1. Using Supply Chain Cost Management
  2. Cost Analysis

Cost Analysis

Cost simulation tools help you with detailed analysis of the rolled-up costs. You can compare costs across scenarios or compare scenario costs with the current published costs, to review the differences in cost and inventory value adjustments.

You can view the rolled-up costs for your items by using the tree view or by using the graphical hierarchical view on the View Rolled-up Costs page. Both views allow you to drill down into the details used for the item costs calculation. By creating different scenarios to represent different manufacturing and cost variables, you can compare the results. After you're satisfied with the cost calculations, you can publish the scenario so that the costs are available for cost accounting.

Some of the information available on this page include:

  • The operation sequence number is prefixed to the operation name in the operation nodes.

  • The materials, resources, and overheads will show the respective costs and rates in the node description.

    • For materials used in discrete work definitions, Material + Resource + Overhead = Entered Unit Cost

    • For materials used in process work definitions, Material + Resource + Overhead = Entered Unit Cost * Cost Allocation Factor of the output.

    • For products, Material + Resource + Overhead = Per Unit Cost.

  • The Entered Unit Cost attribute is available and populated when user has entered the cost manually. This clearly distinguishes from the Per Unit Cost attribute which is the system calculated unit cost. Note that all item costs are reported in the context of the unit of measure specified for costing in the cost profile setup.

  • For operation nodes, the material, resource, and overhead costs are sum of all material costs, sum of all resource costs, and sum of all overhead costs incurred in that operation, respectively. An exception to this would be an operation in process manufacturing work definition which doesn’t yield the output. Such an operation won't display the breakdown of material, resource, and overhead costs.

In the case of supply chain cost rollup, you can validate the product costs and verify the sourcing rules that were used to calculate the costs. Each sourcing rule node has the cost breakdown to validate the rolled-up costs. The View Rolled-up Costs page shows this additional information for the sourcing rule nodes:

  • Source Allocated Material - Material cost breakdown from the sourcing rule

  • Source Allocated Resource - Resource cost breakdown from the sourcing rule

  • Source Allocated Overhead - Overhead cost breakdown from the sourcing rule

  • Source Allocated Unit Cost - Unit cost from the sourcing rule

When multiple sourcing rules (rank = 1) are defined:

Standard cost of product = (User entered buy cost * Buy sourcing rule allocation) + (Rolled-up cost from work definition * Make sourcing rule allocation) + (Transfer cost * Transfer sourcing rule allocation)

Per Unit Cost of the product = SUM (Source allocated unit cost from sourcing rule nodes)

Source Allocated Unit Cost = Unit cost calculated using the sourcing rule * Sourcing rule allocation

If you're interested in analytics for cost planning, you can use the Rolled-up Costs Real Time Subject Area in OTBI if you don't use supply chain cost rollup. You can also use these seeded reports in OTBI for your business:

  • Costed BOM Report

  • Costed BOM (Cost Details) Report

  • Scenario Exceptions Report

  • Where Used Report

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