1. Production Variance Analysis “DUDE, Where’s My Loss?” Presented by: Mike Beovich Sr. Solution Expert 11/10/2015

2. Summary: An overview of how production variance is calculated, common scenarios in which it occurs, and what you can do to proactively manage it. Who Should Attend: Financial staff who manage production accounting or inventory journal entries, as well as any production staff who manage bill of material yields. SUMMARY #Orchestrate2015

3. 1.The math in variances 2.Where to get your variance information – Reports by Dollars/Brands or Components – PdO Summary Tab & Layout & Alerts – Advanced Analytics 3.Surviving Variances & Errors – Common causes of variances – It’s all about the BoM 4.New release information – SAP Cost/Variance Changeup – New ORC 4.2 Help is on the Way AGENDA #Orchestrate2015

4. Variance Math (1) Welcome back to Algebra 1 #Orchestrate2015 Variance Quantity = Planned Quantity Actual Quantity - Variance Amount = SUM(Variance Quantity * Component Unit Cost) Planned Quantity = Factored Planned Quantity It’s almost that easy! …Except X

5. This entire variance process starts and ends with your base component quantities and projected yield BoM Factor Production Factor Planned quantities adjust based on desired production quantity Base Quantity Everything stems from the base quantity which can be viewed in the column, or you can see by taking the factor (quantity) to 1 Planned Quantities #Orchestrate2015

6. Variance Math (2) #Orchestrate2015 Factored Quantity = Base Quantity Reported Complete Quantity X 1,966.77 (Factored) = 66.67 (Base) X 29.5 (Completed) Variance Quantity = Factored Quantity Actual Quantity - Variance Amount = SUM(Variance Quantity * Component Unit Cost)

7. Finding Variances Reports that can help Production Cost Variance Report PdO Layout that offers line item detail of variances #Orchestrate2015 Production Cost Analysis Report Track variances to determine if the are product or package size related, or phase related Component Cost Analysis Report Track your variances via component materials and material groups to see if it’s attributes are true to your recipes Advanced Analytics/Alerts Slice and dice data in your own fashion under your own circumstances and view; or use one of our existing alerts in the system to notify you

8. USUAL SUSPECTS Bill of Materials 9 out of 10 support techs agree, variances occur when we enter in total quantities into base quantity fields Hand keyed production orders ask for ‘Base Quantities’ (Recipe factored down to 1), but a lot of people key in full values (we’ll call it 100). Then you process 30 units, and it bases variances on to (30 X 100). The last support tech blames it on people ‘thumbing in’ wrong numbers Did I say 300?!?!? I meant 30… Luckily (if that’s an applicable word here), this issue also hits inventory and is much easier to track down #Orchestrate2015

9. Release Information SAP Platform Variance Change SAP Variance now gets applied to item cost in inventory rather than Variance G/L accounts Bill of Materials – Component Management New tool to adjust BoMs in a bulk format New Reports Indented BoM Cost BoM Cost Variance Financial Dashboard Adjustments Production Dashboard #Orchestrate2015

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