Welcome to this blog post! In today's edition, I want to outline how companies can move beyond isolated, short-lived cost-cutting efforts and achieve holistic, sustainable cost optimization – leveraging SAP Integrated Product Development (IPD) as a digital product platform, SAP S/4HANA as the ERP backbone, and PwC's collaborative cost optimization solution METUS.
No time to read? Register to access the recording of our latest Meet the Expert webinar via the SAP Supply Chain Management Enablement Hub here.
In this blog, you will find out how manufacturing and industrial companies can:
- Identify and quantify cost potentials across the full product value chain – from R&D and procurement to manufacturing and supply chain
- Connect data from SAP IPD and SAP S/4HANA into a unified, cross-functional cost model
- Simulate and compare alternative cost scenarios in a sandbox environment, detached from live systems
- Push validated change decisions back into SAP IPD and SAP S/4HANA through structured engineering change management
- Achieve measurable and sustainable cost reductions rather than point-in-time fixes
Moreover, we will discuss how product, engineering, and operations teams can collaborate across silos to develop cost-optimized product structures – from early concept all the way through to manufacturing handover.
A core part of this journey is SAP Integrated Product Development, our solution designed to help you define, develop, and deliver sustainable products by connecting insights, processes, and people across your enterprise. While SAP provides the powerful digital backbone for this process, the true impact often materializes when we combine it with deep industry expertise. Today, I want to highlight a compelling example of this synergy: how our partner PwC is helping companies tackle one of the most complex challenges in product realization – holistic cost optimization.
The Challenge: Why Cost Optimization Efforts Often Fall Short
Most companies know they have cost optimization potential. The challenge is realizing it –sustainably and at scale. Based on over 25 years of experience across automotive, machinery, aerospace, and defense industries, and confirmed by our webinar audience poll, we repeatedly see that traditional design-to-cost approaches fall short for structural reasons. The most common barriers are:
- Lack of real-time data availability: Cost decisions are made on outdated or incomplete information
- Organizational resistance and siloed thinking: R&D, procurement, manufacturing, and supply chain each optimize locally, without considering cross-functional effects
- Inadequate methodology: Optimization starts too late in the product lifecycle, after key architecture and cost-driving decisions have already been made. In fact, approximately 70% of total product cost is determined in the conceptual design stage—when the leverage of improvements is highest.
The result is what practitioners call the “waterbed effect”: squeezing cost in one area (e.g., cheaper material in R&D) only creates new cost elsewhere (e.g., additional tooling, rework, or recall risk in production). This is especially common when measures are driven within one function (often component-by-component), while system interactions and downstream impacts—manufacturing, service, logistics, and sales—are only addressed later. Initial savings may appear short-term, but they are often not sustained structurally.
[An image showing the waterbed effect as explained in the text.]
What is needed instead is a holistic, cross-functional view that spans the entire product value chain, supported by connected data and a collaborative platform.
The Solution: PwC's METUS, Connected to SAP IPD and SAP S/4HANA
This is where PwC's METUS solution comes in – a collaborative cost optimization platform that bridges the gap between strategic financial targets and operational product data.
METUS is not a standalone tool. It is designed to extract, connect, and model cost-relevant data from across your SAP landscape – including SAP IPD for engineering and product structure data, and SAP S/4HANA for ERP and material cost data – and bring them together in a single, flexible simulation environment.
The approach follows a clear end-to-end logic:
1. Extract and Connect: Build a Unified Cost Data Model
The starting point is data. Cost information in most companies is scattered across systems: requirements in a requirements management tool, components in PLM, material costs in ERP, supplier data elsewhere. METUS extracts these data elements from SAP and assembles them into a connected, cross-functional cost data model – spanning requirements, technologies, components, manufacturing steps, and supply chain parameters.
This connected model makes visible what was previously hidden: the interdependencies between a customer requirement, the technology choice it drives, the component design it implies, and the cost it ultimately produces.
[An image showing the the dimensions as explained in the text.]
2. Simulate and Optimize: Explore Scenarios Without Risk
Once the data model is in place, teams can use METUS as a sandbox environment, fully detached from live systems. This is critical: the first cost-saving idea is rarely the best one. Teams need the freedom to simulate alternatives, compare scenarios, and assess the downstream effects of any change – before committing to it in production systems.
[An image showing the data flow to an external tool as explained in the text.]
For example: Does swapping a door control unit of a car door reduce costs at the component level, but introduce complications in the manufacturing BOM or require supplier re-qualification? In a connected model, these effects become visible immediately.
[An image showing the UI of METUS as explained in the text.]
The approach combines top-down financial targets (what do we need to achieve to stay competitive?) with bottom-up measure generation (where exactly can we find savings, and how?). A global measure catalog is built across R&D, procurement, manufacturing, and supply chain – validated and quantified collectively within weeks.
3. Push Back and Execute: Structured Change Management in SAP
Once a scenario is validated and a set of cost measures is agreed, METUS can push the changes back into SAP using controlled change objects to ensure compliance and traceability. Depending on the setup, this may involve triggering an Engineering Change Number (ECN) / change number for the engineering domain (SAP IPD) and creating a Change Record in SAP S/4HANA to orchestrate downstream execution (for example, manufacturing BOM and routing updates). This supports a governed workflow with approval steps and end-to-end traceability into manufacturing.
From there, the Intelligent Handover application supports the transition of engineering BOM (EBOM) changes into the manufacturing BOM (MBOM) and related manufacturing objects in SAP S/4HANA—helping ensure that cost decisions made in the optimization platform are executed consistently in operations.
[An image showing the data model as explained in the text.]
For a full demo, register to access the recording of our latest Meet the Expert webinar via the SAP Supply Chain Management Enablement Hub here: In the webinar, the team walked through a concrete end-to-end scenario: optimizing the cost of an automotive door assembly by replacing the door control unit.
Architecture: How SAP IPD and METUS Connect
The integration between METUS and SAP is built on SAP's Integration Suite – the recommended middleware for connecting multiple SAP landscapes. In many industrial companies, SAP IPD (for product engineering) and SAP S/4HANA (for ERP and manufacturing) run in separate systems. SAP Integration Suite bridges these landscapes and provides standardized integration flows and APIs that METUS can consume.
This means METUS can:
- Read product structures, BOMs, and cost data from both IPD and SAP S/4HANA
- Write back validated changes as engineering change records into the SAP environment
So what’s next?
Looking ahead, the integration roadmap includes connecting additional SAP data sources – SAP Advanced Variant Configuration, SAP Digital Manufacturing, SAP Ariba Network, and ultimately SAP Business Data Cloud – to further enrich the cost model and streamline the integration layer.
The METUS Cost Optimizer solution is available today on the SAP Store. Deployment approach and fit depend on the customer’s SAP landscape and configuration—please reach out to validate the appropriate setup.
The Broader Principle: Collaboration and Transparency Are the Foundation
Throughout the webinar, one theme emerged consistently: cost optimization is not primarily a technology problem. It is a collaboration and transparency problem.
The most impactful cost measures are those that consider the full value chain – not just cheaper materials, but smarter designs that reduce assembly effort, improve repairability, and reduce variants. These measures can only be found when R&D, procurement, manufacturing, and supply chain teams sit at the same table, working from the same data model.
METUS, connected to SAP IPD and SAP S/4HANA, provides exactly that: a shared, cross-functional workspace where teams can jointly explore the cost performance of their products and align on the measures that deliver real, sustainable value.
Conclusion: The Power of the Ecosystem
Achieving holistic and sustainable cost optimization requires both a robust digital backbone and deep cross-functional expertise. PwC's METUS solution is a strong example of how a partner solution can provide targeted, high-impact functionality for a specific business challenge – fully integrated into the SAP ecosystem.
By connecting engineering and ERP data, enabling cross-functional scenario simulation, and closing the loop through structured change management, this approach turns cost optimization from a one-time project into a repeatable, data-driven capability.
More Information / Additional Links
To learn more about SAP Integrated Product Development, keep an eye on upcoming Meet the Expert sessions on the SAP Supply Chain Management Enablement Hub.
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