Achieving Omnichannel Success: How the SAP S/4HANA Retail Platform Enables Real-Time Business Decisions
Updated: 5.9.18 Innovative Technologies

Achieving Omnichannel Success: How the SAP S/4HANA Retail Platform Enables Real-Time Business Decisions

By: Michael Senecal

The Crunch: Since the 1970s, SAP has helped enterprises run better by simplifying and automating business processes and leveraging data to generate new opportunities and insights. Now, the SAP S/4HANA Retail for merchandise management, its suite of business applications for retailers, helps enterprises construct lean but nimble omnichannel operations while also encouraging creativity and adaptability. The suite runs natively on top of the SAP data management platform SAP HANA to build end-to-end views of operational data in real time. The SAP S/4HANA Retail platform brings performance and problem-solving capabilities to retailers that traditional enterprise resource planning systems can’t match.

Guangzhou Mini King Food Co., based in Guangzhou, China, is a vertically organized retailer of healthy and natural leisure food products, including Chinese chestnuts and dried and preserved fruit. When faced with the challenge of planning for future omnichannel growth, the company turned to enterprise software provider SAP for insight into increasing efficiency, reducing warehousing costs, and improving decision-making. Mini King operates research and development, and processing businesses that support a growing online presence and more than 300 stores across China.

With SAP S/4HANA Retail for merchandise management, Mini King integrated its finance, procurement, and business processes from end to end, enhancing cooperation across the different lines of its business and enabling decisions based on real-time business insights. SAP technology also let Mini King collect customer information and make product recommendations based on their preferences.

The company now plans to go national with its brand and is even eyeing international expansion. In the words of Xianhao Cai, CIO at Mini King, “We’re rolling.”

SAP serves more than 365,000 customers in more than 180 countries as a global provider of enterprise data platform, business network, and application software and services. The company operates more than 100 innovation centers worldwide, partners with more than 17,000 firms, and is committed to enterprise innovation and to reshaping IT and business trends.

SAP’s commitment to innovation is manifested in SAP HANA, the company’s flagship database management system launched in 2011. SAP HANA, deployed in the cloud or on-premise, unifies transactional and analytical data processing. It stores data in main memory rather than on disk for faster access and arrays it in columns rather than in rows to more precisely answer queries. The innovative technology is sophisticated, but data unification coupled with in-memory, column-oriented data processing means reduced complexity greater responsiveness, and lower costs for retailers.

SAP S/4HANA, released in 2015, is the company’s suite of enterprise resource management (ERP) applications designed to take advantage of the speed and flexibility of the SAP HANA platform. SAP S/4HANA Retail for merchandise management, released in January 2017, is an ERP application solution designed specifically for the retail industry.

Comprehensive Merchandise Management Replaces Fragmented Inventory Control Processes

SAP S/4HANA Retail enables Mini King to connect workers, suppliers, consumers, and assets from end to end. Warehouse inventory reports show real-time stock availability, and selling costs are calculated on a daily basis — instead of monthly. The month-end financial reconciliation process, which previously consumed an entire business week at Mini King, now takes an hour. The result is that profitability projections can occur in real time.

The software makes this possible by giving controllers visibility into inventory and profitability across the value chain — in Mini King’s case, from its procurement of raw fruit and nut products all over the world to their sale online and in stores. In contrast to traditional ERP systems, the effect of changes in consumer demand is easier to anticipate and respond to through SAP S/4HANA. And as the amount of capital needed to maintain inventory is reduced, profitability increases.

Traditional ERP systems often place obstacles between reporting milestones in the value chain. When the generation of profitability reports requires reconciling initial assessments against cost adjustments as goods move along the supply chain, the result is permanent latency in inventory turnover reporting, inflated capital investment in inventory, and reduced profitability.

Behind the scenes, traditional systems spread business information across a myriad of data tables, obscuring the need for course corrections in response to demand changes. Under SAP S/4HANA’s unified, column-oriented architecture, inventory information is stored in general journal tables for simple reporting at any time in the process. Users responsible for the supply chain can react to critical stock situations while controllers can track and assess profitability to make the right adjustments.

Tools to Consolidate and Analyze a Customer’s Transactional Data

SAP S/4HANA includes extensions for optimizing omnichannel customer execution. The platform captures and analyzes every customer demand and facilitates real-time responses to uncover trends, opportunities, and issues. That responsiveness help retailers make better-informed decisions and improve key performance indicators.

The Customer Activity Repository (CAR) operates at the core of the SAP S/4HANA system, receiving point-of-sale data generated across all sales channels. CAR then consolidates and harmonizes that data for consumption by other applications, enabling the delivery of a 360-degree customer view back to the enterprise.

Leveraging SAP HANA’s in-memory technology, SAP CAR connects with SAP S/4HANA to reveal sales performance and customer behavior insights to help retailers optimize analytics and planning, improve demand forecasting, and maximize promotions. Mini King uses SAP CAR to build out product recommendations on its website.

SAP Hybris merges SAP CAR’s POS data with other data sources, including web browsing and social media data, to help retailers understand customers and engage them intelligently. It lets retailers build dynamic customer profiles for personalization, gain insights into their motivations and intentions, make marketing messages more relevant, and use data within e-commerce applications to personalize online shopping experiences.

On the backend, the application leverages customer data to assist in marketing campaign planning, and also serves as a loyalty and lead manager. Customer insights generated in SAP Hybris help retailers manage market trends, increase conversion rates, and build loyalty.

A Portfolio of Solutions for Planning, Promotion & Forecasting

SAP CAR generates data that feeds other SAP S/4 HANA extensions, bolstering end-to-end enterprise connections.

SAP Merchandise Planning analyzes POS data to help fabricate new product opportunities based on consumer preference patterns. Using historical data across product categories and selling locations, SAP Assortment Planning helps determine assortment, product depth, and plan for demand in individual stores.

Graphic of SAP S/4HANA ecosystem

SAP Promotion Management automates marketing and merchandising, analyzing POS forecasts generated in SAP CAR to send offers and promotions at the right time. Optimized promotional pricing and profit forecasts allow retailers to fine-tune their overall marketing strategies.

SAP Forecasting and Replenishment automates replenishment by analyzing stock information, open orders, promotions, and master data from SAP S/4HANA to predict customer demand throughout the supply chain. It then passes the information on to employees responsible for store-based replenishment.

SAP S/4HANA Retail Lays the Foundation for Digital Transformation

SAP S/4HANA Retail for merchandise management enables enterprises to reimagine retail in an omnichannel environment, generating efficiencies that bring competitive power and insights that power innovation. For a large, aspirational retailer like Mini King, that comprehensive operational foundation can make a growth strategy possible.

Integrating previously separate business functions creates new capabilities, practices, and extends innovation across the value chain. Real-time operational insights and analytics remove the barrier between transactions and analysis and encourage a leaner operation and more informed decision-making. With information no longer siloed and fragmented, supply chain teams stay informed to serve customers better while controllers protect profitability. Meanwhile, marketing and customer loyalty functions gain additional effectiveness through the power of end-to-end data unification.

Behind it all is the SAP HANA platform, delivering faster performance on a smaller IT footprint through its merger of transactional and analytical processing and its simplified data management technology. SAP S/4HANA runs natively on SAP HANA to maximize the technology and reduce the cost of ownership for retailers.

In the cloud or on-premise, SAP S/4HANA Retail for merchandise management streamlines and enhances business processes in the cloud or on-premise, helping retailers exceed their goals and plan for whatever the future may bring.