1. Inventory Optimization with
HANA Powered Stock Transfer
Mentor: By:
Dr. Preetham Kumar Kavya Srinet
Mr. Subramanya Sastry C.K. (080911006)

2.  I am intended to develop an Inventory Optimization
application.
 Optimization means providing a balance of supply to
meet the demand at a minimum total cost, Inventory
level and workload to meet customers’ service goal
for each item in the link of Inventory Chain.
 It enables user to generate stock transfer proposal
between two or more stores using HANA as an
underlying database.
Problem Definition

3.  Inventory management includes a company's
activities to acquire, dispose, and control of
inventories that are necessary for the attainment of a
company's objectives.
 The management of inventories concerns the flow
to, within, and from the company and the balance
between shortages and excesses of items in
inventory list.
Introduction

4.  Inventory may account for 20 to 40% of total assets.
 Inventories tie up money, and success or failure in
inventory management impacts a company's financial
status.
 Too much inventory requires unnecessary costs
related to issues of storage, markdowns and
obsolescence
 Too little results in stock out or disrupted service.
Introduction(cont.)

5.  The management of inventories concerns the flow to, within, and from the
company and the balance between shortages and excesses in an uncertain
environment (Tersin, 1988[1]).
 According to McPharson (1987, p360), in apparel manufacturing, "inventory
management systems are designed to obtain concise and accurate
information for control and planning of planned goods.
 Inventory management has been a concern for academics as well as
practitioners, in that overall investment in inventory accounts for relatively
large part of a company's assets. Inventory may account for 20 to 40% of
total assets (Tersin, 1988[1]; Verwijmeren, Vlist, & Donselaar, 1996[2]).
 Besides, long-run production associated with a high level of inventory
conceals production problems (e.g., quality), which can damage a company's
long term performance (Vergin, 1998). Therefore, the primary goal of
inventory management has been to maximize a company's profitability by
minimizing the cost tied up with inventory and at the same time meeting the
customer service requirements (Lambert, Stock, & Ellram, 1998).
 As global competition between suppliers in the open markets has increased,
power has been shifted from suppliers to customers (Verwijmere, Vlist,
Donselarr, 1996). Therefore, the customers' need to reduce the inventory
based on frequent small lot orders has resulted in their partners holding the
inventory (Thomas, 1998).
Literature Survey

6.  In real life few articles/products are fast moving in one
store and slow moving on the other stores.
 It means the demand for that particular article is more in
one store and less on the other store.
 So there is a need for sufficient quantity of such products
where the demand is more.
 Instead of procuring fast moving products from outside
vendors or production units, it’s always better to distribute
the load effectively among the stores.
 This solution provides an effective way for distributing
the products based on the historical sales pattern and It
allows end user to generate a proposal for creating STOs
between different stores to distribute the articles/products
effectively.
Motivation

7. Inventory Optimization - Business
scenario
 The solution optimizes the inventory of a retail chain over
the different stores in the vicinity, minimizing inventory
costs
 The volume of data involved is enormous especially for a
large chain.
 The solution leverages the computational capability of HANA
to crunch huge amounts of data to propose stock transfer,
not possible to achieve on-the-fly with the traditional
approach
 The solution also enables overcome the challenge of delay in
consolidation of data
 The solution provides full insight-to-action with the creation
of the stock-transfer-order in Retail system

8. Inventory Optimization
Stock Transfer
Store 1
Store n Store 2

9. Inventory Optimization
Forecast demand
 Forecast demand
based on past
history
 Forecast demand at
store and product
level
Execute Stock Transfer
 System proposes stock
transfers between
different stores
 Optimize inventory
across stores
 Generate Stock
Transfer Order in Retail
System
Match with inventory
 Match demand with
projected inventory
 Estimate shortfall or
surplus

10. 1. Forecast Demand:
 Forecast demand based on past history and statistical
data.
 Forecast demand at store and product level.
2. Match with inventory:
 Match demand with projected or expected inventory.
 Estimate shortfall or surplus.
3. Connect ABAP to HANA:
 Call and execute the stored procedures in HANA.
 Store fetched data in an internal table.
Modules Involved

11. 4. Generate the STO proposals based on the effectiveness
chosen :
 Time Effective Solution : Select the nearest store that
has stock in excess , if there’s still more requirement , go
to the next nearest store.
 Cost Effective Solution : Select the nearest store that
has enough stock in excess to fulfill the deficit
requirement.
5. Select and store the STO :
 Optimize inventory across various stores.
 Generate Stock transfer Order in Retail System.
Modules Involved(Contd.)

15. State Diagram for Cost Effective Solution

16. State Diagram for Time Effective Solution

17.  The solution leverages the computational capability of
HANA to crunch huge amounts of data to propose stock
transfer, not possible to achieve on-the-fly with the
traditional approach.
 The solution optimizes the inventory of a retail chain over
the different stores in the vicinity, minimizing inventory
costs , using a suitable distance vector algorithm , for
finding out the shortest distance deficient-surplus pair.
 We can overcome the challenge of delay in consolidation
of data (using HANA) and the design must minimize the
number of cache misses .
 It provides full insight-to-action with the creation of the
stock-transfer-order in Retail system.
Methodology

18. The implementation details are :-
 The basic methodology includes the use of SAP HANA
database and ABAP Technology.
 The HANA stored procedures and queries(SQLScript)
provide the basic functionalities of the underlying
objectives.
 ABAP screens , ALV grids and table controls are used
for the UI.
Methodology(cont.)

19. Architecture
HANA DB
Retail System
(NW 7.X)
SQL Scripts
Data in HANADB
CALC Engine
Existing Applications &
Business Logic
Data in Oracle DB
New STO Proposal
Application
ADBC
Data Replication
Secondary
Connection

20.  SAP HANA allows you to read around unwanted data
by organizing tables in an efficient columnar manner ,
i.e. data is stored column wise.
 But what if your database system already caches all
data in RAM, in fast accessible main memory close to
the CPU ?
 Conceptually it is about increasing speed and
increasing execution speed of database queries via
the use of in-memory data storage.
 Queries can be executed rapidly and in parallel that
means that complex coding techniques, e. g. pre-
calculation of values are no longer needed.
SAP HANA (High Performance
Analytic Appliance)

21.  Historically database systems had limited RAM, main
memory is no-longer a limited resource, modern
servers can have 2TB of system memory, this had the
effect that slow disk I/O was the main bottleneck in
data throughput.
 As SAP HANA caches all data in memory, hard disks
are rarely used in the system they are only needed to
record changes to the database for permanent
persistency
 This shifts the performance bottleneck from disk I/O
to the data transfer between CPU cache and main
memory.
SAP HANA(cont.)

22. Hardware architecture: how it works
out.

23. HANA Architecture

24.  To reduce the latency time for bringing data to a processor.
 Contemporary systems had two dedicated layers : database and
application layer. HANA improves the bottleneck by locating
data intensive application logic in database.
 The columnar handling of data enables significant compression(
run length, cluster or dictionary coding) which leads to efficient
communication between RAM and CPUs. Avoiding cache misses,
capabilities in Intel CPUs further enhances performance.
 The use of SQLScript allows programming of data intensive
operations in a way such that they can be executed in the
database layer.
 For the above mentioned solution, it involves handling
enormous amount of data for computing the STO proposal.
HANA is mainly needed to speed up the process which helps to
take the decision for creating the STOs real time.
Need for HANA Database

25.  Calculations are typically executed on single or a few
columns only.
 The table is searched based on values of a few
columns.
 The table has a large number of columns.
 The table has a large number of rows and columnar
operations are required (aggregate, scan, etc.).
 High compression rates can be achieved because the
majority of the columns contain only few distinct
values (compared to number of rows).
Column-based tables have
advantages in the following
circumstances:

26.  The application needs to only process a single record at
one time (many selects and/or updates of single records).
 The application typically needs to access a complete record
(or row).
 The columns contain mainly distinct values so that the
compression rate would be low.
 Neither aggregations nor fast searching are required.
 The table has a small number of rows (e. g. configuration
tables).
Row based tables have advantages in
the following circumstances:

27. HANA : How It Works In Real Time !
An appliance for processing
high volumes of transactional
data in
real time
Includes tools for data
modeling, data and lifecycle
management, security,
operations
Provides support for multiple
interfaces based on industry
standards
SAP HANA
SAP
Business
Suite
SAP NetWeaver
Business Warehouse
Other data sources
Real-time
copy
Batch bulk
uploads
SAP HANA
modeling
SAP BusinessObjects tools
Other query tools
A platform for amazing new business applications built by SAP, partners and customers

28. Security Issues

29.  POC(Proof Of Concept) of SAP HANA.
 Created and implemented a prototype of the Project using
BSPs(Business Servlet Pages) for UI.
 The prototype has been implemented at city level(viz.
Bangalore) on a store to store stock transfer level.
 The project has been developed in ABAP for cross platform
testing and implemented in certain companies for a city
level.
 Stretch the domain of the project(S.T.O.) to a global level.
 Implementation on a cross company stock transfer level.
 Implementation of Cost effective and Time effective
solutions.
Work Done

30.  Implement a minimum distance or shortest path algorithm
to find out the closest deficit-surplus pair of stores and
then perform Stock transfer between them.
 Quality Management and Testing of the application
 Implemented the POCs of :-
 BC 400(ABAP Workbench)
 BC 401(ABAP Objects)
 BC 410(User dialogs with classical screens).
 BC 427(Enhancement Framework).
 BC 430(ABAP Dictionary).
 NET 310(WebDynpro for ABAP).
Work Done(contd.)

31. Screen Shots of HANA DB

32. Screen Shots of HANA DB

33. Screen Shots of The Implementation

34. Screen Shots of The Implementation

35. Screen Shots of The Implementation

36. Screen Shots of The Implementation

37. Screen Shots of The Implementation

38.  Introduction to the ABAP programming language of SAP.
 Development environment.
 Focus is on concepts and fundamental principles.
 Following concepts I have learned:
 • Understand and use basic ABAP syntax elements
 • Implement different types of user dialog
 • Program read accesses to the database
 • Use the ABAP Workbench development tools
 • Understand how developments are organized and
transported
ABAP Workbench

39.  [1] Richard J. Tersine. Principles of inventory and materials
management, North-Holland, 1988.
 [2] Martin Verwijmeren, Piet van der Vlist, Karel van Donselaar,
(1996) "Networked inventory management information systems:
materializing supply chain management", International Journal
of Physical Distribution & Logistics Management, Vol. 26 Issue: 6,
pp.16 – 31
 [3] SAP HANA,
https://portal.wdf.sap.corp/irj/portal?NavigationTarget=navurl://1
f9128b564bd6394b9ecdecda4d91b4a
 [4] SAP Corporate Portal, https://portal.wdf.sap.corp/
References

40. Thank You