This document discusses how a bike manufacturing company can use integrated SAP solutions to evaluate introducing a new product profitably. It describes the process which involves analyzing past data, defining objectives, developing the product, estimating costs, sourcing materials, simulating scenarios, executing production, and analyzing performance. Key SAP solutions involved are SAP Product Design Costing, SAP Integrated Product and Process Engineering, SAP Supplier Relationship Management, SAP Cost and Profitability Analysis, and SAP Cost and Quotation Management.

1. Julien Delvat Alta Via Consulting France June 9, 2009 Benefit from the Integration of SAP Solutions for Profitable Product Innovation

6. Process Overview

7. SAP solutions involved Sourcing Costing Engineering Management Production BO Profit CQM NetWeaver PDCE iPPE ERP Legacy SRM

9. SAP solutions involved Management BO Profit CQM NetWeaver PDCE iPPE ERP Legacy SRM

10. Analyze Profit & Loss by Product Analysis of Actuals from 2007 Analysis of « Sport Male » product Production Costs imported from ERP Other costs allocated based on cost drivers

11. Analyze Setting objectives on sales Objectives on quantities and prices

12. Analyze Setting objectives on production costs Objectives on production costs Production Costs estimated based on cost components of other products

13. Analyze Setting objectives on margins Calculated objectives on margins First Estimate on Margins

15. SAP solutions involved Management BO Profit CQM NetWeaver PDCE iPPE ERP Legacy SRM

16. Develop Project Initialization Create a new Opportunity Targets, coming from management

17. Develop Team Setup Assign Team to Opportunity Each team member will receive a dedicated role

18. Develop Create Positions Create Position for new Product Model Targets, coming from management

19. Develop Assign Task to Development Generate notification to engineering user

20. SAP solutions involved Engineering BO Profit CQM NetWeaver PDCE iPPE ERP Legacy SRM

21. Develop Product Structure Variants Create product variants from existing materials or create new ones

22. Develop Working with Characteristics Handle variants based on characteristics Characteristics on variants and products define which articles will be used

24. SAP solutions involved Management BO Profit CQM NetWeaver PDCE iPPE ERP Legacy SRM

25. Estimate Create Costing Worksheet Create a cost estimate from position

26. Estimate Select Costing Worksheet for Assignment Select cost estimate for assignment from Team Lead to Costing Expert

27. Estimate Assign Costing Worksheet to Costing Expert Select cost estimate for assignment

28. SAP solutions involved Costing BO Profit CQM NetWeaver PDCE iPPE ERP Legacy SRM

29. Estimate Open Working Environment Open working environment and import BOM from iPPE Select iPPE structure from Filter

30. Estimate iPPE structure ready for Costing … no costs ! Structure imported from iPPE, ready for costing iPPE only delivers quantities …

31. Estimate Import Prices existing in ERP © SAP 2007 / Page Import Prices for Materials, Cost Centers/Activity Types, Business Processes, etc. from ERP Specify ERP source system and data to be imported

32. Estimate Identify materials without prices © SAP 2007 / Page New component without price in ERP Import Prices for Materials, Cost Centers/Activity Types, Business Processes, etc. from ERP

34. SAP solutions involved Sourcing BO Profit CQM NetWeaver PDCE iPPE ERP Legacy SRM

35. Source Send material to sourcing © SAP 2007 / Page Select materials from Global View Sourcing with Excel Sourcing with SRM

37. SAP solutions involved Costing BO Profit CQM NetWeaver PDCE iPPE ERP Legacy SRM

38. Simulate Retrieve Prices © SAP 2007 / Page Import Prices for Materials, Cost Centers/Activity Types, Business Processes, etc. from ERP New component with price from SRM

39. Simulate Activate templates for routing and overhead © SAP 2007 / Page Active ERP Templates, that will derive routings and overheads

40. Simulate Derive routing and overhead © SAP 2007 / Page Results from ERP Templates Routing and overhead calculated by ERP

41. Simulate Compare costs with targets © SAP 2007 / Page Compare calculated results with targets from management Targets from Management Calculated Costs Calculated Variances to Targets

42. Simulate Analyze costs before simulation © SAP 2007 / Page

43. Simulate Create new version with different scenario © SAP 2007 / Page Create a new simulation of production in low-cost country plant Select other plant

44. Simulate Results of new version © SAP 2007 / Page Compare results of new version Production Costs decreased Transportation costs increased Total Costs decreased

45. Simulate Comparison of 2 versions © SAP 2007 / Page

46. SAP solutions involved Management BO Profit CQM NetWeaver PDCE iPPE ERP Legacy SRM

47. Simulate Compare targets and estimate (1/2) Compare targets with estimates Estimates from PDCE Initial Estimates

48. Simulate Compare targets and estimate (2/2) Compare targets with estimates Without full estimates, wrong decision would have been taken !!!

49. Simulate Updating targets Compare targets with estimates Updated sales prices Updated marketing costs Margin is back on track !

51. SAP solutions involved Production BO Profit CQM NetWeaver PDCE iPPE ERP Legacy SRM

53. Execute Create Standard Product Cost Estimate © SAP 2007 / Page Create a Standard Material Cost Estimate Total planned costs

54. Execute Cost Component Splits © SAP 2007 / Page Costs can be analyzed by their Nature

56. Analyze Comparison Actuals / Forecasts Compare actual / plan costs for all products or single ones Actual costs from ERP Plan costs from PDCE Target costs

58. SAP solutions involved Sourcing Costing Engineering Management Production BO Profit CQM NetWeaver PDCE iPPE ERP Legacy SRM

59. BO Profit : Cost and Profitability Management Understanding the factors for a better performance Quickly build models based on best methods and practices Modeling & Understanding Collect Measure & Analyze Gather data from the IT system or from web forms Analyze the results for a better understanding of where profit and cost drivers are located Simulate scenarios in order to evaluate the impact of decisions before their execution Test & Improve Resources Cost Objects Activitiés

60. CQM : Cost and Quotation Management Achieving the quote process through Accelerate collaboration with the embedded Workflow and Universal Work List (UWL), based on Role Mgnt Collaborate Improve Integrate Improve with higher win rates, increased profits and better capacity to respond. Leverage your IT footprint with this NetWeaver-based application. Integrate with SRM, ERP, PDCE, and even Legacy Integrate customers, suppliers, and internal teams for a higher productivity and a shorter RFQ throughput Communicate

61. PDCE : Product Design Cost Estimate Calculating complex structures Benefit from the power of the costing engine and tailor it to fit your simulation needs Simulate Retrieve Prices Import Structures Preserve consistency and collect prices from your ERP or legacy systems Import Bills of Materials from your ERP, iPPE or other systems (via XML) and ensure closer collaboration of engineering and costing experts Validate assumptions from early design phases to Start of Production (SOP) with more accurate reporting Analyze

62. iPPE : integrated Product Planning & Engineering Designing complex product variants Access iPPE structures from cFolders or Internet Pricing and Configurator or Product Designer Collaborate Configure Integrate Easily create product variants with step by step configuration. Use characteristics to create assemblies. Import material definitions from your ERP or create them on the fly for a closer collaboration between engineering and production Create new Product Structures made of large number of individual materials; made or configured to order Simulate

63. SRM : Supplier Relationship Management Save costs through closer relationship with your suppliers Partner with your key suppliers and differentiate for higher market success Collaborate Comply Save Costs Provide overview on contracts and expenditures, in line with corporate guidelines With its tight NetWeaver integration, close the loop from source to pay Automate processes like spend analysis, online bidding, contract negotiation, and contract management. Automate

66. Process Overview

67. SAP solutions involved Sourcing Costing Engineering Management Production BO Profit CQM NetWeaver PDCE iPPE ERP Legacy SRM

69. Julien Delvat Alta Via Consulting France June 3, 2008 Use the integration of SAP solutions for a new Costing approach