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Project Platinum – SAP BPC 10.0 NW

Al Ittefaq Steel Product Group, Dammam., Kingdom of Saudi ArabiaAl Ittefaq Steel Product Group, Dammam., Kingdom of Saudi Arabia

Background

AL ITTEFAQ STEEL PROUCTS CO’s (ISPC) is the leading private company in the steel sector in KSA. They operate a number of steel processing, manufacturing and moulding units starting from DRI to downstream products with generation of electricity in-house with help of full-fledged power generation company. These units are spread between Dammam, Jeddah, Riyadh, Dubai.

The main operating steel subsidiaries within ISPC are:

  • Direct Reduction Iron Company (DIRC): DIRC supplies NASCO the required raw materials of Direct Reduction Iron (DIR) in the production of steel billets. The Plant is located in Dammam, KSA
  • National Steel Company Limited (NASCO): NASCO uses steel scrap and DRI to produce steel billets, which is the principal material for ISPC’s rolling mills. The Plant is located in Dammam, KSA
  • Al Ittefaq Steel Products Company (ISPC): Consist 2 branches with utilize the billets produced by its subsidiaries and imported. ISPC 1 is located in Dammam, KSA comprising three rolling mills. ISPC 2 is located in Makkah, KSA.
  • Al- Faisal Steel Products Company Limited (FSPC): Consists of 2 branches FSPC runs a downstream facility which processes Rebars and wire rod produced by the ISPC, to produce downstream products. The Plant is located in Dammam, KSA and Makkah, KSA.
  • Absal Steel Cut & Bend Factory Company (Absal): Absal is a downstream steel manufacturing unit being operated in Riyadh, KSA.
  • Bishah Steel Industries LLC (Bishah): Bishah is also a downstream steel manufacturing unit operating in Dubai industrial free zone.

 

In addition, a number of new capital investment projects are under consideration within ISPC, these include:

  • Arab Steel Company (Arab Steel): Plant of billet as part of phase wide development of an integrated steel complex in Dammam, KSA. Phasing Arab Steel into two developments (Arab Steel 1 and 2). Arab Steel 1 is under trial production.
  • Kingdom Iron & Steel Holding Company (KISHCO) consist of continuous thin slab casting and rolling mill for hot rolled coil in Dammam, KSA. KISHCO would include supporting backward integration into DRI.
  • Al Tuwairqi Pelletization Company (PELLETCO) consist iron ore pellets of a grade suitable to be used as a feedstock for natural gas-based direct reduction.

The Challenges with spreadsheet based reporting before implementing SAP BPC

    1. Consolidation Reporting

It include 3 different kind of consolidation with its purpose and coverage of entities. Being

      • Management Consolidation
      • Legal Consolidation and
      • Zakat Consolidation

Before implementation of SAP BPC company was using Manual Systems in whole consolidation cycle including currency conversion with respect to foreign subsidiaries which required manual interventions and lot of efforts. Due to manual interventions it was taking a lot of time to complete entire consolidation process and also it was required lot of human efforts which results into chances of error prone reporting.

There were 13 SAP companies and 2 Non SAP Companies covered in consolidation process companies at Al Tuwairqi Holding Level. To improve upon this consolidation activities Company decided to go for SAP Business Planning and Consolidation product.

  • Quantitative Analysis Reporting
    Before implementation of SAP BPC Company was using Spread Sheet based Manual Reporting Systems in Quantitative Analysis which required manual interventions and lot of efforts to reconcile quantity and value information. The Objective of quantitative analysis process is to have the Financial Analysis of various Revenue and Cost Parameters to be linked to Quantity (Production/Sale/Inventories) which helps derive the revenue generated on Per Ton Basis which form the key for management decision making process with pricing and cost control. Due to manual interventions it was taking a lot of time to complete quantitative analysis reports process. These reports were prepare in MS Office excel pack which was too much error prone, due to this reason they were unable to use the same with confidence for decision making.There were 7 main operating companies covered in this Quantitative Analysis reporting process at Al Tuwairqi Holding Level.  To improve upon this quantitative analysis activities Company decided to go for SAP Business Planning and Consolidation product.

 

Process carried out by ATH Group before implementation of SAP BPC

      1. Consolidation Reporting

    Before implementation of SAP BPC company was carrying out whole Consolidation across the whole group as a yearly reporting process covering 13 SAP and 2 Non SAP companies. This process involved taking data in the form of F.01 ( in form of flat downloads from SAP FI) and GRR3 reports from SAP ERP in Excel and manual processing of these data to generate consolidated financial statements.Zakat Consolidation process was also carried out for reporting of Zakat Purpose consolidation for the entities operating in Saudi Arabia as a special purpose consolidation.Management Consolidation process was carried out in Al Tuwairqi Holding Co. as a monthly reporting process covering seven major operating companies with measuring key operational ratios and financial ratios for each entity on monthly basis. This process involved taking data in the form of F.01 and GRR3 reports from SAP ERP in Excel and manual processing of these data to generate consolidated financial Statements.

      1. Quantitative Analysis Reporting

    Before implementation of SAP BPC Quantitative Analysis process was carried out as a monthly reporting process covering seven major operating companies which are carrying out core processes of converting iron ore and scrap from the beginning to steel rods and moulded structures as an end result of complete process. This process involved taking data from various data items (all were SAP ECC Flat File Data Dumps) including GRR3 for GL Balances, MC.9 for Stock Values, Sales Report Y_D11_41000003 for sales figures and Quantity. After base data derived from the above mentioned report, calculation of Per Ton value and other figures are done at Entity Stand Alone level. After Completion of Stand Alone Report Preparation, Consolidated Quantitative Income Statement is prepared.

Selection and Implementation of SAP BPC 10.0 NW
SAP BPC 10.0 was selected as the tool that supports the consolidation process. From the client part, participation in the project was led by Core Management Team Members and IT including BASIS & ABAP team and for functional part Corporate Finance and Accounts teams, making sure the main confederation from each group and department were involved to share their specific role in process of consolidation and examples that helped designing a solution that would be easy to maintain and to be scalable so they can reach to the desired reporting system and go through each areas in the organization to derive ultimate desired solutions.

Company has new report requirements of product profitability process. The Objective of Product Profitability analysis process is to have the Final Analysis of Contribution margin and Break Even analysis of various segments of different entities. It also helped in analysing monthly performance report based on criteria such as Sales achievement and machine utilization capacity. This would finally help to derive the revenue generated on Per Ton Basis from each operation within company at Cost Center and Profit Center which forms the key for any decision making process.

Implementation of SAP BPC

    1. For Consolidation Process
      In process of implementing SAP BPC 10.0, started with needs and specifications of Consolidation Process at Legal, Management and Zakat level entity wise and at Group level. Unit level user will prepare their stand-alone level financial statements and send the same to Sr. Account Manager at HO level. We have defined script logics with respect to specific and complex calculations as well as for data loading, currency conversion, inter-company data elimination etc. As per the management requirements we have bifurcated consolidation in three different groups.

      1. Legal Consolidations consist all the 13 companies of Al Tuwairqi Group
      2. Management Consolidation consist all the companies at ISPC level
      3. Management Consolidation consist all the companies at ISPC level
  2. For Quantitative Analysis Process
    In quantitative analysis process specification and requirements Unit level user will prepare his stand alone quantitative analysis reports and send the same to Sr. Account Manager at HO level. We have defined SAP BI Data Extraction Structure with use of APD for complex cell level data extraction based on reporting conditions as s raw material for final reporting which at the end will be supplied to SAP BPC as base data to carry put complex calculation with use script logic for specific and complex calculations.In quantitative analysis process specification and requirements Unit level user will prepare his stand alone quantitative analysis reports and send the same to Sr. Account Manager at HO level. We have defined SAP BI Data Extraction Structure with use of APD for complex cell level data extraction based on reporting conditions as s raw material for final reporting which at the end will be supplied to SAP BPC as base data to carry put complex calculation with use script logic for specific and complex calculations.
  3. For Product Profitability Process
    Product Profitability Analysis process was new process designed while SAP BPC Project Platinum, the company was not carrying out such reporting before and the under same process our team has done business analysis and process re-engineering for reporting with complete new design of reporting and analysis. As a monthly reporting process covering Companies where Profit Centre Accounting is implemented and Profit Centre wise profitability is analysed with help of Contribution Reports for the data from SAP Profit Center Accounting. This process involves taking data from various data times including 0PCA_C01 and a custom data source for Closing Stock of each Profit Centre, this is complete new design of closing stock based on FIFO Method designed in SAP BPC. In this Analysis there are four different reports which are Performance Report, Contribution Margin Report, Pricing Standard report and GL Line Item report for detailed analysis at each Profit Center Level below company code level and totalling to a company code level.

 Processes Implemented in SAP BPC.

    1. In Consolidation Process
      The Legal Consolidation and Zakat Consolidation process  carried out currently in Excel, which has been automated to the extent possible through implementation of SAP BPC as a tool to do the process and calculations. This automation calls for periodical checking and update of master data with respect to Company Code, Change in pattern of Holding, Addition of GL Code to Group Chart of Account. The Consolidation process has been transformed to the extant to minimize manual but controlled processing and intervention with complete elimination of manual interventions with source data to generate accurate reports. The reports generated are checked with source data and a data process which has been carried out is as per the current process of ISPC Group Reporting. Process Transformation involves automatic data extraction from SAP BI/BW, Consolidation process steps which will help users to generate Consolidated Reports. The process steps designed in SAP BPC will generate reports while user have to trigger these steps as these steps are crucial to minimize time required to process data and generate the report from system.The Management Consolidation process was carried out currently in Excel, which has been automated to the extent possible through implementation of SAP BPC as a tool to do the process. Under process mapping, complete mentoring for process completion and stage of process has defined with calling for each person to complete the same once reporting is initiated making indirect measure to complete process at the earliest.  This automation calls for periodical checking and update of master data with respect to Company Code, Change in pattern of Holding, Addition of GL Code to Group Chart of Account.The Management Consolidation Process has been transformed to the extant to minimize manual processing and intervention with source data to generate accurate reports. The reports generated are checked with source data and a data process which has been carried out is as per the current process of ATH Group. Process transformation involves automatic data extraction from SAP BI/BW, Consolidation process steps which will help users to generate Consolidated Reports. The process steps designed in SAP BPC will generate reports while user have to trigger these steps as these steps are crucial to minimize time required to process data and generate the report from system.
    2. In Quantitative Analysis Process
      The Quantitative Income Statement – Stand alone and consolidated report preparation process is carried out currently in Excel, which has been fully automated through implementation of SAP BPC as a tool to do the process. This automation calls for periodic checking and update of material master data, material movements types with respect to GL Hierarchy, Material Hierarchy and Logic Changes for base level Data Extraction with help of BEx query at starting of data extraction process. The Quantitative Income Statement generation process has been transformed to the extant to nullify manual processing and intervention with source data to generate accurate reports. Process transformation involves automatic data extraction from SAP BI/BW, Quantitative Income Statement generation process steps which will help users to generate Quantitative Income Statement, these processes are scheduled and can be run manually when required. Maintenance of the report requires taking care of master data at three different levels. One at ECC Level for GL and Material Hierarchy, one at BI/BW Level for BEx Cell Level Query and APD transferring data to DSO and one at BPC Script Logic and Data Loading Process which fetches data from DSO and runs reporting calculations.
    3. In Product Profitability Process
      The Product Profitability Analysis – report generation process has been designed newly to nullify manual processing and intervention and complete automation of reporting with source data extraction to generation of accurate reports. The reports generated are checked with source data of profit centre level traction data and Additional Stock valuation process taking FIFO Valuation as base. Process transformation involves automatic data extraction from SAP BI/BW, report viewing process steps which will help users to view Product Profitability Analysis Reports, these processes are scheduled and can be run manually when  required. Maintenance of the report requires taking care of master data at three different levels. One at ECC Level for Material Hierarchy, one at BI/BW Level for BEx Cell Level Query and APD transferring data to DSO and one at BPC Script Logic and Data Loading Process which fetches data from DSO and runs reporting calculations.

Considerable Value Additions

  • Business Process Re-Engineering
  • New Report Process Design
  • Improvement in current reporting process with closing of gaps.
  • Drastic reduction in reporting cycle
  • One Data Base, One Reporting System
  • Process Automation and Scheduling
  • No More Spread Sheet Circulations !!

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