sap product lifecycle costing · challenges in early costing co-innovation –a joint approach sap...

CUSTOMER

Solution Management, SAP SE

October 2017

SAP Product Lifecycle Costing Calculating Costs of New Products powered by SAP HANA

2CUSTOMER© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ

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Challenges in early costingChallenges, use cases, and industry relevance

Agenda

Co-innovation – a joint approachDesign thinking and co-innovation with our customers

SAP Product Lifecycle CostingKey capabilities and live demo

1

2

3

Summary and road map 4

Challenges in early costingChallenges, use cases, and industry relevance


Challenges in early costing Co-innovation – a joint approach SAP Product Lifecycle Costing Summary and road map

Project lead

Sales XSales Y

Product

manager

Manufacturing

engineer

Procurement

Engineering

Others

Excel

Excel

Excel or

SAP ERP

SAP

ERP

Controlling

PLM

BoM

EBoM*

Excel

The Challenge Today

Microsoft Excel and

legacy tools used for

early cost estimates

and planning but

SAP ERP for actual

cost calculation

* EBoM = engineering bill of materials:



JAX

BIS:

CRTo:

HES

BIS:

CRTo:

BVS

BIS:

CRTo:

GRV

BIS:

CRTo:

CAN

BIS:

CRTo:

MOG

BIS:

CRTo:

SUO

BIS:

CRTo:

MOD

BIS:

CRTo:

LIN

BIS:

CRTo:

BRE

BIS:

CRTo:

China

BIS:

CRTo:

AGCO says… we are further challenged by diverse business process, data

and system landscape due to our growth by acquisition

…making product costing challenging with designs, sourcing and manufacturing being performed across multiple sites for the same product.

Source: Integrated Cost Management with SAP Product Lifecycle

Costing, Christian Klingler at SAP PLM InfoDay 2017, June 22-23



Design end Engineering Dilemma: The 80 / 20 rule

Cost

Product Life Time

100%

Entry

Cost-Reduction Opportunities

Cost Determination

Time window for cost optimization

80% of the product cost are

determined during the design

stage.

One of the last, untapped

cost optimization potentials

resides in the early costing

process



We want to

reduce product

costs…

We believe our

greatest chance

is early in the

design cycle…


Costing, Christian Klingler at SAP PLM InfoDay 2017, June 22-23



…but, today cost confidence follows our BOM maturity…

New

product

idea

Concept

Review

Project

Approval

Design

Release

OK to

produce

SOP

100%

80%

20%

100%

BOM maturity

Cost confidence

Estimated

Cost

Actual

Cost

We want Cost Confidence

to outpace BOM maturity


Costing, Christian Klingler at SAP PLM InfoDay 2017 June 22-23



Focus use cases for product costing

MOVE DISPOSE

Concept

acquisitionProduction

ramp-upProduction

Start of production

Disposal

Production cost simulation

Engineering or design bill of materials Manufacturing bill of materials

Unstructured data

Pro

duct

matu

rity

Structured data and values available, such as material, bill of materials,

routing, and pricing information

Time

Product or process

development

Inventory valuation (SAP ERP today)Preliminary cost estimate

(new product introduction [NPI] or continuous improvement [CI]

Quotation costing

Lifecycle costing

Concept

acquisitionProduction

ramp-upProduction Disposal

Product or process

development



High Tech • Contract and Component Manufacturer

• Business and Consumer OEMs

Semiconductor

Industrial machinery and components • Component manufacturer

(Endress&Hauser)

• Project manufacturer (Bühler)

• Engineering project Manufacturer (KSB)

Primary Focus Industries

Aerospace and defense• Aerospace contract manufacturer

• OEMs

Mill Products• Metall companies producing metal

products supply automotive (PWO)

CP / Pharma / Chem• Consumer Products

(Hersheys, Marathon Cheese)

• Pharma (Roche)

• Chem (BASF)

Automotive• Automotive Suppliers (Brose, Mahle)

• Automotive OEMs

(AGCO, Daimler, Caterpillar)

Co-innovation with our customers



Design thinking co-innovation with ASUG and DSAG customers



30+ Customers work and have worked with us

…

http://www.sofaselections.com/sites/default/files/vendor/sauder_logo.jpg

http://www.microsoft.com/

http://www.kostal.com/index.html



Typcial Customer Implementations - Global Product Costing at….

• Automotive Global Player, OEM, Use Case Costing of new Products

• Challenge: 11 different sites with own calculation sheets in Excel and own

costing rules

• Solution today: One standardized Process, One Database, efficiency gain

3%

• Early adopter High tech Company, Use Case Costing of New Products

• Challenge: Replacement of multiple software tools with a single solution.

• Solution Today: Standardization of calculations throughout the group

companies comparability and traceability across all companies by using one

database, same cost component structures, same data processing rules

• SME Automotive Supplier, Use Case Cost 2 Quote for new products

• Challenge: 4 sites with own excel spread sheets, different costing sheets, no

integration into ERP - Thin margins, high production cost

• Solution Today: One global costing process, single instance, ERP integrated

• Global IM&C Company producing Food processing machines

• Challenge: Costing was done with several legacy tools across multiple

sites

• Solution Today: Now ONE process, ONE tool, ONE database



Process Innovation

• Harmonize processes and ensure consistency with a common

costing tool

• Increase accuracy through global system accessibility

• Combining multiple sources (multiple ERP, PDM, and other data

sources) into one global costing management tool

• Increase transparency through integrated reporting & analysis

• Improve local content rates to gain further cost efficiencies

through managing this KPI better

• Cross-country user collaboration, saving significant time and effort

Company

Global leading Agriculture OEM

Company

Products and Services: Farming,

harvesting, and tractor equipment

Employees: 20,000 | Revenue: US$10.79 billion (2013)

Situation: Company is using Excel spreadsheets across multiple

sites to calculate their OEM products. Integration in Design,

Purchasing and ERP was not available. Comparison of series

costs with new product costs not possible.

Solution

• SAP Product Lifecycle Costing solution integrated with

different enterprise resource planning (ERP) systems and

databases for one flexible and open tool

• Flexible solution with a user-friendly interface that is available

at multiple sites – a key advantage for AGCO

• Established an interface with PTC Windchill in order to

leverage engineering data early in the process

Improving Product Cost Accuracy and Profit Margins with

SAP® Product Lifecycle Costing

Benefits

3 % expected reduction in product cost estimates

Improved target cost achievement

Greater efficiency, allowing cost engineers to focus on

value-add design and product development

Higher win rate through improved costing process cycle time



Process Innovation

• Retirement of error-prone and highly manual legacy tools and

partner application

• Direct integration to design BOM authored in CAD design tools

and managed in SAP PLM

• Re-use of SAP ERP master data

• Full traceability of performance of design, manufacturing and

supply optimization steps towards target cost

• Ability to innovate and perform in changing business environments

Company

Global leading medical devices company

Employees; xx | Revenue: USD

Situation: Company is constantly designing

new products and experienced challenges

around product cost management of new products.

Solution

• SAP Product Lifecycle Costing integrated to SAP ERP on

HANA

Innovate and perform in changing business environments with


Benefits

Accurately calculate against target cost

Reduced product and development costs

Reduced time-to-market

Increased product profitability



Process Innovation

• Improved accuracy of costs for complex, customer-specific

machines and solutions based on various factors in the quotation

stage of a sale

• Calculation of flexible structures aligned with the latest

manufacturing bills of materials and routings

• Validation cockpit and mass update capabilities to automatically

handle multiple recalculations and yearly calculation updates

• One global tool and harmonized quote and costing process

Company

Family-owned Swiss company operates

in 140 countries.

Products and Services: Solution provider

for food-processing, dye-casting, and surface-coating technologies

Employees: 10,640 | Revenue: CHF 2.54 billion (€2.33 billion)

Situation: Company is constantly designing new products and

experienced challenges around product cost management of new

products.

Solution

• SAP Product Lifecycle Costing integrated to quotation system

and SAP ERP application

Enhancing Sales with Better Quote Costing Using


Benefits

Greater cost accuracy

Faster processing and response times

Intuitive user experience

Lower risk of profit loss



Process Innovation

• Replacement of existing tools by a single tool.

• Standardization of the group pre-calculation

• Using same database, calculation scheme, data processing rules,

and output structure, therewith comparability of all companies

globally

• Starting with quotation costing of Engineer-to-Order products,

followed by cost calculation of casting materials and standard

products.

Company

Global leading manufacturers of pumps and valves, providing

a comprehensive range of service offerings.

Production and assembly sites in 16 countries. Global sales and

service network for 100+ countries.

Employees 16,196 | Sales revenue € 2,334.8 million

Situation: Different pre-calculation structures, processes, and

systems across the KSB Group.

Limited comparability. Lack of traceability.

Solution

• SAP Product Lifecycle Costing

• Integration in S/4 HANA

• SAP Business Intelligence for Analytics

Better quote win rate through accurate product costs using


Benefits

Eliminated mistakes

Comparability and traceability of product costs

Reduced processing times, faster response time

Increased Quote win rate

SAP Product Lifecycle Costing



Solution definition

SAP Product Lifecycle Costing is a solution to calculate costs and other dimensions for new products or quotations in an early

stage of the product lifecycle, to quickly identify cost drivers along the lifecycle, and to easily

simulate and compare alternatives.

Real timeSAP HANA

User centricMicrosoft Excel–like UI

OpenSAP ERP, Microsoft

Excel, and SAP PLM

FlexibleCost structure

First-class user experience Integration with SAP ERPHigh performance

http://www.slideshare.net/sap/the-future-of-networks

http://www.slideshare.net/sap/the-future-of-customer-experience-29818984

http://www.slideshare.net/sap/the-future-of-resource-optimization-amid-increasing-scarcity

http://www.slideshare.net/sap/the-future-of-work-30060347



Cost estimation in SAP Product Lifecycle CostingCosting structure – Prices – Calculation – Simulation

Import the costing

structure from SAP

ERP, Excel or any other

data source such as

PTC Windchill or

others, or manually

create the costing

structure

Simulate cost estimates and

create further versions with more

detailed and up to date price

information

Automatically determine material

and activity prices according to a

defined price determination strategy,

with SAP ERP, other source or

locally maintained prices, or

manually set prices in a calculation

Calculate and save

a first cost estimate

as initial basis1

2

3

4



Key Features

Calculation StructuresCalculationsVersionsReference CalculationsERP/Excel Import

Valuation DataPrices, TarifsCosting SheetsCurrenciesUnits of Measure

User SupportMass ChangeHighlightingLayoutSearch

Calculation Master DataMaterialCost Center, Work Places, ProcessesSAP ERP & S/4HANA Integration

ProjectsProject Master DataLifetimesSurcharges

ExtensibilityCustom Fields / FormulasIntegration to other ApplicationTemplatesAPI / Add In Framework

Authorization / Data SecurityUser ManagementSecurity EngineeringLockingSingle Sign On

AnalyticsSelf Service AnalyticsManaged AnalyticsManagement ReportingKPI Analysis



Work breakdown

structure

Product structure

management

High-level overview

Calculation engine

Existing calculations

Material master

Prices

Purchase agreement

or info record prices

Other sources and

targets and Microsoft

Excel

Routings

Document structures

Order BoMs

Material

BoMs

Calculation user interface

Extensible master, project, and costing structure maintenance

Integration with collaboration solutions

Internal and external communication

Calculation

versioningSimulation Visualization

Costing structure

templates

Activity types, rates,

and cost centers

Costing sheet

Analysis

Planned

Collaboration

User interface

Functions

Source and

target data

Preliminary costing

Quotation costing

Lifecycle costing



Main views

CalculationCreate your costing structure from SAP

ERP, SAP PLM, Excel, or other data

sources, or manually from scratch, and

analyze the cost breakdown

CockpitManage your projects, calculations

and calculation versions and history

centrally

AdministrationMaintain and manage all master data

and settings in one conveniently

structured view

ProjectManage your costing project details

My HomeAccess your last used calculation

versions with one click



Project object for grouping multiple calculations

Projects can

refer to an SAP

ERP PS or SAP

PPM project

Projects are

used to

organize

calculations

and versions

Provides project

attribute

inheritance to

new calculations

and versions

Enables

reporting on

defined sope of

calculations

Foundation for

lifetime

reporting and

simulation



Different ways of creating a costing structure

Microsoft

Excel

SAP ERP

Manual

As many calculations are created in

Microsoft Excel, SAP Product

Lifecycle Costing is designed to import

any quantity structure to create a

calculation as a whole, or to update an

existing calculation at every level.

SAP Product Lifecycle Costing is integrated into the entire

SAP solution landscape. Therefore, existing document

structures, bills of materials, and related routings can

be imported from SAP ERP to create new calculations.

Of course, it is possible to create

a structure from scratch.

SAP Product Lifecycle Costing

simplifies that approach as well.

© 2017 SAP SE or an SAP affiliate company. All rights reserved.



© 2017 SAP SE or an SAP affiliate company. All rights reserved.

Different ways of determining item prices

Prices for all items can be

determined by using the

local master data.

SAP Product Lifecycle Costing can be

integrated into your SAP solution landscape.

Material and activity prices can be easily

determined by getting data from SAP ERP.

A user can also manually maintain

calculation-specific prices for each

item in the costing structure.

Local

SAP ERP

Calculation

specific



Price Determination Strategy

Highlights

Price Determination Access Sequence:

1. Maintain different Price Sources, such as estimated

price, ERP Price, Project Price, Vendor Price

2. Determine the price determination sequence

3. Associate a confidence level with it

The system is determining the price based on the price

determination strategy and applies the appropriate price

in the calculation



Lifetime Cost Calculations

Planned demand/production volumes are applied to base calculations to determine total

product cost over the product lifecycle



Reference calculations used for cost estimate modularization and re-use re

fere

nces

Cost Estimate with 1 Referenced Version



Different ways of calculating and analyzing costs

Within a calculation, you can choose

which existing cost component split

or costing sheet should be used to

calculate or to break down the costs.



Additional analysis options – examples

Fixed and variable costs per cost component and resource Version comparison

SAP BusinessObjects Analysis for Microsoft Office SAP BusinessObjects Lumira



Extensibility options

Open SAP Product Lifecycle Costing for extensions by customers and partners to address custom use cases and

enable integration with third-party systems while helping to ensure data integrity and security.

There are four technical options to extend SAP PLC and integrate with external applications. Each option has

different capabilities and enables different use cases.

Custom fields

and formulas

Standard or custom

SAP HANA viewsBack-end API

Front-end

add-in framework



Flexibly adaptable to your needs – custom fields & formulas example

Custom fields allow you to tailor the data that is used

to fit your organization’s needs.

You can:

• Create custom fields on master data level

• Inclusion and local override on calculation

version item level

• Create custom fields for calculation versions on item

level allowing to

• Enter a manual value

• Get a value calculated by a formula

• Define if a value should be rolled up

• Define for which item categories the custom

field (and its formula) is to be available, and in

which group in the item details it should be

displayed

• Maximum of 150 custom fields



Flexibly adaptable to your needs – ribbon bar add-in example

Templates:

Create multiple cost items based on a few

custom data entries, e.g. auto-create 3 items for

setup/machine/labor from a template.



Flexibly adaptable to your needs – side panel add-in examples

Cross departmental boundaries

Leverage social media platforms embedded

into the solution for collaboration, like SAP Jam

Visualization

Display of thumbnails of the product or component selected

in the costing structure in the side panel (for example, from

the document management system component in SAP

Product Lifecycle Management or the SAP 3D Visual

Enterprise application)



Flexibly adaptable to your needs – integration across applications

R&D –

optimize product design cost

Integration of SAP Product Lifecycle

Costing with SAP Engineering

Control Center

(single repository for product data

generated out of different

engineering authoring tools)

Hannover Fair 2016 video

Sales –

optimize quotation costing

Integration of SAP Product

Lifecycle Costing with SAP

Hybris Commerce, cloud

edition (cost calculation of

the customer-specific parts

and assemblies in SAP

Product Lifecycle Costing

and transfer of the cost into

the quotation)

Transfer to SAP Product Lifecycle Costing

Fetch total cost from

SAP

Product Lifecycle Costing

Total cost from

SAP Product Lifecycle

Costing shown here

https://www.youtube.com/watch?v=x5EbqNcGFfM



High-level architecture

Microsoft

Excel

Optional

Legacy system

Optional

API

SAP HANA

Any database

SAP ERPExpert front end

Replicated

SAP ERP master data

Communication or validation

Local master data

or calculations

Optional

Data query or processing

Live Demo

Summary and Road Map



SAP Product Lifecycle Costing offers

First-class user experience

High performance

Integration with SAP ERP und SAP S/4HANA

Extensibility made for customers



SAP Product Lifecycle Costing offers

Straightforward integration with

SAP and third-party applications

High performance

Extensibility that is made for

customers and is easy to apply

First-class user experience



What our customers and partners are saying

“We recently decided to use SAP Product Lifecycle Costing to calculate and analyze new

products at our company in future. With the power of SAP Product Lifecycle Costing, we strive

to reduce development costs and improve product margins. With the SAP team supporting

us in a unique manner, their team spirit, and the continuous co-innovation with the team of

10 co-innovation customers, we have already made a huge step forward in learning from other

organizations.”

Phillip Feger, Program Manager PLC, Progress-Werk Oberkirch AG

“SAP Product Lifecycle Costing is a new application running on SAP HANA, which now

empowers our customers to really calculate their costs for new products in the new-product

development and introduction phase. We are closely working and co-innovating with SAP in this

area, and we are impressed about the solution capabilities so far. The uniqueness of the product

is the adaptability, UI, performance, and the integration into [SAP] ERP.”

Bernd Schroeder, Associated Partner, MHP – A Porsche Company

https://www.mhp.com/de/home/

http://www.progress-werk.de/



Product road map overview - key themes and capabilities

Today Future DirectionPlanned Innovations

Create/Edit calculations

Import calculations from ERP/Excel

Reference calculations

Manage projects, calculations, versions

Project lifetime

Create/Edit local master data

Replicate/Import master data

Automatic price determination

Custom price sources

Calculation and roll-up

Target costing

Analytics for calculation version

Analytics with external tools

HANA views for projects, calculations, versions

Custom fields&formulas in calculations

Custom fields in master data

Frontend Add-in framework

Backend API for system integration

General access restrictions & instance-based privileges

Mass Change & Filter

Time-dependent surcharges

Work Centers

Status Management

Variant Matrix

Usability improvements

Performance improvements

Add-in Framework extensions

Backend API extensions

Export calculations to Excel

Integration with other SAP solutions

Collaboration workflow support

Import master data from Excel

Export master data to Excel

Advanced Intercompany

Validation and consistency checks

Advanced target costing

Advanced variant handling

Advanced analytics for calculations

KPI dashboards

Advanced simulation in projects

Version comparisons

This is the current state of planning and may be changed by SAP at any time.



Further Information

SAP Cloud

Appliance Library

(CAL)

Overview Video SAP Web Site Solution in Detail

Brochure

Help Portal

https://assets.cdn.sap.com/sapcom/docs/2016/02/f0e72266-5e7c-0010-82c7-eda71af511fa.pdf

https://youtu.be/aMtD-SyA4Eg

http://help.sap.com/plc?current=plc100&show_children=false

https://jam4.sapjam.com/blogs/show/0LuZ7iBPT4sIXCjRf83otK

http://go.sap.com/product/plm/product-lifecycle-costing.html

https://jam4.sapjam.com/blogs/show/0LuZ7iBPT4sIXCjRf83otK

https://youtu.be/aMtD-SyA4Eg

http://go.sap.com/product/plm/product-lifecycle-costing.html

https://assets.cdn.sap.com/sapcom/docs/2016/02/f0e72266-5e7c-0010-82c7-eda71af511fa.pdf

http://help.sap.com/plc?current=plc100&show_children=false

SAP Solution Management

Petra Köpfer-Behncke

[email protected]

Marion Heidenreich (IM&C)

[email protected]

Ulf Petzel (high tech)

[email protected]

Manivel Kulanthaivel (automotive)

[email protected]

Carsten Hilker (finance)

[email protected]

SAP Development

Jochen Rode

[email protected]

Daniela Wünsch

[email protected]

SAP Custom Development

Manthan Peshne (Palo Alto)

[email protected]

Rüdiger Müller (Walldorf)

[email protected]

Thank you

mailto:[email protected]









sap product lifecycle costing · challenges in early costing co-innovation –a joint approach sap...

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