Batch-wise & Product-wise Costing

Objective

Achieve precise batch-wise costing for PDMB, NDMB, 2,5-DMA and other products while providing reliable monthly product-wise costing for pricing and margin decisions.

• Achieve precise batch-wise costing for PDMB, NDMB, 2,5-DMA and other products
• Provide reliable monthly product-wise costing for pricing and margin decisions
• Enable full parent–child batch traceability including partial consumption and by-product reuse
• Eliminate dependence on Excel and Google Sheet formulas
• Standardize SAP data entry via SOPs

Business Problem

The warehouse faced operational inefficiencies due to manual processes and limited system intelligence, resulting in delayed store replenishment. Material traceability was a major issue across production units.

• Material traceability was a major issue across multiple production units
• Significant time wasted searching for material and cross-referencing batches
• High manpower engagement for fetching cost data from SAP
• Delivery to stores was impacted and delayed due to costing bottlenecks

Strategic Framework & Solution

Agile delivery with MoSCoW prioritization was used due to evolving costing edge cases and the client's emphasis on precision over features.

• Discovery & Design: Requirement gathering, process mapping, SAP data understanding.
• Build & Integration: Development of core costing modules, Fleet Tracker integration, and automated SAP-to-system data pipelines.
• Pilot & Validation: Controlled rollout, batch-wise costing validation, GPS tracking verification, finance-led sign-off.
• Scale & Optimization: Full-scale rollout across warehouses and plants, SOP enforcement, continuous optimization.

Solution Overview

A comprehensive batch-wise and product-wise costing solution was implemented to address the complexity of multi-stage manufacturing and cross-unit material flows. The solution treats each production batch as a parent entity, linking all consumed raw materials and in-house intermediates as child batches. It supports partial batch consumption with accurate cost carry-forward, ensuring precise traceability across production stages.

• Automated SAP-to-costing data pipeline — production, material movements, batch records, and cost data extracted nightly from SAP into the costing engine
• Completely eliminates manual query execution, Excel exports, and formula-based calculations
• Finance-friendly costing interface — select product code and date range to generate batch-wise cost and monthly product cost outputs
• Standardized SAP data entry SOP defined and enforced, eliminating duplicate postings and incorrect material issues

Key Features Implemented

• Batch-wise costing engine
• Product-wise monthly costing
• Parent–child batch mapping across units
• Mixed RM handling (vendor + in-house)
• Automated nightly data refresh
• Standardized SAP entry SOP

Before vs After Comparison

• Trust in costing: Low confidence → Accepted by finance — 100%
• Effort per cycle: High manual effort → Automated — 80% reduction
• Costing Accuracy: Inconsistent → Reliable — 95%
• Batch Traceability: Limited → Full parent–child — 100%
• Scalability: Complex formulas → Stable model — Scalable

Deployment Impact & Business Value

• 100% — Batch-wise costing acceptance by finance after SOP and validation
• 70–80% — Reduction in manual effort by eliminating SAP queries and Excel handling
• 95%+ — Accuracy improvement in pricing and margin decisions using batch costs
• 100% — Parent–child batch traceability across stages, units, and by-products

Client Portfolio

Leading Indian specialty chemical manufacturer ("Crystal") producing intermediates and specialty products such as 2,5-dimethylaniline. Operations span 4–5 production units across India.

• Industry: Chemical manufacturer
• Operations: 4–5 production units across India
• Products: PDMB, NDMB, 2,5-DMA and other specialty intermediates

Industry Use Cases

Specialty chemical and chemical intermediates manufacturers running SAP, with multi-stage manufacturing, multiple plants and cross-unit batch flows, and significant by-product reuse.

• Plants requiring accurate batch-wise costing for margin and price setting
• Traceability for audits, quality investigations, and regulatory reporting
• Environments where SAP alone is not delivering the required granularity

Strengths, Weaknesses, Opportunities & Threats

• Strength — Finance-grade accuracy with SAP integration
• Strength — Full parent–child batch traceability
• Strength — Automated data pipeline eliminating manual effort
• Weakness — Initial SAP configuration complexity
• Weakness — Dependency on consistent master data quality
• Opportunity — Expansion to additional product lines and plants
• Opportunity — Predictive costing with AI/ML models
• Threat — Raw material price volatility affecting cost baselines
• Threat — Regulatory changes in chemical industry compliance

Conclusion

The batch-wise costing project for the specialty chemical manufacturer successfully bridged the gap between SAP's standard costing capabilities and the client's need for highly granular, traceable cost information in a complex, multi-stage environment. By combining an automated SAP data pipeline, a robust parent–child batch model, and a simple finance-friendly interface, the solution delivered precise batch-wise costing while significantly reducing manual effort and spreadsheet dependency.