Why Move to SAP S/4HANA Retail?

The retail industry has always been extremely sensitive to changes in consumer sentiment. As trends come and go, procurement departments have always needed to source new vendors quickly.


Manufacturers, in turn, must implement agile management practices that enable quick response time to meet the demands set by ever-changing client requests. These factors and more combine to produce an environment where every organization that is serious about thriving in the retail industry must have a comprehensive and tight enterprise resource planning (ERP) platform to rely upon.


This is where SAP migration comes in. In the wake of the mass digitization of procurement, an ERP system that connects processes, improves insights, and provides a competitive edge is attainable when developers perform system migrations from SAP Retail to SAP S/4HANA Retail.


The Historical Role of SAP in the Retail Industry

Although the need for more integrated information technology platforms has become increasingly apparent over the last decade, SAP customers in the retail industry have traditionally had to rely on a combination of SAP products to meet their IT needs. While brick-and-mortar retail stores were primarily utilizing SAP Retail, brand manufacturers were deploying SAP Apparel & Footwear Solution (AFS), and consumer product companies (CPGs) used non-SAP technologies.


Although SAP Retail 1610 offered several merchandise management features that brick-and-mortar retailers found useful, it took several years for SAP to add a complete sector-specific solution in SAP S/4HANA 1709. Unlike its predecessors, version 1709 offered retailers the ability to optimize stock levels and execute complex procurement procedures with custom business logic.


On the other hand, SAP Retail has always provided customized workflows and collaboration modules for manufacturers and wholesale distributors in the retail industry. The SAP software engineers behind SAP Retail designed these modules to enhance communication across the entirety of the value chain, but the SAP Retail platform's utility quickly began to diminish when advances in e-commerce and logistics proliferated after 2010.


With the barrier to entry in the retail space reduced, manufacturers quickly started developing private-label brands. At nearly the same time, retailers began to expand in-house manufacturing efforts. These retailers, relying on SAP Retail, found themselves looking for a more comprehensive solution.


The information technology stack of vertically integrated SAP customers in the retail industry remained highly fragmented for a while. Businesses that had traditionally been only manufacturers adopted SAP Retail alongside SAP AFS or CPGs.


Complexity exploded as these businesses devoted more and more effort to using separate ERP systems simultaneously, and many companies found themselves getting left behind by more agile competitors.


SAP's legacy AFS systems were never built with direct-to-consumer marketing and communication in mind, and SAP Retail offered few solutions for adapting to dynamic supply chain needs. In short, the need for a new and comprehensive ERP platform in the retail industry became a matter of survival for some of SAP's largest customers. Out of this need, SAP S/4HANA Retail was born.


How SAP S/4HANA Provides Superior Advantages for Retail Businesses

First released in September of 2017, SAP S/4HANA 1709 empowered traditional fashion retailers to seamlessly integrate their in-house manufacturing divisions with consumer-facing retail efforts and use real-time market feedback to streamline supply chain management processes. SAP S/4HANA's initial release also enabled legacy manufacturers in the fashion industry to manage distributor relationships, run new e-commerce operations, and manage global inventory needs on a single ERP platform.

Data Monitoring

With a suite of embedded analytics dashboards and custom data monitoring capabilities, SAP S/4HANA also makes it possible for any retail business to identify changes in demand and reduce inventory waste quickly. Employees and data scientists now have access to a self-serve repository that provides a scaffold for machine learning efforts and integration of predictive models based on artificial intelligence.

Planning Production

In addition, SAP S/4HANA has introduced new capabilities for planning production and managing complex purchase orders. The comprehensive nature of the platform gives SAP customers everything they need to digitize supply chain management from top to bottom while simultaneously increasing e-commerce revenue. Organizations are now set up to benefit from increased data generation instead of devoting large amounts of capital and employee time to managing information silos.

Fulfillment Solutions

Although SAP S/4HANA 1709 was a breakthrough, version 1809 improved upon the initial release by adding features for raw material tracking and long-term customer value optimization. Release 1809 also introduced advanced available-to-promise (aATP) tracking and other automated fulfillment management solutions. With aATP, SAP S/4HANA customers can use data on current raw material levels and existing work in progress to quickly inform managers of exact plant requirements. The same engine that powers aATP lets customers open fast and open communication channels with distributors and retail partners. Furthermore, SAP S/4HANA also contains a revised backorder processing engine to help fashion businesses handle last-minute requests.


SAP S/4HANA's Most Recent Key Innovations for the Retail Industry

Here are some of the recent innovations that SAP S/4HANA brings to retail.

Comprehensive Supply Chain Visibility

Using either bespoke or out-of-the-box key performance indicators (KPIs), SAP S/4HANA customers can use the software's supply-demand overview (SDO) module to retain total awareness of stock levels and future procurement needs at all times.

Support for SAP Fiori Apps

Native integrations with SAP Fiori's supply assignment capabilities let users perform detailed simulations to see how existing logistics operations perform under stress. An advanced business logic engine lets procurement managers quickly introduce operational changes whenever they are needed.

Adaptive Purchase Order Management

The ability to manage procurement processes across multiple geographies, divisions, and supply channels helps managers implement a "just-in-time" decision-making process to optimize purchase order specifications based on market signals.


Making SAP S/4HANA Migration Work

Businesses looking to facilitate a successful SAP S/4HANA Retail migration have several options available. RISE with SAP offers one option, and other cloud-based solutions can help legacy fashion companies stay within budget while making the switch. The best SAP S/4HANA migration services will also:

  • Create custom solutions for optimizing business process intelligence.
  • Optimize the user experience for employees and key stakeholders.
  • Integrate embedded analytics and maximize SAP S/4HANA's artificial intelligence capabilities.

Either type of SAP S/4HANA migration can help scale adoption while reducing hardware risk and lowering the total cost of ownership. Ultimately, the decision of which SAP migration services provider to use will depend on future business plans and current IT pain points.


Making Businesses More Agile with SAP S/4HANA Solutions

In the years since the launch of SAP's most complete ERP solution for the fashion industry, technology for retail and manufacturing has continued to change at an accelerating pace. As major players continue to find themselves under increasing pressure to become more agile, especially in regards to data management capabilities, it's clear that SAP migration services will play an essential role over the next decade for fashion startups and established companies alike.


Fortunately, SAP has demonstrated a commitment to making sure the SAP S/4HANA platform gives businesses the ability to increase productivity, boost top-line revenue, and stay ahead of competitors. SAP development services, provided by SAP development partners, bridge the gaps between systems to make more agile platforms, and therefore businesses, a reality.

Dave Wood
by Dave Wood

Dave Wood is an industry expert within the supply chain and logistics technology landscape. He has worked at Chetu since 2013 and has since built a reputation as a thought leader within the IT community. As the Director of Global Sales at Chetu, Dave plays a critical role in assisting companies with their supply chain, retail, marketing, and media-related software projects. He offers commentary on changing tides within logistics and how inventory and warehouse management systems can propel all facets of retail and supply.