Dynamic commodity fluctuations and pricing in the chemical industry demand a watchful eye on all production and supply chain costs. Our company was experiencing monthly unexpected volatility in cost structure that was taking days of manual effort to diagnose and determine the source. An automated approach was needed. Using product costing analytics in SAP HANA, fueled by the material ledger and product costing data in Tableau, this project was able to identify commodity, freight, and warehousing cost overruns. The out-of-the-box material ledger data was aggregated and fine-tuned to flush out actual period costs of production versus consumption.
Results: A set of dynamic dashboards coupled with detailed SAP cost data allowed comparisons of actual versus standard cost to highlight monthly deviations and cost leakage. The project utilized transfer pricing data to compare make versus buy decisions at multiple levels in the production process. The tool also identified new commodity cost overruns where bills of material deviated from annual operating plan.
Conclusions: By utilizing a best-of-breed approach, making use of both SAP and non-SAP data in a hybrid data model, significant cost reductions and drill-through to identify emerging cost trends can be quickly identified.
