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Overview Stock Ledger Analytics ERMA Stock Ledger Retail Method of Accounting
Overview Stock Ledger Analytics General motivation Inventory valuation methods ERMA Stock Ledger Basics Business Content Business Content Infocubes Business Content Reporting Working with ERMA Stock ledger
Retail Method of Accounting Basics Business Content Analysis Scenarios Business Content Infocubes Business Content Reporting Process Chains Working with RMA Customizing Important Notes
Overview Stock Ledger Analytics General motivation Inventory valuation methods ERMA Stock Ledger Basics Business Content Business Content Infocubes Business Content Reporting Working with ERMA Stock ledger
Buying
Assortment Management Vendor Management/ SRM Global Trade
Wholesale
Storage/ Distribution
Supply Chain Analytics
Sales
Store Analytics
POS DM Store Manager Product Affinity Metrics Loyalty Staff Works/ WFM PCA Business Views
Wholesale
Foundation
Procurement Inventory Sales
Article Hierarchy
Master Data
Article List
Labor Cost
20- 30%
2-10%
Other
2-5%
Overview
In general, a stock ledger is a period-oriented repository of all inventory activity and it feeds financial reporting (i.e., ending inventory and Cost of Goods Sold) management reporting (e.g., sales, margins, ending inventory, etc.) any other business process that takes into account inventory information (e.g., open-to-buy, pricing, etc.). It provides an audit trail and allows for corrections and adjustments to inventory. The stock ledger receives the inventory information, applies the inventory valuation method defined for use, and then calculates the results. The results and reports will be slightly different depending on the valuation method defined and the inventory activity that is tracked, but the overall purpose of the stock ledger remains the same. The stock ledger is the foundation for merchandising activities, a tool for decisionmaking, and is the nervous system of a retailer. It is an essential part of monitoring and reporting business performance. One of the most visible aspects of the stock ledger is the stock ledger reporting, which is critical to a retailer in terms of monitoring performance and managing inventory effectively. These reports provide a unified view across organizational and merchandise hierarchies of all inventory activity types and visibility to key performance indicators.
Each goods movement is classified by a type (e.g., receipt, transfer, sale, shrinkage, etc.) Movement types have important control functions (e.g., relevant accounts / buckets) Revaluation Price changes and manual adjustments create changes to the inventory value at cost and/or retail (e.g., markups, markdowns) Creates revaluation documents
Stock Ledger
Inputs:
Opening inventory Purchases Vendor returns Transfers Markups Sales Customer returns Markdowns Physical inventory Adjustments Shrinkage Stock Ledger
Key Outputs:
General ledger
Cost of sales (income statement) Closing inventory (balance sheet)
Apply a method: Cost method (CMA) Traditional retail method (RMA) Hybrid or extended retail method (ERMA) results of the inventory calculation feed several areas
Overview Stock Ledger Analytics General motivation Inventory valuation methods ERMA Stock Ledger Basics Business Content Business Content Infocubes Business Content Reporting Working with ERMA Stock ledger
Perpetual valuation every goods movement and relevant inventory events automatically update inventory units and values Inventory is managed at the location/item level using a base unit of measure Inventory managed solely on a cost basis (e.g., moving average, standard), Inventory values are based upon what you actually paid for the item
Cost value of inventory is independent of retail price changes, i.e., changes to retail prices do not affect cost value of inventory Cost of goods sold and ending inventory are calculated using the cost per unit multiplied by units current value of inventory is known; it does not need to be calculated at the end of the period.
Many retailers use the traditional retail method of accounting to value their inventory. It is more common in situations where there are many different types of merchandise at low unit cost with a large number of transactions. Inventory is primarily managed in retail values at aggregate levels, e.g., category or department Margin is managed at an aggregate level (e.g. merchandise category) Financial inventory transactions are captured into "buckets " throughout a defined period Cost of sales and ending inventory at cost are derived by applying a cost % to the retail values of inventory The current value of inventory is unknown until it is calculated at the end of the period (e.g., month). A simple illustration of the RMA calculation is provided here
Perpetual valuation every goods movement and relevant events automatically update inventory units and values at both cost and retail, the current value of inventory is always available Inventory is managed at both cost and retail using a base unit of measure
The cost basis is generally moving average cost
Inventory can be managed at either an item level or an aggregate level, e.g., category or department Changes in the retail price cause adjustments to the value of inventory at not only retail, but also at cost
Creates a markdown cost adjustment that is taken in the current period
Cost of goods sold is calculated by taking the cost of the exited inventory (e.g., sales, shrinkage) plus the markdown cost adjustment
SAP 2009 BW Retail Content Supply Chain Analytics / Page 15
Comparison of ERMA to RMA -1Similarities with the traditional retail method Plan, manage, and analyze inventory in retail dollars Markdowns Markdowns trigger an adjustment to the retail value of inventory Markdowns create in the current period a write-down of the cost value of inventory (using a cost %) COGS is increased for the current period by the markdown cost adjustment Revenue and expense recognition timing is the same Most transactions are valued the same ERMA and RMA can feed OTB with markdown values
Comparison of ERMA to RMA -2Differences with the traditional retail method Level of inventory management ERMA: location/item level RMA: category or department level Cost complement ERMA: current margin RMA: (Available for Sale @ Cost) / (Available for Sale @ Retail) Gross margin % ERMA: item level RMA: blended at category or department level COGS ERMA: units * cost, plus markdown cost adjustment RMA: apply a cost % to the total retail reductions Ending inventory at cost is not derived from a cost % Initial margin based on purchases ERMA: new purchases impact item margin only RMA: new purchases impact blended category margin
SAP 2009 BW Retail Content Supply Chain Analytics / Page 17
ERMA
Level of inventory management Cost complement Markup and markdown cancellations Transfers at retail Location / Item Current margin or markup % No If the retail price differs between locations, then the inventory is revalued to the receiving location price and the receiving store takes the adjustment, which goes to receipts Moving average cost of sending location is used
RMA
Location / Category, department, etc. Available for sale (cost / retail) Optional If the retail price differs between locations, then the sending location or the receiving location can take the adjustment; original retail price can be taken into account or not 2 options: (1) apply most recent cost complement to the retail value, or (2) use the moving average cost, which the system calculates anyway Blended at category or department level Apply cost complement (%) to the total retail reductions Derived from a cost complement New purchases impact blended category margin
Transfers at cost
Item level Moving average cost of goods movements (e.g., sales, actual shrink) + markdown cost adjustments Not derived from a cost complement New purchases impact item margin only
Overview Stock Ledger Analytics General motivation Inventory valuation methods ERMA Stock Ledger Basics Business Content Business Content Infocubes Business Content Reporting Working with ERMA Stock ledger
The hybrid or extended retail method is a best of both worlds approach combining elements of the cost method and traditional retail method Takes advantage of the benefits of using the cost method while allowing the merchants to remain in the familiar territory of the retail method An alternative to RMA Inventory values are updated after every inventory transaction, i.e., perpetual inventory Inventory is managed at the location/item level, not a category or department level Inventory is tracked in both cost and retail values using a base unit of measure The cost flow is moving average cost Markdowns may cause adjustments to the cost value of inventory Creates a markdown cost adjustment that is taken in the current period Cost of goods sold is calculated by taking the cost of the exited inventory (e.g., sales, shrinkage) plus the markdown cost adjustment
Stock Ledger analytics in the sense of the extended retail method goes beyond common business content based on SAP inventory management, since it includes the analysis of POS sales as the main sort of inventory-reducing action at most retailers to a degree ERP material documents in general cannot provide. This takes actual sales as well as POS markdowns and promotional markdowns into account. Therefore, the only way to treat actual sales and POS markdowns as separate key figures in the stock ledger is to include sales documents into the analysis. POS transactions transferred directly to BI via PIPE strategic tool for uploading POS data to SAP backend systems with all the potential of enhancing its functionality allows for a more detailed differentiation of actual sales and discounts by various grouping criteria if desired by the customer SD billing item data source is still needed for including customer billing documents in the stock ledger, as is required by retailers using, for instance, the SAP retail store.
SAP 2009 BW Retail Content Supply Chain Analytics / Page 21
General Ledger
Cost $
Cost $ Retail $ Units Stock Ledger Analytics Article Document POS Transactions (sales, returns, employee discounts, etc.)
ERP
BI
POS
Overview Stock Ledger Analytics General motivation Inventory valuation methods ERMA Stock Ledger Basics Business Content Business Content Infocubes Business Content Reporting Working with ERMA Stock ledger
Overview Stock Ledger Analytics General motivation Inventory valuation methods ERMA Stock Ledger Basics Business Content Business Content Infocubes Business Content Reporting Working with ERMA Stock ledger
ERP DataSources:
DataSources
InfoSources
2LIS_03_BF_TR, 2LIS_03_UM_TR, 2LIS_03_BX_TR, 2LIS_40_REVAL_TR, 2LIS_13_VDITM, 0RT_PA_TRAN_CONTROL_TR, 0RT_SL_01, 0RT_SL_02, 0RT_SL_03, 0RT_SL_04, 0RT_SALES,
DataTargets
Foundation: 0RSL_DS51, 0RT_DS52, 0RT_DS53, 0RT_DS54, 0RT_DS55 Stock Ledger: 0RSL_C01, 0RSL_C02, 0RSL_MP01
Overview Stock Ledger Analytics General motivation Inventory valuation methods ERMA Stock Ledger Basics Business Content Business Content Infocubes Business Content Reporting Working with ERMA Stock ledger
Cost of Goods Sold (COGS) Gross Margin $ Gross Margin % Inventory Turnover (Cost) GMROI % Sell Through % Inventory to Sales % RTV to Receipts % RTV to Sales % Customer Returns % Count Adjustments % Manual Adjustments % Shrinkage %
Overview Stock Ledger Analytics General motivation Inventory valuation methods ERMA Stock Ledger Basics Business Content Business Content Infocubes Business Content Reporting Working with ERMA Stock ledger
Fiscal year variants and virtual time hierarchies should be defined consistently first It is important to load relevant master data before upload of transaction data Copying of content queries with cell references could lead to inconsistencies In case of expected performance problems or in order to improve performance you can decide to use account model OR key figure model and deactivate the model which is not needed.
Do's and Don'ts: Useful hints -2Enrichment of article movement Data ( structured articles)
Implementation WRSL_MATMOV_BW of BADI WRSL_MATMOV_BW must be activated explicitly see Customizing in ERP
Useful notes
1146785 - Quantity for local markdowns incorrect in ERMA Stock Ledger In the situation that an article is sold at the same day once within a promotion and at the same day regularly without a promotion assignment, the Quantity for local markdowns is not correct displayed in ERMA and Cost Stock Ledger. 1147052 - Overall manual stock adjustment wrong Stock ledger adjustments as a result of synchronizing the stock ledger ending inventory with ending inventory calculated by ERP, using the transformations from info cube 0RSL_C01 to the cube itself, do not contribute to the overall manual stock adjustment key figures (0RSLINTCOBU etc.). 1139734 - Incorrect mapping in transformation into 0RMA_C02 1138737 - incorrect update of revaluations 1138826 - Goods issue and goods receipt from stock in transit 1102271 - Reading master data in the start routine 1099816 - Performance of transformations into InfoCubes 1150054 - Transformation 0RT_DS53 -> 0RT_SL_02 cannot be activated 1110726 - How to enhance the BI content for ERMA stock ledger
The ERP enhancements for Stock ledger Analytics are technical in nature and not readily visible to the user. They include: Table USEG has been enhanced by two new flags which indicate whether revaluation has taken place because of a promotional markdown or manual adjustment (local markdown) or because of both reasons holding at the same time Enhancements to revaluation and inventory management function modules (and a structure that feeds back a revaluation function module) Enhancements to the extraction process from ERP to BW, including New fields in several table (e.g., USEG, MSEG, TMCA, WRF6, T001K, TWZLA, T134, MARV) New extraction structures Enhancements of the data sources
DataSources
Description
extracts article type attributes developed specifically for the retail sector, whereby the article type ID indicates whether you are trading an article or merely using it as an empties article or packing material. extracts the value-only article to which you post the stock using the customer number of the site and the merchandise category for value-based inventory management. The system requires this information to balance POS Data Management data in SAP NetWeaver BI. extracts attributes of the retail revaluation profile This determines in particular whether markdowns in promotions or at POS lead to stock revaluations centrally, or whether these markdowns are handled locally at the POS. The system requires this information for comparison with data from POS DM in SAP NetWeaver BI.
Data Target
0RT_DS05
0RT_MGR_VALART_ATTR
0RT_DS04
0RT_REVPROF_ATTR
0RT_SPSTRUC_ATTR
determines whether the structured article is to be split into its components for inventory management. This is carried out for every article type (sales set, prepack, or display) and site category (store or distribution centre) depending on the additional optional parameters (purchasing organization, distribution channel, site, and structured article). The system provides information separately for the goods receipt and purchase order processes and requires this information for comparison with data from POS DM in SAP NetWeaver BI extracts the valid information concerning valuation and inventory management for every valuation area and material group combination. The system requires the valid retail revaluation profile for comparison with data from POS DM in SAP NetWeaver BI.
0RT_DS02
0RT_VALAREA_ATTR
0RT_DS03
DataSources
Data Source Name
0COMP_CODE_MAT_ATTR
Description
extracts attributes of the article management record and displays the open posting period for article movements. The system requires this information to balance the closing stock of report Stock Ledger Variance from ERP Inventory (0RSL_MP01_Q0020) with the stock posted in the ERP system.
Data Target
0RT_DS05
Append
0RT_RSL_03_BF_AP
Description
Article Movements from Inventory Management for Stock Ledger extracts additional attributes for article movements and movement types if structured articles are split into their components for inventory management. The system requires this information for comparison with data from POS DM in SAP NetWeaver BI. When the DataSources are transferred from BI Content, the system adds the fields of this append DataSource to the 2LIS_03_BF DataSource fields.
Data Target
0RT_RSL_ARTICLE_AP
Article Number for Stock Ledger extracts additional merchandise-category hierarchy attributes for the article data. The system requires this information for stock ledger analytics evaluations at the merchandise-category hierarchy level. When the DataSources are transferred from BI Content, the system adds the fields of this append DataSource to the 0ARTICLE_ATTR DataSource fields.
Retail Method of Accounting Basics Business Content Analysis Scenarios Business Content Infocubes Business Content Reporting Process Chains Working with RMA Customizing Important Notes
Many retailers use the traditional retail method of accounting to value their inventory. It is more common in situations where there are many different types of merchandise at low unit cost with a large number of transactions. Focus is to manage the category or department margin, not item margin ( manage on aggregate levels) Margin is managed at an aggregate level (e.g. merchandise category) Financial inventory transactions are captured into "buckets " throughout a defined period Cost of sales and ending inventory at cost are derived by applying a cost % to the retail values of inventory The current value of inventory is unknown until it is calculated at the end of the period (e.g., month). A simple illustration of the RMA calculation is provided here
Background
Most commonly used in fashion and general merchandise, but not uncommon in grocery and hard lines Most common in Americas Asia Pacific Japan Australia and New Zealand India Generally not found in Europe (although some European retailers with global operations use it regionally) More common with older retailers, less so with newer ones
RMA is a philosophy or mindset It involves tracking and calculating inventory information that drives margins, compensation, reporting, buying, pricing, and other merchandising decisions RMA was developed before the advent of perpetual inventory systems RMA is used today because of perceived advantages, tradition, merchant familiarity and switching costs
SAP 2009 BW Retail Content Supply Chain Analytics / Page 40
BARRIERS TO CHANGE
Legacy systems limit the ability to change Tradition and ingrained behavior RMA is a mindset Merchants know the levers to pull to get the desired results Switching costs Possible adverse profit or tax impact from switch Involvement of auditor Disruptive process, re-training requirements
SAP 2009 BW Retail Content Supply Chain Analytics / Page 41
General Ledger
Cost $
Compare RMA to CMA inventory values and post adjustments to special inventory and COGS G/L accounts.
Cost $ Retail $
ERP
BI
POS
Retail Method of Accounting Basics Business Content Analysis Scenarios Business Content Infocubes Business Content Reporting Process Chains Working with RMA Customizing Important Notes
Retail Method of Accounting Basics Business Content Analysis Scenarios Business Content Infocubes Business Content Reporting Process Chains Working with RMA Customizing Important Notes
The DataStore object 0RMA_DS10 forms the basis for the ongoing correction of the initial inventory for each posting period in the DataStore object 0RMA_DS01 due to reclassifications. The recasting of all remaining RMA buckets takes place at the end of the posting period with the transformation from the DataSource 0RT_RMA_03. The RMA results data of this posting period, that is subsequently recalculated through the transformation from the DataSource 0RT_RMA_02, is flagged with a special version relevant for Accounting that cannot be overwritten. Past posting periods can also be covered by recasting. In this way, RMA results data under one reporting version can be overwritten several times by further recasting runs in subsequent posting periods. The latest data in each case is updated in the InfoProviders 0RMA_C01 and 0RMA_C02.
Retail Method of Accounting Basics Business Content Analysis Scenarios Business Content Infocubes Business Content Reporting Process Chains Working with RMA Customizing Important Notes
DataSources
ERP DataSources: 2LIS_03_BF, 2LIS_03_UM, 2LIS_03_BX, 2LIS_40_REVAL, 2LIS_13_VDITM, 0RT_RMA_VAL_TRAN BW DataSources: 0RT_PA_TRAN_CONTROL, 0RT_RMA_02, 0RT_RMA_03
InfoSources
2LIS_03_BF_TR, 2LIS_03_UM_TR, 2LIS_03_BX_TR, 2LIS_40_REVAL_TR, 2LIS_13_VDITM, 0RT_PA_TRAN_CONTROL_TR, 0RT_SL_01,0RT_SALES, 0RT_RMA_01, 0RT_RMA_02, 0RT_RMA_03, 0RT_RMA_10, 0RT_RMA_11, 0RT_RMA_12
DataTargets
RMA: 0RMA_DS01, 0RMA_DS02, 0RMA_C01, 0RMA_C02, 0RMA_MP01, 0RMA_DS10, 0RMA_DS11, 0RMA_DS12, 0RMA_DS13, 0RMA_DS14, 0RMA_DS15
Retail Method of Accounting Basics Business Content Analysis Scenarios Business Content Infocubes Business Content Reporting Process Chains Working with RMA Customizing Important Notes
Queries
Historical comparison reports compares the RMA results for a particular Fiscal Year/Period (which is called as Current Year Period or CYP as in the reports) with pervious Fiscal Year/Period (which is called as Last Year Same Period or LYSP as in the reports). This report calculates RMA results using Article Hierarchy with VAT for Fiscal Year/Period and compares the result with last year same Fiscal period. Report displays report displays key figures, subtotals, and totals for all relevant inventory related transactions. There is ratio called Variance that s calculated from CYP and LYSP.
Retail Method of Accounting Basics Business Content Analysis Scenarios Business Content Infocubes Business Content Reporting Process Chains Working with RMA Customizing Important Notes
The start of the process chain is the InfoPackage 0RT_RMA_03. The next step is the DTP from the PSA of the DataSource 0RT_RMA_03 in the DataSource object 0RMA_DS01. An activation process ensures the release of the new RMA data in the RMA DataSource object 0RMA_DS01.
SAP 2009 BW Retail Content Supply Chain Analytics / Page 62
Retail Method of Accounting Basics Business Content Analysis Scenarios Business Content Infocubes Business Content Reporting Process Chains Working with RMA Customizing Important Notes
Retail Method of Accounting Basics Business Content Analysis Scenarios Business Content Infocubes Business Content Reporting Process Chains Working with RMA Customizing Important Notes
implementation of SAP ERP and SAP BI In ERP the valuation at cost price (CMA) must be active and the inventory must be correspondingly initialized. The valuation according to RMA is carried out as follows: at the end of each posting period the inventory values according to RMA are recalculated and the differences are posted to special correction accounts in FI. To ensure correct consideration of sales at the cash desk in the RMA, you also require SAP POS DM in order to transfer the sales directly from the POS to SAP BI. With this component you can aggregate all inventory-changing, RMA-relevant transactions at the level required for RMA, that is, the RMA valuation object, you can carry out the calculation according to RMA, and you can transfer the results to Accounting. In the SAP BI reporting you can analyze the RMA inventories flexibly according to different criteria.
A single point of entry for key tasks: Location settings Turn on RMA valuation for a location Import the merchandise hierarchy valid for this location
Valuation level settings Turn on or off RMA valuation for that valuation level object RMA valuation is used for management reporting only or management reporting and financial reporting End of period closing process / postings to the general ledger
TA: WRMA_ADMIN
Change Parameters
Some of the functions that are mentioned on previous slide are performed within the RMA workbench. The functions are as follows: Maintain the RMA parameters for the stores Mass maintenance RMA parameters for stores Import the merchandise or article hierarchy into the RMA object hierarchy Set the RMA object relevancy for RMA objects Post the RMA results into ERP General Ledger Repost results View the application logs of the posting runs to ERP Reversal
SAP 2009 BW Retail Content Supply Chain Analytics / Page 67
Retail Method of Accounting Basics Business Content Analysis Scenarios Business Content Infocubes Business Content Reporting Process Chains Working with RMA Customizing Important Notes
Useful notes
1139163
Missing RMA delivery Customizing In delivered Retail Method of Accounting (RMA) Customizing, some entries that are essential to using the RMA engine p productively are missing.
1139771