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Author's profile photo David Branley

SAP Total Margin Management – Understanding the Past to Model the Future

At SAPPHIRE this year, you may have seen ConAgra win a HANA Innovation award for the work they have done with SAP on a new solution called SAP Total Margin Management based on SAP HANA.

ConAgra Foods, Inc. in one of the North America’s largest packaged food companies with branded and private branded food found in 99 percent of America’s households, as well as a strong commercial foods business serving restaurants and foodservice operations globally. Within this industry, increasing competitive pressure requires more accurate forecasts of future costs in order to maximize margin.

The company partnered with SAP to co-innovate on a margin management solution that provided visibility to costs at the lowest level of granularity, and the forecasting capabilities to model scenarios to better predict the future.

There are two key components to SAP Total Margin Management:

The first provides a better ability to understand the past by:

  • Decomposing complex Bill of Materials
  • Creating models based on history
  • Break those models down by customer / product combinations
  • Allow these models and drivers to be used for forecasting and scenario analysis
  • By breaking everything down to a base level where you are able to compare like with like

The second key component is the ability to efficiently model the future by:

  • Converting drivers to levers
  • Take into consideration inventory position when projecting the future
  • Having the information available at a level of detail necessary to provide “margin flow analysis”, which is to understand variances based on price, product mix and volume.

A new video showcasing the power of the solution is not available here

Good Cost management identifies items where increased cost level must be understood, addressed or taken into account in pricing and operational planning, allowing you to respond to changing market conditions speedily. SAP Total Margin Management helps you to understand the Profit and Loss Statement at any and every level of the business – by customer, or product, by brand, or by area of responsibility.

SAP HANA is the high-speed in-memory platform needed to process and visualize this amount of information. Users can quickly perform iterative scenarios and “What If” forecasting on large amounts of data.

SAP Total Margin Management is generally available as of May 2015 and is an excellent example of how SAP is working directly with customers to solve real business problems and help their businesses RUN SIMPLE.

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