local Integration Engine

RosettaNet, …

IDocs RFCs

Proxy Runtime Proxy

SAP Web AS 6.20

File DB JMS

3rd Party Apps

SAP System

Apps of Business Partner

XI Protocol

Partner Connectivity Kit Apps of (small) Business 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 protocol 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 Integration Engine and converts them for the recipient. Therefore, instead of having separate communication options for every combination of application 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 themselves to forwarding messages to the recipient(s) and, if necessary, performing 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.

Business Process Engine

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 partners 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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EE

Custom developments and enhancements SAP customers also have the option of developing or enhancing adapters. 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 integration 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 Repository as the smallest possible software component. SAP software component 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 integration

In many cases, this enables out-of-the-box integration without any need for complex developments. All Integration Repository objects are provided 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 configure 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 customers 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 Retail applications, connecting the retailing system to SAP NetWeaver 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 costeffective way together with the PIPE, as demonstrated by volume tests.

Main connection channel

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 solution, SAP POS and SAP Enterprise POS, to be connected to an SAP Retail system and the PIPE (see Figure 3.18).

R

SAP POS

SAP Enterprise POS R

SAP BI (PIPE )

R

SAP ERP / SAP Retail

R

3rd Party POS System R

Point of sale integration

3rd Party ERP System R

SAP NetWeaver Process Integration (PI)

File Adapter

JMS Adapter

RFC Adapter

IDOC Adapter

ARTS XML Adapter

Integration Directory System Landscape Directory

Integration Data

System Landscape Data

Integration Engine

Adapter Engine

Business Process Engine 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 thirdparty POS solutions and third-party ERP systems to be connected, provided they support the ARTS XML industry standard. 91

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Master data management integration

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

SAP Master Data Management (MDM)

R

File System Management File Storage

R

SAP SRM

SAP CRM

R

R

SAP Retail

R

SAP ERP

SAP BI

R

Legacy System 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 centrally 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 example, 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 purchase 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 documents 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 introduce a new seasonal article into the assortment), he can create a basic article 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 Entering vendor invoices automatically

Invoice Verification

Invoices must be entered and verified efficiently. Logistics invoice verification allows vendor invoices to be entered automatically by means 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 Goods Receipt

Assignment Test no Goods Receipt

Supplier

Goods Receipt

Actual Cost Settlement

Target Invoice

? Payment

Repeated Checks until Goods Receipt

Supplier

ActualCost Settlement

Target Invoice

?

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 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.

Assignment test

Another option presented by logistics invoice verification is based on the concept of evaluated receipt settlement (ERS). Here, the system creates a target invoice based on the articles and quantities entered in the goods receipt, and the amount determined is paid to the vendor. The extent

Evaluated receipt settlement (ERS)

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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 accounting in the form of a posting record, where they are then posted. If financial accounting is run in another SAP system or an external system, the posting records are transferred by remote function call (RFC).

5.1.8

Correct invoices

Subsequent Settlement

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

One-time or periodic settlement

Retailers and their business partners meet at regular intervals (for example, at the start of each year) to negotiate rebate arrangements for the 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.

Volume-rebate arrangements with validity period

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 Adapter Engine, 89 Affinity, 101 Aggregated Long-Term Forecast, 114 Aggregation, 78 Allocation of warehouse stock, 182 Allocation table, 178 Processing, 178 Allocation with direct delivery (thirdparty processing), 182 Analytical applications, 80 Analytical CRM, 84, 282 Analytic Engine, 76 Article category, 47 Article grouping, 49 Article hierarchy, 50 Article Master Data, 42, 46, 56, 66 Article type, 47 Article valuation, 194 Assortment Management, 102 Automated replenishment, 224 Automatic allocation table creation, 179

B Back office, 242 Bar code, 207, 236 Benefits of enterprise SOA, 302 BI Content, 81, 109 Billing, 192 Bin management, 171 Bottom-Up planning, 100, 102 Bullwhip effect, 220 Business explorer, 76 Business function, 38 Retail, 38 Business Intelligence Platform, 74 Business network transformation, 297 Business Package, 275 Business Partner Data, 53

Business process engine, 89 Buying patterns, 282

C Call center, 279 Category, 51 Centralized procurement strategy, 174 Change in Stock, 187 CIF Technology, 211 Cleansing, 62 Closed loop, 106 Collaborative planning, forecasting and replenishment (CPFR), 212, 221 Collective purchase order, 181 Items, 181 Collective purchase orders, 142 Composite Applications, 34 Configuration, 36 Configurator, 246, 253 Connectivity kits, 307 Consumption-based planning, 174 Cross-docking, 173, 183, 203 Customer cards, 285 Customer data, 235 Customer loyalty marketing, 83, 287 Customer Master Record, 53 Customer relationship management, 279 Customer retention, 231 Customs processing, 166

D Data mining, 76, 84 Data pool organizations, 59 Data Warehousing functionality, 74 Data Warehousing workbench, 76 Default service schedule, 274 Demand group, 124 Demand influencing factors (DIF), 225

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Index

Demand reality, 68 Distribution chain category, 52 Document flow, 150 Downtime security, 247, 256

E e-business, 17 E-commerce, 290 E-marketing, 289 Embargo check, 165 Employee data, 272 Enhancement Package, 38 Enterprise service bundles, 307 E-service, 291 ES Workplace, 312 European Union, 167 Evaluated receipt settlement, 151 Extensible Markup Language (XML), 87 Extensible Stylesheet Language for Transformation (XSLT), 87

F Finding storage bins, 203 Flow-through, 173 Merchandise-driven, 183 Recipient-driven, 183 Forecast-based planning, 176 Forecast optimization, 127 Forecasts, 69, 123, 272 Foreign trade, 196 Franchise, 264

G Generic article, 47 Global Data Synchronization, 59 Global transport management, 172 Goods issue, 188 In SAP EWM, 204 Posting, 190 Goods movements, 188 Goods receipt, 184

In SAP EWM, 202 Processing with a reference document, 185 Without reference to a document stored in the system, 186 Governance, 300 Grouped purchase order document, 149

H Handling unit management, 205 Handling units, 189, 205 Head office, 252 Server, 246, 251

I Identification standard, 42 Import and export control, 165 Inbound interface, 243 Indirect purchase requisition, 174 Industry extension, 38 In-store inventory management, 269 In-store processor, 257 Integrated warning system, 229 Integrating handhelds, 264 Integrating POS data, 261 Integration directory, 87 Integration engine, 88 Integration knowledge, 84 Integration repository, 86 Integration server, 87 Intra-European-Union flows of goods, 167 Intranet, 260 Inventory management, 192 Investment buying, 140 Invoice verification, 150

J J2EE, 250 Just in time, 172

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Index

K 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 Networks, 256 Normal purchase order, 137

Order entry, 279 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 Pull process, 135, 177 Purchase order monitoring, 160 Push process, 136, 177 Putaway and picking strategies, 203 Putting articles away, 185

O Offline capability, 257 OLAP, 76 Operational Assortment Planning and Control (OAPC), 118, 136 Optimization procedure, 127 Orchestration, 298

Q Quality management, 204 Quantity optimizing, 140 Quants, 205

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Index

R Radio data transmission integration, 207 Radio frequency handhelds, 248 Reference article, 50 Release procedure, 141 Reorder point planning, 175 Replenishable basics, 103 Replenishment control, 204 Replenishment parameter, 225 Replenishment planning, 176 Requirement quantity optimization, 224 Requirements calculation, 224 Requirements planning, 174 Resource management, 208 Retail method of accounting (RMA), 196 Retail store, 234 Return on investment (ROI), 141 RFID, 207 Risk management, 167

S Sales audit, 244 Sales channels, 232 Sales data, 222, 227 Sales figures, 80 Sales history, 123 Sales order, 262 Sales promotion effectiveness, 125 Sanctioned party list screening, 165 SAP Auto-ID Enterprise, 208 SAP Auto-ID Infrastructure, 208 SAP Community Network, 312 SAP Compliance Management, 164 SAP Customs Management, 166 SAP Demand Management, 129 SAP Developer Network, 90 SAP Electronic Compliance Reporting, 167 SAP Event Management, 215 SAP Event Manager, 160 SAP Extended Warehouse Management, 201

SAP Forecasting and Replenishment, 219 F&R Processor, 228 SAP Global Trade Services, 168 SAP MAP, 104, 108, 119 SAP Markdown Optimization, 126 SAP NetWeaver BI, 72, 106 SAP NetWeaver BI Accelerator, 78 SAP NetWeaver Developer Studio, 308 SAP NetWeaver MDM, 57, 62, 64, 92 SAP NetWeaver PI, 84, 91 SAP POS DM, 82, 244 SAP Price Optimization, 122 SAP Promotion Optimization, 125 SAP Retail, 17 SAP Risk Management, 167 SAP Transportation Management, 214 SAP Workforce Management, 270 ABAP component, 277 Java component, 277 Scheduling, 150 Scoring system, 156 Seasonal goods, 103 Seasonal procurement, 145, 161 Self checkout, 241 Semantics, 300 Service, 240 Service-oriented architecture (SOA), 297 Shift planning, 270 Shipping procedure, 166 Single article, 47 Site, 52 Category, 52 Master Data, 52 Slotting, 206 Slow seller management, 116 Solution Map, 29 Special forms of distribution, 182 Split valuation, 195 Spreadsheet, 107 Stability criteria, 300 Stable upgrade, 39 Standard price procedure, 194 Stock transfer, 188 Storage Bins, 187

338

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Index

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

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 T 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

Warehouse automation, 209 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

Usability of the article, 193

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