Six key takeaways: Experiences with Product Forecast and Simulation, the new SAP HANA Optimised Business Content

26 September 2014

George Campbell-Kelly

George Campbell-Kelly

Former Consultant

As I enter the final stages of a project to implement the new SAP HANA Optimised Business Content 'Product Costing Forecast and Simulation', I thought it'd be a good time to share key takeaways from the project.

I’m really impressed by PCFS’s capabilities. The speed of the processing in SAP HANA allows a level of interactive forecasting and planning that was previously not possible. As a result, PCFS can provide a massive benefit to a business’s raw material purchasing and its procurement strategy.

What is PCFS?

PCFS uses data from the Bill-of-Materials, prices for raw materials, a sales plan and a set of its own configurable cost drivers. It processes all this data within SAP HANA, and the reporting output allows analysis of the forecast raw material prices, forecast total raw material spend and forecast production costs for the sales units.

 

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By way of example, here are three genuine questions. Thanks to PCFS, these can all now be answered in a matter of minutes:

  1. Should we continue to buy this strategic raw material from an external supplier, or should we commission a new plant so that we can make it ourselves?
  2. We have two variants of a product. Our customer is happy with both of them. Which is of these two variants would be better for us? The total industry manufacturing capacity can have a huge impact on the price of a raw material, which can significantly alter when a new facility is created. Such scenarios are complex to model, especially when taking into account how the raw materials are used by many different products, each with its own forecast sales plan
  3. Many raw materials are affected by a smaller number of base commodities. For example, if the cost of Lanthanum metal were to change, then the price of many raw materials would alter but in differing proportions. How would a change to one or more cost driver’s affect our total raw material spend? Which products would be most affected? And which products will have the greatest impact on our profit, especially considering the likely sales plan?

How does PCFS work?

The datamodel exists within traditional SAP BW. It extracts data from the standard CO-PC extractors in ECC and loads the data into a series of SAP HANA Optimised DSOs. Integrated Planning (IP) input layouts are used to enter the cost driver prices and a sales plan, which are also stored in DSOs.

A series of HANA stored procedures processes the data held within SAP BW and passes it to your chosen reporting tool. The stored procedures are written in native HANA code, which is somewhat similar to SQL.

 

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Takeaway 1: Implementation is quick

The SAP HANA business content is very quick to implement, especially if you are using CO-PC. The development phase of our project was a few weeks, rather than months than a project of this complexity might be

Incidentally, I have implemented an almost identical project using BW. Scoping, designing and implementing the full solution was a six month project and required a corresponding level of involvement from the business

Takeaway2: Keep it standard

The PCFS HANA code is complex. If you do not have a strong background in SQL  you will find it difficult to understand. Early in our project we made an active decision not to make any changes to it.

During the project we found a number of issues within the SAP HANA code which were very quickly fixed by SAP. Looking at the corrections, I am pleased that they made these. Had we made any changes to the code, then we would not have been able to receive SAP’s support in resolving these issues.

Using PCFS without any modifications allows you to use SAP to support it. In the future, you will benefit from future corrections and enhancements that are planned for PCFS.

Takeaway 3: You don't have to use CO-PC to use PCFS

Our client did not use CO-PC. In fact, not all parts of the business used SAP. By using DataServices we were able to extract data from a variety of source systems, including Microsoft Dynamics, Oracle JDE and SAP ECC.  

Our extracts consisted of the Bill-of-Materials (BoM) and Purchase Orders (POs), plus the associated master data. Custom developments in SAP BW allowed us to take this data and convert it into a format comparable to the data provided to CO-PC, allowing us to use standard PCFS.

This approach required extra time to develop our understanding of the CO-PC data, and pass our knowledge and experience onto the rest of the project team. During this time, an IDES system proved invaluable in giving a substantial volume of consistent data for testing.

Takeaway 4: Data is key

Like all planning projects, you need to have good and correct data. The quality of the final plan is dependent on the transaction data and master data. Checking and validating this is a critical step. If the input data is incorrect, then the output plan will be incorrect too.

During your project, you must establish how you are going to use PCFS and then setup your master data and define your planning configuration. Whilst the project team can guide and support, this is ultimately a business task and should be given adequate time in the project plan.

Takeaway 5: It is a planning project

The output of PCFS is a plan. It might be that a brand new plan is created each month, or only the current plan which is simply updated. You are very likely to need different types of plans, for example a current forecast, annual budget and some temporary scratch plans for what-if analysis.

Before you use the tool you need to define and agree the different versions and how they will be used. Topics such as version control, authorisation, locking and submission can have huge implications on the way that versions are setup.

Consider having someone who is experienced with financial planning to own the ongoing planning process and get them involved in the project to help define the system.

Takeaway 6: PCFS is improved in later releases

PCFS is new piece of software. You will need to be running at least version 7.31 of SAP BWonH (BW on HANA). Over the past year some critical and important improvements and corrections have been made to PCFS. These corrections are available by implementing a support pack.

Future support packs will contain corrections for issues, some of which were discovered during our project, plus additional advanced functionality. For example, it will soon be possible to retain a permanent copy of a ‘what-if’ scenario for future analysis and comparison. 

Summary

If your business buys raw materials and consumes them within a BoM, then you could benefit from PCFS. The capabilities of PCFS, and the ease at which it can be implemented, make it the ideal project for a first SAP HANA project.

PCFS should be seriously considered by any business that buys raw materials and uses a Bill-of-Materials. It will give you a level of understanding of your product costs and raw material spend that you have never had before.

 

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