In the past 5 years, SAP CAR (Customer Activity Repository) has been one of the most attractive solutions we offer to Retailers. As SAP Digital Business Services, we are happy to guide our customers how they can leverage CAR’s capabilities to improve their businesses. CAR is an innovation that can serve different purposes and in this article I will talk about some of the fundamental blocks that most retailers are interested in. There isn’t a single use case of CAR and every retailer has different priorities/needs.
I am often asked the basic question by my customers: ‘What is CAR?’
1. Central Repository for Your Retail Business Data
The first mission of CAR is to be a central repository or a central hub for your business data. Business data represents not only 'Customers’ and their ‘Activities’ but also your ‘Inventory’, ‘Master Data’ and so on. The source of this business data can be other platforms or systems that activities occur; CAR collects all the relevant information to support the processes that I will mention later. When we speak about ‘Customer’ data, we can break it down to Customer Names/Address, Loyalty Membership/Cards/Points and so on. When we speak about ‘Activities’, we can talk about ‘Sales Transactions at Point-Of-Sale’ or ‘E-commerce Orders at Web Shops’. When we speak about ‘Inventory’, we speak about your inventory position and stock categories (own stock, consignment stock) at distribution centers or stores. When we say ‘Master Data’, we mean all master data information which you run your business on, such as articles, stores, prices and so on.
CAR is the central repository or frequently I like to use the word ‘hub’ to describe the main goal of CAR.
2. Real-Time (and really Real-Time)
Now comes the magic. CAR is a real-time platform. What I have described so far in terms of collecting data happens in Real-Time thanks to advance technologies we use. CAR knows about your POS sales in your stores in real-time, CAR knows your inventory position in your stores in real-time, CAR knows about your E-commerce orders in real-time. Whenever your store staff posts a goods receipt or customers purchase goods at POS tills, CAR knows about it, you don’t need to wait for hours or sometimes days of data replication and processing to be able to access this critical information. There is no value of knowing your real-time stock information in 4-5 hours where customers instantly make purchasing decisions either in brick-and-mortar store or you web site. A marketing analyst should not spend weeks to create a customer segment based on purchasing behaviour or an assortment planner should not spend weeks of sales analysis to create a store cluster based on store KPIs.
3. Lowest Granularity
One important aspect that differentiates CAR from other applications is that we keep the data at the most granular level and we don’t require aggregates or cumbersome replications to process huge data. We are leveraging the power of in-memory technology and CAR is designed to provide optimum results with SAP HANA. Let me give an example: CAR holds your Point of Sales transactions (which we call as TLOG) at the most detailed level i.e. every till receipt in every store, cashier name, every product line item, product price, the discount(s) given, loyalt points won etc. We can then provide business critical information in real-time based on big data. For example before you go lunch in your office at 12:00, you can insantly see how your promotion has done in your 100 stores in the first 2 hours since the stores opened at 10:00 and what margin you have achieved. No need to wait to collect the data, wait for days so you can have a meaningful report.
4. Prediction
CAR comes with an embedded Forecasting engine under the hood: 'UDF-Unified Demand Forecasting'. UDF is based on our 20 years of retail data science experience across many retail customers and several proven SAP solutions such as SAP Forecast & Replenishment, SAP Demand Management, Khimetrics.
When we came up with a new forecasting engine, we had the following principles:
- We need to provide a new engine to cater for prediction needs of Retailers in the digital world
- In a digital world, sales prediction is a crucial element for all processes; Merchandise Planning, Assortment Planning, Promotion Planning, Allocation Planning, Replenishment and so on.
- A retail company should not have multiple systems or solutions, 3rd party cloud services or software providers to have predictive insight in their processes.
- A retail company should not worry about how and why they transfer their confidential sales data to other systems or external third parties
- A retail business user should not need to be a data scientist or should not rely on data scientists to have predictive insights for his/her business
We provide the Retailers a sales forecast at the most granular level (e.g. Sku, day, store and even hourly) considering all past-future events, price changes, offers and in real-time without the need of collecting data from external systems which is typically a process that can take days. Don’t forget that data science is not only about accuracy in forecasting with the help of good data scientists; it’s about how to handle big data, how to deal with change management, how to embed prediction in your processes, how to serve todays digital needs of agility. We therefore place UDF at the centre of CAR.
UDF is one of the most adorable components of CAR and I will talk about it in detail in another blog.
5. Omnichannel Processes
This is a great topic on its own. Omnichannel has been one of the biggest areas where we dedicated investment and efforts. Our goal was to arm our top solutions with Omnichannel capabilities. Now our SAP Retail solution portfolio has got great Omnichannel capabilities which no other software can provide such seamlessly and effortlessly i.e. Out-of-theBox !
From CAR’s perspective, we have put critical Omnichannel responsibilities on top of CAR’s existing capabilities.
- CAR is your Omnichannel sales repository. It collects and stores all your Point-of-Sale transactions in the stores and your B2C Sales Transactions (E-commerce Orders) instantly
- CAR is your Omnichannel Price & Promotions hub. CAR is the central brain that calculates and serves the applicable, consistent and accurate price, offer, promotion, basket discount or other incentives to your consumers across all digital channels/touchpoints without the need of having siloed systems.
- CAR is your Omnichannel Inventory, Availability and Sourcing hub that centrally knows your real-time accurate stock position across your fulfilment locations. CAR also takes over the responsibility of making the sourcing decisions while the consumers are browsing your Web Shop, adding products to baskets or during check-outs. All this happens in real-time without the need of making your siloed systems talk to each other in a delayed fashion.
You can assume that CAR is your new ‘Omnichannel Hub’ in a digital world.
6. Swiss Knife - CAR Consuming Apps
We have built CAR to allow Retailers to be able to run other state-of-the-art business applications on top of CAR or next to it. We provide some of these solutions as ‘Consuming Apps’ where you don’t need to spend months or even years of effort to build. These consuming apps are designed in a way that you don’t need to spend years to integrate into your business data, your sales forecast or your operational processes.
Let me give some examples how you can benefit from CAR by using our newest consuming apps designed to make Retailers best run businesses:
- Merchandise Planning: Almost all retailers go through a planning process where company objectives are planned, revised and executed across different departments such as Financial Plans, Merchandise Plans, Store Plans, OTB Plans in a top-down, bottom-up fashion. Retailers work on retail KPIs such as sales, purchasing budgets, margin or shrinkage goals with several versions and also they monitor the progress based on their plans. Thanks to SAP Merchandise Planning for Retail, we make these Retail processes possible on CAR.
- Assortment Planning: Retailers would like to plan how their merchandise mix should be present in which stores, what their store clusters are, which are the high performing products are and which are not and how they can optimize their assortments to gain maximum profit. This is an area where data science and prediction should provide fast insight. Thanks to SAP Assortment Planning for Retail, we make Assortment Planning nice and easy.
- Promotion Management for Retail: Promotion planning is an end-to-end process where all departments like marketing, merchandising, purchasing and finance are involved. SAP Promotion Management for Retail provides promotion planning processes where you can design and execute the most effective offers to customers leveraging promotional forecasting and also from an Omnichannel perpective.
- Allocation Planning: All fashion retailers and also most of the non-fashion retailers require advanced tools to plan their initial or in-season allocation to stores. Planning needs to be done based on sales forecast and historical sales. SAP Allocation Management for Retail provides intuitive tools to business users to eliminate the cumbersome manual work and high possibility of loss sales.
- Other applications: There are many other applications we can list here such as SAP Sales Insight where we provide further data mining capabilities such as basket affinity analytics or marketing analytics where you can combine sales/forecast data to be able to run targeted marketing campaigns or offers on selected customer segments.
Retailers sometimes fall into the trap of thinking that there are also best of breed applications in the market for the above needs. I would like underline the fact that all our solutions are modern and have been recently renovated/optimized from usability, front-end, technology and market requirements perspectives. No other best-of-breed solution can provide this. Simply think about that you go for separate Best of Breed solutions for each of the above topic and imagine the money and time you will spend. Our solutions share the same data foundation, data model, forecasting engine and this is a huge saving.
7. Real Time Analytics
Last but not least, CAR offers powerful real-time analytic capabilities. CAR comes with an extensive library of embedded retail analytics, queries and KPIs. Let me give an example, if you require the following information: 'POS returns in a certain week last year, your promotional sales between 10-12 am in the weekends', 'top 10 products that Hakan Yakici purchases both online and offline', 'stock of a certain product in consignment in top 20 stores' ... you can derive this information extremely fast. CAR comes with many out-of-the box queries with many retail specific KPIs.
Apart from the above SAP solutions, our partners also offer superb solutions that work as consuming applications on top of CAR. I can name a few examples here: 'Strategic Purchase Planning/Vendor Negotiation' by GICOM, 'Fraud Management for Retail' by Retail Solutions.
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CAR is one of our most strategic solutions and we will continue to invest with new features and capabilities. As SAP Digital Business Services, we provide our customers advisory and implementation services to get the most value out of these innovative solutions. I strongly recommend new customers of SAP to place CAR at the centre of their transformation planning and existing SAP customers to plan their transition to SAP CAR using available migration methods.
If you are interested in any of these innovations, please contact me. For licensing requirements of CAR, CAR components and CAR consuming applications, please contact your local SAP Account Executive.
Hakan Yakıcı
SAP Digital Business Services EMEA South Retail Lead