Back to the future
Square, practical, good: this is the triad that chocolate manufacturer Ritter has been promising its customers since the 1970s. Founded in 1912, the family-owned company now employs around 1,300 people and has a turnover of 430 million euros.
As is the case with many medium-sized companies, IT, controlling and process efficiency are increasingly in focus. A sustainable structure is the guarantee for successful international operations.
What is the benefit of the information provided by controlling and at what cost? Do we have the right systems and the processes? Driven by these questions, there have been numerous adjustments in the controlling area of the company over the past years - but it remained piecemeal.
Ritter had already introduced SAP as a central system in the early 1990s, after which in-house developments were added. In the meantime, many of the functions required by Ritter are available in the standard SAP software.
"Back to standard, for more efficiency and future viability" - that was the target. In 2013, an operational analysis marked the beginning of the joint project with the consulting firm Plaut.
Various specialist and subject areas were examined and compared with the current SAP standard. All departments that have a connection to the controlling module SAP CO and CO-PA, such as production planning and control as well as logistics, were involved.
Six focal points
Ritter has carried out the resulting work packages over the past two years to improve its planning, control and information systems.
"In addition to a new cost center structure, the focus was on optimizing variance analyses for production orders, simplifying secondary allocations, changes in product costing and initiating a general harmonization of internal and external accounting"
says Plaut project manager Oliver Schöb.
First, the team took a close look at the cost center structure for packaging. To date, Ritter has been working with a product-related cost center variant.
It had become apparent that a cost allocation based on the source of the costs could only be guaranteed by a considerable additional effort in controlling. The solution: a plant-related cost center structure.
The changeover required extensive adjustments to work plans and confirmations. But thanks to this harmonization, Controlling can apply a uniform approach to planning, price calculation and also the monthly target/actual variance analyses for all cost centers.
In a second project strand, the improved analysis of production variances was on the agenda. In cost unit accounting, the SAP standard provides numerous variance categories.
If required, a variance analysis can be performed for each production order and for each cost element. One thing was clear: The large number of objects makes a complete evaluation impossible with a reasonable amount of time.
It was necessary to focus on the essentials. In the case of production orders, it is particularly important to differentiate between material consumption and internal activities, i.e. machine and personnel hours.
With the approach of splitting quantity variance in the two categories, Ritter will benefit from more transparent performance in the production area in the future.
How can secondary allocation, i.e. internal cost allocation, be simplified? The desire for source-based cost allocation has led to complex constructs consisting of various distribution keys and numerous sender-recipient relationships.
The problem: dissatisfaction among cost center managers, as the origin of the values was often not comprehensible. One of the project team's solutions therefore had to aim at reducing the distribution keys and sender-recipient relationships The result: increased cost transparency.
The lower causation equity cannot be dismissed out of hand, but the advantage of simplified handling outweighs it.
New planning method
Another sub-project dealt with the introduction of a new planning method. Previously, planned capacity utilization for the production cost centers had been determined on the basis of actual capacity utilization.
Correction factors should reflect expected changes in the future. Here, Ritter can now draw on a model that derives planned employment from the planned sales volumes of the products.
Conclusion
The solutions developed by the team can all be mapped to the current SAP standard. According to Schöb, the standardization project is important for Ritter's flexible and future-proof positioning. In the future, it will be much easier to penetrate the system.
