/BACK
Problems
Accounting and analysis of data on the marginality of items is one of the most challenging tasks for the retail business, both in terms of planning and data analysis. The intricacy stems principally from the fact that, in most cases, remuneration from suppliers is agreed upon considerably later than the actual sale of items, yet marginality calculations must be completed at least weekly. Furthermore, the lack of batch accounting for suppliers in retail complicates the problem, since it prevents determining the supplier for each sale in order to correctly calculate the profit earned through discounts, promotions, and bonuses (back margin).
Solution and architecture
Sapiens has developed a compensation distribution system from suppliers to solve this problem. The goals were defined as:
- Development of a methodology for determining back margin indicators for all interested corporate divisions;
- Computation of compensation indicators for the future (with a one-year timeframe);
- Compensation for certain items of merchandise;
- Automatic supplier identification for each sale;
- Calculation of the amount of compensation attributed to the cost of sales and the remaining items;
- Creation of accounting entries for SAP FI accruals.
Architecture
The solution automates the following functions using BW on Hana tools:
- Calculation of planned compensation indicators using historical data and expert input. Compensation planning enabled us to accurately take into consideration and reflect back margin indications in the cost price without having to start from the moment they were documented.
- Replacement of planned data with actual data as information becomes available. A unique compensation system is set up for a variety of compensation scenarios.
- Distribution of compensation amounts by specific items of goods;
- Suppliers' distribution of sales and balances (based on the FIFO method);
- Attribution of compensation to the cost of sales;
- Formation of an array of data for accruals in SAP FI.
Owing to the created methodology for calculating and accounting for the distribution of compensation from suppliers, it was possible to create a unified approach to both the process of accounting for compensation and the analysis of this data in the reporting system. A definition of the algorithm for distributing sales and balances to suppliers was necessary due to the ERP system's absence of batch accounting. The tried-and-true FIFO (first in, first out) approach was chosen as a consequence. The system was built using the SAP BW on Hana platform. The SAP BW on Hana system uses the same corporate data warehouse (CDW) that was utilized in the deployment of this solution. Both the targeted indicators and the shares for the distribution of remuneration for products in the balances and for the cost of sales require CDW data.
Another advantage of the SAP BW on Hana platform is the ability to evaluate data on a large number of key analysts without sacrificing performance.
Result
The following results have been achieved:
- Formation of back margin indicators in a unified reporting system;
- Improving the accuracy of planning and drawing up a plan/fact of reporting taking into account back margin indicators;
- The capacity to accurately calculate marginality for each product;
- Obtaining supplier balances in SAP ERP without utilizing batch accounting;
- The adoption of a transparent algorithm for cost and sales compensation allocation;
- Updating back margin indicators on a daily basis at the product name level;
- Automation of the process of creating accounting entries for supplier compensation.
This solution has been applied at Russia's largest electronics and home appliance retailer.
/BACK
Problems
Accounting and analysis of data on the marginality of items is one of the most challenging tasks for the retail business, both in terms of planning and data analysis. The intricacy stems principally from the fact that, in most cases, remuneration from suppliers is agreed upon considerably later than the actual sale of items, yet marginality calculations must be completed at least weekly. Furthermore, the lack of batch accounting for suppliers in retail complicates the problem, since it prevents determining the supplier for each sale in order to correctly calculate the profit earned through discounts, promotions, and bonuses (back margin).
Solution and architecture
Sapiens has developed a compensation distribution system from suppliers to solve this problem. The goals were defined as:
- Development of a methodology for determining back margin indicators for all interested corporate divisions;
- Computation of compensation indicators for the future (with a one-year timeframe);
- Compensation for certain items of merchandise;
- Automatic supplier identification for each sale;
- Calculation of the amount of compensation attributed to the cost of sales and the remaining items;
- Creation of accounting entries for SAP FI accruals.
Architecture
The solution automates the following functions using BW on Hana tools:
- Calculation of planned compensation indicators using historical data and expert input. Compensation planning enabled us to accurately take into consideration and reflect back margin indications in the cost price without having to start from the moment they were documented.
- Replacement of planned data with actual data as information becomes available. A unique compensation system is set up for a variety of compensation scenarios.
- Distribution of compensation amounts by specific items of goods;
- Suppliers' distribution of sales and balances (based on the FIFO method);
- Attribution of compensation to the cost of sales;
- Formation of an array of data for accruals in SAP FI.
Owing to the created methodology for calculating and accounting for the distribution of compensation from suppliers, it was possible to create a unified approach to both the process of accounting for compensation and the analysis of this data in the reporting system. A definition of the algorithm for distributing sales and balances to suppliers was necessary due to the ERP system's absence of batch accounting. The tried-and-true FIFO (first in, first out) approach was chosen as a consequence. The system was built using the SAP BW on Hana platform. The SAP BW on Hana system uses the same corporate data warehouse (CDW) that was utilized in the deployment of this solution. Both the targeted indicators and the shares for the distribution of remuneration for products in the balances and for the cost of sales require CDW data.
Another advantage of the SAP BW on Hana platform is the ability to evaluate data on a large number of key analysts without sacrificing performance.
Result
The following results have been achieved:
- Formation of back margin indicators in a unified reporting system;
- Improving the accuracy of planning and drawing up a plan/fact of reporting taking into account back margin indicators;
- The capacity to accurately calculate marginality for each product;
- Obtaining supplier balances in SAP ERP without utilizing batch accounting;
- The adoption of a transparent algorithm for cost and sales compensation allocation;
- Updating back margin indicators on a daily basis at the product name level;
- Automation of the process of creating accounting entries for supplier compensation.
This solution has been applied at Russia's largest electronics and home appliance retailer.