Automotive Suppliers know that estimating and managing pre-production costs is a significant determinant of profitability. Given the need to compete effectively to win business, and then to drive targeted cost reductions year over year, it is vital to understand all aspects of product cost to meet customer requirements and identify where improvements might be realized.
All too often in the current state, this is an offline, Excel based, process. Not a surprise, as ERP and PLM tools that might otherwise support the cost modeling process have a nasty habit of requiring master data – materials, resources, bills of material, for example, that may not yet exist. And good system governance discourages adding master data to operational systems without following consistent practices for release and approval, for good reason.
But the fact that the process can’t leverage (exclusively) ERP master data does not mean it should not be informed by shared enterprise data. When comparing possible manufacturing locations, for instance, cost modeling must be transparent in application of labor and overhead rates that are established and agreed upon.
To do so effectively requires a cost modeling environment that is informed by ERP, perhaps multiple instances, as well as by PLM, and by projected cost rates and material prices that the cost engineer or analyst can combine flexibly and share transparently.
Into this void, SAP has recently introduced Product Lifecycle Costing, a completely new product developed on a Hana platform with input from customers in automotive and other manufacturing industries.
Last year at Sapphire, we discussed the concept of this coming application.
This year we have it live.
Given the importance of this tool to our automotive customers, we will be featuring it at the Automotive pod in the Industries Campus. I’ll have basic demonstrations available and welcome discussions on a variety of use cases.
See you there!