“In our Engineering department, we have excellent people to create custom products. In order to create customised offers, they search in SAP for similar products that were already sold at least once and adapt the corresponding Bills of Material. Especially for the ETO (Engineer to Order) and ATO (Assembly to Order) processes, this is a real struggle in our SAP system. How can we improve this?”
Implementation of SAP Variant Configuration to improve competitiveness
Thanks to SAP Variant Configuration, Ariston Thermo Group responds 6x faster to requests for quotations
The Engineering department of the Ariston Thermo Group struggled a lot with their product management structure and process in SAP when reacting to requests for quotations. The more custom the customer request was, the more complex it was for Ariston to configure the corresponding product in SAP. When the opportunity came to optimise and simplify their SAP processes, they jumped on it and chose PIKON to implement SAP Variant Configuration and adapt it to their needs.
About Ariston Thermo Group
Ariston is the global expert in water heating and heating products, providing people around the world with efficient and high-quality solutions for their comfort through innovative Italian design.
Thanks to its global expertise and deep understanding of consumer needs, Ariston has been trusted and welcomed by millions of families around the world for over 50 years, selling its products in more than 150 countries.
Ariston is also valued by experts and professionals for its constant efforts in redesigning its products with the aim of making every step of installation and maintenance simple and efficient. The Ariston brand belongs to Ariston Thermo Group, a global leader in water heating and is widely known under brand names, such as Elco, Cuenod and Ecoflam.
Why Elco (part of the Ariston Thermo Group) needed better product struc-tures and processes in SAP
Thomas Wünsch, Managing Director Industry at Elco GmbH (part of the Ariston Thermo Group), was frustrated by Elco’s slow response time to requests for quotes, caused by a lacking product management structure and overview in their SAP ERP system.
In order to create an offer, his staff in the Engineering department each time needed to do a manual search for already existing similar products in SAP ERP and then adapted the related Bills of Material to create a customized offer, meeting the requirements in the requests for quotations.
This manual process did not only take too much time, but also caused a too large number of product variants to be created in the system. Due to this always increasing amount of data, it became very difficult for the engineers to keep the overview and find the relevant existing product. At a certain point, it was even needed to have a long-time experience to cope with this task, which made it very complex for new employees to settle in and offer support.
Another frustration of Mr. Wünsch was the complexity to establish cost transparency and to define the operating results of a customer order.
How PIKON helped Elco simplify and optimise their product management with SAP Variant Configuration
Elco GmbH relied on PIKON’s SAP ERP optimisation expertise to find the right solution. A first analysis together with PIKON’s expert, Sascha Gerhardt, pointed out really quick that the implementation of SAP Variant Configuration would probably be the best solution to tackle Elco’s challenges.
With a Proof-Of-Concept in Elco’s SAP ERP system, PIKON demonstrated that a new approach for order entry through SAP Variant Configuration works and accelerates their process radically.
At this point, PIKON also introduced a self-made template, enabling Elco’s users to enter product structures and product characteristics without needing to have specific SAP knowledge. This makes it easier to convert their technical product view to SAP-conform standards. The introduction of this PIKON template made the internal coordination among the users improve significantly.
Together with Mr. Frank Büschelberger from Elco’s Engineering department, PIKON’s expert, Sascha Gerhardt conducted a thorough business analysis (As-Is vs. To-Be). This revealed that more than 90% of Elco’s existing products could be implemented through SAP Variant Configuration.
PIKON’s Complexity Score Index Calculation (PIKON CSI) was used to assign the products to different product groups, broken down into high, medium or low complexity, based on the number of characteristics, the number of values and the complexity of object dependencies.
In order to have more cost transparency over customer orders, PIKON recommended to create SAP CO-PA reports (CO-PA = the standard SAP component “Profitability Analysis” for operating results) on product features, rather than on individual material masters (as done before). This new reporting type has become possible to use, since there is now only ONE material master for the configurable material, representing different products. This approach, however, went against Ariston Thermo’s global scale strategy, being a product company and having a product cost approach.
Because of that, PIKON’s Custom Development department came into play and developed a custom background program that creates a SAP material master record in every customer order for the particular characteristics of the configured product in question. For these material master records (i.e. material variants), the existing product controlling reports can be re-used. In order to avoid redundancy, the custom program also verifies whether material variants with the same characteristics already exist.
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How SAP Variant Configuration made Elco more competitive in their market
Thanks to the implementation of SAP Variant Configuration and the related process optimisations, Ariston now benefits from the following product management improvements to be more competitive in their market:
- Their response time to requests for quotes is reduced from 12 days to 2 days. This impressive reaction time acceleration improves an important, competition-critical Key Performance Indicator (KPI) dramatically.
- The Ariston product management and variant diversity are back at a manageable and controllable level.
- For new employees, it has become much easier to settle in.
- All the Ariston sales people worldwide can now configure the requested products autonomously. This ensures a uniform approach, simplifying and streamlining the group-wide cooperation.
- In accordance with Ariston’s corporate product strategy, the product controlling approach remains at material-level. With the development of a custom background program (fully maintained by PIKON), the cost transparency over customer orders is ensured and Ariston can now easily define the operating results of their orders.
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