11
CONTENTS
1. Objectives
2. Benefits of Profitability Analysis
3. What is CO-PA
4. Integration
5. Planning
6. Reporting
7. Assumptions
CONTENTS
1. Objectives
2. Benefits of Profitability Analysis
3. What is CO-PA
4. Integration
5. Planning
6. Reporting
7. Assumptions
22
OBJECTIVES
ObjectiveObjective
To provide an overview of Profitability To provide an overview of Profitability Analysis (CO-PA)Analysis (CO-PA) To understand the flow of actual data To understand the flow of actual data from other SAP R/3 Modules to CO-PAfrom other SAP R/3 Modules to CO-PA To introduce the Planning features in To introduce the Planning features in CO-PACO-PA To introduce the Reporting features To introduce the Reporting features in CO-PAin CO-PA
44
BENEFITS OF
PROFITABILITY ANALYSIS
Benefits of Profitability Benefits of Profitability AnalysisAnalysis
To extend the capabilities of SAP to To extend the capabilities of SAP to better analyse profitability of STH better analyse profitability of STH products by different dimensionsproducts by different dimensions Provide MKT and Management with a Provide MKT and Management with a tool for better product managementtool for better product management Basis for decisions in pricing, Basis for decisions in pricing, customer selection, policies on terms, customer selection, policies on terms, quantity control, choice of distribution quantity control, choice of distribution channel, channel, and marketingand marketing
Benefits of Profitability Benefits of Profitability AnalysisAnalysis
Up-to-the-minute reporting Up-to-the-minute reporting up-to-the-minute analysis of up-to-the-minute analysis of
profitability profitability up-to-the-minute analysis of sales up-to-the-minute analysis of sales
managementmanagement analysis of any segments of the analysis of any segments of the
business (products,customers, sales business (products,customers, sales districts and any combination of these districts and any combination of these and other characteristics) and other characteristics)
analysis of organisational units (such as analysis of organisational units (such as sales organisations or business areas) sales organisations or business areas)
77
WHAT IS CO-PA
Why CO-PA?Why CO-PA?
Sub-module of SAP R/3 CO (Cost Sub-module of SAP R/3 CO (Cost Controlling) ModuleControlling) Module Flexible reporting tool to analyse Flexible reporting tool to analyse company’s profit company’s profit and lossesand losses Freely defined “slices and dices” of Freely defined “slices and dices” of analysisanalysis Freely defined structure of P&L Freely defined structure of P&L sheet to match the company’s sheet to match the company’s requirementsrequirements
Key TerminologyKey Terminology
Operating ConcernOperating Concern- - CO-PA reporting environmentCO-PA reporting environment. . - C- Complex of CO-PA configuration tables omplex of CO-PA configuration tables
and data repositoriesand data repositories CharacteristicsCharacteristics
- - CCriteria/Dimension for analysis of a riteria/Dimension for analysis of a company’s profitscompany’s profits
Key TerminologyKey Terminology(Cont’d)(Cont’d)
Value FieldsValue Fields - P&L Reporting Lines- P&L Reporting Lines
Profitability SegmentsProfitability Segments
- - AA unique combination of unique combination of characteristic values which forms a multi- characteristic values which forms a multi- dimensional segment. dimensional segment.
Aims of Profitability AnalysisAims of Profitability Analysis
Billingdocuments
CompanyCompany
SalesDivision
SalesDivision
RegionRegion
ProductProduct
CustomerCustomer
MarketMarket
• Which are the largest and fastest growing customers ?
• How have sales and contribution margins changed in the last period for each product?
• What are my worst and best performing sales organisations in different regions ?
Typical Questions in CO-Typical Questions in CO-PAPA
Pro
duct
Gro
ups
Custo
mer
Gro
up
FFB
CPO
PK
Export-1
Export-2
Local
A B C
Customer
Profitability AnalysisProfitability Analysis
Operating Concern
AttributesData Structures
Operating Concern
AttributesData Structures
ControllingArea
ControllingArea
CompanyCode
CompanyCode
ControllingArea
ControllingArea
CompanyCode
CompanyCode
CompanyCode
CompanyCode
Creation of An Creation of An Operating ConcernOperating Concern
CustomerCustomer
ProductProduct
Distribution ChannelDistribution Channel
Components that make up the views of profitability
CharacteristicsCharacteristics
Fixed CharacteristicsFixed Characteristics
User-Defined User-Defined CharacteristicsCharacteristics
CustomerCustomer
ProductProduct
Distribution ChannelDistribution Channel
Unique combination of characteristic values
Export ABC
CPO
Profitability SegmentProfitability Segment
What is to be evaluated?Examples: Industry Group, Product Group, Product Type, Product, Customer, Customer Group, etc
What is to be evaluated?Examples: Industry Group, Product Group, Product Type, Product, Customer, Customer Group, etc
A characteristic value is a specific value of a characteristic.Examples: Customer : Customer A, Customer B
Product Group: FFB, CPO, PKCustomer Group: Export, Local
A characteristic value is a specific value of a characteristic.Examples: Customer : Customer A, Customer B
Product Group: FFB, CPO, PKCustomer Group: Export, Local
A profitability segment is a unique combination of characteristic values of characteristics.Examples: 1) Customer A, CPO, Local
2) Customer B, PK, Local
A profitability segment is a unique combination of characteristic values of characteristics.Examples: 1) Customer A, CPO, Local
2) Customer B, PK, Local
CO-PA ConceptsCO-PA Concepts
Profitability Profitability SegmentSegmentProfitability Profitability SegmentSegment
CharacteristicCharacteristic Value ValueCharacteristicCharacteristic Value Value
CharacteristicCharacteristicCharacteristicCharacteristic
SalesSales
DepreciationDepreciation
RebatesRebates
ReturnsReturns
DiscountsDiscounts
OverheadCosts
OverheadCosts
Numerical values that are reported for each profitability segment
Value FieldsValue Fields
Value FieldsValue Fields
Gross sales
Sales Deductions
Standard COGS
Prod..Variances
S&D Costs
Fixed Distribution
Advertising PromotionsG&AOther Income/Loss
Salesorder
Production order
Delivery Billing
Group
G/A Distribution
Advert. Campaign
PP-PC
SD
CCA
Internal Order
CO-PA
FI document
CO-PA Integration CO-PA Integration ChartChart
FI
An operating concern represents an An operating concern represents an organisational unit of a company. Each organisational unit of a company. Each operating concern contains certain operating concern contains certain attributes and a data structure.attributes and a data structure.
The characteristic determine the content of The characteristic determine the content of the operating concern. An operating concern the operating concern. An operating concern consists of a number of fixed characteristics consists of a number of fixed characteristics and up to 50 user-defined characteristics.and up to 50 user-defined characteristics.
The value fields contain the transaction data The value fields contain the transaction data of costing-based CO-PA.of costing-based CO-PA.
Organisational Organisational Elements - SummaryElements - Summary
Reporting DimensionsReporting Dimensions
• What are the reporting dimensions required by ABC?
• How to determine the dimensions?– Are they available in the Standard SAP Master Tables?
Eg. Material Master : Material Group Customer Master : Customer Group
– Can they be derived from existing master data fields?Eg. Material Number -> Species
2525
INTEGRATION
PAPAPAPA
External Data EntryExternal Data Entry Direct InputDirect Input
FIFI
SDSD
PCPC
CCACCA
Population of CO-PAPopulation of CO-PA
SD Billing DocumentsSD Billing Documents
Sales QuantitySales QuantitySales RevenueSales Revenue
Sales DeductionsSales Deductions
Product Costing Product Costing CO-PC CO-PC
Standard Cost Standard Cost of Productsof Products
Valuation Valuation CO-PACO-PA
Estimate Sales Estimate Sales and Administrationand Administration
Overhead CostsOverhead Costs
CO-PACO-PA
Profitability SegmentsProfitability SegmentsKey FiguresKey Figures
Cost CentersCost Centers
CO-CCACO-CCA
Departmental CostsDepartmental CostsAdministrativeAdministrative
Orders & ProjectsOrders & Projects CO-OPACO-OPA
Direct/Indirect CostsDirect/Indirect CostsProduction VariancesProduction Variances
Financial AccountingFinancial AccountingFIFI
Direct CostsDirect Costs
ExternalExternalData Data
TransferTransfer
Profitability AnalysisProfitability Analysis
ManualManualCO-PACO-PAPostingsPostings
Integration ModelIntegration Model
Example : SD InterfaceExample : SD Interface
SD Interface : ConcernsSD Interface : Concerns
Pre-requisites : Pre-requisites : GL Account Posted From SDGL Account Posted From SD
field status group : profitability segment field status group : profitability segment requiredrequired
cost element category = 11/12cost element category = 11/12
Efforts :Efforts : Create New Accounts For SD PostingsCreate New Accounts For SD Postings
Derivation RulesDerivation Rules
Customer HierarchiesCustomer Hierarchies
ValuationValuation
Characteristic Derivation & Characteristic Derivation & ValuationValuation
Direct Posting From FIDirect Posting From FI
Make to Stock Production Make to Stock Production VarianceVariance
Costing BasedCosting Based Transferred to Transferred to Value Value
Fields . Fields .
Fictitious costsFictitious costs are are permittedpermitted
Capture Capture Product Product CostingCosting Info Info
Short term up-to-date Short term up-to-date information information . .
Less Resource Less Resource IntensiveIntensive
Account BasedAccount Based Transferred to cost Transferred to cost
and revenue and revenue AccountsAccounts
ReconciledReconciled with FI with FI No Product Costing No Product Costing
Info.Info. Same as in FI Same as in FI
(data transferred (data transferred when posted in when posted in Financial Accounting)Financial Accounting)
More Resource More Resource IntensiveIntensive
Two Types of Two Types of Profitability AnalysisProfitability Analysis
Data Flow in Costing-Based Data Flow in Costing-Based Profitability AnalysisProfitability Analysis
Data Flow in Account-Based Data Flow in Account-Based Profitability AnalysisProfitability Analysis
3939
PLANNING
Online (Manual) PlanningOnline (Manual) Planning Parallel versions (multiple plan versions)Parallel versions (multiple plan versions) Flexible design of individual planning layoutsFlexible design of individual planning layouts Planning of profitability segments : Bottom-up strategyPlanning of profitability segments : Bottom-up strategy
Automatic Planning FunctionsAutomatic Planning Functions Copy, change and re-organise (delete) plansCopy, change and re-organise (delete) plans Perform top-down distributionPerform top-down distribution
Planning IntegrationPlanning Integration Transfer of planned overhead costs to CO-PATransfer of planned overhead costs to CO-PA Transfer of planned PA to SOPTransfer of planned PA to SOP
PlanningPlanning
Bottom Up PlanningBottom Up Planning
Top Down DistributionTop Down Distribution
Plywood-123Plywood-123Prod. Grp:PlywoodProd. Grp:Plywood
Plan 2000 : 110.00Credit : -110.00 Plan 2000 : 110.00Credit : -110.00
Plywood-ABCPlywood-ABC
Prod. Grp:PlywoodProd. Grp:Plywood
Plan 2000 : 220.00Credit : -220.00 Plan 2000 : 220.00Credit : -220.00
Cust. Grp : LocalCust. Grp : Local
Act 1999 : 3 pcsPlan 2000 : 33.00 Act 1999 : 3 pcsPlan 2000 : 33.00
Cust. Grp : LocalCust. Grp : Local
Act 1999 : 3 pcsPlan 2000 : 33.00 Act 1999 : 3 pcsPlan 2000 : 33.00
Cust. Grp : LocalCust. Grp : Local
Act 1999 : 3 pcsPlan 2000 : 33.00 Act 1999 : 3 pcsPlan 2000 : 33.00
Cust. Grp : LocalCust. Grp : Local
Act 1999 : 20 pcsPlan 2000 : 220.00 Act 1999 : 20 pcsPlan 2000 : 220.00
Planning RulesCharacteristics Char. Value Distr. Level Planning RulesCharacteristics Char. Value Distr. Level
Product Group PlywoodProduct *Customer Group x
Product Group PlywoodProduct *Customer Group x
4343
REPORTING
Forms
Key Figures Characteristics
Drill Down ReportCreateChangeExecute
Excel
Word
Architecture of Drill Architecture of Drill Down ReportingDown Reporting
Sales RevenueSales Revenue
- COGS- COGSGross MarginGross Margin
- Indirect Expenses- Indirect Expenses
Total Profit MarginTotal Profit Margin
Billing Documents/FIBilling Documents/FI
Billing Documents/FIBilling Documents/FI
Building A Profitability Building A Profitability ReportReport
Cost Center/Internal OrderCost Center/Internal Order AssessmentsAssessments
Functions in Drill Down Functions in Drill Down ReportingReporting
Plywood
Plan/Actual Reports• Act/Bud/LY By Period• Brand Results MTD (Act/Bud/LY)
Types of ReportTypes of Report
Actual Report
Budget Report
Product/Country Reports• Brand Results by Country• Brand Results by Product
Reporting Dimensions
Sample Report -By Sample Report -By Product/CountryProduct/Country
4949
ASSUMPTIONS
AssumptionsAssumptions
Reporting Dimensions Reporting Dimensions (Characteristics) will be based on fields (Characteristics) will be based on fields already defined in the systemalready defined in the system Re-conversion of existing material Re-conversion of existing material masters, if required, is specifically masters, if required, is specifically excludedexcluded
Goals of CO-PAGoals of CO-PA up-to-the-minute analysis of profitabilityup-to-the-minute analysis of profitability up-to-the-minute analysis of sales up-to-the-minute analysis of sales
managementmanagement analysis of any segments of the business analysis of any segments of the business
(products,customers, sales districts and any (products,customers, sales districts and any combination of these and other combination of these and other characteristics) characteristics)
analysis of organisational units (such as sales analysis of organisational units (such as sales organisations or business areas) organisations or business areas)
basis for decisions in pricing, customer basis for decisions in pricing, customer selection, policies on terms, quantity control, selection, policies on terms, quantity control, choice of distribution channel, and marketingchoice of distribution channel, and marketing
SummarySummary
Costing-based vs Account-based CO-PACosting-based vs Account-based CO-PA Costing-based CO-PA and account-based CO-Costing-based CO-PA and account-based CO-
PA.PA. Costing-based CO-PA allows the presentation Costing-based CO-PA allows the presentation
of results by comparison of posted revenues of results by comparison of posted revenues and sales deductions with imputed costs and and sales deductions with imputed costs and sales deductions.sales deductions.
Account-based CO-PA allows the presentation Account-based CO-PA allows the presentation of results in accounts (by omitting the use of of results in accounts (by omitting the use of costing based values), which ensures the costing based values), which ensures the ability to reconcile with FIability to reconcile with FI
SummarySummary(Cont’d)(Cont’d)
Areas of ConcernedAreas of Concerned Integration points require significant Integration points require significant
cross-functional team cooperationcross-functional team cooperation Early research minimizes problems laterEarly research minimizes problems later Table size and reporting performance Table size and reporting performance
must be managedmust be managed
SummarySummary(Cont’d)(Cont’d)
Accuracy of the Accuracy of the Dimension InfoDimension Info
• Are the dimension info available for the following reporting figures?
- SD [Sales Revenue, Std COGS, Discounts, etc]
- CO-PC [Production Variances]
- Cost Center Overhead [Administration Cost, Salary, etc]
- Direct FI Postings [Other Expenses, Miscellaneous]
Customer & Material RelatedMaterial
Related
User-Defined
update whichcharacteristics?