As a business owner or manager, you know how crucial it is to keep your equipment and facilities running smoothly. That's why you rely on SAP's planned maintenance module to schedule and track maintenance tasks. But despite your best efforts, you’re bound to come across a time when the actual costs of maintenance tasks differ significantly from the planned costs. This discrepancy can be frustrating and can throw off your budgeting and forecasting efforts. That's why it's important to understand the differences between planned and actual costs and how to manage them effectively.
When SAP best practice functionality is followed through the work order, capturing the ‘Plan vs Actual’ costs can be simple. The planned cost is the estimated cost of completing a maintenance task based on various factors such as the labor, material, and overhead costs. The actual cost, on the other hand, is the true expenditure incurred in completing the maintenance task. The difference between the planned cost and the actual cost is the variance. Positive variances indicate that the actual cost was less than the planned cost, while negative variances indicate that the actual cost was more than the planned cost.
Now, ask yourself this: what if all your data activities were captured and enacted within SAP instead of, in effect, outsourcing them to external applications or Excel? What if the integration between SAP modules were so finely honed that you could trust the analytical output with confidence?
Ensure the Best Outcome, Follow these SAP Best Practices for Work Orders
To manage Planned vs Actual costs effectively in SAP, it's important to have a clear understanding of the business process that the work order needs to follow. The work order process typically involves the following steps:
- Creation of a work order: A work order is created in SAP's planned maintenance module to schedule a maintenance task. The work order contains information about the task, such as the equipment to be maintained, the type of maintenance required, and the estimated cost.
• Stock material is reserved
• Request for material (direct procurement)
• Request for external contractor services
• Assigning internal time and resources
- Execution of the work order: Once the work order is created, the maintenance task is executed according to the instructions in the work order. This involves the use of labor, materials, and equipment.
• Scheduling the tasks with anticipated time duration
• Scheduling the assigned resources
3. Confirmation of the work order: After the maintenance task is completed, the work order is confirmed in SAP. This involves updating the actual cost of the maintenance task and any other relevant information.
• Good issue of the stock material
• Vendor payment for external material
• Invoice verification and service entry sheets completed for payment to contractors for services
• Internal time confirmations for the assigned resources
4. Analysis of the work order: Finally, the work order is analyzed to identify any variances between the planned cost and actual cost. This helps to identify areas where improvements can be made to the maintenance process.
Now that we have an idea of the business process that the work order needs to follow, it is reassuring to know that all these related expenditures are efficiently captured in SAP.
That leads to the best possible outcomes. We can use SAP reports to retrieve the data and analyze the historical expenditure by each machine or functional area over a set period. And we can quickly view the variance between the planned costs versus what it costs to complete a specific task.
Best Approach for Monitoring Planned vs Actual Costs
To effectively monitor planned vs actual costs, businesses are well advised to use SAP's variance analysis report. This report provides detailed information on the variances between planned and actual costs, enabling businesses to identify areas where improvements can be made to the maintenance process.
Another technique is to use Key Performance Indicators (KPIs). Examples such as maintenance cost per unit of production, maintenance cost as a percentage of total revenue, and maintenance cost as a percentage of asset value can provide valuable insights into the effectiveness of the maintenance process.
Managing planned vs actual costs in SAP's planned maintenance module is crucial for businesses looking to optimize their maintenance process and improve their bottom line. By understanding the differences between planned and actual costs, we can develop strategies to reduce these differences and improve the accuracy of maintenance cost estimates.
By monitoring planned vs actual costs, we can identify areas where improvements can be made to the maintenance process and ensure that their equipment and facilities are running smoothly. Most importantly, we can confidently rely on accurate data to make more informed decisions on future financial budget planning in one system of record.