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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]
© 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
© 2012 SAP AG. All rights reserved. 4
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
© 2012 SAP AG. All rights reserved. 5
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
© 2012 SAP AG. All rights reserved. 6
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
© 2012 SAP AG. All rights reserved. 8
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
© 2012 SAP AG. All rights reserved. 9
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
© 2012 SAP AG. All rights reserved. 11
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
© 2012 SAP AG. All rights reserved. 12
Use Cases, Value Chain, and Data Maturity
Early Design Phase Detailed Design Production
Start of Production Freeze Targets
Dispose …
Inventory Valuation (ERP today)
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
© 2012 SAP AG. All rights reserved. 13
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
Inventory Valuation (ERP today)
Baseline, versioning and simulation
ERP back-end integration (outbound)
Intercompany Profit Simulation
© 2012 SAP AG. All rights reserved. 14
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
Prices for Materials
Prices for Activities
Prices for Processes
Overhead
BOM Routing Valuation
Finance Logistics / ERP Engineering / PLM
Reference Structure
Engineering Production
Controlling
Purchasing
Others (Treasury, Business
Planning, Sustainability)
© 2012 SAP AG. All rights reserved. 15
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
Prices for Materials
Prices for Activities
Prices for Processes
Overhead
BOM Routing Valuation
Finance Logistics / ERP Engineering / PLM
Reference Structure
Controlling
Purchasing
Engineering Production
Controlling
Purchasing
Others (Treasury, Business
Planning, Sustainability)
Technical
Sales
© 2012 SAP AG. All rights reserved. 16
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
Prices for Materials
Prices for Activities
Prices for Processes
Overhead
Valuation Controlling
Purchasing
Others (Treasury, Business
Planning, Sustainability)
Finance
BOM Routing
Structure Engineering
Production
Logistics
Treasury
Controlling
Purchasing Cost Estimate
Predictive Cost
© 2012 SAP AG. All rights reserved. 17
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
© 2012 SAP AG. All rights reserved. 21
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
© 2012 SAP AG. All rights reserved. 22
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
© 2012 SAP AG. All rights reserved. 23
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