Extending Profitability Beyond Checkout: Recirculating Products Using No-Code AI Platform
While they expertly deliver innovation and quality to their customers, Callaway Golf’s previous planning and reporting tool wasn’t making the cut. To evolve their enterprise, the sports giant decided to replace their outdated planning software with SAP Analytics Cloud for planning.
Together with Avvale, Callaway Golf successfully implemented SAP Analytics Cloud across their global enterprise in just 6 months. Now, Callaway Golf has a single, consolidated planning solution that has enabled streamlined expense and asset plans so they can focus on what they do best– revolutionizing the sporting world with cutting edge equipment.
Avvale’s 2023 SAP Hackathon winning solution, Reclaim, is an AI solution built on SAP Business Technology Platform that empowers companies to increase prosperity while reducing dependency of materials and energy. While this form of exponential technology is presented here as a fashion solution, the truth is - it can be iterated across industries to weave together profitability and sustainability. Discover the driving challenges, the opportunity, the Reclaim approach, and the profound impact this technology can have on the future of business.
The Challenge
The environmental implications embedded into the fast consumption-fed linear economy are simply not sustainable. Every second, the equivalent of a garbage truck’s load of clothing is burnt or buried in a landfill. The fashion industry emits about the same quantity of greenhouse gasses per year as the entire economies of France, Germany, and the United Kingdom combined. It takes 10,000 liters of water to make a single pair of jeans.
Consumers are deeply aware of the environmental implications, and their loyalty to brands reflects this growing knowledge. 84% of global respondents to a consumer survey said they are more inclined to buy from a brand whose values align with their own; and more than 90% of global Gen Z respondents based their brand loyalty on shared values.
The Opportunity
Technology enables new, circular business models that encourage reuse and reduce consumption, generating new value across all industries in the pursuit of a more sustainable future. This year, the global second-hand apparel market is estimated at US$ 72 billion. It is projected to expand at a prolific compound annual growth rate of 14.8% from 2022 to 2032, reaching a valuation of US$ 283 billion by 2032. 33% of Gen Z’s and millennials did some type of resale purchase or rental in the past 12 months. Participation in the Gen Z and millennial re-commerce market is growing 40% year over year.
The Challenge
Before integrating SAP Analytics Cloud, Callaway Golf's planning landscape centered around SAP's legacy planning solution, Business Planning and Simulation (BPS). While BPS met Callaway Golf's planning needs for many years, the enterprise began to experience limitations with their old solution:
- Disconnected plans across the board: As Callaway Golf expanded and acquired new brands, planning processes greatly differed across the enterprise with some business units using Excel spreadsheets and others using legacy solutions for planning.
- Outdated planning functionalities: The existing legacy planning solution lacked many modern functionalities. Among them, salary calculations and asset depreciation automation needed improvement. As a result, it became difficult to create detailed and accurate forecasts across the globe.
- Significant IT support: The legacy solution required continuous management from IT to maintain runtime. IT had to carve out a full day every week to manually maintain the solution.
- No single source of truth: Various departments and brands used different data sources, which led to data silos across the organization, making it difficult to gain a clear picture of the enterprise's planned expenses.
- Rigid user interface: Legacy forecasting system was difficult to navigate and lacked working functions and calculations across the board, such as planning on depreciation and existing assets, adding vendors or members on the fly, and breaking down their cost center expense planning forecasts.
The Approach
With Avvale experts on their side, Callaway Golf laid out the following goals for their new planning landscape with SAP Analytics Cloud:
- Crowdsource and consolidate plans across the enterprise to gain a global overview of their planned expenses and expand the input capabilities to each responsible owner.
- Leverage elevated planning functionalities to create faster and more accurate forecast cost center expense and asset reports. The ability to customize calculations enhances and automates the reporting metrics.
- Harness the power of self-service analytics to alleviate IT from the burden of simple maintenance and data entry requests, so they can focus on high-ROI tasks.
- Maximize user-driven admin capabilities to control the management of calculations and forms.
- Create new KPls driven by the business needs.
When SEM-BPS was the center of Callaway Golf's planning landscape, flexibility was a huge factor that was missing. SAP Analytics Cloud contains powerful scenario planning capabilities that help organizations quickly uncover actionable insights to make data-driven decisions. For Callaway Golf, SAP Analytics Cloud's modern planning functionalities provided users with the ability to:
- Add members on the fly
- Plan on existing as well as planned assets and automatically calculate the depreciation of values
- Test "what-if" scenarios for deeper analysis by creating private versions of plans
- Customize the solution based on their current business process
- Perform driver-based calculations
- Empower users to execute end-to-end planning scenarios, without the help of IT
The Approach
Avvale created the Reclaim app to capitalize upon this emerging market, increasing profit without increasing inventory. When products reach end-of-life, consumers take pictures of the items and upload them to the company’s loyalty app, equipped with Reclaim technology. AI determines what the products are and the condition, comparing the used products to available stock from the retailer's S4 system and determining if the products can be sold on the secondary market. The products are shipped back to the retailer in eco-friendly packaging through partnerships with local shipping companies. Consumers are awarded with loyalty points for sending in worn items that can be used within a peer-to-peer marketplace or towards a new purchase.
Developed on SAP Build Apps (formerly AppGyver), the Reclaim application front-end was built using zero lines of code. This allows citizen developers to build professional applications using an intuitive, visual drag-and-drop experience. SAP Build Apps are designed for anyone to quickly build applications regardless of their role or skill level– opening up opportunities for businesses of all industries and headcounts. Using an AI core, the application handles the execution and operations of AI assets in a standard, scalable, and hyperscaler-agnostic way.
The Impact
In a recent trends report, Gartner concluded that “applying the circular economy could unlock trillions of dollars in the global economy, create hundreds of thousands of jobs and lead to millions of tons of avoided emissions.” Avvale created Reclaim intentionally, knowing regenerative systems leveraging AI will be the “True North” for an accelerated path towards circularity. Digitizing fashion can enable circular business models such as rentals, resale, and repair– driving shared values that foster longer lasting, emotional loyalty with consumers.
Using Reclaim, second-hand products become a new business model, transforming insights into consumer demand, product usage, and trends. Targeted sales and incentives reduce inventory, while sustainable and circular models strengthen brand loyalty and boost customer base.
