] Real Costing Raul Morales Business Development

]Real Costing

Raul MoralesBusiness Development

Real Experience. Real Advantage.

[

2

Real Experience. Real Advantage.

[ Sugar Historical Prices

3

Real Experience. Real Advantage.

[ Corn Historical Prices

4

Real Experience. Real Advantage.

[ Coffee Historical Prices

5

Real Experience. Real Advantage.

[ Oil Historical Prices

6

Real Experience. Real Advantage.

[ Exchange Rate Changes

7

Real Experience. Real Advantage.

[ Back to Base

8

Real Experience. Real Advantage.

[We see new external factors affecting business Globalization – plants in different locations Exchange rates fluctuations – markets integration

are changing exchange rates in real time Automation – different plants, different

productivity Logistics integration - new routes, several vendor

options and cost fluctuations Energy – oil prices and energy prices are changing Commodities – raw material price is changing daily Risk and Hedge Management

9

Real Experience. Real Advantage.

[

10

Learning Points

What is an economic event? Nature Date Amount

Now technology is allowing to register economic events in real time and apply for two important objectives: Legal requirement, Banks, Stockholders,

Government Monthly, Average or Standard, Not accurate for

decision Making Management decision making process

Real cost, Trustable information

Real Experience. Real Advantage.

[ Detailed Standard Cost x Real Cost

Global Standard Cost per Material and Plant MonthMaterial Ledger is not activatedNo Real Raw Material variations No Real Labor variations No Distributed Overhead per plant No General Manufacturing CostsNo Multilevel Actual Products Real No Finished ProductsNo MulticurrencyNo tools to adjust planned

11

Detailed Monthly Real Cost per Material and PlantActivated SAP Material LedgerReal Raw Material variations Real Labor variations Real Overhead per plant General Manufacturing CostsMultilevel Actual Products Real Finished ProductsMulticurrencyAdjust of planned near of real

Real Experience. Real Advantage.

[

12

Material Ledger/Actual Costing Carry material prices in Multicurrency and actual

costing Up 3 currencies/valuations

Covers: Inflation Exchange Rates

Carry your inventories in 3 different valuations Legal Valuation Valuation for reporting Profit center valuation

Actual Costing calculates an actual price for each material

Valuation using a moving average price results in the following: Goods receipts are posted at the goods receipt

value. The price in the material master is adjusted to the

delivered price

Real Experience. Real Advantage.

[

MARKETING

QUALITY

LOGISTICS

TECHNOLOGY

HUMAN CAPITAL

CUSTOMER SERVICE

MARKETING

QUALITY

LOGISTICS

TECHNOLOGY

HUMAN CAPITAL

CUSTOMER SERVICE

Ohter

Profitability Analysis

Revenue (+)Cogs (-)= GMOverhead (-)=EBITDA

Real Experience. Real Advantage.

[ It is not an ERP activation it is a culture change Real costing requires:

Material Ledger activation/Actual Cost Process review – procurement, production,

warehouse management, transportation, sales, profitability analysis

Master data review – materials, bill of material, final products, co products, routes

New functionalities activation – material ledger, standard transportation, bill of material, standard warehouses, production orders

Strategic understanding of Supply Chain Process

14

Real Experience. Real Advantage.

[ Material Ledger

15

Real Experience. Real Advantage.

[ Actual Costing

16

Real Experience. Real Advantage.

[ Profitability Analysis

17

Real Experience. Real Advantage.

[ Product Costing Planning

18

Real Experience. Real Advantage.

[ Actual Cost Component Split

19

Real Experience. Real Advantage.

[ Plant Price

20

Real Experience. Real Advantage.

[ Material Price Analysis

21

Real Experience. Real Advantage.

[ Material Price Analysis

22

Real Experience. Real Advantage.

[

23

Real Experience. Real Advantage.

[ Price Analysis

24

Real Experience. Real Advantage.

[ Integrating Economic Events

Trustable information for decision making process Critical information available in real time Process automation Focus on process improvement Scalable for more complex costing models

25

Real Experience. Real Advantage.

[ Colombian Coffee

Founded in1927 Coffee Producers Union Non Profit Organzation Considered the best coffee around the world Supporting more than 500k families 1,000 SAP Users Version 5.0 New controlling culture, based on Real Cost and

Shared Services

26

Real Experience. Real Advantage.

[ Large Corn Ingredients Company

More than 2,000 SAP uses 10 production plants Mexico, USA and Canada Guadalajara Mexico and Chicago Review current Costing Model Activating Material Ledger and Product Costing

27

Real Experience. Real Advantage.

[

] Thank you for participating. +1 404 783 1539raul.morales@softtek.com