Retail — Foundations Organizational Setup

SAP Retail Portfolio

• Foundation → SAP Business Technology Platform (BTP): APIs, data models, services.
• Core ERP → Intelligent Suite (S/4HANA Retail for Merchandise Management).
  • On-premise / private cloud = SAP S/4HANA Retail (main focus).
  • Public cloud = SAP S/4HANA Cloud for retail, fashion, vertical business.
  • Core functions: master data, buying, logistics, sales, store ops.
• Industry-specific add-ons:
  • SAP CAR (Customer Activity Repository bundle) → POS data, sales analytics, inventory visibility.
  • SAP Forecasting & Replenishment (F&R) → advanced replenishment on SCM platform.
• Intelligent Enterprise / Composable Suite: combine on-prem + cloud, adopt innovations fast.
• Native Industry Cloud apps (delivered as “minimal marketable products”):
  • Predictive Planning & Inventory Orchestration (e.g., Predictive Replenishment).
  • Order Management (e.g., Omnichannel Promotion Pricing Service).
  • Retail Store / Sales Audit (e.g., Omnichannel Sales Transfer & Audit).

End-to-End Business Processes

1. Requirements Planning (Vendor → DC)

• Run MRP for DC → system generates purchase requisitions.
• Convert PR → purchase orders.
• Vendor delivers → goods receipt posted into warehouse.
• Followed by invoice verification & condition contract updates.

2. Store Replenishment

• POS captures daily sales transactions.
• Sales data flows to central system → nightly replenishment run.
• System creates stock transport orders (DC → Store) and sometimes vendor orders.
• For STOs: DC creates outbound delivery, picks/pack, goods issue.
• Store posts goods receipt (via Fiori app Receive Products).

👉 Interview phrasing:

“Replenishment is driven by POS sales, calculated centrally overnight, and executed via STOs or vendor POs.”

3. Store Operations (Fiori Apps)

• Apps: Receive Products, Count Stock, Manage Stock Counting, Adjust Mass Stock – TODAY.
• Physical Inventory: create PI document → count → review → post differences.
• Sales Orders in Stores (via Fiori):
  • Pickup scenario: bulky item ordered in-store, delivered at issue counter, then billed.
  • Third-party scenario: non-stock item ordered → vendor delivers directly to customer. System creates PR → PO → invoice → billing.
  • Click & Reserve scenario: online order for store pickup. Reservation → customer tries in-store → final purchase posted as POS sale.

4. Promotions & Merchandise Distribution

• Promotion created → add supply, price, listing data.
• Generate allocation table → triggers vendor POs + STOs.
• Cross-docking: vendor pre-picks/pack → bypasses warehouse putaway → faster flow.
• Stores post goods receipt, then sales start.

Interview Cheat Sheet

• Core ERP = SAP S/4HANA Retail for merchandise mgmt (master data, buying, logistics, store ops).
• Key add-ons = CAR (POS data), F&R (replenishment).
• Industry Cloud = predictive planning, omnichannel order mgmt, store audit.
• Processes =
  • Vendor → DC replenishment.
  • DC → Store replenishment.
  • Store operations (Fiori apps).
  • Sales order processes (pickup, 3rd party, click & reserve).
  • Promotion mgmt with allocation tables & cross-docking.

👉 If asked to “walk through SAP Retail processes”:

“We start with vendor procurement into DCs, replenish stores nightly based on POS sales, run store ops through Fiori apps, handle both POS and SD sales orders, and manage promotions via allocation tables and cross-docking.”

Org Setup

Organizational structures in SAP Retail are basically the “map” of your company inside the system. They define how legal, financial, and operational units are connected — from corporate group level down to individual stores. If you can explain this well in an interview, you show both functional knowledge and that you understand how SAP mirrors reality.

Why Organizational Structures Matter

• They map the individual parts of a company (like Purchasing, Sales, Logistics).
• They ensure all subareas are linked in a consistent way.

Client and Company Code

• Client is the highest organizational level in SAP.
• Company code is the smallest unit for external reporting.
• Company code must produce a legally compliant balance sheet and P&L.
• Each company code represents an independent accounting unit.
• Multiple company codes can belong to one client.

👉 Interview soundbite: “Company code is the smallest unit for external reporting; it must produce a legally compliant balance sheet and P&L.”

Controlling Area & Cost Centers

• A controlling area handles internal cost accounting.
• Inside it, cost centers are where costs are collected — based on function (e.g. Marketing), physical location (Store #25), or responsibility (Operations).
• This structure is what allows FI postings to flow into CO reporting.

Operating Concern & Profitability Analysis (CO-PA)

• Operating concern is the highest organizational level for profitability analysis.
• CO-PA provides detailed profitability reports by market segments.
• It supports strategic decision-making by analyzing revenues and costs.
• Data can be collected at different levels, such as products, customers, or regions.

👉 Interview tip: If asked about CO-PA, emphasize: “It’s a market-oriented approach, showing profitability by segment to support decision-making.”

Profit Centers

• A profit center = an organizational unit for measuring profit/loss at a branch or division.
• In Retail, stores are often profit centers so management can compare P&L across locations.

Sites, Stores, Distribution Centers & Storage Locations

In SAP Retail, the site is the central master data object. Everything starts here — pricing, replenishment, promotions, inventory management. If I get a question about “where Retail happens,” the answer is almost always: at the site.

Site

• Represents a store, distribution center (DC), or production location.
• Almost all retail processes (merchandise distribution, pricing, stock movements) are site-dependent.
• Transaction to display a site: WB03 (display site master).

👉 In interviews, I should phrase it like:

“In SAP Retail, the site is the foundation. It’s the one master record that drives how a store or DC operates in the system.”

Storage Location

• A sub-unit inside a site, used for detailed stock management.
• Example: backroom vs shop floor, or refrigerated area vs normal area.
• It lets us keep inventory separate and more realistic.
• In customizing, storage locations are created under a plant (site).

👉 Interview phrasing:

“A site holds inventory overall, but storage locations break it down so stock can be managed more precisely.”

Distribution Centers (DCs)

• A DC site usually has several storage locations.
• Example: high-rack warehouse, bulk zone, or a flow-through area for cross-docking.
• Each storage location in a DC can be linked to Warehouse Management (WM, 3-digit number) or Extended Warehouse Management (EWM, 4-digit number).
• Transaction to display DC site master: WB03 (same as stores, just type = DC).

👉 Interview phrasing:

“In DCs, we almost always see multiple storage locations because stock is physically structured. Stores, on the other hand, typically just have one.”

Stores

• A store site is usually simpler: often assigned just one storage location.
• That’s enough to keep stock of what’s on hand without overcomplicating.

Quick Mental Model for Interview

• Site = main object (store, DC, production).
• Storage location = subdivision of a site for inventory.
• DC = site with multiple storage locations (connected to WM/EWM).
• Store = site with usually one storage location.

👉 If they ask: “How do you view a site in SAP Retail?” → I can say: “Via WB03 for display, WB01 to create, WB02 to change.”

Sales Organization, Distribution Channel & Distribution Chain

• Sales organization: legally responsible for sales, including product liability and claims. Divides markets into regions. All SD transactions happen inside a sales org.
• Distribution channel: how you reach customers — stores, wholesale, mail order, online.
• A distribution chain = combination of a sales org + a distribution channel.
• Each sales organization is assigned to exactly one company code to connect SD and FI.

Divisions & Sales Area

• In Retail, divisions are not actively used.
• Still, because some SD tables need a division, a dummy division (often “R1”) is maintained.
• A sales area = sales org + distribution channel + division.

Strategic vs Operational Elements

• Some elements are strategic → they must be defined in customizing before you can create master data.
  • Example: company code is required in the site master, customer/vendor business partners.
  • Example: purchasing organization must exist to assign vendor data, conditions, info records.
• Others are operational → used in processes but not as master data keys.
  • Example: purchasing group.

👉 Interview framing: “Strategic org elements are part of customizing and act as key fields in master data; operational ones are more about day-to-day process handling.”

About the Author

Dzmitryi Kharlanau

Senior SAP Consultant·EPAM Systems

Senior SAP SD / O2C Consultant | S/4HANA Logistics | Integration at EPAM Systems. Interested in S/4HANA, automation, AI, and Event-Driven Architecture (EDA).

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