Symphony Program

Supply Chain Blueprint

Record to Report Topics for Escalation
Transfer Pricing

September 2011

Material Ledger Opportunities

Within the SAP system, Material Ledger offers:
Product profitability analysis including manufacturing variances
Deferral and amortization of product cost variances
Elimination of inter-company profit
A decision to use Material Ledger has ramifications on:
Profitability analysis with integrated ERP data
Transfer Pricing (to be confirmed)
TCGM accounting, intercompany margin valuation and consolidating
eliminations
Measuring and planning Exchange on intercompany margin
Product cost planning
Commercial performance measurement
Inter-company profit elimination if entire Abbott is not on Symphony
requires multiple solutions

Supply Chain RTR

Company
Confidential

Functionality with / without Material Ledger

Product Profitability Analysis within SAP
With Material Ledger

Without Material Ledger

Product profitability analysis at actual net

cost is possible through manufacturing
margin at the product ID level

Product profitability analysis is calculated

outside of the system

Requires changing how commercial

affiliate performance is measured.

Product Costing Variances

With Material Ledger

Without Material Ledger

Are part of Commercial Performance

Supply Chain RTR

Company
Confidential

Are part of Manufacturing Performance

(before IDVs)

Functionality with / without Material Ledger

(contd)

Inter-company Profit Elimination

With Material Ledger

Without Material Ledger

Inter-company profit at Actual Exchange Rates flows to Commercial Performance

Profitability analytics change
Inter-company profit elimination in SAP
Master Data replaces TCGM factors
Deferred Margin includes deferred manufacturing variances as well as purchasing (PPV) and
remeasurement (SRV) variances
Product cost planning changes
Exchange measurement and planning changes
Margin tracking by Source and Location changes
Will require multiple inter-company profit elimination solutions if entire Abbott is not on Symphony

Supply Chain RTR

Company
Confidential

Inter-company profit at Plan Exchange Rates flows to Commercial

Performance
Elimination of Inter-company profit is in consolidation process (outside
of SAP)
Deferred Margin includes deferred PPV-Exchange and SRV on Transfer
Prices and Exchange for ALOG and APO AG (excludes manufacturing
variances)

Functionality with / without Material Ledger

(contd)

A repository for Transfer Prices to be used to process all inter-company

transactions (to be confirmed)
With Material Ledger

Without Material Ledger

Transfer prices are stored and integrated

with other SAP processes

Supply Chain RTR

Company
Confidential

A solution is needed to get transfer prices

into a single source for Inter-company
transactions

Proposed Implementation Options for Transfer Pricing

Supply Chain RTR

Company
Confidential