Reviewing Sourcing for the Retail Industry

The retail industry is going through dramatic changes due to changing consumer preferences like unified commerce and seamless shopping experiences, emerging new business models like business to home and the sharing economy, and transformational competitors. Retailers are looking for new ways to compete, increase margins, and secure customer loyalty.

One of the ways retailers can tackle these challenges is by automating the source-to-contract process. SAP Ariba Strategic Sourcing Suite's new layer of innovations to support the sourcing of direct materials includes specific functions for the retail industry. This sourcing functionality for the retail industry enables retailers to combine the competitive sourcing process with a structured and automated way to communicate the required specifications to the supplier, while at the same time collecting all the relevant product data from the supplier.

The product data might be used to help with an award decision, for the actual procurement process in the retailer’s backend system, and to collect a full product dataset for the product information management system. The process should be highly automated to make it as easy, fast, and efficient as possible to increase adoption, gain speed, lower administrative costs, and increase the number of private label products in the assortment without any headcount increase.

The SAP Classification System is a tool that enables you to group specific objects, such as articles and sites together in an ordered structure. Its basic function is as a repository for all the characteristics that objects can have.

Characteristics are the features or attributes that are possible within a class type.

• Example: color

Each characteristic can be assigned characteristic values.

• Example: The characteristic "color," could have the three characteristic values "red", "green" and "yellow".

These characteristics can then be used to group similar objects together in classes so that the system can find them more easily in transactions. The system searches for objects using the class and the characteristics defined for the class. The characteristics can be used as search terms, which ensures that objects that are identical or similar from the point of view of their characteristics are retrieved as quickly as possible.

Merchandise categories enable you to classify and structure all aspects of the merchandise in your enterprise. In doing so, each article is assigned to a specific merchandise category. This assignment is valid throughout the enterprise.

Merchandise categories can be assigned to stores and store departments. You can also group merchandise categories into hierarchies. A successfully implemented merchandise category hierarchy is an essential tool for efficient merchandise category management. The main focus for the management of your merchandise then shifts from individual articles to merchandise groupings. The aim of merchandise category management is the better coordination of various customer considerations at each business location (for example, store), including elements such as variety, price structures and advertising.

Retail data flows from the ERP system to SAP Ariba Sourcing in the following order:

1. The ERP system sends data to SAP Ariba Cloud Integration Gateway in IDOC format.
2. The SAP Ariba Cloud Integration Gateway converts IDOC to SOAP messages and sends it to the SAP Ariba Retail component.
3. The data is enriched using a file upload functionality to add questions and tags. When requested, the SAP Ariba Retail component sends the data to the SAP Ariba Sourcing.
4. SAP Ariba Retail component data is converted into line items and line item terms in a sourcing event.

The Category Attribute Hierarchy provides the following capabilities:

• Centrally maintain content, such as questions and terms, and tag them to be automatically added based on category, region, and department fields.
• Models SAP Retail Merchandise Category Hierarchy.
• Automatically add item terms to items based on category in both Sourcing and Contracts.
• Automatically add event questions to sourcing events based on category.
• Separate category hierarchy from commodity code hierarchy and match between the two.
• Ability to upload into SAP Ariba via XML.

It delivers the following key benefits:

• Reduces the number of Sourcing and Contract templates.
• Improves user experience because the system will automatically add content instead of leaving it the user to manually figure out which content to add.
• Aids in enforcing compliance by prompting users to include questions for their suppliers.

The Category Attribute Hierarchy feature needs to be enabled. It internally creates a realm in the SAP Ariba Retail component.

• Feature Toggle: AttributeHierarchy UP-7003
• Default: Off
• Parameter: Application.AQS.ArticleIntegration.Enabled
• Default: On

In the past, administrators had to upload content via an XML interface. You can now create and manage category attribute hierarchy questions on the Category Attribute Management user interface page. Adding and managing category attribute hierarchy questions on the user interface provides an alternative to uploading them in a category attribute hierarchy XML file.

The category attribute hierarchy user interface makes it easier for users to perform the following tasks:

• Upload category attribute hierarchy data
• Create hierarchy questions and characteristics/terms
• Provide search capability

This results in faster iteration and easier maintenance.

The Category Attribute Management page can be accessed by selecting Manage → Administration → Category Attribute Manager. The Questions tile on the Category Attribute Management page displays the total number of questions in the system. You can click on the Questions tile to search for questions or to edit questions.

While creating a question, you can create a section under which that question will appear in a sourcing event. If there is a section with a specific name in a sourcing event template, and you add an item from the category attribute hierarchy that has a question that is associated with a section of the same name in the XML file. Two sections of the same name are not created in the event. Instead, questions are added to the section that is declared in the sourcing event template. The system only checks the current locale for existing sections of the same name.

Questions can be associated with categories, articles, or sites in a category attribute hierarchy or article master.

The terms region, site, and plant are used interchangeably, with each being used in one of the following contexts:

• Region is used on the data import and export administration pages of the SAP Ariba Sourcing solutions.
• Site can be associated with articles, categories, lots, questions, or attributes that are included in the XML that is loaded with a category attribute hierarchy or article master.
• Site is labelled as Plant on the article master search screen.

When an article is copied from the article master, the SAP Ariba system performs a search of the region hierarchy to see if there is a match there for the site/plant that is associated with the article. If the site/plant is present in the region hierarchy, then the region is set for that article, and any questions or attributes that are associated with that article are fetched based on the criteria described below.

The following rules apply to questions in category attribute hierarchies and article master:

• Questions that are not linked to a site in the XML are generic questions. When generic questions are linked to an article or category, they are displayed in a sourcing event whenever an item based on that article or item category is added to a sourcing event.
• Questions that are linked to a site are considered region-specific questions. Region-specific questions are displayed in a sourcing event with an item only when the site is linked to the article or item category.

• The Retail Add On is applied on the ERP system.
• The SAP Ariba Cloud Integration Gateway access from SAP Ariba applications (PL-10635) feature toggle is enabled for the realm.
• The SAP Ariba Cloud Integration Gateway from Integration Manager is enabled and a project is created for the realm in SAP Ariba Cloud Integration Gateway.
• The Category Attribute Hierarchy (UP-7003) feature toggle is enabled.
• This internally creates a realm in SAP Ariba Retail component.

An article is the smallest unit or customer pack that can be ordered independently and that cannot be split into smaller units. Articles are generally ordered for a site and sold. However, they are not always sold in the same form as that in which they were purchased.

An article master record contains the data required to manage an article. This data can be categorized as follows:

• Data of a descriptive nature such as size and weight
• Data with a control function such as the article type

For each article, you create an article master record in the article master. In the article master record, you assign the units of measure and dimensions (in which an article is traded) to the article in particular. If, when you create an article master record, a reference article exists for the merchandise category, certain data is proposed from the reference article.

An article master record contains not only data relating to the article itself, but also information from other relevant areas. In the article master, these areas are known as user departments. The integration of such data in a single database object eliminates redundant data storage.

For a generic article, you can display the variants that exist, together with the corresponding description, by choosing validity areas and displaying the possible entries.