LAPP Insulators introduces SAP BPC

Ceramic and composite insulators ensure that power lines are fixed, held or guided when electrical energy is transported from A to B through an overhead line or switchgear. Although insulators are subjected to high mechanical stress, not to mention extreme climatic conditions and harmful environmental influences, it is vital that they work perfectly and safely for many years – and sometimes even decades – on end. Product quality requirements are therefore extremely high and are particularly well met by LAPP Insulators – a leading manufacturer and supplier of high-voltage insulators – thanks to patented manufacturing processes, among other things.

The internationally active company from Wunsiedel in Upper Franconia is expanding; insulators are currently being manufactured at five sites worldwide and sold in more than 70 countries. The economic success – in 2013, LAPP Insulators generated a turnover of more than €123 million – is based on innovations, continuous optimization of production and business processes, and rapid responsiveness. For this purpose, as well as for planning and controlling growth in a targeted manner, the Management team needs up-to-date and meaningful reports from all companies concerning the financial situation, the order backlog down to the product line, or the gross profit at customer and material level.

This is precisely why the SAP Business Planning and Consolidation (SAP BPC) application has been introduced. The solution fits seamlessly into the existing SAP landscape, a central SAP ERP system and an SAP Business Warehouse (SAP BW), and works in conjunction with SAP BW.

“We were looking for a solution that, as a first step, would enable us to uniformly and faultlessly consolidate monthly reporting throughout the company. This task could no longer be completed satisfactorily with Excel,” explained Veronika Capek, Managing Director and CFO at LAPP Insulators.

The individual companies’ financial data flows into a central business warehouse, where it is harmonized and made available to the SAP BPC application or the central Controlling Department as quickly as possible. Standardizing the database creates a single source of truth (i.e. a clear view of the financial figures and corporate performance of the five production sites and the two management companies). Not only does this increase the quality of financial planning; at the same time, it gives Management meaningful reports that enable them to take strategic business and investment decisions.

“With the help of SAP BPC, even cash flow reports based on account activity can now be generated automatically, relieving the strain of manual work on controllers,” Mr. Rottmann pointed out.

Intercompany elimination has been simplified too, since the reconciliation of internal account balances between the individual companies – for the likes of expenses, income, receivables and payables – is also performed automatically.

In-depth target/actual and forecast comparisons down to each individual business unit also provide Controlling and the Management team with detailed insights into how sales, profit margin or operating result are developing. Based on the forecasts, LAPP Insulators knows exactly which insulators are produced at which margin, and can therefore check the internal monthly reports in a targeted manner for deviations.

Budget planning can also be carried out with greater clarity and efficiency. As soon as the individual companies’ target figures are entered into SAP BPC, Central Controlling can view them immediately, compare them with the current specified values, and make corrections as appropriate. During this process, the default values for each budget plan are recalculated based on defined business rules.

In addition to the strategic benefits of centralized and integrated financial planning and consolidation, there are operational benefits too.

“Nowadays, we prepare the required reports in three days instead of six, as was previously the case, since there’s no longer any need to go through the time-consuming process of coordination using Excel files by email or over the phone,” Mr. Rottmann clarified.

This means controllers at head office can now devote more of their energy to value-adding activities such as analyzing and interpreting financial figures. Companies already using SAP ERP simply upload the required financial data to SAP BPC with the click of a mouse. The production sites in the USA and Poland, which store report-relevant figures in local third-party systems, can also send them directly to the application by means of the file upload feature. The currency is converted from US dollars to euros automatically.

Controlling is also always informed about the current reconciliation status and can intervene in the processes early on if necessary, since the locally recorded financial data is directly available in SAP BW and can be viewed at any time. Based on the reconciled reporting data, the consolidated group reports are prepared according to precisely defined work steps, and each individual stage is logged and documented by means of the audit trail. This ensures a high level of auditing acceptability, because all processes or changes are completely traceable.

And the company’s experience is ongoing, because the solution is being gradually expanded. For example, the company would like to transfer certain key sales figures from the newly installed CRM application – Microsoft Dynamics CRM – to SAP BPC for internal reporting. There are also plans to give Management mobile access to financial, planning and budget data.