SAP SCM F&R Best Practices for Retail

Industry
113,773

Abstract:

Forecasting & Replenishment (F&R) is the process of demand as well as replenishment

planning generating order proposals and exceptions for the retail industry. SAP F&R is a
solution meant for efficient replenishment of stores and distribution centers in retail industry.
Its main goal is to simultaneously reduce inventory while optimizing actual service levels.

F&R is a multi-step process, focusing on forecasting for individual products and locations
and replenishment planning based on forecast / reorder point and/or target stock. F&R
focuses on products which are replenished regularly from external and/or internal vendors.
Solution is capable to leverage quantitative techniques to forecast true market demand
based on historical performance, past promotions, future events and demand generation
activities. Solution requires the products to have a measurable and repeated sales history as
well as up-to-date stock information to generate appropriate order proposals.

1.0 Business Process Definition

Forecasting & Replenishment (F&R) is the process of forecasting and replenishment planning
generating order proposals and exceptions for the retail industry. F&R is a multi-step process and ,
focusing on forecasting for individual products and locations followed by replenishment planning
based on forecast / reorder point and/or target stock.

F&R typically leverages quantitative techniques to forecast true market demand based on historical
Performance, past promotions, future events and planned demand generation activities. Forecasting
is followed by Replenishment Planning to generate order proposals and exceptions. Inventory
Analysts review the order proposals and exceptions before releasing the order proposals for
execution.

SAP F&R optimizes the internal logistics of retail companies by improving the replenishment
processes and aims to achieve the following:

–Cut surplus stock in distribution centers and stores

–Reduce stock-outs in distribution centers and stores

–Lessen the large amount of manual work required by implementing highly automated replenishment
planning in stores and distribution centers

–Increase transparency in the supply chain through effective analyses

–SAP F&R helps to minimize the total cost of ownership.

2.0 Forecasting & Replenishment Challenges Faced by Business

When clients focus on Forecasting & Replenishment for their DCs and Stores, they will face
issues that could span supply, demand and even the nature of the products being forecasted.

Product Challenges:

 Large number of SKUs in retail business

 Capital investment products
 Inventory holding costs

Demand Challenges:

 Various patterns of demand for different SKUs

 Slow Runners with Intermittent Demand
 Requirement of tracking the demand signal daily

Replenishment Challenges:

 Various types of replenishment requirement for different SKUs

 Procurement challenges to satisfy vendor minimum order requirements vis-a-vis inventory
optimization
 Manual procurement as well as smoothing of procurement cycles etc.

3.0 F&R Process Flow Overview

Following diagram depicts an overview of the business processes involved in the execution cycle
of F&R.
To ensure a smooth execution of the above processes, business needs to adopt certain best
practices with regard to the information management related to master data management, sale
history and forecasting processes, replenishment processes as well as analysis of KPIs.

4.0 F&R Best Practices

4.1 Best Practices – Master Data Management

 Forecast horizon should be long enough to provide visibility for forecasting

 Master data changes performed in the ERP system, which are relevant for SAP F&R, need to
be transferred to the SAP F&R system. This data is collected in a first step in temporary
“buffer tables” in the SAP F&R inbound interfaces for later processing. Only after having
received and processed all changed master data information in SAP F&R, the forecast and
replenishment calculation process can be started. It is therefore important that the available
time window for this process is kept and monitored. If the time window for sending changed
master data information to SAP F&R is not sufficient the job for transferring the data can be
scheduled more than once a day.
 Changes performed to transactional data in the ERP system, for example to purchase orders,
promotions, contracts, stock and consumption data of F&R relevant article/site combinations
need to be transferred to the SAP F&R system. This data is collected in a first step into the
 buffer tables in the SAP F&R inbound interfaces for later processing. It is therefore important
that the available time window for this process is kept and monitored for accuracy.

4.2 Best Practices – Forecasting Process

 Forecasting should be done daily for all SKUs of all Stores / DCs
 Forecasting time buckets should be aligned with business requirements
 Forecasting can be done in multiple units of measure, including units, lbs and pallets

4.3 Best Practices – Historical Data Management

 At least three years of history should be used to form the basis for statistical and judgment
forecasts, with the option to use more
 Demand history for forecasting models true Stores demand (requested dates and quantities),
not actual DC Shipment history (e.g. late shipments, short shipments)
 History used for forecasting should be as close to the point of true customer demand as
possible
 Lost sales should be systematically captured and applied to demand history
 History is adjusted for outliers that are detected and dispositioned based on standard rules
 Promotion history should be systematically captured and used to split history into base and
promo demand
 Historical substitution, merging, and chaining should be enabled to support product transitions
 Daily Sales History stored in BI Cube causes Performance Issues for Conversion of Waves

4.4 Best Practices – Statistical Forecasting

 The starting point for all demand plans should be a statistical forecast available at the
individual SKU or SKU/Store level
 Statistical forecasting models are established and periodically fine-tuned by a trained
statistician
 A statistical forecasting model that generates the lowest error is systematically chosen
 Pick-best statistical forecast options can be limited by SKU to those that are appropriate to
the demand pattern rather than all modeling options
 Manual Replenishment Type Changes need to be “Business-Rule-Based” and should not be
decided by a “Situation”.
 Data for introduction of New Store & New SKU Algorithms should be captured from similar
Sister Stores / SKUs.
 Listing period data plays an important role in forecasting of SKUs. Improper listing data would
cause wrong seasonality resulting in over-stocking or under-stocking. Hence suitable
governance should be in place to maintain data related to listing.
 Documented comments capture the reason for significant variation from the statistical
forecast recommendation.

4.5 Best Practices – Replenishment Process

  Vendor Lead time should be managed by Market instead of by SKU
 Improved KPI on In-Stock Position
 Data issues on Presentation Stock should be streamlined
 Data misinterpretation on Vendor Minimum vs. Rounding Profile vs. Min Order Qty should be
managed
 Manual Replenishment Type Changes need to be “Business-Rule-Based” instead of
“Situation-based”
 Restriction Profile should be setup for DCs on “Truck Load”
 Importance of Smoothing of Procurement Cycles across the entire business week should be
emphasized
 Store Communication must be streamlined
 Manual Ordering – guidelines for Do’s & Don’ts should be established for better optimization
of store inventory.

4.6 Best Practices – Performance Measurement

 Forecast accuracy and bias should be regularly reviewed and root causes of error should be
discussed with forecast contributors
 Error calculations should be weighted to minimize the impact of large errors on low-volume
and low-cost SKUs
 Lags for forecast accuracy measurement should be synchronized with and vary by product
lead times
 Fine-tuning of system parameters for batch jobs is the key to a smooth functioning of daily
planning process in F&R
 Setting of user parameters should be managed to avoid Performance Issues in F&R
landscape.

5.0 Conclusion

Adherence to the best practices facilitates the smooth functioning of the planning process in F&R
while optimizing the system performance and output of the planning algorithm. Data inconsistencies
play a crucial role in F&R landscape. Unlike CIF in APO, where the transaction data are transferred
from ECC to APO in real-time, buffer interface in F&R is asynchronous. Any synchronization between
ECC and F&R is an on-going maintenance activity and needs to be ensured before every FRP run.
While planning the data management strategy, planners must consider the performance issues due to
data volume and schedule of the jobs to generate inconsistencies and their manual cleanup.

Best practices need to be established for respective organizations suiting to the specific needs of the
business with regard to the master data management, forecasting process and application of demand
influencing factors, replenishment process and optimization of order proposals followed by
performance assessment of KPIs. Most importantly, bets practices should be treated as a set of
guidelines and needs to be fine-tuned and optimized as the solution landscape as well as experience
of the planners mature over a period of time.

6.0 Conclusion
Pravat Dash, CPIM is a Managing Consultant in the Business Consulting Services Group of IBM
Global Services. He has over 16 years of SAP SCM/ERP implementation and industry experience in
the area of Supply Chain Management and Logistics. He has worked as Lead Consultant and APO
Team Lead for implementing SAP SCM solutions for clients in various industry verticals for the past
12 years. He has authored multiple papers in Supply Chain Planning space. You may reach him via
email [email protected].

SAP F&R (SCM) t-codes useful for testing

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Listed below are some F&R t-codes that would be useful for QA folks involved in testing this module. In
no way is this a comprehensive list, and it is possible that some of the explanations provided are not fully
accurate.

This is intended to help those who’re new to SAP’s F&R module and need some guidance on where to go
in the system to find/ do some common things in there.

When we started implementing F&R in my organization, I was not very successful in finding information
on the internet regarding this module. Hence, this article. I hope it folks find it helpful.

T-CODE/ PROGRAM/ TABLE NAME PURPOSE

/n/fre/rwb Create/ view order proposals (OPs)

/n/fre/ordno View a single order proposal (OP)

/n/fre/cade Runs for 1 combination of location and product.

Can be used to check if article (product) is currently

listed to a location. If article listing (to specified
location) is currently valid, the row will appear in
yellow.

Also used to confirm procurement cycle assignment.

/n/fre/tse01 Most commonly, used to review:

consumption data (Key figure parameter: CONS_DATA)

Forecast with safety amount (Key figure parameter:

FC_MAX)

Forecast w/o safety amount (Key figure parameter:

FC_MEAN)

Order forecast (ORD_FC)

 T-CODE/ PROGRAM/ TABLE NAME PURPOSE

/n/fre/cdm_viewer Another option to view forecast data & consumption

data based on location, then product.

SE38 –> Read stock data for 1 or more location – product

/FRE/FU_TOOLS_READ_STOC combinations.
K OR

/n/FRE/READ_STOCK
/n/fre/schedule Review/ maintain procurement cycles

/n/fre/mass_trprod2 Review transportation lanes.

Enter source location, target location (typically DC –>

store) and execute.

Highlight result row and click on the ‘Display time

dependent values’ icon.
SE38 –> /fre/ts_generate Program to generate consumption data

SE38 –> Program to feed consumption data via a text file.

/FRE/FU_TOOLS_TS_FILE_LOA Format below:
D
Location;Product;Week;Sales;Forecast;Promotion;Unit

0101;7450050013;12011;180;;;EA
/n/FRE/MASS_MATLOC Mass maintenance for location-products.

Enter product(s)/ location(s) and execute. Double click

to review a specific entry.

Clicking on the ‘TD fields’ icon displays listing

information.
/n/fre/mass_loc Mass maintenance for locations.

Enter location(s) # and execute. Double click to review

a specific entry. Used to view and validate any new
vendors pushed from ECC to SCM.
/n/fre/difwb DIF WB. Used to check transfer of promotions from
ECC to FnR

/n/fre/pwb Product workbench: confirm location product data

Managing Buffer Interface in SAP F&R
Landscape
023,736

Abstract:
SAP SCM F&R system deals with very high volume of master and transaction data due to the nature of
business in Retail sector and no of stores and SKUs involved in planning process. Due to the huge volume
of data, interface between F&R and ECC is designed differently as compared to Core Interface (used
between APO and ECC). Data interchange between F&R and ECC takes place through the interface
named as “Buffer Interface”. This paper attempts to capture the technical architecture of buffer interface
and discuss the consistency reports that need to be executed periodically to keep both the systems in sync
and ensure higher level of accuracy of the planning results generated from the FRP run.

1.0 Introduction to F&R

SAP Forecasting and Replenishment (SAP F&R) is a Retail specific application out of the SAP for Retail
portfolio. A standard integration into Retail’s powerful back office system comes as part of the solution
and massive amounts of data are being transferred almost on a daily basis. The challenge to feed SAP F&R
with large amounts of master data and master data changes as well as transactional information via a set of
highly of complex interfaces requires tools and monitors in order to ensure data consistency at all times in
all areas as early as possible.

Data inconsistencies will negatively impact the results in all subsequent F&R processes such as forecast
calculation by using for instance incorrect information on sources of supply, minimum stock, procurement
cycles, listing intervals and eventually end up in critical stock-out or stock-over situations.

Manual checks and controls are not an option in high-volume Retail businesses so a set of check reports
and monitoring tools is available to compare master data on both sides – ERP and SAP F&R – and display
any inconsistency to allow early intervention and prevent damage in the follow-on processes.

2.0 F&R Architecture

Business Process Description:

This business process description will describe only the most important steps that are necessary to operate
an SAP F&R solution. Individual SAP F&R implementations of customers are not considered. Therefore,
it can be that individual critical steps are not described, or that some steps in this description are not
relevant for specific customers.

Master Data Load:

The master data is sent via RFC to SAP F&R using the standard SAP ERP Retail Plug-In Interface.
Transactional Data Load:

Open and changed orders in SAP ERP Retail and Stock/Inventory data are sent to SAP F&R via RFC
using the standard SAP ERP Retail Plug-In Interface.

(SAP F&R Architecture)

For master data of new SAP F&R relevant article/site combinations there is an initial load (report
FRE_INIT_LOAD, transaction FRE01) first from SAP ERP Retail to SAP F&R. This report is supposed to
be started once for the initial data supply of SAP F&R. Then, the delta load (report FRE_DELTA_LOAD,
transaction FRE02) for change pointers due to master data changes by planners is executed daily.

3.0 Architecture of Buffer Interface

Buffer interface is the interface through which the master and transaction data get transferred from ECC to
F&R and vice-versa through RFC. Unlike Core Interface (CIF) used in SAP APO, Buffer Interface (BIF)
is asynchronous and is designed to handle high volume of data involved in retail planning process.

Technical architecture of the buffer interface is as shown below:

In Buffer Interface, data gets pushed from ECC to buffer tables in the interface and from the buffer tables,
booking job transfers the data to F&R. Order proposals created by F&R are transferred to ECC using a
SAP standard program. Data between the two systems are in sync only at a point of time and any changes
in ECC are not automatically reflected into F&R until the consistency programs are executed through the
buffer interface.

4.0 Consistency Reports in ECC

SAP provides the following reports to maintain consistency between ECC and F&R systems. These
reports are executed in SAP ERP system.

4.1 FRE_CHECK_LOC_PROD (T Code – FRE_C1)

Report compares location product master data and optional sales price, listing information, reference
modules and unit of measure between SAP ERP Retail and SAP F&R and displays inconsistencies like
missing location product data in SAP F&R or SAP ERP Retail as well as differing location product master
data field values.
In a first step on the SAP ERP Retail side, the relevant article/site combinations that exist in table
FRE_DB_ART_SITE are read according to the selected site and article. The required data from SAP F&R
is collected via remote function call using FM /FRE/MD_CHK_READ_DATA. Then, the required data is
selected from the SAP ERP Retail side using FM FRE_MD_CHK_READ_DATA.

In a following step, the collected master data values from SAP ERP Retail and SAP F&R are compared.

Detected inconsistencies can be cleaned up executing the report FRE_REINIT_LOAD for inconsistent
location products in ECC. Afterwards, in F&R, run report /FRE/BIF_INB01 for location products to post
the entries from buffer table to F&R database.

4.2 FRE_CHECK_LAYOUT_MOD (T Code – FRE_C3)

The report FRE_CHECK_ LAYOUT_MOD compares layout module data between SAP ERP Retail and
SAP F&R and displays found inconsistencies like missing layout module data in SAP F&R or SAP ERP
Retail as well as deviations in layout module data field values.

In a first step, on the SAP ERP Retail side the relevant article/site combinations existing in
FRE_DB_ART_SITE are read according to the selected article and site. The required data from SAP F&R
is collected via remote function call. Then, the required data is selected from the SAP ERP Retail side. In a
following step, the report searches for inconsistencies by comparing the layout module data between SAP
ERP Retail and SAP F&R.
Detected inconsistencies can be cleaned up executing the report FRE_REINIT_LOAD in ECC followed by
the execution of the report /FRE/BIF_INB01 in F&R to post the entries from buffer table to F&R
database.

4.3 FRE_CHECK_SUPPLY_NET (T Code – FRE_C2)

The report FRE_CHECK_SUPPLY_NET compares supply net data (internal and external transportation
lanes) between SAP ERP Retail and SAP F&R and displays found inconsistencies like missing
transportation lanes in SAP F&R or SAP ERP Retail as well as deviations in supply net data field values.

Depending on the SAP F&R release, the supply network consists of different tables. The report considers
if the old lanes model or the new lanes model is active (table FRE_SEND_OPTION, field
FRE_NEW_LANES).

In a first step on the SAP ERP Retail side, the relevant article/site combinations that exist in
FRE_DB_ART_SITE are selected according to the selected article and site.

The required supply net data is collected from SAP F&R via remote function call. Then, the required
supply net data is determined on SAP ERP Retail side. In a following step, the collected supply net data
from SAP ERP Retail and SAP F&R is compared.

Detected inconsistencies can be cleaned up executing the report FRE_REINIT_LOAD followed by the
execution of report /FRE/BIF_INB01 in F&R to post entries from buffer table to F&R database.

4.4 FRE_CHECK_PO_OP (T Code – FRE_C4)

The report FRE_CHECK_PO_OP compares purchase order and order proposals between SAP ERP Retail
and SAP F&R and displays found inconsistencies like missing order proposals / missing purchase orders in
SAP F&R or SAP ERP Retail as well as differing data field values.

In a first step on the SAP ERP Retail side the selected data will be checked for relevancy. The relevant
article/site combinations that exist in table FRE_DB_ART_SITE are read according to the selected site and
/ or article. In a second step it will be checked if purchase orders exist which are relevant for transmission
to SAP F&R via checking the relevant document types according to customizing and several criteria
regarding the order itself (such as LOEKZ etc.). Then it will be checked if order proposals exist which are
relevant for transmission to SAP ERP.

Only order proposals which have at least status transferred (31) and at the most status completed (90) are
compared for consistency. In a following step, the collected purchase orders and order proposals from SAP
ERP Retail and SAP F&R are compared.

Detected inconsistencies can be cleaned up executing report FRE_ORD_START_OUTB_INTVL in ECC

for inconsistent purchase orders. Afterwards, in F&R, run report /FRE/BIF_INB01 to post the entries from
buffer table to F&R database.

4.5 FRE_REORG_ART_SITE (T Code – FRE_C5)

While an article site combination is transferred to SAP F&R for the first time, an entry in a control table
(FRE_DB_ART_SITE) is created in order to indicate that the initial load of all relevant data for that article
site combination to SAP F&R has been carried out.

In case an article site combination is not relevant for SAP F&R anymore, the entry in the control table
FRE_DB_ART_SITE is removed (FRE02). In case a specific site is not relevant for SAP F&R anymore
because it is not contained in any SAP F&R relevant article site combination anymore, it should also be
removed from FRE_DB_SITE.
5.0 Consistency Reports in F&R
This section describes the consistency reports those can be executed in SAP SCM F&R system.

5.1 /FRE/BIF_CHECK_CONSUMPTION (T Code – /FRE/BIF_CHECK_CONS)

Report /FRE/BIF_CHECK_CONSUMPTION compares consumption data based in SAP ERP or SAP BI

with consumption data in SAP F&R. Using this report it is possible to select the data base in SAP ERP to
be compared with the data in SAP F&R.

Consumption data stored on weekly and daily basis can be compared. In case the report detects
inconsistencies it will be displayed by naming the system with the data inconsistency and also the period
(time bucket).

In a first step in SAP F&R the location products to be checked in SAP ERP are selected and then
depending on the selection criteria table MSEG or MVER will be accessed via remote function call in
order to perform the check.

Detected inconsistencies can be cleaned up for the data source in ERP by executing the report
FRE_SEND_TSD (T Code – FRE03). This report transfers the consumption data to F&R buffer
table /FRE/BIF_TSD.

To start the interface processing in F&R to book the data from buffer tables to F&R database, within the
interface processing transaction the flag “time series data” has to be set and execute the report:
/FRE/BIF_INB01 (T Code – /FRE/BIF).

5.2 /FRE/BIF_CHECK_STOCK (T Code – /FRE/BIF_CHECK_STOCK)

A state in which the consumptions of both systems can be compared can only be reached once the interface
processing in both involved systems has successfully finished. This means in SAP ERP the Report
interface “FRE_SEND_TSD” (transaction FRE03 – transfer of stock and consumption data) was executed
and no changes to the stock have occurred since then. In SAP F&R the report “/FRE/BIF_INB01”
(inbound processing of stock data) was executed and has finished successfully.

Report /FRE/BIF_CHECK_STOCK generate the list of inconsistencies between ERP and F&R which
needs to be corrected using SAP ERP time series interface for stock information. To remove
inconsistencies, use report FRE_SEND_TSD in ECC. This report transfers the consumption data to F&R
buffer table /FRE/BIF_TSD. Subsequently, execute report /FRE/BIF_INB01 in F&R.

6.0 Lessons Learned

 Execution of Inconsistency Jobs are performance Intensive – Inconsistency jobs in F&R
landscape are highly performance sensitive due to huge volume of data compared and multiple
interfaces involved. SAP recommended OSS notes must be implemented to address all the
performance issues. Additionally, to manage the execution of the consistency reports, jobs need to
be staggered in different time periods throughout the week when stores are not operating or least
amount of transactions are being entered into the ERP system. After generating the
inconsistencies, they need to be fixed using cleanup reports manually which needs to be scheduled
to avoid any performance issues in SAP ECC.
 Inconsistencies of data impacts FRP Run – Master and transaction data inconsistencies impact
the duration of FRP (Forecasting & Replenishment Planning) run resulting in delayed completion
of the planning jobs. Data inconsistency also results in failure of planning run for stores for which
 the data is incorrect. Any batch job failure needs to be addressed manually and demands extensive
man-hours from application support team.
 Data Consistency requires on-going maintenance – To have explainable planning output from
FRP run, data consistency must be planned carefully and dedicated team should be put into place
to improve and maintain the quality of data. Continuous support required to clear the data stuck in
the interface after every FRP run and order proposals released from F&R to ECC. Otherwise,
duplicate or delayed procurement might disrupt the inventory levels since retail stores operate on
optimized inventory and procure more frequently to reduce the cost of storage and obsolescence.
Any delay in clearing the order proposals from interface might result in a new order proposal from
FRP run the following day, resulting in duplicate orders.

7.0 Conclusion
Data inconsistencies play a crucial role in F&R landscape. Unlike CIF in APO, where the transaction data
are transferred from ECC to APO in real-time, buffer interface in F&R is asynchronous. Any
synchronization between ECC and F&R is an on-going maintenance activity and needs to be ensured
before every FRP run.

Presence of buffer interface (BIF) facilitates the handling of high volume of data, but poses challenge of
asynchronous data transfer unlike CIF. BIF can handle huge volume of data whereas CIF is designed for
only critical data relevant for advanced planning in APO. Managing integration in CIF is easier due to one
time configuration and activation of integration models, following which transaction data flows in real-
time and master data needs to be synchronized less frequently after initial transfer. Managing integration
using BIF is challenging due to asynchronous mode of data transfer through buffer tables.

While planning the data management strategy, planners must consider the performance issues due to data
volume and schedule of the jobs to generate inconsistencies and their manual cleanup.

8.0 About the Author:

Pravat Dash, CPIM is a Managing Consultant in the Business Consulting Services Group of IBM Global
Services. He has over 16 years of SAP SCM/ERP implementation and industry experience in the area of Supply
Chain Management and Logistics. He has worked as Lead Consultant and APO Team Lead for implementing
SAP SCM solutions for clients in various industry verticals for the past 12 years. He has authored multiple
papers in Supply Chain Planning space. You may reach him via email [email protected].