s a p ®

f a s h i o n m a n a g e m e n t
D e v e l o p e d w i t h fa s h i o n b r a n d s
f o r fa s h i o n b r a n d s
t a b l e o f c o n t e n t s

4
Executive Summary

6
O u r U n d e r s ta n d i n g

14
T h e SAP S o l u t i o n

19
W h y SAP ?

23
N e x t St e ps

© 2 0 1 4 SAP SE o r a n SAP a f f i l i a t e c o m p a n y | 3
 e x e c u ti v e s u mma r y

e x e c u ti v e s u m m a r y

Our understanding • Deliver a consistent customer experience with a unified solution that
The fashion world is constantly changing, which means you must supports all channels
continually invest to stay competitive. And what is one of the highest • Improve inventory efficiency with a single global inventory holding
priority areas for investment? Tools that help shorten the time from concept for retail, wholesale, and e-commerce channels
to customer, boost collaboration across the supply chain, and offer end-to- • Increase operational efficiency with common processes that share
end visibility, flexibility, speed, and verticalization. SAP solutions can help a single set of master and transaction data across all channels
you achieve these objectives while reducing overall IT costs and promoting
future growth. With our investment in the SAP® Fashion Management Why SAP?
application, we have made a commitment to help fashion companies: At SAP we can draw on the following to help you achieve your strategic
• Become brands that stand out from the crowd vision:
• Drive efficiencies in their global operations • Our experience of working with a network of 12,200 retailers, fashion
• Be recognized market leaders brands, and wholesalers
• Wholesale and retail software developed for the core business of fashion
The SAP® solution companies, including product development, retail processes, and
We believe that SAP can play a key role in helping you execute your strategic shopper interaction across all points of contact
growth priorities, such as global e-commerce, multichannel opportunities, • A global team of SAP experts that specialize in wholesale and
and store expansion while delivering engaging customer experiences. retail fashion
Through our robust, vertically integrated solution we can help you drive • A proven value-engineering methodology, including benchmarking with
significant bottom-line improvements and improve your competitive peers or competitors and the development of a business case to support
position. business process and improvements in your key performance indicators
(KPIs)
The SAP Fashion Management application helps you:
• Achieve rapid wholesale and retail global expansion with support SAP can help you transform your business by using a proven value
for multiple languages, multiple currencies, multiple tax regimes, and framework that delivers immediate business value, as well as ongoing IT
multiple import and export requirements simplification that reduces total cost of ownership.
• Globally command and control a single stock holding across all
channels using a real-time supply and demand picture that drives
better decisions

4 | © 2 0 1 4 S A P S E o r a n S A P affi l iat e c ompa n y

 executive summary

Let’s talk
In this document we outline the challenges facing the fashion industry
and how our solutions help you address them. Take a few minutes to read
through and, when you’ve finished, let’s talk about how we can help your
company with its specific priorities.

To get in touch
Find an SAP office near you here
To get more information
Visit our retail web site
Or follow us at

Leading fashion companies are utilizing SAP technology and software to

increase market opportunity, achieve profit goals, and grow market share.

Up to 15%
R e d u ct i o n i n i n v e n to ry

50%
R e d u ct i o n i n o r d e r s ca n c e l l e d d u e to
n o n ava i l a b i l i t y

Source: SAP Performance Benchmarking

© 2 0 1 4 SAP SE o r a n SAP a f f i l i a t e c o m p a n y | 5
 O u r U n d e r sta n d i n g

t h e c u r r e n t m a r k e t r e a l i t y

Fashion is being driven by four critical forces:

Globalization Faster fashion Customer experience Vertically integrated channels

• Manufacturing flexibility to deploy • Asynchronous seasons • Knowledge of brands, • Move by fashion retailers to
rapidly and globally and themes not channels wholesale and manufacturing to
• Opening up of new channels in • More styles • Need for consistent interaction control brand image and quality
new markets simultaneously to • Segmented regional and with preferred brands • Move by fashion manufacturers
address customer globalization localized seasons and trends – • Buying journey with many and wholesalers to retail to
• Sustainable operations and “look local think global” touch points increase revenue, margin,
manufacturing and brand image

6 | © 2 0 1 4 SAP SE o r a n SAP a f f i l i a t e c o m p a n y
 O u r U n d e r sta n d i n g

Fashion executives’ challenges that SAP Fashion Management resolves:

Faster fashion Adaptable global business

How can my business deliver How can we move quickly and
shorter seasons across efficiently into new channels and
omnichannels with more styles? markets?

Seasonal merchandising Simplification

How can I improve customer How can I have a single, central
service and fill rates while reducing software instance with a common
excess stock? view across all business segments?
How can I lower my total cost of
Increased revenue and margin ownership?
How can I make the best use of
my inventory across channels and Common face to all channels
reduce markdowns? How can my brand be consistent
across channels and geographies?
Unified planning and sourcing
How can I unify siloed, multichannel
plans and sourcing?

© 2 0 1 4 SAP SE o r a n SAP a f f i l i a t e c o m p a n y | 7
 O u r U n d e r sta n d i n g

C h a l l e n g e s i n t h e F a s h i o n I n d u s t r y

› ›
D i st r i b u t i o n C e n t e r s Brand and merchandise
management
Inability to develop assortments
and pricing targeted to the needs of
the customer across asynchronous
seasons, regional trends, and
Brand and Sourcing, Supply Omnichannel demand for global ranges that
›

›
merchandise procurement, and chain customer respect local and regional trends
T h i r d - pa r t y management manufacturing experience Wholesale
Sourcing and procurement
›
lo g i st i c s or External
providers C usto m e r s Difficulty managing a large and fluid
vendor network
Human resources
›

›
Supply chain
Finance
Inability to respond to customer
demands for flexibility and
Information technology
responsiveness

›
Technology and platform E-commerce Customer experience
Fickle customers that have
›

temporary loyalty to the brand,

Suppliers sto r es
› not the channel, and demand
consistent standards regardless
of touch point to the brand

8 | © 2 0 1 4 SAP SE o r a n SAP a f f i l i a t e c o m p a n y
 O u r U n d e r sta n d i n g

O u r U n d e r s t a n d i n g o f y o u r P r i o r i t i e s

S t r at e g i c P r i o r i t i e s

Globalization Customer experience

• Develop profitable new channels, • Unify the customer experience
markets, and brands through all phases and touch points
• Work closely with business partners, • Increase visibility of trading across
suppliers, and manufacturers to channels and customers
SAP helps fashion companies with
develop new products
multiple sales channels to act as one,
›
• Adapt supply and sourcing to Vertically integrated channels
with common processes based on a flexible global-trading strategies and • Integrate wholesale and retail
global real-time foundation that improves business models sourcing, supply chain, and delivery
efficiency and delights customers. processes
Faster fashion • Improve service levels while lowering
• Make more styles available more channel inventory investment
often • Optimize brand distribution and
• Develop focused target segments image
and assortments by analyzing
customer behavior and building
customer profiles
• Build localized and relevant
assortments

© 2 0 1 4 SAP SE o r a n SAP a f f i l i a t e c o m p a n y | 9
 O u r U n d e r sta n d i n g

“ T o d a y ’ s e m p l o y e e s a n d c o n s u m e r s a r e n e t w o r k e d a n d o n t h e m o v e . G r e at p r o d u c t s

a l o n e a r e n o l o n g e r e n o u g h t o e a r n t h e i r l o y a l t y. B u s i n e s s e s h a v e t o p r o v i d e

a n e x t- g e n e r at i o n e x p e r i e n c e , ta i l o r e d c o m p l e t e l y t o t h e i n d i v i d u a l . SAP i s d r i v e n b y

a r e l e n t l e s s p a s s i o n t o h e l p o u r c u s t o m e r s i n n o v at e t o w i n . W e d e l i v e r t h e i n d u s t r y

s o l u t i o n s a n d t h e r e a l -t i m e p l at f o r m f o r e n t e r p r i s e s t o r u n l i k e n e v e r b e f o r e .”

Bill McDermott, CEO, SAP SE

10 | © 2 0 1 4 SAP SE o r a n SAP a f f i l i a t e c o m p a n y
 O u r U n d e r sta n d i n g

O p p o r t u n i t i e s f o r y o u r c o m p a n y

The SAP Fashion Management application impacts many KPIs across key operational processes. Below is a selection of the metrics that we can
benchmark and use to identify opportunities for improvement to drive value.

• Stock-outs • Stock-outs
• Sales and gross margin optimization • Revenue from substitutes or
• Markdown or discount management Brand and Sourcing, Supply Omnichannel alternatives
merchandise procurement, and chain customer • Reduction in chargebacks
(reduction of markdowns)
management manufacturing experience
• Reduction in revenue loss with quick • Number of sales transactions where
time to market up-sell and cross-sell are offered
• Reduction in finished goods
Human resources • Warehouse operations efficiency
inventory
• Warehouse technology cost
• Reduction in chargebacks
Finance • On-time shipment of orders
• Number of sales transactions where
• Order-receipt-to-ship cycle time
up-sell and cross-sell are offered
Information technology • Orders expedited
• Revenue from substitutes or
alternatives • Inventory accuracy
Technology and platform
• Improvement in on-time delivery of
shipments to customers or stores

• IT budget spent on data • Procurement productivity • Purchase order error rate • Business and operations reporting
cleansing • Improvement in annual savings • Improvement in on-time delivery productivity
• IT integration cost on direct and indirect materials of POS to suppliers • Invoice processing efficiency
• IT data-quality repair cost • Improvement in annual services • New-contract creation cycle time • IT cost to support planning and
• IT efficiency savings • Reduction in work-in-progress consolidation
• Increase in spend under contract inventory • Time to create new finance report
• Reduction in work-in-progress • Reduction in cost to support
inventory supplier contract management

© 2 0 1 4 SAP SE o r a n SAP a f f i l i a t e c o m p a n y | 11
 O u r U n d e r sta n d i n g

M o v i n g t h e n e e d l e

Implementation of the SAP Fashion Management application can help you “move the needle” for these KPIs. For example, improving the business
processes that touch the KPIs below is critical for your company to achieve corporate and shareholder value objectives as well as continue to deliver
world-class experiences for its customers. Our industry value engineering team would be pleased to work with you to identify core metrics and potential
improvements.

STRATEGIC PRIORITY KPI IMPACTED AREA

Transportation spend
(% of revenue)
Globalization Sourcing and procurement
Product data formally managed
(in %)
Time to market for new products
(in months)
Faster fashion Brand and merchandise management
New products launched annually
per US$100 million of revenue
Orders backordered
(in % make for stock)
Customer experience Customer experience
Orders cancelled
(% of orders backordered)
Expedited transportation spend
(% of revenue)
Vertically integrated channels Supply chain
Inventory cover
(weeks of supply)

12 | © 2 0 1 4 SAP SE o r a n SAP a f f i l i a t e c o m p a n y
 O u r U n d e r sta n d i n g

© 2 0 1 4 SAP SE o r a n SAP a f f i l i a t e c o m p a n y | 13
 T h e SAP S o l u t i o n

H o w SAP C a n H e l p Y o u A c h i e v e Y o u r V i s i o n

We believe that SAP can play an important role in helping you transform your business, stay competitive, and deliver on your business imperatives.

1 Brand and merchandise management

2 Sourcing and procurement

SAP has identified four

areas where value can be ›
created for you.

3 Supply chain

4 Customer experience

14 | © 2 0 1 4 SAP SE o r a n SAP a f f i l i a t e c o m p a n y
 T h e SAP S o l u t i o n

B r a n d a n d M e r c h a n d i s e M a n a g e m e n t

You have the opportunity to win over demanding customers to your brand, improve customer loyalty, and increase sales and brand value. By enlarging the
footprint of the brand with more styles available more often and shorter selling seasons, you can manage a targeted global and local range of products.

S o l u t i o n C a pa b i l i t i e s b e n e f i ts
Brands that leverage detailed customer information to develop • Predict, understand, and adapt to customer behavior
personalized marketing and merchandising strategies can have with powerful analytics
greater success in maintaining loyal customers. • Plan and deliver assortments based on current customer
• Provide one source of product master data across all parts preferences and trends
of your enterprise • Win new customers with compelling promotions and
• Manage and analyze season, collection, and theme across the › marketing campaigns
• Drive top-line growth and improve customer satisfaction
entire value chain
with strategic pricing
• Develop deep insights about your customers’ buying
• Manage multiple seasons
preferences and manage their shopping experiences across
• Offer customized products to customers with value-added
e-commerce, stores, and social channels in real time
services
• Create integrated marketing, promotions, and loyalty
programs based on a common view of the customer
• Strategically plan assortments by customer, product,
and location to provide relevant and localized merchandise

© 2 0 1 4 SAP SE o r a n SAP a f f i l i a t e c o m p a n y | 15
 T h e SAP S o l u t i o n

S o u r c i n g a n d P r o c u r e m e n t

Develop stronger relationships with your sourcing and manufacturing partners and gain efficiency opportunities with effective cross-channel sourcing.

S o l u t i o n C a pa b i l i t i e s b e n e f i ts
Keeping pace with demanding customers in a dynamic – even • Find new suppliers and speed onboarding by creating rich
volatile – marketplace while managing increased complexity at a profiles with transactional information
reasonable cost is exceptionally challenging. Successful fashion • Enrich supplier relationships over time with improved
companies collaborate with a global business network of vendors, performance and risk management
manufacturers, and logistics service providers to deliver greater, • Develop strategic sourcing and contracting and identify more
differentiating value to customers in a profitable way.
• Identify and onboard suitable vendors, manage the entire
› opportunities to save
• Plan product creation – from design and component sourcing
vendor lifecycle, and continuously analyze vendor performance to production and quality management
• Understand total spend, define your sourcing strategy, • Effectively collaborate with vendors across ordering, invoicing,
and efficiently manage the operational buying process and payment processing
• Reduce costs with special handling and services delivered
• Create differentiation by delivering brand and product
at the source
innovation and development, as well as production planning
• Benefit from advantages in improved lot sizes and cost savings
and execution
in transportation
• Source and buy for all channels, combining purchase demand
across channels in one purchase order, optionally using
segmentation
• Use sourcing variants such as third-party order, purchase
to order, and make to order, with value-added services at the
source

16 | © 2 0 1 4 SAP SE o r a n SAP a f f i l i a t e c o m p a n y
 T h e SAP S o l u t i o n

S u p p l y C h a i n

Reap the benefits of improved planning, optimized inventory, and accurate order allocation.

S o l u t i o n C a pa b i l i t i e s b e n e f i ts
With improved visibility into channel demand, a customer-driven • Improve use of inventory
supply chain can synchronize supply with your extended business -- Gain greater forecast accuracy and optimize inventory for higher
network. Simultaneously, it must integrate and automate logistics customer satisfaction
and fulfillment across stores, customers, distribution centers, and -- Deliver products on time and as promised – how, when,
warehouses – meeting demand where it actually occurs. and where customers want them
• Immediate inventory visibility across all channels (wholesale,
retail, franchisee, and digital)
› • Optimize inventory allocation
-- Reduce lost sales due to stock-outs
• Integrated systems that provide optimal cross-channel -- Improve order fill rate
allocation methods from planning through execution, helping to -- Enhance customer satisfaction
ensure superior customer service and higher profitability -- Increase service levels and reduce chargebacks and deductions
caused by suboptimal allocation and fulfillment
• Segmentation and common inventory to optimize inventory
• Improve service levels and easily comply with vendor restrictions
allocation to demand changes
• Harmonize supply plans across the network
• Full traceability of historical demand to improve future
-- Optimize sourcing
planning
-- Maximize efficiency in sourcing
-- Improve price, quality, and transparency
-- Reduce transportation cost

2 5 . 8 % r e d u c t i o n i n r e v e n u e l o s s d u e t o s t o c k - o u t s w h e r e f o r e c a s t s i n c o r p o r at e d e m a n d

h i s t o r y a n d a u t o m at i c a d j u s t m e n t s f o r b a d d ata a n d p a s t p r o m o t i o n s

Source: SAP Performance Benchmarking

© 2 0 1 4 SAP SE o r a n SAP a f f i l i a t e c o m p a n y | 17
 T h e SAP S o l u t i o n

C u s t o m e r E x p e r i e n c e

Brand owners have the opportunity to serve and sell to customers by using different channels such as wholesale, retail, and digital as well as various
customer-facing technologies.

S o l u t i o n C a pa b i l i t i e s b e n e f i ts
Customers expect a consistent sales experience, regardless of • Improve margin and revenue figures
how they engage with a brand. To serve the various sales channels, • Focus and deliver on excellent customer service
brand owners must understand their customers’ needs, anticipate • Hit customer retention targets
their demands, and offer consistent, omnichannel interactions. • Increase customer satisfaction levels
• Manage your wholesale customer and key accounts • Improve product availability with better demand fulfillment
• Assign inventory to the right customer demand by providing › • Operate effectively with one view of the customer across
all interaction channels
product availability information and rules-based order allocation
and inventory segmentation • Design for channel expansion, from wholesale to retail sales
or vice versa
• Effectively develop price strategies based on seasonality, size,
• Minimize seasonal excess stock and avoid price markdowns
color, customer, price groups, and other characteristics
• Use seasonal processing to maximize control and fine-tune
seasonal delivery periods
• Improve customer service with value-added services such as
ticketing, labeling, and special handling
• Manage your own retail channels, from stores, e-commerce,
and B2C to franchisee

18 | © 2 0 1 4 SAP SE o r a n SAP a f f i l i a t e c o m p a n y
 W h y SAP ?

W h y SAP ?

SAP’s vision is to help the world run better and improve people’s lives. Our mission is to help every customer become a best-run business – this is what we
bring to you.

We are the market leader in enterprise application software, with

more than 183,000 customers across 120 countries. Our solutions
and services are today’s business enablers, and we continuously
work with customers to help them address the needs of tomorrow.

The SAP Fashion Management application provides:

• A vertically integrated solution to deliver adaptable global
business, faster fashion, and a unified customer experience
• Support for end-to-end, real-time processes based on a single
global inventory foundation that improves efficiency and delights
customers
• A comprehensive fashion solution based on the SAP ERP
application

SAP has:
• Deep industry experience coupled with strong and engaged
customers
• Excellent customer references with tangible business benefits

© 2 0 1 4 SAP SE o r a n SAP a f f i l i a t e c o m p a n y | 19
 W h y SAP ?

O u r P l a c e i n t h e F a s h i o n I n d u s t r y

10 of the top 10
most admired apparel and footwear retailers
in the world run SAP solutions

18 of the top 20
apparel and footwear retailers in the world run
SAP solutions

12,200
retail customers worldwide

Vertically integrated channels on a single platform

Deep industry-specific functionality

Built on industry best practices

Clear industry road map

Source: SAP analysis of Forbes 2000 rankings (May 2013) and SAP customer database as of March 2014

20 | © 2 0 1 4 SAP SE o r a n SAP a f f i l i a t e c o m p a n y
 W h y SAP ?

I n t e g r a t e d S o l u t i o n f o r F a s h i o n

The SAP Fashion Management application provides a comprehensive With 15 years of product innovation, SAP offers a complete fashion suite
solution for fashion companies that: that helps you run Right NOW, based on a single foundation that helps
• Breaks down the barriers and inefficiencies across sales channels remove organizational silos, enabling you to establish best-business
with a single, real-time solution processes and create an information-driven culture.
• Increases the speed of range introduction and improves targeting
to channels and sales locations to maximize sales potential We believe our strategy and solutions will help fashion companies drive
• Helps you gain up-to-the-minute visibility across all partners to action and measurable results. To anchor our global leadership position,
expedite deliveries to match customer need we will continue to invest and innovate in this strategic focus for SAP.

V a l u e M a p f o r Fa s h i o n

Brand and merchandise Sourcing, procurement, and Supply chain Ominchannel customer
management manufacturing experience
• Social, marketing, and • Sourcing, supplier management, • Supply chain insight • Customer insight
merchandising insight and insight • Demand planning • Customer interaction and
• Product design and development • Procurement • Supply planning personalization
• Omnichannel marketing • Branded manufacturing • Omnichannel inventory and • Digital commerce
• Optimized merchandise and • Sustainable operations order response • Order management and
assortment planning • Optimized logistics and orchestration
• Pricing and promotion fulfillment • Store excellence

Corporate functions > Human resources | Procurement | Information technology

Technology > Big Data | Analytics | Enterprise mobility | Cloud solutions

© 2 0 1 4 SAP SE o r a n SAP a f f i l i a t e c o m p a n y | 21
 W h y SAP ?

T h e V a l u e o f P a r t n e r i n g w i t h SAP

SAP brings a strategic partnership with an unparalleled amount of

experience and track record to the fashion industry to assist with the
business and it transformation journey. Whether you needs solutions in
applications, cloud, mobile, analytics, or database and technology areas,
SAP can partner and deliver.

Tightly integrated complete solutions

SAP offers a comprehensive portfolio for fashion companies, enabling
a total customer experience from offer to monetization of any transaction –
integrated, yet modular by design.

Key breakthrough innovations

The SAP portfolio is based on the industry’s most innovative technology
– including the SAP HANA® platform and mobile, analytics, and cloud
solutions – to deliver business process optimization and efficiency at the
lowest possible cost.

Proven time to value in large-scale implementations

Leading fashion companies throughout the world continue to rely on
SAP to enable them to offer a comprehensive customer experience.

Delivering value to your company

Many of the world’s leading fashion companies, across every segment,
are reaping the benefits and running better with SAP software and services.

22 | © 2 0 1 4 SAP SE o r a n SAP a f f i l i a t e c o m p a n y
 Next Steps

N e x t S t e p s

Achieving your vision will require significant focus and executive

commitment along with a business partnership with SAP to drive
a successful outcome.

Recommended next steps for your transformation journey:

• Thought leadership workshop with business and IT executives
to identify key value areas
• Connection with other fashion companies to exchange best practices
and experiences
• An industry value engineering approach to identify commercial
business and specific use cases

© 2 0 1 4 SAP SE o r a n SAP a f f i l i a t e c o m p a n y | 23
www.sap.com/contactsap

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