US

SAP ERP Audit for Palmers Textil

  • €1.5 mn

    is the amount of
    estimated savings cooperation

  • 8

    SAP areas were analyzed
    & improvements proposed

  • 4

    months it took to
    complete the full audit

  • 95%

    reduction of manual
    effort in retail processes

  • 97%

    higher revenue
    from retail

solution delivered img

Project
Overview

Palmers Textil AG is a famous Austrian fashion/clothing brand founded in 1914. Back in 2017, the company was still using the outdated version of its ERP developed by SAP. This software was never optimized or upgraded. Our task was to complete a comprehensive assessment of core systems, find issues, and propose ways to optimize SAP management.

Business
Challenge

In 2000, Palmers decided to go digital, launched the first online shop. For internal enterprise management, the company installed SAP ERP. This system had been working as it is for almost 15 years until the new leadership team came. It included Matvei Hutman, Tino Wieser, Luca Wieser, and Marc Wieser – ex-CEO of Nike and Benetton. At the moment, Palmers was unprofitable, so the new board wanted to fix things.

In this case, IT optimization was the first optimization step. Thus, Palmers hired our retail business consultants to analyze the internal SAP ERP system and the related processes. We talked to stakeholders, checked how they work with SAP, and noted how to improve work. During this assessment, we found specific issues in retail, procurement, finance, controlling, master data management, integration.

Project
details

Palmers wanted to get a modern, user-friendly online shop with new features. The main task was to migrate the entire e-commerce section. We moved it from the old SAP Hybris version to a new Magento 2, open-source platform written on PHP. Further, we connected this online shop to a new FIEGE Order Management System with FTP and XML tech. Finally, both solutions were integrated with a Klarna payment tool and back-office SAP software.

  • Time: 4 months

  • Platform: On-premises – SAP ERP

  • Team: 10 members

    • IT Project Coordinator
    • Project Manager
    • Advanced Business Application Programming (ABAP) Expert
    • Business Application Software Integrated Solution (BASIS) Expert
    • Finance & Controlling (FICO) Expert
    • Materials Management (MM) Expert
    • Process Integration (PI) Expert
    • Retail Expert
    • Sales & Distribution (SD) Expert
    • Warehouse Management (WM) Expert
  • Industry: Apparel & Fashion / Retail

AUDIT RESULTS

Retail Processes

This section provides analytics and suggestions related to the sales of Palmers’ products. It includes planning, forecasting, automation, data processing, and general sales tips. We defined key issues with integrations, analytics, and paper-based processes.

Proposed solutions:

  • Enable SAP IS Retail with analytics and strategies
  • Enable SAP MDG for master data management
  • Implement a business process system
  • Implement a flexible planning system
  • Implement a forecasting and replenishment system

Estimated savings:

  • 97% higher revenue thanks to better forecasting
  • 95% reduction of manual work
  • 36% higher operations margin
  • 36% reduction of supply chain management costs
  • 34% lower logistics spending
  • 26% lower days in inventory ration

Procurement

This section reveals issues and potential improvements related to purchasing, payments, budgeting, and documenting of procurement processes. We focused on improvements of system control, approvals, and reporting.

Proposed solutions:

  • Add budget control
  • Add new and update existing reports
  • Add PDF output forms
  • Add POSM, packaging, and product material to inventory management
  • Add the necessary documents, store it in the related warehouse
  • Connect payments and procurement processes
  • Define approval strategies for procurement
  • Process all purchases using SAP Purchase Order

Estimated savings:

  • €50,000 per year savings related to reduced human workload
  • Procurement savings thanks to transparent reporting, budgeting, and approval

Finance

This section focuses on significant aspects of financial operations: daily processes, procurement, fixed assets, reporting. The most pressing issues centered around insufficient usage of SAP standard tools, manual work, and international payments.

Proposed solutions:

  • Add automated multi-currency postings
  • Automate processes for partners’ accounts
  • Connect purchase orders and payments
  • Enable SAP BPC for automatic consolidation
  • Enable SAP FI-AA module for all entities
  • Enable SAP SD for asset sales
  • Handle accounting and reporting in SAP, restrict external advisors
  • Improve existing documentation
  • Optimize usage of depreciation areas, create new ones
  • Provide extra training for employees
  • Tune small issues like payment terms and templates
  • Use SAP Purchase Order for all purchases
  • Use standard SAP tools wherever it’s possible

Estimated savings:

  • €156,000 per year savings related to: accounting coordination, process management out of SAP, manual work, and outsourcing fees
  • €40,000 per year savings related to payment checking
  • €42,000 per year savings related to manual reporting
  • €100,000 per year savings related to invoices and down payments
  • Extra savings related to re-calculations
  • Reduced delays of approvals

Controlling

This section refers to control and approval processes in daily operations and reporting. These issues are different from reports in other parts. Mainly, they refer to the limited use of SAP in the company.

Proposed solutions:

  • Enable SAP CO for controlling
  • Enable SAP FI-FM, Cash Management, and reports for cash flow
  • Enable SAP FIN-FSCM-CR for credit management
  • Reduce reporting in Excel
  • Use internal orders and a work breakdown structure

Estimated savings:

  • €40,000 per year savings related to manual reporting
  • €40,000 per year savings related to search out of SAP, manual control
  • Better management decisions thanks to transparent reports

SAP Process Integration

This module in the SAP ERP provides for seamless development, configuration, operation, and monitoring of integration scenarios. Here, the company had issues with interfaces and data interchange.

Proposed solutions:

  • Add proper documentation for the module
  • Migrate to SAP PI EDI
  • Migrate to SAP PI web interface via integration tools
  • Update internal interfaces

Estimated savings:

  • €50,000 per year savings related to integration

Master data

This section contains issues and proposals related to master data – core information shared across the company’s departments. Master data management was unoptimized, there was no central department for these processes.

Proposed solutions:

  • Add restrictions for general ledger accounts
  • Add templates and workflows
  • Cleanse existing data, delete unused
  • Define methods for local reporting preparation
  • Establish a central hub for master data governance
  • Implement proposals from retail, procurement, and finance sections

Estimated savings:

  • €30,000 per year savings related to financial master data management
  • €48,000 per year savings related to manual master data maintenance
  • €50,000 per year savings related to master data reporting
  • €96,000 per year savings related to support of inconsistent IT tools

ABAP

This term stands for a high-level programming language used in SAP. Our ideas and recommendations relate to ABAP development and maintenance because major issues were associated with scalability, execution, and transparency.

Proposed solutions:

  • Add custom fields to tables
  • Add Excel-based operations to SAP
  • Re-engineer core custom programs
  • Refactor code
  • Switch to PDF print forms
  • Update documentation
  • Use BAPI, BDC, and LSMW for data updates

Estimated savings:

  • €100,000 per year savings related to manual reporting and documentation

SAP BASIS

The final audit section reviews the existing software and hardware problems, suggests harmonization steps for basic SAP systems. We focused on problems with outdated modules and interactions with providers.

Proposed solutions:

  • Have one system for one host
  • Move systems to other cloud providers and hosts
  • Reduce database size and the related fees
  • Update Oracle software and client versions
  • Update SAP procedures

Estimated savings:

  • €150,000 per year savings related to local SAP support and optimized resources

AUDIT RESULTS

After the complete review of all SAP systems and processes, we ended up with a set of proposals plus potential benefits. We predicted the total approximate savings of €1.5 million in the case of 3x business growth. Partially, these suggestions resulted in the next Palmers cases. For example, we replaced Hybris with Magento for e-commerce.

VALUE DELIVERED

  • A full assessment of internal processes

    We revealed how Palmers works with SAP, which areas require optimization, and how to complete it.

  • Estimated savings in cash and time

    Our consultants proved that it’s possible to cut spending, reduce manual effort, and improve revenue.

TECHNOLOGIES

  • sap icon
  • oracle icon
  • abap icon

Client
Information

Palmers Textil AG is an international clothing brand that originated in Austria. Ludwig Palmers started it as a laundry back in 1914. In 2000, the company opened its first online shop. Since 2015, Palmers is owned by P Tex Holding GmbH. Today, the brand sells underwear, clothes, and accessories in more than 300 stores in 17 countries.

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  • Industry:

    Apparel & Fashion / Retail

  • Size:

    1,001-5,000

  • Country:

    Austria

  • Years on market:

    106

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