SAP HANA offers numerous benefits for companies in the chemical industry. In the first part of this series [ The value of SAP HANA for the chemical industry – Part 1] I explored benefits in product compliance and operational excellence. This blog will focus on the three remaining cases: S&OP, margin simulation with real-time raw material prices, and profitability analysis.
Sales and Operations Planning
For many chemical companies, sales and operations planning has become a simple check before production to make sure supply meets demand. But there is much more to it. S&OP has a huge potential to be a strategic process that actually drives your business. In today’s market, due to complex supply chains and volatile demand, fluctuations in supply and demand occur regularly. It is necessary to drive and shape demand with the supply chain – in a way that maximized profitability. Stakeholders across the organizations need to be able to collaborate quickly and adjust plans accordingly.
With the substantial progress in the development of hardware and software, companies now have the ability to turn S&OP into a competitive advantage using SAP Sales and Operations Planning powered by SAP HANA. This platform enables corporations to get real-time simulations of demand, supply and financial data in seconds and allows them to make quick decisions based on multiple scenarios or in case of unexpected events.
SAP Sales and Operations Planning enables enterprises and their supply networks to become more demand driven.
Margin simulation with real-time raw material prices
With volatile raw material prices companies need to constantly have the ability to check and change product sales prices in order to ensure profitability. Calculating the impact of a price change in raw materials, on the finished product through multiple levels of bill of materials, has historically been cumbersome and time consuming, if possible at all. It also requires access to relevant real-time and historical data. (Historical data allows corporations to run what-if simulations and scenario planning)
With SAP solutions powered by SAP HANA this data can be rapidly analyzed and visualized on a user-friendly dashboard. For example, a paint company might have specific raw material requirements in their paints in Europe compared to North America. With the power of SAP HANA the salespeople of the paint company can quickly assess risks (possibly change product prices) due to fluctuations in raw materials price. This allows companies to always meet expected profit margins and mitigate risks with volatile raw materials prices.
It’s the end of the month and you are completing your cost allocation and order settlement reports like every month. You end up taking several-hours to finish a certain report. In contrast, with the SAP CO-PA Accelerator powered by SAP HANA, the same report can be created in minutes.
The ability to quickly analyze massive amounts of real-time data in minutes is needed to wisely evaluate the impact of major decisions on the future enterprise performance. . In a demo, with the power of SAP HANA a revenue report with more than 5 million line items took a few seconds compared to almost an hour and a half with the traditional reporting technology. With SAP HANA, faster response to changing product cost structures and the ability to make profitable portfolio decisions quickly can lead to an increase in gross margins.
These cases highlight just a few of the advantages SAP HANA offers companies in the chemical industry. By having the power to capture, process and analyze real-time data companies can accurately forecast financial structures and react quickly to mitigate risks. The power of SAP HANA truly offers companies a competitive advantage in the industry.
Have you experienced any of the above benefits by implementing SAP HANA? Leave your stories below or share them @SAP4Chemicals