What Is SAP AFS?

SAP AFS is SAP's specialized Apparel and Footwear Solution. SAP AFS is an industry-specific software
solution based on SAP standard modules, but built with extra functionalities. Those extended features
and functionalities help to support the various special requirements of the apparel and footwear
industry.

The apparel and footwear industry is highly competitive and fragmented due to low barriers of entry. So
it is one of the most competitive and demanding industries that exists in all of retail. Because of the
constant challenges and high demand within the global AFS business environment, retailers are
frequently creating new trends and battling against the relentless pressure of high costs and changing
lead times. Adaptability is crucial in order to remain competitive.

To help retailers combat against the numerous challenges of the apparel and footwear industry, AFS
provides a unique set of services and solutions that help empower business partners, employees, and
customers, allowing them to work in successful partnerships. SAP AFS is available on-demand from any
location and across any platform (such as mobile e.g. with SAP FIORI). Allowing for the use of the latest
SAP technology and infrastructure, AFS is an obvious solution for companies in the apparel and footwear
industry.

Specific Apparel and Footwear Industry Challenges

The apparel and footwear industry is truly global in scope, in that manufacturers can now sell different
products that are produced in different countries and spanning many different continents. A global
procurement strategy requires processes combined with offshore and contract domestic production
processes. This combination of domestic plus nearshore plus offshore production often create complex,
inefficient and hard to monitor value chains.

To remain competitive, apparel and footwear companies must assume the role of coordinator (for
internal processes) and focus also on intercompany processes. This means a major turn for those
companies, shifting their main focus and competencies away from pure production and more onto
planning, controlling, and textile monitoring in the overall value chain.

Areas of more importance, such as production planning, product development, control and
coordination, quality assurance, finished goods and raw material requirements planning, and transport
optimization are most often kept at central headquarters. This more vertically integrated approach
makes partner collaboration and data flow in the textile supply chain complicated, but extremely critical
to the success of companies in the apparel and footwear industry.

Other major challenges retailers face are labor and outsourcing problems. Outsourcing and multilevel
division of labor are common practice in the apparel and footwear industry. Companies optimize their
production processes in order to cut costs and achieve financial success. Automation of the production
of shoes and clothing can also only be done to a certain degree and level, which quickly limits savings
potential.

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Because of this limited savings potential, companies began outsourcing their product production to
lower wage countries – reducing costs, but compromising quality and production process transparency.
Largely spread out global production locations naturally complicate production process supervision and
monitoring, resulting in more expensive and longer transportation routes and unmet production
delivery deadlines.

Finally, due to the fact that the fashion industry is constantly and sporadically changing, seasonality is
one of the most important aspects in the apparel and footwear trade. Companies must be able to cope
with the unpredictable seasonal fluctuations, variations in design, forecast uncertainty, shortages in
stock, and inevitable costly markdowns in prices.

SAP AFS Advantages

SAP AFS helps resolve a lot of issues that appear due to seasonality, mentioned above. Any one product
can change characteristics based on the various seasons throughout the year- colors can change, along
with label details, for example. Being deeply rooted in the Sales and Distribution (SAP SD) module of
SAP, seasonality affects the entire supply chain within a company. SAP AFS allows for season settings to
be maintained in combination with aspects such as category, color, and size. This allows companies to
effectively manage and maintain large volumes of seasonal industry-specific data.

There is also AFS’ special ability to handle material sizes through the use of material grids in SAP’s
Material Master module (SAP MM). These grids are three dimensional and can maintain three variables
within a given grid value. For example, products can be separated by size, seam length, and collar size
through the use of these grids. All three variables will be maintained independently, but can also be
combined to create a unique grid value, reducing complexity and data volume.

Another great feature of SAP AFS is the ability to categorize products based on their common features,
such as quality grade and importing country of particular products. Different products will have different
market values as well as customer demand patterns, which can easily be replicated using these
categories. The supply and requirements will also be allocated through these categories.

Some additional advantages of SAP AFS are those in Sales Order Processing such as Fast Order Entry,
Rush Orders, Credit Card Processing, and Value-Added Services. Currently, SAP AFS is scheduled to be
supported by SAP through the year 2020, with some major changes coming; which will be explained
later on in this article.

SAP IS-RETAIL

SAP IS- Retail provides features for the products, information, and personalized shopping experiences
that retail shoppers are looking for. Retail management and SAP’s omni-channel commerce software
allow for consumers to shop when and where they want, reaching shoppers across any channel such as
retail stores, online stores, mobile stores, telephone, etc. Real-time customer and point of sales insights
allow retailers to harness the visibility they require in order to optimize everything from merchandising
to their entire supply chain.

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SAP IS-Retail includes two main categories; (1) Fashion and (2) Food, Drug, and Convenience. The
fashion spectrum of SAP Retail helps those in the fashion industry simplify their vertical business and
prepare for growth. Integrated SAP software helps boost supply chain collaboration, shorten the time
from product concept to customer, and offers end-to-end flexibility, speed, and visibility. Automated
and efficient processes help retailers reach their business goals using few resources and less money-
allowing them to zero in on customer needs, as well as great customer service, and overall customer
experience.

The Food, Drug, and Convenience spectrum also helps companies to meet product expectations,
information, and engagement. This on-demand SAP solution provides direct communication with
customers, across various sales channels and platforms. This allows for a single real-time retail platform
that can be used for anticipating specific customer needs, as well as support that enables businesses to
provide solid product delivery times to investors.

SAP FASHION MANAGEMENT

AFS was primarily designed for those companies dealing in the manufacturing industry. For companies
with business in various areas of retail, it was difficult for them to manage and maintain the entire
supply chain from goods manufacturing to product placement and sales. Both SAP solutions, AFS and IS-
Retail, have lots of great features but each solution addresses problems differently.

When a company requires both solution flavors, problems often occur, such as requiring a solution
optimized for production transactions as well as another focused on distribution and retailing. When
this occurs, does a company choose one solution that works best, or do they implement both, using
them together side-by-side? To help create a more holistic picture of the entire data flow process, SAP
invented a new solution- SAP Fashion Management.

SAP Fashion Management (SAP FMS) is an integrated SAP solution that combines SAP AFS with SAP IS-
Retail. Developed in HANA’s Big by Business Suite, Fashion Management blends manufacturing business
processes with retailing, and cultivates them into one single vertical solution. First released in June 2014,
when SAP joined forces with Adidas, Tommy Hilfiger, Armani and Luxotica, this new solution enables
companies to manage their business processes across one single larger system landscape. FMS is very
similar to SAP ERP IS-Retail with AFS Functionality ported via an Add-on.

SAP Fashion Management was created as an Add-on for SAP IS-Retail within SAP ERP, and is based on
various components of Materials Management (Inventory Management and Purchasing), Logistics, and
Sales and Distribution (Sales). SAP FMS contains many of the functionalities of AFS, but also includes
completely new functionalities that were created to help support multi-channel business around the
globe. Through SAP FMS sharing key processes over a global inventory, new key benefits for businesses
are those such as higher customer satisfaction, fewer chargebacks from customers, and lower inventory.

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A few examples of the exciting new features now available through SAP FMS are:

• Customer Centric Marketing and Merchandising

• Marketing and Merchandising Insight
• Omni-channel Marketing
• Merchandise Planning & Assortment Management
• Pricing & Promotions
• Sourcing, Buying, and Private Label
• Sourcing, Vendor Management, Insight
• Buying
• Private Label
• Collaborative Retail

• Supply Chain
• Supply Chain Insights
• Demand and Replenishment Planning
• Omni-channel Inventory & Order Management
• Logistics and Fulfillment
• Omni-commerce Customer Experience
• Customer Insight
• Omni-commerce Orchestration
• Customer Engagement & Personalization
• Store and Digital Commerce
• Human Resources
• Solutions for HR
• Finance
• Solutions for Finance
• Platform and Technology
• Solutions for Platform and Technology

It’s important to note that SAP FMS is only available through SAP HANA. This is due to the fact that the
amount of data to be processed in production and retail is huge and must be delivered through a unified
platform. A second reason is that the additional developments for SAP FMS must be built to leverage the
new database reality. By using SAP HANA, it is possible to build new applications that were not available
previously.

The Future of AFS and FMS

FMS is an obvious go-to solution for new customers in the fashion industry and is set to have AFS fully
integrated by late 2015. With AFS only being supported by SAP through the year 2020, the move to FMS
is evident for those in the apparel and footwear industry. However, for already existing AFS customers,
the transition must be adopted at a slower gradual pace as they evaluate their current needs and make
the required changes over to FMS. To help already existing AFS customers, SAP has released several
tools available to help them transition smoothly from AFS to FMS.

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If you would like to obtain further information regarding the migration from SAP AFS to FMS, IS-Retail,
or SAP HANA please contact us at 1 (484) 401-7218 or via email at [email protected] to schedule a
free consultation with one of our expert consultants.

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