Audit of SAP ERP Modules for Fashion Brand

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 Back in 2017, the company was still using the outdated version of its ERP developed by SAP.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.

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.

Team composition
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
Client name

Palmers Textil AG
Expertise used

BI and reporting, Cloud solutions, Data warehouse and ETL
Duration

4 months
Services provided

Software audit
Country

Austria
Industry

Retail, Logistics

sap erp audit for palmers textl project overview

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.

Audit areas

Retail process

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

sap erp audit for palmers textl audit areas 1

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

sap erp audit for palmers textl audit areas 2

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

sap erp audit for palmers textl audit areas 3

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 erp audit for palmers textl audit areas 4

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

sap erp audit for palmers textl audit areas 5

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

sap erp audit for palmers textl audit areas 6

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 erp audit for palmers textl audit areas 7

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

sap erp audit for palmers textl audit areas 8

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.

Case study

SAP ERP audit for Palmers Textil

diceus.com

SAP ERP audit for Palmers Textil

€1.5 MN

€1.5 million is the amount of estimated savings
4

4 months it took to complete the full audit
8

8 SAP areas were analyzed and improvements proposed
95%

95% reduction of manual effort in retail processes
97%

97% higher revenue from retail

Project overview

Client information

Information

Team composition: 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
Client name:

Palmers Textil AG
Expertise used:

BI and reporting, Cloud solutions, Data warehouse and ETL
Duration:

4 months
Services provided:

Software audit
Country:

Austria
Industry:

Retail, Logistics

Business challenge

Value to our client

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.

Tech stack used in project

ABAP
Oracle
SAP
SAP Retail
SAP FICO
SAP Logistics
SAP PI
SAP SD
SAP MM
SAP Finance

diceus.com

SAP ERP audit for Palmers Textil

Project overview

Client information

Business challenge

Audit areas

Retail process

Procurement

Finance

Controlling

SAP Process Integration

Master Data

ABAP

SAP Basis

Audit results

Value to our client

A full assessment of internal processes

Estimated savings in cash and time

Our tech stack