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SAP debuts 4 AI-based retail capabilities

At the National Retail Federation 2024 conference, SAP will feature new retail capabilities for predictive demand planning, predictive replenishment of goods and order management.

SAP unveiled four new AI-based capabilities designed to help retail businesses better manage planning, inventory and customer experiences.

Two of the new capabilities are designed to provide predictive recommendations for planning, while the other two are aimed at order management and sourcing, according to Shardul Vikram, CTO and head of data and AI for industries and customer experience at SAP. All four will be featured at next week's National Retail Federation 2024 conference.

"They are all about how to infuse responsible business AI into the day-to-day flow of the retailers to help all parts of the business processes, from sourcing to planning to fulfillment," Vikram said. At SAP, business AI refers to applications and AI models that have been trained on SAP-specific, business-relevant data.

The two new predictive capabilities are as follows:

  • SAP Predictive Replenishment, which provides timely recommendations for inventory planning and primarily applies to consumable items with a limited shelf life. SAP Predictive Replenishment is expected to launch in the third quarter of 2024.
  • SAP Predictive Demand Planning, which enables retailers to plan the products they need to buy and plan for promotions. SAP Predictive Demand Planning is expected to be available in Q4 2024.

The two new order management capabilities are as follows:

  • SAP Order Management for Sourcing and Availability, which helps retailers determine how to reach the right sources to procure products, available now.
  • SAP Order Management Foundation, which is an order management system that works end-to-end, from order entry to order fulfillment, also available now.

The four capabilities are built as part of SAP's industry cloud portfolio and available to licensed users, Vikram said. They can run as independent apps, but they can be deployed together in a single package as well.

"You can use any of them in a composable manner and customize them to your needs," he said.

Pricing has not been disclosed.

The two predictive capabilities use customized data models for each customer and use only that customer's data to train models, Vikram said. For example, a retailer can take the historical data that's in its system to train data models that provide specific predictions of what products it needs to bring on and when.

"Each retailer's needs are unique, so generating a global model won't work well for any of them," he said.

Improving omnichannel processes

Swarovski, a global jewelry-maker and retailer based in Austria, anticipates that the new SAP capabilities will improve its ability to provide omnichannel processes and customer personalization, according to Lea Sonderegger, chief digital officer and CIO at Swarovski.

We are keen on optimizing our demand planning and forecasting because this helps us to have the right product at the right place where the customer wants it, and second, to minimize inventory risks.
Lea SondereggerChief digital officer and CIO, Swarovski

The nearly 130-year-old company, which produces and sells jewelry and home decorations in about 2,500 stores around the world, was a pioneer in e-commerce, with an online shop that launched in 2001. Swarovski has been an SAP customer for 40 years and uses an array of SAP tools to have a vertically integrated supply chain, Sonderegger said.

Swarovski moved from on-premises SAP ERP to S/4HANA Cloud in June 2023 through the Rise with SAP program and is looking forward to using the new AI-based capabilities to enable even more comprehensive omnichannel processes, she said.

"We will be able to optimize our demand and forecasting process significantly, because we are a global business that's quite complex with the volatilities in the world today," Sonderegger said. "We are keen on optimizing our demand planning and forecasting because this helps us to have the right product at the right place where the customer wants it, and second, to minimize inventory risks."

The AI-based capabilities will also enable Swarovski to create a more personalized customer experience, which is vital for the luxury retail experience, she said.

"Imagine if you come into a store, and you only have little time, and you know what you want, but it's not there," Sonderegger said. "We need to have this omnichannel experience where we can cater for [a better customer experience], so having the right systems that can cater for the customer needs is key."

More complex retail environments

Retail has become more complex over the past few years, and retailers need tools that allow them to use data better to act more intelligently, said Leslie Hand, group vice president at IDC.

"There's a readiness to embrace data and AI intelligence to drive insights into the operations and the things they need to do," Hand said. "That's very different than in years past, where many retailers still on Excel spreadsheets would say they have all the intelligence they need and their planners know what they're doing."

Supply chain is a good area for those technology investments because it is data-driven, she said. Analytics have always been part of the story for creating better plans and replenishing and pricing products better, but now retailers need to be able to do end-to-end supply chain faster to be fluid and in step with the consumer.

"If the consumer suddenly shifts patterns and stops buying a certain product, [the retailer] needs to be there with the product they want, which means they need to be much more flexible," Hand said.

There are many AI-based retail applications available now, but SAP has a market advantage because there's a perception that the vendor's technology works, she said. Retailers want to make sure that the technology provider they select understands their business and is prepared to tackle what's ahead.

"They want to know they can count on the provider -- that it's a robust business that's been successful for some time, and that it's innovating for the future so that they can adopt new ways of doing things without too much pain," Hand said.

Jim O'Donnell is a senior news writer who covers ERP and other enterprise applications for TechTarget Editorial.

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