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Proposed Variance Analysis Report in Oracle ERP System

Please find the strategy we would adopt to meet the requirements below in detail. This may take little time as I have documented with a well thought out plan in the projects best interest.

You will agree with me that these are not Day1 related reports which will stop us from performing transactions in the system. Also it will make more sense to test these analytical reports in a test instance where we have replicated at least 15 days of Production data. Request you to go through the below without a pre-conceived notion and then you will appreciate the timelines.


A.      Variance Analysis

Type
Pre-requisites & Solution
Proposed Timelines
Pre-requisite
Maintenance of Standard Costs:
We can maintain Standard Costs and Usage of each of the component of Finished Goods (for all ingredients & resources) in the system. The same can be copied every month / overwritten effective from any month.

Solution
Cost Sheet Report – Standard Vis-à-vis Actuals
-          Once the ‘Cost Sheet Report’ is ready, you would be able to see the cost for a particular FG Item (across all production batches for the month) vis-à-vis standard cost.
06-Oct-2013
Solution
Variance Analysis – Material Cost Variances (Price & Usage)

This I believe is a report whose format is shared by Costing, but no efforts are put on this requirement as preliminary things as discussed above need closure.

All the elements which are required to arrive at the Material Cost variances are already incorporated in the solution proposed by KPMG and are being captured in the system. It is only a matter of reporting this data in the way you wish to see & analyze. We will continuously engage the technical team to work on these reports in parallel and make sure these reports are delivered before we close the first month in ERP by 20th Nov 2013. By this the technical team will have 30-40 days to deliver them while we continue working on our go-live strategy and execute go-live.

Elements required to calculate Material Cost Variances
Material price variance
=  (standard price – actual price)*actual quantity
Material usage variance
= (Standard quantity – actual quantity)* standard price (or)
= (Standard quantity for actual production – actual quantity production) * standard price

20-Nov-2013
Two weeks after go live.
 

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