Preh, a subsidiary of Joyson Electronics in Ningbo, China is a manufacturer of high-quality automotive
electronics systems. With more than a hundred years of experience in the electronics industry and over forty years in the automotive sector the Germany-based company has the perfect combination of access to growth markets, deep technical know-how and cost efficiency. Preh is a global growth company with five sales locations and six production plants and a strong market position in the automotive market for HMI (human machine interface) and E-mobility systems.
Processes not up to date to Support Business Growth
With constant company growth and ever-changing market requirements the product lifecycle costing at Preh had reached its limits.
Harald Bayer, Department Head Project Calculation at Preh Group, recalls “We are on the way to becoming a two billion Euro company and doing product costing without the support of a fully integrated data processing system. For our management it was time now to give the calculation of all our new products a new basis”.
The company knew it needed a single source of truth for all product cost information that would also enable analyses and support reporting.
Introducing a Future-Proof Standard Solution
“We looked at several software solutions on the market and our choice was SAP Product Lifecycle Costing. As we are trusting on the strength of SAP this was a decision for the future”, Harald said, and added “and an SAP standard solution is better fitting into our system landscape”.
According to the manager key objectives for the project were:
- Replace former processes with a standardized process across the company
- Improve quality and accuracy for product costing along the product lifecycle
- Increase cost transparency, for reporting and analyses to easily identify cost drivers
- Increase speed and flexibility in the product costing process and the efficiency of the entire organization
SAP Product Lifecycle Costing (SAP PLC) helps companies gain visibility across teams, calculate, and proactively manage costs, and support new product innovations and customer-specific engineered products.
A Central Database as one Source of Truth for Product and Project Calculation
Harald said “In the first step SAP Product Lifecycle Costing was implemented at our headquarters in Germany. Currently, we are doing the global rollout. This includes all business units at all locations and development centers with the goal to set a common standard with global software. And we want to make it available for all users involved in the product costing process. Therefore, we will train a large part of the entire PDP organization. There will be only one database”. He added “The solution is integrated with our SAP ERP system that is a single global instance”.
To support various stakeholders in the most efficient manner, Preh created different apps and layouts within SAP Product Lifecycle Costing (SAP PLC), for example a quality checker that helps avoid errors and therefore increase the quality of the costing result and a material price app in which the purchasing department can enter material prices that are automatically transferred into the database. In addition, the SAP Services and Support team supported the company in developing different reports and an interface to purchasing to provide up-to-date material prices.
Another partner, NTT Data, was involved with creating additional reports and analyses and with data modeling which helped create more transparency thanks to different views.
Increasing Transparency helps Identify Cost Drivers and Optimize Design
In terms of value Preh gained Harald said “The main benefit is transparency. We can do analyses and reporting by pushing a button. With that, we know everything about cost drivers and see the entire product costing. We can easily make comparisons between different calculations and see cost bridges which was a lot of effort in the past”.
Moreover, leveraging the new database, the company can:
- Get an easier overview which parts are used in which project
- Get up-to-date purchasing price information, twice a day
- Examine calculations and prices of specific years
- Make more precise product and project calculations
From a business perspective this means:
- Increased competitiveness thanks to cost transparency and insight into cost drivers to make better design decisions
- Quick access to accurate product costing information
- Major time savings as master data is automatically replicated from SAP ERP, allowing employees to focus on cost improvements
Harald commented “We can easier identify our cost drivers for working closely with development, purchasing, and our suppliers”.
By the end of the year, Preh plans to leverage SAP PLC to calculate more than a hundred projects with up to ten different product variants, and many more later.
The manager concluded “The choice of SAP Product Lifecycle Costing was the right decision. We were able to increase quality and accuracy in our processes and did an important step in our overall digitalization efforts”.
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