Group Costing, Corporate Controlling

Mapping Global Supply and Value Chain at Corporate Level

There are two core elements in the current trend for globalization:

  • decrease in depth of the manufacturing supply chain
  • more and more complex supply and value chains with a larger number of participating parties.

This trend is partially due to the outsourcing of activities to low cost Countries, but also to a stronger focus on process improvement. 
As a result supply chain management, planning and all methods (i.e. Manufacturing Resources Planning, MRP II) based on the assumptions that the company is a single entity are no longer suitable and have to be replaced by new processes and systems such as Advanced Planning System (APS). These tools are aimed at planning, monitoring and optimizing the value chain across the company and regardless of any geographical boundary. SAP’s answer to these trends is APO (Advanced Planner and Optimizer), but competitors also developed solutions such as I2, Manugistics and others, What is often ignored and remains underestimated, is the consideration of integrated value flows which can indicate results in quantity in the APS systems. This aspect is of particular importance for group costing and controlling in a production environment.

 

Conflict Situation

Conflict Situation

 

There is a general trend towards thinking that it is sufficient to take the quantities from the APS tool, multiply by the corresponding prices, and then consolidate in a business intelligence system. This method provides what looks like a final and accurate number, but all links to the supply chain are lost, which means that the result is probably far from accurate. Especially in the manufacturing world where production happens in different locations of different countries, it is important to have the ability to keep costing at corporate level separate and in parallel to local costing. By doing this, the business performance management system can benefit from receiving data concerning global profitability from multiple locations and without manual alterations. Examples of this way of operating and reporting can be found in BASF, Evobus, International Paper, Heidelberger Druck, and Infineon, just to mention a few names from different industries. IM&C works on the integration of planning and monitoring, of corporate and cross-company value chains. For this reason, IM&C has been able to establish the GCP (group costing and profitability) engine as a unique solution in different industries.

 

As you can see below, the architecture of the GCP engine fits without any difficulties into other SAP system environments and is similar to that of other systems of the SAP business suite.

 
GCP Engine Architect and System integration

SAP Architecture and System integration

click to enlarge pictures

 

By adopting the GCP engine, clients can start from the actual costing results at local and global level, and build their planning accordingly, calculate variances and compare simulation scenarios. GCP is open to non-SAP systems and can integrate quantity and value flows along the chain coming from the different systems available across the supply/value chain.

 

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