From the previous blog we have elaborated on the trends in procurement with a focus on service procurement. This blog continues with the specifics about applying Business Suite 7 (SRM) to serve the trends in service procurement. Improvements to the procurement process for service categories is now a big opportunity with the latest the technology solutions provided by SAP, given the current pressures to maintain profits due to the current economic environment.
How can we improve this procurement process for services?
We see SAP provides with the current business suite SRM 7.0 release, which will become general available in 2009, a complete suite of integrated functionality to close the loop of strategic purchasing (Source to Contract) and operation procurement (Purchase to Pay) for the service procurement spend categories. The Capgemini procurement scope picture explains the interrelation between the strategic sourcing cycle and the operational procurement cycle.Important connection is utilization of central contract management in order to capture the negotiated prices and capture the savings.
Because SAP business suite SRM 7.0 enables access to all contracts in a secure, centralized repository, procurement can monitor, identify, and reduce maverick buying.
When integrated with SAP ERP ECC 6.0 Ehp4 , SAP business suite SRM 7.0 can serve as a centralized repository for all operational procurement contracts. With centralized contracts, procurement departments can use contracts as a “source of supply” across SAP SRM and one or more integrated back-end systems, track contract usage, and drive compliance to negotiated terms, thereby delivering realized savings. This is specifically suited for the public sector
How does service procurement in the business suite SRM 7.0 solution realize saving with respect to the Capgemini Value Triangle?
As we see service procurement as high value complex commodities the characteristics implicate the opportunities of the Capgemini Value Triangle are on the side of Demand Management to reduce consumption, consolidate spend and improve speciications via.
- Centralized management; procurement department has centralized and standardized control over services categories
- Compliance enforcement; compliance enforcement to the approved suppliers and the negotiated rates
- Enforced contract usage for service procurement will reduce maverick spend and standardize specification via the service hierarchy usage
- The usage of service hierarchy in the MDM catalog which can be transferred to the RFx and even a RFx response can be uploaded in the MDM catalog will contribute to standardize specifications
The second side shows the Supply Base Management with the opportunities to restructure relationships, increase competition and restructure the supply base via.
- Supplier collaboration; collaboration with suppliers on service definitions, bid responses, purchase order delivery, service confirmations and invoice distribution
- Enable supplier collaboration for external service procurement by integrating between MM-SRV and supplier Self Service
- Enhance supplier self service to submit service entry sheets and invoices for services performed
- Purchase Order and contract creation in ERP based on SRM RFx including response modification with hierarchical structure
The third side of the value triangle shows the Total Cost Management with the opportunities to optimize the total supply chain cost, reduce total lifecycle, ownership cost and reduce / eliminate transactions via.
- As a result of the above with a rationalization of the supply base for service commodities, less vendor, material, price data maintenance is required
- The enabling of e-procurement with integration of RFx functionality and central contract management a reduction of redundant data entry of contracts and paper based activities of RFx is established
- Automated processes; streamlined, automated, and integrated processes from request to settlement
The procurement function is ready to contribute to the company strategy of reducing cost in current economic downsize economy. The cost reduction will directly influence the company margin and bottom line profit. The maturity of implemented procurement solutions is scattered and most companies have not yet harvested the benefits of improving the procurement process of complex services. This raises an opportunity and the SAP business suite 7.0 SRM solution can comply with the requirements of procurement of complex services.
To summaries the SAP SRM 7.0 benefits:
- SAP ERP external service procurement process
- SAP SRM sourcing capabilitieso SAP SRM-MDM catalog as a service repository
- SAP Supplier Self Service component for service procurement collaboration
- Enhanced interfaces for sourcing of external service structures
- Extended sourcing functionalities for external service structures
- Hierarchical structures of line items in SAP SRM sourcing cockpit, RFx, RFx response, SAP Supplier Self Service order and SAP Supplier Self Service confirmations
- Leverage SRM-MDM catalog as a repository for model servicespecificationso Enable SAP Supplier Self Service confirmation as service entry sheet
- Offering of sourcing functionalities of SAP SRM for existing SAP ERP External services management customers without disrupting their current way of working with the software
- Support for end-to-end process for complex services
- Deeper integration of suppliers in service procurement processes through SAP Supplier self Service