Interview Story - Solved A Problem

When I was involved in D3 Systems Applications and Products (SAP) deployment, converting 6 ERP systems in Europe to a central SAP, I was responsible for providing transfer prices to all products in all European warehouses of selling entities in Europe.

This task was quite substantial due to the number of unique products in these warehouses. Yet, it became far more difficult because of the "chicken or egg" nature of transfer pricing.

Transfer prices determined the allocation of shared machinery and manufacturing costs to each unit of product. The per-unit costs were used to determine the transfer price. We needed a process for where to start.

I did research on the number of products involved in the situation to set the scope.

Then, I found they all have existing transfer prices. I discovered that about 80% of product prices would be unaffected. The remaining 20% would need new transfer prices due to costing process changes in SAP.

I proposed using existing transfer prices for these products as the initial starting cost. This would avoid leaving any holes.
Then, we could iteratively adjust their transfer prices once the new manufacturing cost is established in SAP.

The plan was used in a go-live cutover plan. It resulted in all products in local warehouses having an initial cost established in SAP. The transfer price was then adjusted based on the SAP deployment costing process. Within about three iterations, and just a few weeks of management discussions, there were firm prices in place.