Project Report

On

Impact of SAP
Implementation
On Retail Sector

Project Contents
1. Introduction
2. Objective/s
3. Nature and scope of the study.
8
4. Library research
4.1.ERP
4.1.1. Problems with Enterprise Applications in the Retail sector
12
4.1.2. Advantages of Using a Retail ERP Suite
4.1.3. SWOT Analysis of Retail ERP Systems
4.2.SAP
4.3.SAP Implementation Methodologies
4.3.1. Basic essentials
4.3.2. Big Versus small approach
20
4.3.3. Conventional methodology
23
4.3.4. ASAP methodology
5. Research methodology
33
6. Data collection
6.1.Case study 1- Pantaloon (Big Bazaar)
6.2.Case study 2-Shoppre Stop
37
6.3.Case study 3- ITC retail
6.4.Case study 4- Tata Trent
7. Analysis.
7.1.Features of SAP solutions.
42
7.2.Benefits of SAP solutions
8. Business Implication
9. Conclusion
10.Strength and limitations of the study.
51
11.Bibliography - systematic and complete list of References.
52

Introduction
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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 tbusiness, as well as global and inter organizational requirements of supply chains
and customer relationship management; companies are regularly forced to redesign
their business processes.
E-business refers to online shopping, that is, sales on the Internet. End customers
can browse electronic catalogs on the Internet, select products, place an order, and
pay immediately online. A lesser known term is 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.
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:
The customer is only happy if goods are available in the right place at the
right time and for the right price.
A company must be able to respond flexibly to changes in demand
patterns to retain its customer base and win new customers.
It is only possible to respond promptly to delivery delays if they are known
of in good time.
Working capital can only be freed up for important investments if stock
levels can be reduced through shorter lead times and procurement cycles.
SAP helps to 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.
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:

 Complex processes that forecast consumer demand while taking into

account information about space and capacity in the supply chain and
automatic item planning
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
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.
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 supports the retail user, with the key challenges they face-not only in
streamlining and accelerating processes, but also in tapping potential for expansion,
analysis, and customer retention.

Research objectives

Study of SAP implementation methodologies.

Study of how SAP implementation plays most important role in retail sector.

Study of Business Processes in retail sector and its integration with

information Technology (I.T.).

Nature and Scope of the study

In this project I have made an attempt to study the ERP [SAP] and its implications
on the operations of the retail companies.
The Indian retail sector is the fifth largest in the world. Comprising of organized and
unorganized sectors, India retail sector is one of the fastest growing sector in India,
especially over the last few years. Though initially, the retail industry in India was
mostly unorganized and the retail operations functionality such as merchandizing,
supply chain management, in-store operations, seasonality and promotions
planning are extremely complex.
Entering of SAP solutions in the sector of retail it minimizes the complexities of
retail Operational functionality for example advanced planning and scheduling
systems,

inventory

management

systems,

promotional

and

seasonality

management systems, data management and merchandizing systems. SAP helps

retailer to get the better understanding of their business, anticipate their business
needs, and inspire their customers, vendors, employees, and shareholders by
delivering results.
Two important areas where SAP solutions can reduce complexity and improve
results:
Merchandizing system
Merchandizing systems impact top-line revenues and need to be configured,
customized and managed effectively for the retailer to improve its top line. To
6

achieve this, retailers need to effectively extract large amounts of data and pull this
data to carry out effective forecasting, assortment planning, and collaboration with
its suppliers so that promotions and other merchandizing activities are effective and
efficient.
Supply chain systems are key from a bottom line point of view as they play a key
role in getting the right product to the right place at the right timewhich in turn
impacts the inventory levels and the rate of flow of products through the retailers
stores, both of which are significant components of the retailers cost of doing
business.
Data Management
Data management is important in the retail sector because so much decisionmaking is based on data. If the data not systematic, the effectiveness and efficiency
of carrying out retail operations is hampered.
First part in data management is data creation. In Data Creation the merchandise
product registered in system, the nomenclature of this product is carried out by
Brand name, product identifier (end use), unit of measurement, case lot, marketing
company, vendor, manufacturing details etc.
The second part is data maintenance. In this Identifying data ambiguity, avoiding
repetitions, identifying flagging non traded and slow moving products, every
product have life cycle indentify which product in declined stage and remove that
product from system, removing those products which not profitable for vendor.
Maintaining

customer

loyalty,

priority

for

Indian

retailers

in

ordinary

circumstances, is now of prime importance in the current market situation. As a

result retailers across the India are using SAP technology for greater visibility into
consumer spending trends, enabling them to create shopping experience that
motivates their customer to return again and again. SAP's comprehensive retail
suite, designed with flexible deployment blocks, provides customers agility to adapt
the changing market conditions and leverage newer opportunities.

Scope of project
Geographical Scope
The locations to be covered for SAP implementation are the retail companies in
Indian Markets.
Functional Scope
The scope defined for implementation of SAP in the Retail sector organizations in
India.

Library research
Enterprise Resource Planning (ERP)

Enterprise resource planning is a business management system that integrates all

aspects of the business, including planning, manufacturing, finance, HR, sales, and
marketing. ERP attempts to integrate all departments and functions across a
company onto a single computer system that can serve all those different
departments' particular need. The typical ERP system will use multiple components
of computer software and hardware to achieve the integration.
ERP system has many advantages -both direct and indirect. The direct advantages
include improved efficiency, information and business integration for better decision
making, better analysis and planning capabilities, flexibility, faster response time to
customer queries, etc. The indirect benefits include better corporate image,
improved customer goodwill, customer satisfaction, and so on.
Commercial ERP Packages

SAP

Oracle

BAAN

J.D. Edwards

People soft

Problems with Enterprise Applications in the Retail sector

Integration of the various business functions is an essential prerequisite for
synchronization among the different business activities involved in a retail business.
A number of large retail chains around the India have already invested in packaged
software suites to integrate their core business activities. However, a lot of retailers
are still using fragmented legacy software applications to manage their core
business functions which results in somewhat lower levels of effectiveness and
efficiency. Moreover, a majority of Chief Information Officers (CIO) in the retail
sector believes that it is cumbersome to rip and replace their existing information
systems handling the routine management of the retail operations.
Most of the existing retail applications used by the businesses lack an all
encompassing approach and require some degree of customization before they can
be fully integrated with a business process. Major problem areas in the existing
enterprise applications in Retail include:

1. Outdated architecture Most of the legacy enterprise applications in retail

have an outdated architecture that is inflexible and rigid. This inflexibility and
rigidity pose a challenge to the business efficiency. The lack of flexibility
prevents the legacy software to be used with the contemporary products
available in the market that may add muscle to the retail operations. Todays
business environment demands real time adaptability from the software
systems.
2. Limited scope Most of the legacy systems were designed to take care of
specific problems tasks and as a result, lacked an enterprise wide approach
to the problem solving process. This makes such systems unsuitable for use
in the contemporary business environment that is highly competitive in
nature. Modern businesses require an enterprise wide approach to retail
management process and legacy systems fall short of such a requirement.
3. High maintenance costs Legacy information systems are costly to
maintain. The cost component is high because such systems are no longer
used in the industry and require specialized personnel for maintenance
purposes. Moreover, the maintenance cost of legacy systems keeps on
increasing with the passage of time. The older an information system is, the
higher are its associated maintenance costs to be borne by the retail
business.
4. Integration and scalability problems Legacy software does not allow
addition and integration of new applications. This prevents such systems from
scaling up or integrating with similar systems used by the associates or
business partners. Such integration and scalability problems tend to multiply
as the size and scope of retail operations increases.
5. Increased risk to the business A combination of old and new information
systems makes the whole system susceptible to failure or crash. The
heterogeneity in the system is the primary cause of risk. The solution lies in a
close knit, homogeneous information system that can integrate seamlessly
with other such systems in real time while imparting the much-needed
stability to the whole system.

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Advantages of Using a Retail ERP Suite

Primary advantages:
1. Retail specific components Unlike a general ERP package, retail ERP suite
offers retail centric components that are customized to meet the specific
requirements of a retail organization in an effective and efficient manner. This
makes a retail ERP suite much more suitable to meet the specific requirements
of a retail organization.
2. Segment specific expandability option Within the retail sector, there is a
wide variety of different segments that vary in their nature and scope of
operations. A retail ERP package has provisions to meet the varying needs of the
different segments within the retail sector.
3. Support for the store system Retail ERP suite offers support for the store
systems that form the pivot of a retail business. The critical functions include
keeping track of the inventory, ordering and replenishment, loss prevention and
task management. This makes retail ERP system suited to the specific needs of a
retail organization.
Secondary advantages:
1. Configuration and scalability A good retail ERP system allows a high
degree of customization and is easily scalable to attune itself to the size of
the organization and its level and scope of operations. Such configuration and
scalability prove to be a boon in managing the retail operations across an
enterprise. This allows a retail ERP system to grow with the organization.
2. Phased implementation support Modern retail ERP systems provide
support for phased implementation. This feature allows the software package
to be implemented in a step-by-step incremental manner rather than in one
go. This makes the transition to an ERP package a lot easier. This feature
allows the users to acclimatize themselves to an ERP package that may
initially seem complicated to use.
3. Support for advanced functionality Modern retail ERP systems provide
support for advanced functionalities that is helpful in the decision making
process such as formulating pricing strategies, merchandise planning,
inventory optimization and store execution. The advanced functionalities help
the users formulate business strategies to introduce efficiencies in the critical
11

business processes. The top management uses this feature to set the
benchmarks and achieve the desired results.
4. Workflow automation and enterprise process management Modern
day retail ERP packages offer workflow automation and enterprise process
management to make the workflow smooth and seamless across the entire
enterprise. This allows the management to monitor and keep track of the
workflow while also undertaking the enterprise process management leading
to the identification and removal of any inconsistencies in the business
process.
5. Technology and application integration A good retail ERP system allows
technology and application integration to allow a platform independent,
seamless transfer of processes across different modules running on different
technologies in an enterprise wide environment that may include interaction
with legacy systems and external entities such as the suppliers and the
customers. Such integration provides the critical enterprise-wide view to the
management.
SWOT Analysis of Retail ERP Systems

STRENGTHS

WEAKNESS

Provides an enterprise wide view

of the workflow

Expensive to procure
Requires significant employee
training

Allows integration with systems

of associates and business
partners

Compatibility issues with

other/legacy systems

Helps in routine decision making

Security concerns
Allows streamlining of business
processes

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OPPORTUNITIES

THREATS

Booming retail sector in the

emerging Indian markets

Opposition to globalization and

transnational movement of
goods

The retail sector is overlooked by

the major ERP solution providers
High efficiencies becoming
critical in the retail sector due to
the cut-throat competition and
paper-thin margins

Increasing complexity of such

systems
Divided opinion over the ReturnOn-Investment (ROI) from such
tools
Security concerns regarding
sharing of data over a network

System Application and Product

(SAP)
Sap is the leading Enterprise information and management package worldwide.
Uses of this package make it possible to track and manage, in real time, sales,
production, finance, accounting and human resources in enterprise.
A typical company has many separate systems to manage different processes; each
of these systems has its own databases and seldom passes information to other
systems in a timely manner. SAP takes a different approach. There is only one
information system in an enterprise. All applications access common data. Real
events in the business initiate transactions.
SAP Application Modules
SAP has several application modules. These modules may not all be implemented in
a typical company but they are all related and are listed below:

13

Figure 1: SAP modules

SAP FI Module - where FI means Financial Accounting essentially this SAP
module delivers your regulatory books of record, including General ledger ,Book
close ,Tax, Accounts receivable, Accounts payable, Asset Management (SAP AM)
,Consolidation, Special ledgers.
SAP CO Module - The CO stands for Controlling basically the SAP Module which
allows you to manage your internal cost/management accounting, including Cost
elements, Cost centers ,Profit centers, Internal orders ,Activity based costing
,Product costing .
SAP PS Module - and PS is Project Systems this SAP Module is where you can
manage your projects, large and small, including Make to order ,Plant shut downs
(as a project) ,Third party billing (on the back of a project).
SAP HR Module - ah yes, the HR is for Human Resources ... people are the
important part of this SAP module, including Employment history, Payroll Training
,Career management, Succession planning .
SAP PM Module - where Plant Maintenance is the PM this SAP module is where
you maintain your equipment (e.g. a machine, an oil rig, an aircraft etc), including
Labor, Material Down time and outages.
SAP MM Module - one of the most important SAP Modules where MM is Materials
Management - underpins the supply chain, including Requisitions, Purchase orders,
Goods receipts, Accounts payable Inventory management, BOMs ,finished goods
etc.

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SAP QM Module - and QM stands for Quality Management in this SAP module
improves the quality of your goods, including Planning, Execution, Inspections, and
Certificates.
SAP PP Module - one of the really big SAP modules is Production Planning
manages your production process, including Capacity planning, Master production
scheduling, Material requirements planning, and Shop floor.
SAP SD Module - another one of the large SAP modules is Sales and Distribution
from order to delivery, including RFQ, Sales orders ,Pricing, Picking (and other
warehouse processes), Packing, Shipping .
SAP BW Module - where BW stands for Business (Data) Warehouse which includes
the following main functions: Data extraction from source systems, some technical
and functional transformation of the data, Storage of the data in what are called
Info providers, reporting (which uses Info providers).
SAP ABAP - is not really a module - it stands for Advanced Business Application
Programming and this is the structured programming language for custom
development including reports.

SAP Implementation Methodologies

How SAP project are implemented?
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Basic essentials
The basic steps required to implement SAP as follows:

Determine that company ready for implementation: an organization need to

be ready for change and its management has to be fully behind the project.

Develop an implementation plan: Without it, there will be either a slow and
grinding project or a disaster.

Develop the budget: This is the very critical factor that drives many elements
including scope and scheduled: depending on the methodology and type of
cost structure, the overall implementation cost and budget can vary
considerably.

Select the implementation partners: This determine the quality and level of
skills and experience that will be available for project.

Big Versus small approach

There are two implementation approaches that are generally followed for SAP
projects. These are
Big bang approach:
In this approach, full-blown Sap system is implemented. The entire modules
required by the company are configured and implemented. All legacy systems that
can be replaced by SAP are targeted for retirement. All divisions and/or subsidiaries
of company are included into single phase project.
Advantages

Few or even no interfaces between legacy systems and the new application
are needed because all modules go live at the same time.

There is a short throughput time.

The project members motivation is high.

It is highly efficient, because redundant customizing is avoided.

There is optimal integration of all components under consideration of the

integrated business processes.

Disadvantages

The implementation is complex due to the increased need for coordination

and integration.

It is resource intensive over a short period of time.

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All employees are subject to higher stress levels at the same time.

A high degree of consulting support is required.

Organizational changes must be limited in order to overcome resistance to

change among employees.

Phased Approach:
In this approach, which is the modest in nature, a step by step implementation is
undertaken. The overall project is implemented in a number of phases. The
objective is to avoided risk and work on smaller, and more manageable, project. A
number of options are existing within the phase approach method.
Advantages

The complexity for coordinating, controlling, and organizing the project and
resources is reduced.

A minimal amount of human resource is required for the project team and
user community.

The quality of the projects improves because the project members increase
their knowledge and skills.

A team of internal consultants can be established over time, reducing the

cost of the project.

There is a smoother changeover throughout the company: people have time

to adapt to changes.

Costs are spread over a longer period of time.

Modest organizational changes can be considered during the implementation.

Disadvantages

There is a longer project throughput time.

Interfaces must be developed to maintain existing systems.

Integration advantages of the project can only be used step by step.

Customizing may not be optimally set because integrating components have

not yet been implemented.

Return on investment is generally delayed.

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Implementation Methodologies
Conventional methodology:
There are two methodologies used to implement SAP project: ASAP methodologies
and conventional methodologies. The conventional methodology is known as SAP
procedure model, was initially widely used to implement SAP. In the past few years,
it has been overshadow by the rapid ASPS methodology. However it is still preferred
methodology for implementing SAP at very large companies, especially for those
with revenue with millions dollars.
ASP procedure model can be divided into 4 major phases:

Organization and conceptual design

Detailed design and system setup

Go-live preparations

Productive operations

This methodology required very detailed analysis of the existing system, current
functionality and business processes to be conducted. A significant amount of time
in spent on matching as-is and to-be system. A decision making is very slow as
it is based on consensus, which takes time to achieve.
A drawback of procedure model is even though it did not dictate it, too many
implementation tried to mirror existing system within SAP. Another negative of this
methodology is that it uses a companys existing process, instead of SAP processes,
as the starting point of the mapping processes.

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Figure 2: Comparison of ASAP methodology and conventional

methodology
ASAP methodology
In an effort to speed up SAP project and keep cost under control SAP introduce to
ASAP methodology, which has been quite successful till- date. With the ASAP
methodology, an implementation period as short as five month has been achieved.
It contains the Roadmap, a step-by-step guide that incorporates experience from
many years of implementing R/3. Along with that, Accelerated SAP contains a
multitude of tools, accelerators and useful information to assist all team members in
implementing R/3. Quality checks are incorporated at the end of each phase to
easily monitor deliverables and critical success factors. ASAP is delivered as a PCbased package, so that - if required - an implementation project can begin prior to
having an R/3 System installed.
What SAP can do
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ASAP has been design with the objective of standardizing and streamlining SAP
implementation the following list of SAP characteristics:

Optimizes time quality and resources

Leverages best business practices

Delivers a process oriented project map (ASAP road map) that provides step
by step direction

Determine the implementation cost and scheduled, cost implementation cost

and time

Provides process, tools, training and services

Provides detailed help through various implementation phases

Provides checklist, questionnaires, and technical guide.

Supports continuous improvement

Figure 3: ASAP road map

Phases of ASAP implementation,
1. Phase 1: Project Preparation
2. Phase 2: Business Blueprint
3. Phase 3: Realization
4. Phase 4: Final Preparation
5. Phase 5: Go live & support
The implementation time required for each phase depend on the total project
implementation time that, typically, ranges between 6 and 18 months for ASAP
projects .for example ,at a mid cap company project, for which the total
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implementation time was one year, the approximate time spent on each phase was
as follows,
1. Project Preparation: 1 months
2. Business Blueprint: 2 months
3. Realization: 6 months (2 months for simulation + 4 months for validations)
4. Final Preparation: 3 months
In another project at a 2 billion dollar company, which lasted 18 months, the
breakdown follows,
1. Project Preparation: 1 months
2. Business Blueprint: 5 months
3. Realization: 9 months (4 months for simulation + 5 months for validations)
6. Final Preparation: 3 months
ASAP- first phase-Project Preparation: Decisions, decisions start
planning
Phase one initiates with a retrieval of information and resources. It is an important
time to assemble the necessary components for the implementation. Some
important milestones that need to be accomplished for phase one include,
1) Obtaining senior-level management/stakeholder support.
2) Identifying clear project objectives.
3) Architect an efficient decision-making process
4) creating an environment suitable for change and re-engineering
5) building a qualified and capable project team.
Senior level management support
One of the most important milestones with phase 1 of ASAP is the full agreement
and cooperation of the important company decision-makers - key stake holders and
others. Their backing and support is crucial for a successful implementation.
Clear project objectives
be concise in defining what your objectives and expectations are for this venture.
Vague or unclear notions of what you hope to obtain with SAP will handicap the
implementation process. Also make sure that your expectations are reasonable
considering your company's resources. It is essential to have clearly defined ideas,
goals and project plans devised before moving forward.
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An efficient decision making process

One obstacle that often stalls implementation is a poorly constructed decisionmaking process. Before embarking on this venture, individuals need to be clearly
identified. Decide now who is responsible for different decisions along the way. From
day one, the implementation decision makers and project leaders from each area
must be aware of the onus placed on them to return good decisions quickly.
Environment suitable for change and re engineering
Your team must be willing to accept that, along with new SAP software, things are
going to change, the business will change, and information technology enabling the
business will change as well. By implementing SAP, you will essentially redesign
your current practices to model more efficient or predefined best business practices
as espoused by SAP. Resistance to this change will impede the progress of your
implementation.
ASAP- Second Phase- Business Blueprint: What we are doing and what we
need
SAP has defined a business blueprint phase to help extract pertinent information
about your company that is necessary for implementation. These blueprints are in
the form of questionnaires that are designed to probe for information that uncovers
how your company does business. As such, they also serve to document the
implementation. Each business blueprint document essentially outlines your future
business processes and business requirements. The kinds of questions asked are
germane to the particular business function, as seen in
the following sample questions:
1) What information do you capture on a purchase order?
2) What information is required to complete a purchase order?
Accelerated SAP question and answer database
The question and answer database (QADB) is a simple although aging tool designed
to facilitate the creation and maintenance of your business blueprint. This database
stores the questions and the answers and serves as the heart of your blue print.
Customers are provided with a customer input template for each application that
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collects the data. The question and answer format is standard across applications to
facilitate easier use by the project team.
Issues database
Another tool used in the blueprinting phase is the issues database. This database
stores any open concerns and pending issues that relate to the implementation.
Centrally storing this information assists in gathering and then managing issues to
resolution, so that important matters do not fall through the cracks. You can then
track the issues in database, assign them to team members, and update the
database accordingly.
ASAP Phase- 3 - Realization: Just do it!
With the completion of the business in phase 2, "functional" experts are now ready
to begin configuring SAP. The Realization phase is broken in to two parts,
1) Your SAP consulting team helps you configure your baseline system, called the
baseline
configuration.
2) Your implementation project team fine-tunes that system to meet all your
business and
process requirements as part of the fine tuning configuration.
The initial configuration completed during the base line configuration is based on
the information that you provided in your blueprint document. The remaining
approximately 20% of your configuration that was not tackled during the baseline
configuration is completed during the fine tuning configuration. Fine tuning usually
deals with the exceptions that are not covered in baseline configuration. This final
bit of tweaking represents the work necessary to fit your special needs.
Configuration testing
With the help of your SAP consulting team, you segregate your business processes
into cycles of related business flows. The cycles serve as independent units that
enable you to test specific parts of the business process. You can also work through
configuring the SAP implementation guide (IMG). A tool used to assist you in
configuring your SAP system in a step by step manner.

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Knowledge Transfer
As the configuration phase comes to a close, it becomes necessary for the Project
team to be self-sufficient in their knowledge of the configuration of your SAP
system. Knowledge transfer to the configuration team tasked with system
maintenance (that is, maintenance of the business processes after Go-live) needs to
be completed at this time.
In addition, the end users tasked with actually using the system for day-to-day
business purposes must be trained.
ASAP Methodology - Phase 4 - Final Preparation: Just checking
Everything all right?
As phase 3 merges into phase 4, you should find yourselves not only in the midst of
SAP training, but also in the midst of rigorous functional and stress testing. Phase 4
also concentrates on the fine tuning of your configuration before Go-live and more
importantly, the migration of data from your old system or systems to SAP.
Workload testing (including peak volume, daily load, and other forms of stress
testing), and integration or functional testing are conducted to ensure the accuracy
of your data and the stability of your SAP system. Because you should have begun
testing back in phase 2, you do not have too far to go until Go-live. Now is an
important time to perform preventative maintenance checks to ensure optimal
performance at your SAP system.
At the conclusion of phase 4, take time to plan and document a Go-live strategy.
Preparation for Go-live means preparing for your end-users questions as they start
actively working on the new SAP system.

ASAP - Phase 5 - Go-live and Support: It is a tough world out there Sure
everything is all right?
The Go-live milestone is itself is easy to achieve; a smooth and uneventful Go-live is
another matter altogether. Preparation is the key, including attention to what-if
scenarios related not only to the individual business processes deployed but also to
the functioning of technology underpinning these business processes and
preparation for ongoing support, including maintenance contracts and documented
processes and procedures are essential.
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Figure 4: Key deliverables

Research Methodology
The research is based on a literature review. The research data includes books,
articles and studies related to SAP implementation. This secondary data covers the
case studies of retail giant companies in India. Research literature was based on
case methods in order to capture the reality of the phenomenon. The preliminary
explanations were reflected during the analysis of industry related examples.

Data collection
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Data is collected from various retail industries who are implemented SAP in their
systems; I have collected the secondary data from companies website and
customers success stories from the website of SAP.

Case study 1: Pantaloon

Pantaloon Retail is the flagship enterprise of the Future Group, with a presence
across multiple lines of business. The company owns and manages multiple retail
formats such as Big Bazaar, Food bazaar etc. That caters to a wide
cross-section of Indian society. The company operates through
four million square feet of retail space, has over 140
stores across 32 cities in India and employs over 14,000
people.
Aim
Store operations have never been as important to retailers as they are now.
Successful retailers are those who know that the battle for customers is only won at
the frontline, which in the case of a retail chain is at its stores. Pantaloon was
regularly opening stores in the metros and there was an urgent need for a reliable
enterprise wide application to help run its business effectively. The basic need was
to have a robust transaction management system and an enterprise wide platform
to run the operations. The company was looking for a solution that would bring all of
its businesses and processes together.
Solution
The management of pantaloon decided to implement SAP retail solution. Some of
the qualities of SAP retail solutions are that it supports product development, which
26

includes ideation, trend analysis, and collaboration with partners in the supply
chain; sourcing and procurement, which involves working with manufacturers to
fulfill orders according to strategic merchandising plans and optimize cost, quality,
and speedvariables that must be weighted differently as business needs, buying
plans, and market demand patterns change; managing the supply chain, which
involves handling the logistics of moving finished goods from the source into stores
and overseeing global trade and procurement requirements; selling goods across a
variety

of

channels

to

customers,

which

requires

marketing

and

brand

management; managing mark-downs and capturing customer reactions, analyzing

data, and using it to optimize the next phase of the design process.
The implementation
The implementation was done by the SAP team with help of Nova soft which is
based out of Singapore. Some people from Pantaloon also assisted in the project.
About 24 qualified people worked on this SAP implementation. SAP was chosen as
the outsourcing party on a turnkey basis.
Three Phases of implementation
SAP implementation is not a single phase process. The project was divided into
three phases.
The first phase involved blueprinting existing processes and mapping them to the
desired state. In this phase, the entire project team worked on current processes
within the structure of the organization, analyzed and drafted them. This blueprint
was later used in the formation of new states of the solution. Since the SAP would
combine all the processes, each and every one of these had to be evaluated.
In the second phase, the SAP platform was developed with the help of Nova softs
template which was predefined by SAP after evaluation of Pantaloons needs and
expertise in retail solutions.
The last phase in this project was for stores to switch over to the new system and
for current data to be ported. Before the SAP implementation, all the data was
unorganized. This data had to be migrated to the new SAP application.
The project was flagged off on 15th June 2005 and took about six months to finish. It
went live at the head office on 1st January 2006. The stores went live on SAP from
1st January 2006 to 30th June 2006.
Benefits and Challenges

27

The key challenges in this project were not in the implementation. Rather, the
difficulties were faced during the data migration and in managing the interim period
when the project was underway for about six months. Migrating unorganized data to
an organized format is a challenging task.
Pantaloon has not been able to see immediate benefits from this implementation.
This application certainly has long term benefits which will be seen when the
performance of various aspects will be analyzed. They have already started working
on MAP (Merchandise Assortment Planning), Auto-Replenishment and Purchase
Orders.
Maintenance & Hardware
This application is currently being used by around 1,200 employees across the
organization. For maintaining this implementation and its related applications,
Pantaloon has an in-house team and it has outsourced ABAP resources. They are
also in the process of setting up a SAP Competency Centre. The system runs on a
HP Superdome server on HP UNIX 11i and the database is from Oracle. The cost of
this project was about $10 million.

Case study 2: Shoppers Stop

The organization aiming to position itself as a global retailer, Shopper's Stop is a
family store delivering a complete shopping experience. It is a retail venture of the
K. Raheja Corporation with operations in Bangalore, Hyderabad,
Jaipur, Delhi, Chennai, Mumbai, Pune, Gurgaon and Kolkata.
About 50,000 customers visit a Shopper's Stop every day. The
company has a national presence of over 6, 00,000 square feet
of retail space and stocks over 250 brands of garments and
accessories.
Aim
Make shopping a delight by understanding the customer's needs, provide better
products and reduce operational cost and boost revenues.
The solution
Shopper stop management decided to use a SAP BI solution from Business Objects
as well as the SAS analytical application. It uses the Business Objects solution for
reporting and some advanced analysis. They use a combination of Business Objects
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and the SAS solution for trend analysis, promotion management, and customer
behavior, segmentation, buying basket analysis, profitability and lifecycle analysis.
They also use it to understand the effectiveness of marketing efforts. This Business
intelligence is integrated to SAP SCM and CRM.
The benefits
BI has helped the company craft focused campaigns and offer incentives to its highvalue customers. It has helped the organization study the demographics of target
markets and position appropriate merchandise in its retail stores.

Case study 3: ITC Retail

ITC is one of Indias biggest and most successful diversified
corporate with an annual turnover of more than Rs16, 000
Corers (USD 3.5 Billion). The Foods Division, one of its youngest
and fastest growing arms, was the client for this specific
project.
Aim
Make an enterprise-class system that would support the end-to-end supply chain of
ITCs Consumer Goods divisions raw food material procurement operation. Given
the poor infrastructure and socio-economic realities of the Indian rural hinterland,
the task was a multi-dimensional and complex challenge.
The Solution
ITC retail domain management decided to implement SAP IS retail in their system.
Two Phases of Implementation
ITC InfoTech set up e-Choupals (Virtual Village Marketplaces) - enabled through
Internet kiosks and Saagar-choupals (Physical Village Hyper Malls) - comprising of
retail mega stores, procurement centers, pharmacies, food courts and farmer
advisory centers. In this way, ITC InfoTech creatively leveraged Information
Technology (IT) in favor of India`s small and poor farmers.
The technology implementation roadmap comprised of Two Phases, aligning it fully
with the business goals.
Phase -1
Connectivity - Managing environmental aspects such as positioning computer and
other equipment in villages and enabling connectivity
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IT Skills - Imparting skills to the first time IT users in remote areas of Rural India.
Phase - 2
Personalization - Personalization of product and content range for the very
fragmented and heterogeneous farmer groups
Supply Chain Alignment Effective IT architecture for Choupal Sagar to ensure
efficient delivery of goods & services to every remote retail location, including
integration with the ERP / backend systems of participating farmers, distributors,
service providers.
The benefits

Superior retail experience to Rural Customers right range, greater

availability, freshness, right price and genuine branded quality.

Highly efficient supply chain quicker turns, lower costs and active supply
channels.

Agile retail operations quick introduction of promotions and price changes

through integration with POS.

Creation of a local language portal providing information to farmers on varied

topics such as local weather, market prices and best practices and
personalizing of content & product range.

Case study 4: Tata Trent

Established in 1998, Trent, a Tata Group company, is engaged in the retail business
of readymade garments, household items and gift articles, cosmetics and perfumes.
Trent runs the business under two formats: Format-I, a lifestyle retail chain, and
Format-II, a hypermarket with a large assortment of products
available at very low prices. The company has around 25
stores under Format-I and a central warehouse in Pune. It also
has one store under Format-II and a warehouse in Ahmadabad.
Aim

30

For every product purchased, a Goods Receipt Note (GRN) was generated. Every
month, at the central warehouse, approximately 2,000 GRNs were generated, while
at each individual store 300 GRNs were generated in the same time. Each GRN was
also accompanied with other documents, making the set of documents for one
purchased good four-five pages long. After receiving the original set of documents
consisting of invoice, lorry receipt, quality inspection report at the head office, the
bills were passed by recording the purchases and crediting the vendor. There for the
current system having many drawbacks,

Existing process was time consuming, cost intensive and demanded

dedicated resources

The report generation was cumbersome and distributed

The expansion plans anticipated hurdles in scaling-up operations

The solution
The management of Tata Trent decided that to implement cross application of SAP
that is document management system (DMS).
Implementation phases

Plain vanilla implementation of DMS: This benefited by way of fast and easy
retrieval of required documents and easy information management.

Integration of DMS with SAP: The users can now view the images from the
SAP screens, thereby ensuring easy data entry and transaction management.

The benefits

Digitization of records

Easy retrieval of documents in SAP

Faster invoice processing

Cost reduction

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Analysis
By studying this cases I have find out that SAP solutions has made a strong mark in
the growing Indian retail sector.
SAP provides an integrated technology platform for retailers and a one point
solution for supporting and managing different business models such as owned
stores, franchise stores, shop n shop, super market, and hyper market concepts.
Strong business decision and analytical capabilities have enabled retailers of all
sizes the power to make the right decisions quickly and profitably.
The SAP solution portfolio combines the SAP Business Suite family of business
applications with a broad set of integrated retail applications to help companies
profitably serve consumer demand across multiple channels.
Some of the most common SAP solutions features used in the retail industry,

Merchandise and Master Data Management: Harmonized, synchronized

and optimal workflow controlled master data across the different lines of
business Merchandise and Category Management ensures that assortments
meet

the

expectations

of

customers

within

specific

micro

markets,

determines optimal product mix, prices and promotions supporting step-bystep cooperation and coordination in development, implementation, and
monitoring of business plans.

Forecasting and Replenishment: solution that enables retailers to

dramatically improve on-shelf availability, reduce inventory, and optimize the
supply chain.

Workforce Management - A centrally managed, Web-enabled workforce

management solution gives retailers improved flexibility and control over
their business processes. It allows corporate management to take more
ownership of schedule planning and execution, giving managers more time to
assist customers and coach employees.

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Store Management: Store management systems need to cater to the fastchanging needs of customers today. These systems must quickly gain fast
and reliable, accurate, and insightful customer information in many ways.

POS Data Management - enables you to examine all your key issues
events and promotions, prices and margins, and reason codes for returns as
well as a host of other parameters.

Strategic planning SAP helps you develop your rolling three-year strategic
plans by providing historic data analysis capabilities as the basis of forward
projections, and enabling you to build financial models of various potential
plan scenarios. With SAP solutions, you

can analyze prior financial

performance, customer trends, get B.I on your competition, and develop

alternative forward plans.

Price and revenue management SAP helps you manage prices

throughout the product life cycle, including initial pricing as well as
promotional, markdown, and clearance pricing. You can change prices
individually or via automatic mass maintenance based on pre-specified dates,
by item, store, zone, or region. Prices can be downloaded to stores with start
and end dates and times for automatic management of the complete pricing
cycle.

Promotion planning and management SAP solutions enable you to plan,

execute, and evaluate the success of promotions. With SAP solutions, you can
plan individual promotions, determine promotional order quantities, place
promotional orders based on historical information, allocate promotional
inventory, and evaluate the success of your promotions.

Transportation planning With SAP solutions, you can plan effectively for
incoming and outgoing shipments.

Vendor relationship management SAP solutions support you in a variety

of ways that you use to select suppliers, capture supplier information, and
track supplier performance against key metrics.

Vendor collaboration With SAP, you and your vendors can work more
effectively together developing products, forecasting and replenishing items,
and planning and executing promotions.

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Purchase order management SAP helps you manage purchase orders

through their entire life cycle from initial creation to supplier payment and
dispute resolution.

Customer

loyalty

management

Using

database

of

customer

purchasing history, demographic details, and planned promotions, you can

provide the right incentives to keep customers buying and generate their
loyalty.

Document management- SAP helps you to create and manage your

electronic documents and retrieve easily when you want.

The retailers are reaping the benefits of SAP solutions, including

Increased sales With customer relationship management and business

warehouse capabilities, basket analysis helps you maximize the number and
frequency of customer visits, and increase spend per visit.

Increased profits With price optimization across the product life cycle,
including regular prices, promotional prices, and clearance or markdown
prices, you can increase profits while building customer loyalty and
maintaining a desired competitive position.

Reduced cost of products You can tighten supplier management and

reduce the cost of goods with the integrated vendor scorecard, reporting, and
vendor portal solution of SAP.

Reduced labor costs You can reduce labor costs and improve productivity
with human capital and workforce management solutions, which provide
centralized control of store personnel.

Better product flow-through Merchandise and assortment planning,

forecasting, and replenishment solutions ensure that the right products are
planned, procured, allocated, replenished, and reordered to maximize product
flow-through and inventory productivity.

Increased productivity and improved decision-making The underlying

workflow management tools in all SAP solutions make it easier to focus on the
important parts of the job by automating basic, repetitive tasks and
highlighting only exceptions for action.

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Simplified operating processes and common standards SAP uses one

integrated database to ensure one version of the truth and support the
companywide adoption of standard best practices.

Lower total cost of ownership SAP integrated solutions reduce total cost
of ownership by providing best-of-breed business-process support right out of
the box, along with adherence to retail industry standards (ARTS and VICS)
and IT industry standards (XML).

Sarbanes-Oxley compliance SAP's financial solution, the market leader

worldwide, ensures that you will be able to integrate your financials
seamlessly even if you have made a number of acquisitions, or operate in
different countries and across different channels.

Reconciliation of financial, merchandise, and assortment plans By

using one integrated database to develop all plans, you can achieve plan
reconciliation and ensure improved merchandise offers for the customer.

Improved efficiency You and your partners can operate more profitably by
using embedded workflow management tools, ensuring that corrective action
is taken before critical situations become crises.

Reduce erroneous data entry.

Should be able to effect efficient, smooth and easy bar coding.

Business Implications
35

The Business implications of a retail SAP system are immense indeed. In the
contemporary

business

environment

where

liberalization,

privatization

and

globalization are the order of the day, most of the retail businesses around the
world operate under the fiercely competitive market conditions. Such competition
has led to the paper-thin margins in this sector. In order to remain competitive, the
retail organizations surviving on thin margins cannot afford the luxuries of systemic
inefficiencies or delayed decision-making. Both the activities, be it increasing
efficiencies in the business process or the ability to take prudent decisions quickly
requires an inside out awareness of the business process. A retailer ought to know
the complete picture that can indicate the true state of a retail business.
A retail organization may comprise of a small chain of retail stores confined to a
small town or city or may include a mammoth organization having its presence
around the world in the form of thousands of stores scattered across the different
parts of the world. Wal-Mart is one example of a retail business with its operations
spanning across different continents around the world. Management of such a
distributed network of retail chains is a Herculean task indeed. The retail (SAP)
packages help the retailers in better management of their enterprise wide
operations spanning the entire globe.
The retail SAP systems provide one-stop solution for most retail information
processing challenges by providing a comprehensive solution to managing a
complex retail business. An (SAP) system helps the retailers manage their
businesses in an effective and efficient manner by providing integrated and
consistent information flow. It makes the task of keeping track of all the transactions
so much easier. A retail ERP system allows automatic recording of the transactions
in real-time environment. They have become indispensable tools to survive and
increase profitability in the retail sector for large retail organizations. The major
competitive benefits of using the SAP system in the modern day retail include:
1. Graphical User Interface (GUI) support The retail SAP systems extend a
Graphical User Interface (GUI) to the users that make it very easy to interact
with the software suite. The GUI is critical to make the retail SAP systems
popular with the non-technical users.
2. Allows optimum utilization of the resources A retail SAP systems
allows an organization to utilize its resources in an optimum manner. This

36

optimization subsequently translates into reduced costs and correspondingly

high profits.
3. Reduction in the overhead and Inventory A retail SAP system allows
the organization to considerably reduce the overhead and excess inventory
thereby reducing the unnecessary costs to the company.
4. Timely responsiveness Retail SAP systems allow the organizations to
respond to any challenges or constraints in the real time and thereby extend
timely response to any customer demands.
5. Enterprise wide solution The retail SAP systems offer an enterprise wide
integration of the various Information Systems (IS) that allows the users to
have an enterprise wide view of the problems and implement the appropriate
solutions.
6. Integrated work environment A retail SAP system offers an integrated
work environment throughout the organization that can be easily monitored
and managed.
7. Easy scalability and adaptability A retail SAP system offers easy
scalability options as per the size and scope of an organization while it also
allows integration with the different technologies as well as the legacy
systems running at the business associates or partners end.
8. Knowledge transfer between industries A retail SAP system facilitates
transfer of knowledge between related industries and this process stimulates
innovation and subsequent growth.

37

Conclusion
A retail SAP system makes management of a retail business a lot easier by utilizing
the computing power offered by the modern day Information Systems (IS) in an
integrated and consistent manner. The SAP Information Systems facilitates faster
and better management decisions by providing crucial information in a timely
manner. Because of its integrated structure, it also eliminates errors caused by
multiple input of the same data required in disparate legacy systems.
When implemented properly, Retail SAP Systems have been found to deliver high
ROI despite their high initial and maintenance costs.

Limitations
Every project has some limitations even the researcher came across some
limitations while working on the project which made the analysis a little
inappropriate at times. Some of the basic limitations faced during the research are
listed below:
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Companies denied disclosing the facts and figures regarding the operations
and implementation process.

The study is based on companys secondary data sources.

At the time of research most of the officials did not sincerely respond to the
researcher.

Bibliography
http://www.sap.com/industries/retail/customer
s

Book: Implementing SAP with an ASAP methodology

focus
By Arshad khan

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http://www.networkmagazineindia.com/200602/coverstories03.shtml

Article on SAP for RETAIL Overview

http://www.sappress.de/download/dateien/1680/sappress_sap_for_retail.pdf

Article on SAP-SD-Project implementation methods case study

http://www.scribd.com/doc/3887903/SAP-SD-Project-implementationmethods-case-studies

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