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Author's profile photo Mukund Rao

Master the challenge of identifying and controlling the product costs – SAP PLC

Automotive industry is undergoing a technology-driven transformational change.  New business models, innovative products and services are creating some exciting times in the automotive ecosystem.  Innovations like 3-D printing are pushing the parts manufacturer to innovate while staying profitable and competitive.  In order to achieve the goals of profitability and cost-effectiveness you need a tool that facilitates such an objective by simplifying a complex process.  In the all too familiar scenario in the Auto ecosystem the corporations have distributed engineering and manufacturing where each division uses its own costing tool to evaluate and manage costs of new and existing products.  In the absence of a common platform where all the relevant departments can input and simulate costs of a new part/assembly and compare make vs buy decisions a corporation tends to bleed a lot of money due to incorrect and non-standardized evaluations.

Good news, you can take control, monitor and address these challenges with SAP Product Lifecycle Costing solution that has been released end of 2015.  The current release is at Version 1.2.

Early Costing and a streamlined Quotation Process

Every new product, no matter how innovative, has to be profitable. A part number might not yet exist and details are nothing more than a plan in the engineer’s mind.  You still need to calculate cost factors for the skeletal bills of material while it is taking shape, and continually be able to adjust and enhance them.  As part of the quotation process the suppliers need to keep a folder of the different cost versions during the lifetime of the product.  This process ensures visibility into why and when the costs changed and what steps need to be taken to keep it under the target cost.

The advantage of one platform that SAP’s Product Lifecycle Costing brings is the integration with ERP that helps bring all the parts of costing analysis together for greater efficiency and visibility.  This includes master data related to the product structure that typically comes from CAD or PLM systems, the logistics valuation of the product including operations and routings, activity rates and overhead costs provided by the controller as well the purchasing department’s inputs.

When you have the ability to accurately calculate costs in the early stage of the product lifecycle, it becomes easier to identify cost drivers and areas for improvement to facilitate savings so that costs don’t snowball down the line. With the added ability to create and compare alternatives in a real-time, intuitive interface, ROI is basically guaranteed.  Product Lifecycle Costing has been developed with some of our co-innovation customers and is designed so as to ensure minimal disruption and easy user adoption.

Discover the benefits of this revolutionary solution and how it might enhance profitability in your organization.  Register today and learn more about SAP Product Lifecycle Costing and other technology trends influencing product management at the upcoming Automotive News webinar on Sept. 21st. Also visit us at our premier annual Best Practices for Automotive event Oct. 17 – 19th in Detroit and see the latest innovations including PLC and how it can benefit your organization.

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