SAP SE today unveiled its new SAP Product Lifecycle Costing solution. This stand-alone offering, which is powered by SAP HANA, can be connected to ERP solutions and any other business system using existing data to create better pricing information for an initial product cost estimate.
It is part of the SAP solution strategy for the extended supply chain, a holistic business approach to managing the entire lifecycle of a product, with connected processes in design, manufacturing, logistics and service.
Manufacturing companies are facing increasing pressure to provide innovative, customer-driven products and quotations at competitive prices. Lack of product visibility early in the quoting process has typically resulted in profitability losses downstream, when the actual production order is priced. For some manufacturers, the variance between the quote and the production price results in profit losses counted in the millions of dollars.
In manufacturing industries, product costing for new products is often performed using Microsoft Excel-based spreadsheets and not integrated into operating business systems like ERP, data for which is created at a later stage. The early phases of new product development involve a multitude of stakeholders who would benefit from visibility into ERP data as well as from a way to simplify the maintenance of an overwhelming maze of spreadsheets.
Designed to drive profitability, SAP Product Lifecycle Costing allows companies to manage product costs and quotations for both new product innovations and customer-specific engineered products in line with strategic targets. In the early stages when the design is evolving and master data is incomplete, transparency and proactive management are critical to help secure future product margins.
SAP Product Lifecycle Costing is designed as an end-to-end solution for early engineering, quotation and lifecycle costing. As such, it provides a high-performance, real-time calculation engine with a modern, dedicated and role-based user interface. It offers Excel-like configuration and can be personalized. The solution includes:
- Flexible, hierarchical product-costing structures, with native integration with the SAP ERP application and product lifecycle management (PLM) data structures
- Open, standards-based application programming interface (API) for integrating with other applications
- What-if scenarios and analytics to support smart design, production, and supply chain and sourcing decisions based on alternative product structures, cost rates or quantities
- Standard SAP business application security, locking and versioning
With this broad set of functions, companies are now able to accurately calculate against target cost, mitigate financial risks, shorten quotation cycle, reduce time to market, shrink development costs and increase product profitability. SAP Product Lifecycle Costing was built together with 30 co-innovation customers who helped design and shape the solution in a true design-thinking experience.
“SAP’s approach is to support the design-to-profitability paradigm in the best way possible while giving engineers the freedom to create new products by not hindering them with premature business data needs,” said Hans Thalbauer, senior vice president for the Extended Supply Chain, SAP. “It is no longer a question of who owns or creates the data, but how to enable all stakeholders to work together in that early stage. The ability to deliver your products faster than anybody else is a key differentiator. In our opinion, future economic success will rely on early insights into profitability to mitigate risks and identify alternatives early on. Only by optimizing the entire design process will manufacturers be able to deliver better products faster and at lower cost.”
