Retail — Distribution And Replenishment
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Replenishment Planning
1. What is Replenishment?
- Goal = make sure stores/customers have the right stock while minimizing cost & capital.
- Replenishment determines requirements → creates follow-on documents automatically:
- Purchase Requisition
- Purchase Order
- Stock Transport Order
- Sales Order / Delivery
👉 Interview phrasing:
“Replenishment ensures demand-oriented supply for stores/customers. The system compares stock vs. target stock and creates POs or STOs automatically.”
2. Two Inventory Management Types
- Standard Procedure — MM Inventory Management
- Full article-level inventory (every GR, GI, movement posted).
- Supports forecast-based planning, static & dynamic target stock, full ATP checks.
- Used when stock is tracked at article level.
- Simplified Procedure — Replenishment-Based Inventory Mgmt (RBIM)
- For stores/customers using value-only inventory (MM stock always = 0).
- Based only on POS sales data.
- Forecast not supported → only static target stock. Manual corrections possible (Correct RS flag).
- Used for small stores, customers (VMI), simplified environments.
👉 Interview phrasing:
“If a store has full article-level IM, we use the standard procedure with forecast and ATP. If value-only, then simplified procedure applies — driven by POS sales, static target stock only.”
3. Target Stock Determination
- Static (RP / RS) — manually entered empirical value; can be combined with time-phased planning (e.g., deliver every Tuesday).
- Dynamic (RF / RR) — based on forecast. Target = forecast issues + safety stock (coverage days). Min/max can cap the target. Requires standard procedure.
Example:
- Dynamic = system calculates 200 yogurts for next 5 days based on forecast + safety stock.
- Static = target stock set to 100 by planner.
4. Replenishment Planning Run
- Run manually (online) or in background (batch).
- Standard procedure steps:
- Read current stock (MM-IM).
- Consider expected receipts/issues (ATP check).
- Optionally consider forecasted issues.
- Calculate expected stock at lead-time end:
Expected stock = Current stock + Receipts – Issues
- If below target → replenishment requirement = Target – Expected.
- Requirement transferred to Store Order function.
- In simplified procedure: Expected stock = current stock (no ATP/forecast).
Follow-on documents via Store Order: PR (if vendor not unique), PO (external vendor), STO (DC supply), Sales Order (external customer).
5. Requirement Groups
- Help maintain master data more easily by grouping sites/categories.
- Example: Large store dairy = 200 milk / 100 yogurts; Small store dairy = 50 milk / 20 yogurts. Assigned per site + merchandise category.
6. Advanced Replenishment Solutions
- SAP Forecasting & Replenishment (SAP F&R, SCM-based)
- Advanced forecasting (seasonality, trends, promotions, DIFs).
- Multi-echelon replenishment (MER) → roll up store forecasts to DC.
- CPFR, exception handling, alerts; fresh products support.
- POS data typically via SAP CAR POS DTA.
- SAP Replenishment Planning (CAR-based)
- Newer Fiori-based (SAP CAR 5.0) using Unified Demand Forecasting (UDF).
- Fresh focus: shelf-life, spoilage, intraday; cost-optimal ordering; embedded analytics (SAC).
- Integrates with SAP Retail/FMS/S/4HANA.
- SAP Predictive Replenishment (PRP, Industry Cloud)
- Newest (2022+) — part of Predictive Planning & Inventory Orchestration.
- Initial focus on DC replenishment; integrates with Order & Delivery Scheduling (ODS).
- Roadmap: more functionality planned.
7. Interview Cheat Sheet
- Principle: Demand-oriented supply, auto-create follow-on docs.
- Standard vs Simplified: Standard = article IM, full ATP, forecast possible. Simplified = value-only IM, POS-driven, static only.
- Static vs Dynamic Target Stock: Static = manual; Dynamic = forecast + coverage days + safety stock.
- Replenishment Run: Stock check → ATP → requirement → Store Order.
- Advanced Tools: SAP F&R; SAP Replenishment Planning (CAR); SAP PRP (Industry Cloud).
👉 Quick 10-sec interview answer:
“In Retail, replenishment compares current + expected stock vs. target stock and generates POs or STOs automatically. If store has full IM, we use standard replenishment with forecasts and ATP. If store is value-only, we use simplified replenishment based only on POS sales. Static target stock is manual, dynamic uses forecast and coverage days. Advanced replenishment is done via SAP F&R, Replenishment Planning, or Predictive Replenishment, depending on retailer maturity.”
Goods Issue Process in a Distribution Center
1. Core Principle
- Goods Issue (GI) = movement of stock out of the DC.
- Always based on an outbound delivery (from STO, SO, or allocation table).
- GI completes shipping and triggers updates in inventory, FI/CO, billing, and document flow.
👉 Interview phrasing:
“In SAP Retail, the GI process is always tied to an outbound delivery, which controls picking, packing, and shipping activities. GI reduces stock, posts accounting, and triggers billing.”
2. Outbound Delivery Document
- Central document in GI with:
- Header: shipping point, route, recipient.
- Items: articles, quantity, storage location, picking data.
- On creation the system runs checks: ATP, route determination, picking location determination.
- Managed via Outbound Delivery Monitor (select open deliveries, run TO creation, GI posting).
3. Picking Process
a) Without WM (IM only)
- Picked quantity entered directly in the delivery.
- After optional packing → GI posted.
b) Lean WM
- No bin-level stock; system creates Transfer Orders (TOs) for picking.
- “Fixed bins” can be assigned to articles (informational).
- Stock updated at storage location level only.
c) Full WM / EWM
- System generates picking TO; strategies determine source bins.
- TO confirmed (manually/automatically), picked qty updated in delivery → ready for GI.
- RF / voice-picking supported.
Status logic: Picking: A=open, B=partial, C=complete. WM: A=TO required, B=created not confirmed, C=confirmed.
4. Handling Units (HU)
- HU = package + content (pallet, carton, etc.) with unique ID (e.g., SSCC18).
- Contains packed articles, packaging material, weight, volume.
- Benefits: HU-level stock, end-to-end flow, packing proposals, multi-level packing (carton → pallet → truck).
👉 Interview phrasing:
“Handling Units let SAP track logistics packages, not just articles. They move unchanged through the supply chain and make downstream processing easier.”
5. Goods Issue Posting
Final step of outbound process. Can be triggered:
- In the outbound delivery (manually).
- In collective processing (Outbound Delivery Monitor, wave pick monitor).
- By confirming TOs (WM).
Effects of GI posting:
- Reduces DC stock; posts FI/CO (stock → COGS/Inventory change).
- Updates delivery status and document flow; creates billing due list (if billing relevant).
- For STOs: one-step = direct GR in receiving store; two-step = stock moves to in-transit until store GR.
After GI, delivery is locked for changes (quantities, dates).
6. Integration Points
- Shipping Point: org unit responsible for GI (determined by shipping condition + loading group + supplying site).
- Wave Picks: group deliveries into work packages per shift/time slot.
- Transportation Chains: map route (vendor → DC → store), monitor delays.
- Delivery Note: printed/EDI before or after GI.
7. Inventory Management & Valuation
- GI is a goods movement (e.g., 601 = SO GI, 641 = STO GI).
- Quantity-only or valuation-relevant; if valuation → FI/CO document created.
- For STOs, stock-in-transit accounts may be used.
8. Interview Cheat Sheet
- Outbound delivery is the central doc for GI.
- Picking variants: direct in delivery (no WM), Lean WM (TOs), Full WM/EWM (bin-level TO + confirmation).
- Handling Units = packages with IDs enabling packing-controlled logistics.
- GI posting effects: reduce stock, FI posting, billing trigger, update delivery/doc flow.
- STO GI: one-step (GI+GR) or two-step (stock in transit then GR).
- Outbound Delivery Monitor = control center.
👉 10-sec answer:
“Goods Issue in a DC starts from an outbound delivery, which controls picking, packing, and transport. If WM/EWM is active, transfer orders manage bin-level picking. Handling Units represent packages. Posting GI reduces stock, posts FI/CO, triggers billing, and moves stock in transit for STOs. The Outbound Delivery Monitor is the key tool for managing the process.”
Generating a Collective Purchase Order
1. What is a Collective Purchase Order?
- A procurement document bundling requirements at DC level.
- Purpose: consolidate store/customer demand (from STOs or SOs) into one vendor PO.
- Belongs to the Pull planning process → demand-driven (stores/customers pull).
In contrast, Push planning uses Allocation Tables to distribute centrally planned volumes.
2. How CPO Works in the Pull Process
- Stores/customers create requirements (STOs or SOs).
- DC collects them → bundles into a Collective Purchase Order for the vendor.
- Distribution profile in the article’s Logistics: DC view decides which distribution method to apply.
So CPO links the vendor PO with the downstream issue docs (STO/SO).
3. Processing Methods for Merchandise Distribution
- Cross-Docking: vendor pre-picks per recipient; DC cross-docks.
- Flow-Through: vendor delivers in bulk; DC picks and redistributes immediately.
- Putaway: merchandise stored at DC first, then distributed later.
- Optimizing variants: CD/FT or CD/PA — system chooses the best mix.
4. Focus on Flow-Through
Difference vs Cross-Docking: vendor does not pre-pick; DC must pick & redistribute, but avoids full putaway (uses flow-through zone).
4.1 Recipient-Driven Flow-Through
- GR at DC → merchandise posted to “flow-through” storage location.
- Outbound deliveries generated per recipient (store/customer).
- Picking organized per store order.
4.2 Merchandise-Driven Flow-Through
- GR posted to “merchandise-driven flow-through” storage location.
- Picking via distribution order (WM transfer order) — pick article by article across recipients.
- Then system generates outbound deliveries (not picking-relevant) for GI & delivery notes.
- Lean WM required.
Key difference: Recipient-driven = pick per store; Merchandise-driven = pick per article.
5. Where it Matters
- Recipient-driven: small, specific assortments.
- Merchandise-driven: bulk handling (e.g., 1,000 bottles of Coke split across 50 stores in one run).
6. Interview Cheat Lines
- “A Collective Purchase Order is the pull-based way of bundling store/customer demand into one vendor PO at DC level — a mirror of allocation table in push planning.”
- “Flow-Through avoids full putaway; recipient-driven is store-focused, merchandise-driven is article-focused and requires Lean WM.”
- “Retailers mix methods: Cross-docking for vendor-prepacked promos, flow-through for fast movers, putaway for slow movers.”
Executing Merchandise Distribution
1. Two Phases of Merchandise Distribution
Planning Phase
- Push: Allocation Table creates procurement & issue docs centrally.
- Pull: System bundles existing STOs/SOs into a Collective PO at DC.
In both cases, vendor PO and issue docs (STO/SO) are linked via distribution data so the DC knows which recipients get what at GR.
Processing Phase
- Starts with Goods Receipt at DC (vendor PO).
- Ends with Goods Issue from DC (to stores/customers).
- System confirms the processing method at GR based on profiles + Customizing.
2. Distribution Profiles & Control
- Site Distribution Profile (DC level): choose CD/FT/PA, when to adjust distribution data (GR, GR+variance, manual), when to create follow-on docs.
- Article Distribution Profile (article/DC): choose processing method, over/under-delivery handling (adjustment profile). Allocation Table can override.
3. Processing Methods
1) Cross-Docking (CD)
- Vendor delivers pre-picked merchandise; DC does GR → GI (no picking).
- Requires Supplementary Logistic Services (SLS) to provide recipient quantities to vendor.
- Leanest but vendor charges for pre-picking.
Example: Vendor sends mixed pallets labeled for Store A/B/C. DC forwards them.
2) Flow-Through (FT)
- Vendor delivers in bulk; DC re-picks quickly via flow-through zone.
Variants:
- Recipient-Driven: outbound deliveries per recipient; picking per store/customer order.
- Merchandise-Driven: pick article by article via Distribution Orders (WM TO). Requires Lean WM.
3) Putaway (PA)
- Merchandise stored in DC bins; later picked for STOs/SOs.
- Used when stock isn’t allocated yet or needs buffering.
Optimizing Procedures
- CD/FT: cross-dock what fits recipients; re-pick the rest.
- CD/PA: cross-dock matched quantities; putaway the remainder.
Example: 10 pallets shipped; 8 pallets match store orders (CD), 2 pallets go to storage (PA).
4. Pre-Picked Cross-Docking with SLS (Example)
- Vendor PO contains recipient-level quantities (via SLS).
- Vendor pre-picks & labels packages per store.
- DC GR: inbound HUs moved directly to GI zone.
- Outbound deliveries generated automatically (not picking-relevant).
- GI posted → merchandise leaves DC.
👉 Leanest process: DC works as a transit hub with minimal handling.
5. Why MD Matters (Interview Angle)
- Efficiency: reduces DC handling costs, inventory, and capital lockup.
- Flexibility: supports CD, FT, PA in one system—often mixed.
- Integration: links procurement (vendor POs) with distribution (STOs/SOs).
- Customization: profiles + allocation tables fine-tune per article/DC/site.
“Merchandise Distribution in SAP Retail is the bridge between procurement and store supply. Planning can be done via allocation table (push) or collective PO (pull). At goods receipt, the system adjusts quantities and applies one of three processing methods: cross-docking, flow-through, or putaway. Cross-docking is leanest if vendor pre-picks using SLS; flow-through enables fast redistribution with DC picking; putaway stores stock for later use. Optimizing procedures combine them for maximum efficiency.”
