Hyperion Planning is often considered a Finance only tool due to its popularity and success in the FP&A space. Although Hyperion Planning is an effective Finance tool, it can be applied to a large variety of modeling scenarios in Supply Chain Planning as well. This blog will show how an Oracle EPM customer mitigated many of the problems they were facing with their manual Raw Material Analytics processes to demonstrate the true power of the tool.
Background of Raw Material Analytics
The Oracle EPM customer is a global provider of chemical and equipment services/products spanning over 100 countries with hundreds of plants/warehouses worldwide. The customer has many ERP systems with hundreds of thousands of raw material SKUs and used only manual templates for tying all material movement to P&L.
Manual Process Pains
Relying on many regional sourcing teams without a single source of truth for their data, the customer was struggling to find the insights they were hoping for. It became clear that there were two major problems with their current manual raw material analytics processes:
- Low level of visibility and standardization throughout regions
- No central hub for reporting and forecasting
Low Visibility and Lack of Standardization
The supply chain team had to rely on each regional sourcing team to provide their own data. Unfortunately, it was very difficult to take the data they received from each region and gain specific insights at a more granular level. Regional teams did not always collect and compile their data in the same way and at the same levels. Metadata hierarchies and classifications often varied between regions. With all these variances between regions it became almost impossible for the supply chain team to glean any meaningful insights from a more granular level of their data, such as how raw material cost changes truly impacted their bottom line.
No Central Hub
Not having one single hub for all divisional reporting and analysis or regional forecasting caused a direct impact on efficiency and performance. For example, the supply chain team had to gather all manual templates offline from regional sourcing teams. Making sure that templates were collected from all regions required a lot of time and effort that could have been spent on more value adding activities. Not having a central hub also minimized the amount of ad hoc analysis into underlying SKU impacts which are crucial for reporting and forecasting activities. Even if some insights were possible, communication throughout the business was difficult because there was not a common basis of information for all regions.
Hyperion Implementation
Implementing Hyperion Planning completely transformed the customer’s raw material analytics processes. Hyperion Planning became that single source of truth for all reporting and forecasting processes. The customer was able to leverage a data warehouse for spend/volume information and divisional sales data sourced from many ERP systems. This implementation allowed for the creation of one master data set for material classification and plant codes, putting the entire company completely in sync for the first time.
Benefits for the Supply Chain Team
The customer saw an immediate impact on their raw material analytics processes after implementation and directly addressed a few of their biggest pain points with their old processes.
First, Hyperion Planning means a significant reduction in manual template work during close. You can fully automate material spend/impact and commodity-driven forecasting down to the SKU level. In that case, the supply chain team gains deeper insights much quicker. Consequently, quickly calculating what is driving YoY changes in spend (material price changes, FX impact, volume impact) allows the supply chain team to evaluate vendors and divert spend to more favorable terms. Alternatively, they can negotiate with less favorable terms.
Next, Hyperion Planning provides the clarity and ownership of data the customer was hoping for. Application availability to supply chain and sourcing teams provide standardization and clarity into their data. Finally, customers enjoy one source of truth for their data. As a result, the entire company can have informed conversations impacting the bottom line. Sourcing teams now use new ad hoc capabilities to quickly analyze raw material pricing down to the plant level to identify cost saving opportunities.
Summary
Hyperion Planning provides major benefits for the raw material analytics process:
- Standardization throughout the entire company for effective communication
- Reduction in time spent on manual activities
- Stronger Ad Hoc capabilities to make quick and accurate cost saving decisions
Similar impacts are not specific to raw material analytics. You can see more impacts in a variety of operational modeling uses. These cases include capacity planning, supply chain efficiency, price volume mix, SKU level product analysis, sales campaign results and marketing promotion impacts.
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