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Co-innovation preview: HANA-based Product Cost Simulation

for New Product Introduction and Engineering Change Orders

Carsten Hilker SAP [email protected]

mailto:[email protected]

© 2012 SAP AG. All rights reserved. 2

Why is early Costing important?

Extraordinary pressure on ‘time-to-market’ and ‘design-for-cost’

Last, large untapped cost optimization potential is in early costing process

Cost

Product Life Time

100%

Entry

Cost-Reduction

Opportunities

Cost Determination

Actual Expense

Time window for

cost optimization

SAP Product Costing - Today


SAP Objects in Product Design and Quote Costing

A number of existing applications in SAP allow to capture product structures

These structures are built for various reasons, including but not limited to ‘costing’

SAP DMS

Bill of Documents ETO

SAP SD

Order BOM Project Manufacturer

SAP PLM

Material BOM Component Manufacturer

PSM (iPPE) Automotive

WBS BOM Heavy Machinery, Shipbuilders

write-back of results

import of structure data

SAP Preliminary Cost Estimate


Inventory Valuation (ERP today)

Prices for Materials

Prices for Activities

Prices for Processes

Overhead

Valuation Controlling

Purchasing

Others (Treasury, Business

Planning, Sustainability)

Finance

Contributor / Linear workflow

(with some iterations)

BOM Routing

Structure Engineering

Production

Logistics

Materials to be costed known

BOM & Routing known only

classical BOM used for valuation

Selection parameters in Customizing

Selection per key date

Costing as blackbox for user

(exception error handling for

incomplete structures)

Prices known

Selection parameters in

Customizing

Valuation as blackbox for user

(exception error handling for

missing prices)

No manipulation of prices.

Instead master data changed and

costing repeated.

Legal rules have to be applied

Only classical BOMs are relevant

Consumed by

Inventory valuation

Owner of data

Cost Estimate

Standard Cost

Production

Controlling

Purchasing


Challenges

End-to-end coverage

Early design phase … through disposal

Functionality

Design-to-cost … and Target costing

Performance

Large number of items to be processed

Deep structures to be processed

Simulations

What-if analysis

Real-time structure development

Analytics

Lifecycle Costing, Supply Chain Costing and Intercompany Profit management

In-memory


In-memory computing can transform your business

With in-memory technology integrated

in your business, you’ll see immediate benefits

Immediate answers – with 10000x faster analytics

Real-time access – when it happens, you see it

Deeper insight – interrogate more granular data

From React to Act – before it happens, you know it

Simpler and more cost-effective – manage large data

volumes while reducing IT complexity

In-memory computing is a technology that moves data from disk to local memory so

that the results of complex analyses and transactions are available at your fingertips

– and business decisions can be executed without delay


HANA Innovation Overview for the Business Suite

Side-by-side scenarios Integrated scenario

AnyDB

HANA DB

Client

SAP

Business

Suite /

non-SAP

AnyDB

Client

SAP

Business

Suite

AnyDB

HANA DB

BW SAP

Business

Suite

HANA DB

(VDL)

AnyDB

HANA DB

Apps SAP

Business

Suite /

non-SAP

HANA Analytics (Content &

Virtual Data Layer)

HANA

Accelerators

BW on HANA Business Suite

on HANA

HANA Applications (Next Generation &

Strategic Investments)

HANA DB

CR

M

SC

M

SR

M

PLM

ER

P

VD

L

SAP Business Suite

BW

Apps

Innovation:

Functional applications

natively built on HANA,

with an without Business

Suite integration

Live Customers:

• Bosch Siemens

Hausgeräte GmbH –

Cash Forecasting

• Centrica– Smart Meter

Analytics

Supercharged BW :

Fasten up your BW

without disruption

Live Customers:

• Lenovo – BW on

HANA

• Hilti – BW on HANA

More Insight:

Exploring data loaded

from Business Suite

on any level of detail

Live Customers:

• Adobe Systems

Inc. – Ops.

Reporting RDS

• Yoke Industrial –

Ops. Reporting

RDS

In seconds:

Accelerating existing

transactions of the

Business Suite

Live Customers:

• Ferrero S.p.A. –

COPA RDS

• Colgate-Palmolive

– COPA Custom

Solution; TPM on

HANA

All in One – Ultimate:

Business Suite solution fully

integrated with and optimized for

HANA as database

Live Customers:

• Manufacturing Customer –

Business Suite on HANA

• Primary Metals Customer –

Business Suite on HANA

Client

Targeted Solution


The information in this presentation is confidential and proprietary to SAP and may not be disclosed without

the permission of SAP. This presentation is not subject to your license agreement or any other service or

subscription agreement with SAP. SAP has no obligation to pursue any course of business outlined in this

document or any related presentation, or to develop or release any functionality mentioned therein. This

document, or any related presentation and SAP's strategy and possible future developments, products and

or platforms directions and functionality are all subject to change and may be changed by SAP at any time

for any reason without notice. The information in this document is not a commitment, promise or legal

obligation to deliver any material, code or functionality. This document is provided without a warranty of any

kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness

for a particular purpose, or non-infringement. This document is for informational purposes and may not be

incorporated into a contract. SAP assumes no responsibility for errors or omissions in this document, except

if such damages were caused by SAP´s willful misconduct or gross negligence.

All forward-looking statements are subject to various risks and uncertainties that could cause actual results

to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-

looking statements, which speak only as of their dates, and they should not be relied upon in making

purchasing decisions.

Legal disclaimer


Use Cases, Value Chain, and Data Maturity

Early Design Phase Detailed Design Production

Start of Production Freeze Targets

Dispose …


Intercompany Profit Simulation

Preliminary Cost Estimate

Quotation Costing

Lifecycle Costing

Production Cost Simulation

Unstructured data

Product Maturity

Structured data available (e.g. material, bill of

material, routing, pricing)

Time


Use cases & Requirements

Real-time calculation engine

Cost structure design based on engineering data (including one-off cost)

Multi dimension calculations & roll-up

Target costing methodology

ERP back-end integration (inbound)

Collaboration

Visualization & Key elements of UI

Knowledge-driven optimization

Combined view on cost and profitability

Use cases …

Requirements …

Preliminary Cost Estimate

Quotation Costing

Lifecycle Costing

Production Cost Simulation


Baseline, versioning and simulation

ERP back-end integration (outbound)

Intercompany Profit Simulation


Cost Estimate

Target Cost

Current Estimated Cost

Production

Controlling

Purchasing

USE CASE: Preliminary Cost Estimate

Contributor / Iterative workflow

Materials to be costed partially

unknown.

New materials to be costed against

certain targets (cost, weight,...).

BOM & Routing partially unknown.

Parts of BOM and routing are new

(design is part of process). For standard

parts/operations: BOM and routing

reuse existing BOMs/ routings.

Classic Material BOM or external

structure is primary reference structure.

Other source structures are Document

structure; PSM / iPPE; WBS BOM.

Multiple versions of structures exist in

parallel. Each change to be passed to

costing engine.

Prices are unknown.

Quotations for new parts to be

negotiated with suppliers.

Reuse of prices for existing parts but

with future key date.

Value structure may include other value

attributes, e.g. Weight, CO2

Multiple price assumptions exist in

parallel.

Prices and timing of price selection can

vary.

Consumed by

Basis for go/no go decision

Referenced in lifecycle costing.

Engineering

Owner of data




Overhead

BOM Routing Valuation

Finance Logistics / ERP Engineering / PLM

Reference Structure

Engineering Production

Controlling

Purchasing




Cost Estimate

Price to be quoted

USE CASE: Quotation Costing

Owner of data Contributor / Iterative workflow

Materials known. Material to be costed

defined with customer (engineer-to-order).

Customer may add additional constraints

(e.g. max price)

BOM and routing reuse existing

BOMs/routings and old cost estimates for

similar products (selection UI).

Variant BOMs, Order BOMs are used heavily

Order BOM (result-oriented, or knowledge-

based), Classic Material BOM or external

structure is primary reference structure.

Other source structures are Document

structure and WBS BOM.

Multiple versions of structures exist in

parallel. Regular communication between

structure maintenance & costing engine.

Prices for new parts to be negotiated

with suppliers.

Reuse of prices for existing parts but

with future key date.

Value structure may include other value

attributes, e.g. weight, CO2???

Gradual refining of price information

from first guess to „quote-ready“.

May include other constraints e.g. max

weight

Technical

Sales

Consumed by

Transfer to quotation (SD document) and

then freeze

Goal: Contractual justification for price

quoted. Quotation may be reused later for

other customer/revisit of rejected quote




Overhead

BOM Routing Valuation

Finance Logistics / ERP Engineering / PLM

Reference Structure

Controlling

Purchasing

Engineering Production

Controlling

Purchasing



Technical

Sales


USE CASE: Production Cost Simulation

Materials to be costed known

(commercial plan)

Production quantities/ demand known

BOM & Routing known (one

assumption)

Transfer structures as base data to

costing system (single load - ETL)

Transfer parts of cost estimate where

fixed (e.g. conversion costs)

Minor manipulation of structures after

loading, but essentially one version of

structures.

Transfer prices to costing system

Model additional factors affecting

price (e.g. FEX, commodities)

Significant price manipulation for

simulation purposes (multiple versions

as output)

Consumed by

Transfer to commercial P&L for planning

purposes

Goal: understand impact of various price

factors on product costs Contributor / Linear workflow

(with some iterations) Owner of data




Overhead

Valuation Controlling

Purchasing



Finance

BOM Routing

Structure Engineering

Production

Logistics

Treasury

Controlling

Purchasing Cost Estimate

Predictive Cost


High Level Data Flow

ERP CO Controlling

Prices, Standard cost

estimates

ERP Logistics

BOM, Routings etc.

External data

sources like Excel

bi-directional

xml interface

Target Solution

HANA Application

NetWeaver / ABAP

User Interface

Functions / Features

Calculation Engine

In-memory data store *

Right Hemisphere

Visualizations

PLM

Engineering drawings,

document structures

ERP SD / Quotations

ATO scenarios

Business Suite

Potential (SLT) replication of all relevant input data onto HANA in standard. Would negate individual look-up s and

improve response time (additional HANA space / license cost limited) limited. Available with SUITE@HANA anyways

Business Suite

write-back

to ERP

write-back

to ERP

write-back

to ERP

data

look-up

costing

information

SAP in-memory

computing

Co-innovation


SAP Influence Programs


Customer Engagement Initiative


Co-innovation

Designed to

Get early insight into SAP product plans

Influence development for all SAP products

Collaborate closely with SAP product teams.

Network with peers around specific topics


Expectations

Influence our planned solutions

Engage with the SAP product team to jointly collaborate on the functional definition

throughout the whole definition and/or development cycle. Support the

Requirements definition

Product Development

Testing

Early Adoption

Several hours per month (elaboration, discussion, review) for 6 - 9 months


Current Status: solicitation of co-innovation partners

If you are interested in working with us let us know

Send an e-mail to [email protected]

Next Steps

Need to make sure Feedback Agreement is in place / need to put FBA in place

mailto:[email protected]

Appendix