SAP Thought Leadership Paper

Run Simple with GST

Discrete Manufacturing and Auto
2016 SAP SE or an SAP affiliate company. All rights reserved.
Run Simple with GST Discrete Manufacturing and Auto

GST The New Beginning

Financial Year 2017-18 will be the defining year for India Inc. with the advent of
much awaited Goods and Services Tax (GST) reform. GST is expected to have a
far reaching and wide impact on business, society and general economy. It is also
expected to address the current issue of inefficiencies in the tax system, prevent
cascading impact of multi-level taxation, plug the revenue leakages and raise the
transparency levels in business. Smooth transition to GST is one of the top 3
agenda items on the Board and Managements strategy and execution list. With
GST, the past no longer holds good and future is laden with number of
implementation challenges. Discrete Manufacturing and Automobiles is one of the
key industries to witness the massive impact on account of GST implementation.

GST regime has a high level impact on

end to end business model of companies
engaged into Discrete Manufacturing
and Automobile

Supply Chain Customer

High level of dependency on area based incentives High level of B2B and B2C exposure
CNF agency arrangements High level of direct marketing costs
Consolidation of warehousing and logistics Emergence of alternate distribution arrangements
Supply rules impacting movement of goods Price control measures

Business Model
Working Capital
Co-marketing and bundle product arrangements
Inventory management and SKU management
Use of intellectual property
Tax credit and compliance management
High level of foreign and domestic investments
Grandfathering of accumulated tax credit
Complex transfer pricing arrangements
Changes in valuation rules
Manufacturing
Multi-locational manufacturing facilities
Sub-contracting arrangements

2016 SAP SE or an SAP affiliate company. All rights reserved.

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Run Simple with GST Discrete Manufacturing and Auto
An organisation needs to re-evaluate the
business models, business processes and carry
Impacted Processes/
Functions/Departments Impact Sub-areas
Procurement to Pay (P2P),
Manufacturing
Order to Cash (O2C)
out significant changes in order to sail through
the GST implementation journey smoothly.
Consolidation of the
Warehousing, Logistics and
Distribution facilities
Renegotiation of the
transportation and logistics
contracts
Transition of vendors to the
new tax model
Business allocation to
vendors
Supply of raw materials/
inputs to the vendors
Stock transfers between
suppliers/manufacturing
locations to other locations
Withdrawals of area based
incentives impacting cost of
sourcing
Pricing of the products
Pricing arrangements with
channel partners
Warranty component in the
price of the product may
attract different tax rate
Withdrawals of area based
incentives impacting the
pricing of key products
Re-modelling of the dealer
and distributor
commissions
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Key Imperatives SAP S/4HANA Solutions
Comprehensive review of SAP Business Planning
the existing supply chain add-on on SAP S/4HANA
and modelling of the SAP Predictive Analytics
required supply chain SAP Profitability and Cost
with scenario analysis Management
Re-alignment of the SAP Net Margin Analysis
procurement function on SAP S/4HANA
Re-calibrated supply SAP GRC Access
chain design Control, Process Control
Review the volume and
value of interstate
movement of the key
inputs
End to end visibility of the
supply chain
Build adequate flexibility
in the overall supply chain
Review the volume and
value of interstate
movement of the
products
Evaluate channel SAP Business Planning
partners margin neutral add-on on SAP S/4HANA
pricing SAP Predictive Analytics
Formulation of a new SAP Profitability and Cost
geography linked Management
distribution plan SAP Net Margin Analysis
Channel partner on SAP S/4HANA
education, awareness and SAP GRC Access
transition plan Control, Process Control
2016 SAP SE or an SAP affiliate company. All rights reserved.
Run Simple with GST Discrete Manufacturing and Auto
Impacted Processes/
Functions/Departments Impact Sub-areas
Record to Report (R2R) Accurate recording and
reporting of the tax credits
Correct administration of
the taxable and exempt
inputs/products
Generation of multiple
reports and returns and
timely filing
Tax and Compliance Upgradation of the vendor
Management data base and tax
registration details
Applications of the
necessary tax masters/
rules to vendors
Working Capital Identification, recording and
Management efficient utilization of the
input tax credit
End to end visibility of the
inventory across the
re-modelled supply chain
Business Planning and Accurate planning and
Forecasting management of volume
Channel partner profitability
and efficiency analysis
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Key Imperatives SAP S/4HANA Solutions
Initiatives for increasing SAP GRC Access
awareness of the key Control, Process Control
reporting requirements SAP Master Data
across business functions Governance
Establishment of strong SAP S/4HANA
internal controls for SAP Financial Closing
transaction capture, Cockpit
record, review and SAP Receivables
reporting Management
SAP Disclosure & Notes
Management
SAP Shared Services
Framework
Collaboration with TAXINN with GST
multiple business Compliance
functions to ensure tax SAP GRC Access
compliances Control, Process Control
Ensuring technology SAP Master Data
readiness Governance
SAP TAO
SAP Shared Services
Framework
Understanding and SAP Cash Management
evaluating the working on SAP S/4HANA
capital efficiencies due to
elimination of cascading
taxes
Formulation of robust SAP Business Planning
budget and operations add-on on SAP S/4HANA
plan incorporating the SAP Predictive Analytics
impact of GST regime SAP Profitability and Cost
Frequent review, Management
monitoring and sharing
insights with business to
reframe operations
strategy
Recording and reporting
of the savings in supply
chain costs
2016 SAP SE or an SAP affiliate company. All rights reserved.
Run Simple with GST Discrete Manufacturing and Auto

Impacted Processes/
Functions/Departments Impact Sub-areas Key Imperatives SAP S/4HANA Solutions

Understand, evaluate and

guide business team for
leveraging opportunities
arising due to GST
implementation like
expansion of margin,
better realizations etc.
Evaluate impact of GST
on key capital investment
decisions

With SAP S/4HANA, companies engaged into
Discrete Manufacturing and Automobile Sector
will be able to analyze high volume of data on the
basis of market, demand, production and
inventory across various locations and compare
with the post-GST scenario. Such analysis will
enable the management of the companies to
capture the opportunities in disguise which will
be unfolded only after the launch of the new
tax regime.

For more information on GST,

visit: http://sap.com/india/simpleGST

Note: The material and the information therein related to taxation are proprietary to Dun & Bradstreet Information Services India Private Limited.
Any content that has mention of SAP products/services is owned by SAP.

2016 SAP SE or an SAP affiliate company. All rights reserved.

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Run Simple with GST Discrete Manufacturing and Auto

2016 SAP SE or an SAP affiliate company. All rights reserved.

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