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Product Hierarchy wise Profitability
Through the Financial Accounting and Profit center reporting it is not feasible to draw profitability at various levels of products.
For example; In an automobile Industry the levels of Product hierarchy would be as under;
- Level 1 : Auto Sector, Farm Equipment Sector
- Level 2 : Export and Domestic
- Level 3 : Type of vehicle (Passenger, Pickup, Tractor etc.)
- Level 4 : Model Family (Bolero, XUV700 etc.)
- Level 5 : Variants (AX5, AX7 etc.)
It is essential to have the contribution margin report at the various level of product hierarchy to take marketing decision & push for sales.
This contribution reports at all the level of product hierarchy is required on real time basis, and Hence it is required to have the Product Hierarchy in COPA.
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Frequently Asked Questions
Level 1 : Auto Sector, Farm Equipment Sector
Level 2 : Export and Domestic
Level 3 : Type of vehicle (Passenger, Pickup, Tractor etc.)
Level 4 : Model Family (Bolero, XUV700 etc.)
Level 5 : Variants (AX5, AX7 etc.)
It is essential to have the contribution margin report at the various level of product hierarchy to take marketing decision & push for sales. This contribution reports at all the level of product hierarchy is required on real time basis, and Hence it is required to have the Product Hierarchy in COPA.
Basic Costing Module
At the month end we can get the complete profitability (Post allocation of common and overhead expenses) for each level of the Product Hierarchy.
Manual work for such type of profitability if asked by management is very high in the absence of this feature, so this is reduced / eliminated from the MIS / Costing team. (Dependency also not there the report can be run by anyone with proper authorizations in place.)
Design the Product Hierarchy as per the organizations and products maximum up to 6 levels. This Hierarchy to be assigned to the product master for the finished goods. Necessary settings to be done in System for this in SD and COPA module as well.
Assumptions:
All the finished goods should be mapped to the product hierarchy (designed) Flow of direct and indirect cost to be allocated up to the Product Hierarchy Levels.
To design the product hierarchy as per the requirements in the Business.
Flow of the product hierarchy to COPA with linking to Sales & COGS on real time basis
COPA Report showing contribution as per the different levels of Product Hierarchy
Get the sign off on the product hierarchy with All HODs
Configure the product hierarchy in the system with all the levels
Mapping of the product hierarchy with Finished parts ( we need support of the business and marketing team to map the right product with right hierarchy)
Creation of required configuration in COPA to flow the hierarchy into COPA
Testing the entire solutions and Training for future maintenance
Move all the changes in system to Production system in SAP
Post go live support and hyper care
1 week to prepare the document for sign off
1 week to configure the hierarchy in system and COPA
1 week for Testing in Quality system
1 week for moving the changes to Production and mapping the Hierarchy with Finished products.
1 week for post go live support
6 weeks to get the product hierarchy design, configure, map and ready for the COPA reports. This timelines can vary if the no. of products are high in any organizations, this timelines is for organizations where the products are in the range of 1000 to 1200
M2 – Solution Document
M3 – UAT Sign off
M4 – Go Live
M5 – Completion of 1 weeks of Post go live support
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