If you have read my earlier post this week on why you should ramp-up to SAP SRM 7.0 eHp2, http://scn.sap.com/community/srm/blog/2012/04/04/why-you-should-ramp-up-to-sap-srm-70-ehp2–part-1-strategic-sourcing-innovations I am living by my promise to deliver each of innovations in a way that you could relate to as an SAP Procurement consultant / customer and even in the shoes of Solution management. I believe in the statement that “Take Criticism as Constructive Judgment” and only then can we change the world than being caught in the dimension that we all think is right, because we have done Supply Chain in some form or the other with our own hands
2.0 What is today’s topic? How would we make it interesting & engaging?
Strategic Sourcing Innovation 1 : Automatic Info Record and source list Update from Central Contract, a very key area of enhanced Integrations of SRM with ERP
Most of us consultants in the real-world, most of the times come across folks from the business or the client side that are not very savvy, accustomed to Cliché or even some of the procurement jargons, Ex. BOM, Scheduling Agreement, Source List, P2P etc
These could be SAP specific terminology or even sometimes generic #procurement specific.
Hence, most of us follow a standard protocol when we talk, or even blog or explain some of the functionalities to customers from both the SAP and non SAP world.
What this simply means is “revisit the definition”
So to understand Innovation 1 of the SAP SRM 7.0 ehP2 Strategic sourcing, one needs to clearly understand what Info Record, Source List & Central Contract mean, in SAP Procurement.
Purchasing: Info Record
Serves as a source of information for Purchasing. The purchasing info record (also referred to in abbreviated form as the “info record”) contains information on a specific material and a vendor supplying the material. For example, the vendor’s current pricing is stored in the info record.
The info record allows buyers to quickly determine:
- Which materials have been previously offered or supplied by a specific vendor
- Which vendors have offered or supplied a specific material
The source list is used in the administration of sources of supply. It specifies the allowed (and disallowed) sources of a material for a certain plant within a predefined period. Each source is defined by means of a source list record.
The source list serves: Read more http://help.sap.com/saphelp_46c/helpdata/en/75/ee110455c811d189900000e8322d00/content.htm
- To define a source of supply as “fixed”. Such sources count as preferred sources over a certain period of time.
- To define a source of supply as “blocked”.
- As an aid in selecting the preferred source during the source determination process.
- To block the external procurement of a material.
A central contract is a long Term, legally binding agreement between a purchaser and a supplier. It defines the purchase and supply of goods or services at agreed prices and conditions, such as quantities to be ordered and rebates. The advantage of SRM central contract, is that it can sit on top of multiple SAP ECC back-ends and can be distributed to the back-end systems, hence proving the point that you can run your negotiations, events in SRM and get into a Central Global contract with the supplier and all your legal entities (ECC backend-local) tied to your SRM system can take advantages from a Volume bundled negotiated price driven by the central contract
4.0 Experience & Belief in the solution
What difference will the innovation bring in? Some of the points that I think would be tangible business benefits to Strategic & Operational buyers with my experience with the updates to these Type 2 master data elements, if I were to call it in a fancy way.
- Strategic Buyer had to manually go in and update the Source Lists & Purchasing Info Records, Configuration elements were not driven from inside the SRM Central Contract prior to distribution. If there was any change made to the Central Contract in SRM, this was leading to errors or Contract compliance issue, if there was a data mismatch that wasn’t manually aligned.
- The additional step of updating the master data for Source Lists & Info Records so that the connected processes downstream wouldn’t be impacted
- I can think of a situation in Plan Driven Procurement, where, if this wasn’t updated then the next MRP run would be inaccurate in picking up the changes that were coming in from the modified central contract
- More over the flexibility to choose the Block Type for Source Lists and the Update logic for the Info Record, can now be controlled from inside the SRM Central contract
- This avoids dependency on the Strategic or the Operational buyer to keep things in sync and at the same time
Earlier version Central Contract screen-shot without the Innovation
5.0 What you can do now with the new feature?
1) Info record updates in ERP when central contract distributed from SRM
2) Source list update in ERP when central contract distributed from SRM
- During the Central Contract distribution process the Buyer has an option to update a source list and/or info record automatically when the contract is distributed
- While performing the Source list update from inside the Central Contract distribution process, Buyer can update with options: Fixed Source, Blocked Source
SCOPE: The source list update is available only for materials when the distributed
document is of type purchasing contract
- You can update the info record with the options : Update with plant, Update without plant, Update with or without plant
SCOPE: The info record update is available only for materials when the
distributed document is either purchasing contract or scheduling agreement
What does Info record update mean?
What does Info record update mean ? Note 569885 explains the behavior of Info record update in ERP (see section “Contract” at the end of note). This new feature in SRM is consistent with the behavior in ERP. If no info record exists, an info record is created on contract distribution. If an info record already exists, no updates to existing info record take place.
The new enhanced screens would look something like this
More clear visual on the screen that matters to visualize the Innovation
To get a more closer look at the update section
Metrics that you would achieve with this Innovation
- Ensure compliance with central contracts
- Ensure visibility to the central contract conditions
- Reduce manual efforts to update masters
6.0 Logistics: Pre-requisites to use this feature
Switch/ dependencies & Business Function
Switch: SRM_702_UPDATE_INFO_RECORD and Switch: SRM_702_UPDATE_SOURCE_LIST
Dependencies: SAP ECC EhP6 is required. BF: LOG_MM_P2PSE_3; Switch : MM_SFWS_INT_PUR
Stay tuned for the next post on Innovation 2: Direct Materials procurement in classic deployment
This has been a hot topic that many folks including myself would be extremely important. Just an out of context cross-reference to my Lessons learnt in a SRM Plan Driven procurement implementation can be read here Lessons Learnt in an SRM 7.0 Plan Driven Procurement Scenario implementation.
Also, to give your feedback to Ramakrishna Potluri on what you think of Innovation 1 Strategic Sourcing: of this blog Automatic Info Record and source list Update from Central Contract SAP SRM 7.0 EhP2 you can e-mail Ramakrishna.firstname.lastname@example.org
8.0 SAP Procurement : The Social Outreach
Please follow @SAP_Procurement on twitter for the latest trends from the SAP Procurement portfolio of solutions, you can also follow my handle @tridipchakra for a dope of procurement xChanges in the SAP world (articles, blogs, whitepapers).
Focused hash-tags for SAP Procurement: #SAPSRM #SAPSourcing #SAPCLM #procurement #SAPSLM #SourcingOnDemand #SAPCatalog and there will be more in the making as we tide along with like-minded Procurement aficionados like you.