At a Glance:

• Salling Group eyes becoming an e-commerce leader in Denmark.
• SAP Customer Activity Repository and its unified demand forecast (UDF) component critical to replenishment process.
• Redwood partners with Salling Group to enable 24/7 logistics operations.
• SAP BASIS and applications teams should be united to monitor SAP system health.

Denmark may be small in geography compared to its neighbors, but the country is making huge strides in retail — a credit to the growth and expansion of Salling Group. As the Nordic’s largest retail group, Salling Group serves 11 million customers per week through its department stores, supermarkets, discount stores, and hypermarkets. Its brand diversity makes Salling Group unique in the region, with SAP playing a central role in the company’s expanding customer base.   Steen Isdahl, Chief Operations Officer for Salling Group, says the company is the only Danish retailer to have stores outside of Denmark. In addition to its presence in neighboring Germany, Salling Group is also present in Poland. Due to a growing Polish economy and an increase in personal disposable income, extending the company’s market reach into Poland is a strong focus. Equally important is growing its e-commerce business in all markets, particularly in online food and meal delivery. Isdahl says five years ago Amazon expanded into Hamburg, claiming 7% of the e-commerce market in its first month. The e-commerce giant holds 60% to 70% market share overall in Germany. “Amazon caused us to broaden our scope and realize we needed to be present online at home and in regional markets,” Isdahl says. “We have the same ambition of being the market leader online, and we’re on our way to fulfill that despite starting 10 years later than other entrants. We’ve had the opportunity to see what has and hasn’t worked for others, so we can do it right the first time.” Isdahl says to compete against Amazon and other online retailers Salling Group acquired Wupti.com in 2015 and built upon that with Bilka.dk and BilkaToGo.dk to become Denmark’s largest online marketplace. It increased its product offerings from 14,000 to more than 500,000 currently. For its supermarkets, BilkaToGo allows customers to order their groceries online with curbside pickup, while Skagenfood is Salling Group’s offering for meal box solutions. “E-commerce is here to stay, and we want the same market share in that space as we do in brick and mortar,” Isdahl says. “The younger generation is working from home more and their lives are more versatile, so they’re not attached to a brick-and-mortar location. It’s critical for us to attract the next generation with a customer experience and e-commerce solution that’s flawless.”

SAP and Supply Chain Process Requirements

To successfully extend its footprint across borders and expand its service offerings requires effective and efficient supply chain processes. For Salling Group, SAP serves a critical role for meeting those requirements. SAP transaction codes. To ensure data uniformity across all of its supermarkets, Isdahl says the company utilizes SAP ERP Central Component (SAP ECC) and its function codes. A grocery manager, for example, has the same systems, access, and data across all stores. “Every supermarket receives a PDF in the morning to review the numbers and what products need replenishment, price reductions, and the like,” he says. “This transparency and product intelligence allows us to expand into other markets and gain the benefit of scale. It’s what enabled us to apply our SAP system and expand into a new, highly competitive market like Poland and compete while also complying with the country’s norms and operating requirements.” SAP unified demand forecast module. The physical boundaries of the warehouse don’t fluctuate. Internally, however, it’s essential to set replenishment rules to synchronize the inbound and outbound processes most efficiently. Isdahl says Salling Group relies on SAP Customer Activity Repository and its unified demand forecast component in conjunction with SAP Allocation Management for batch job execution. However, to utilize unified demand forecast and SAP Allocation Management effectively requires clean, reliable data — both foundational and new data. “Old data is necessary for your replenishment algorithm so that the appropriate warehouse and product are picked by the batch job,” Isdahl says. “We have a replenishment timeframe between midnight and 3:00 am across all warehouses and all countries. Thus, batch control and data control are absolutely key to using the right SAP algorithm for warehouse execution.” Isdahl takes pride in saying that Salling Group and its competitors are all using SAP, but the company is doing it 30% better than the competition. “I want our people to be inside the modules and understand and optimize them down to the database level so that our batch jobs run fast. Our load by scanning process is a big part of our success.”

Cloud Is the Future for Salling Group

Salling Group is an SAP house first, Isdahl says. However, to complement SAP and help tie logistical processes together around its process integration and batch program, the company sought the expertise of third-party provider Redwood. Its technology is helping Salling Group consolidate all logistics transactions in SAP. SAP Business Process Automation by Redwood coupled with SAP ECC enables 24/7 supply chain operations, Isdahl says. “SAP Business Process Automation by Redwood allows the ability to add and detract conditions across the supply chain and recalculate the forecast and replenishment on the fly,” Isdahl explains. “This is critical with our new home delivery offering competing with Amazon Prime and Nemlig.com. The ability to reschedule batch jobs and run queries flawlessly is an absolute must.” The next phase of the Redwood collaboration is transitioning from on-premise to the cloud. “Redwood offers a certified SAP cloud solution. We had four years with zero disruption on-premise, which makes going to the cloud an easy choice to secure and archive the same level of stability.”

KPIs and Lessons Learned

As Isdahl looks back on the expansion into new countries, the drive toward e-commerce dominance, and the best practices of Salling Group’s logistics operations, he points to the criticality of uniting the SAP BASIS team with the application team. Both must be integrated with each other to gain full operational transparency and tackle problem resolution. “SAP BASIS has health KPIs that track 40-50 daily KPIs throughout the SAP system, such as on-time delivery, batch-time execution, storage health, and fill ratio. If a KPI is under a certain threshold, we have 24 hours to correct it, or the issue gets escalated,” Isdahl says. “Having a system health check across all systems that are measured everyday by a united team is important.” Just as critical is recognizing that the master data is the key to everything. To grow fast and achieve agility, says Isdahl, companies must have several controls in place. “When you introduce new products or integrate a company in the e-commerce space, the master data control takes the longest to resolve.” He explains that when Salling Group acquired BR, a Nordic toy chain, his team was ready to absorb its SAP system within six weeks. However, it required 18 weeks to clean the data that came with the system. Master data control is critical.  

What Does This Mean for SAPinsiders?

• Implement 24/7 support. With Salling Group’s growing supply chain and tight replenishment schedules, Isdahl say having 24/7 support internally and from third-party providers ensures schedules are maintained and KPIs are measured continually.
• Put knowledge before transformation. Communicate and share system knowledge before the transformation occurs. Ask team members and business units to challenge each other and ask difficult questions like “are we ready if it fails?” Laying those challenges bare, says Isdahl, ensures that system needs are met during the planning and implementation, while identifying strategies if the business needs to pivot.
• Ready your master data. Be sure to have your master data and processes in full order. Because there are differences between on-premise and the cloud, these are two different solutions, says Isdahl. Internally, be ready to embrace cloud solutions and release on-premise control.

Company Snapshot

Salling Group Headquarters: Brabrand, Denmark Industry: Retail Employees: 55,470+ Revenue: 9.6 billion+ U.S. dollars in annual sales Company details:

• Family-owned and operated company since 1906
• 2 Salling stores
• +1400 Netto stores in Denmark, Poland, Germany
• +100 Føtex stores in Denmark
• 19 Bilka hypermarkets in Denmark
• Starbucks/Carl’s Junior franchise
• On-line channels for all formats
• Bilka to go

SAP solutions: SAP ECC, SAP Customer Activity Repository and its unified demand forecast component, SAP Allocation Management, SAP Business Process Automation by Redwood, SAP Fiori, SAP Extended Warehouse Management, SAP BW/4HANA, SAP Global Trade Services, SAP Global Batch Traceability, EM, SAP Trade Management, PO and Solman.