After two great releases in the first half of this year, we are continuing our journey of enabling the intelligent enterprise in the third quarter. Our development team for Sourcing & Procurement, is constantly working on revamping the procurement processes.
Proposal of Options for Materials without Purchase Contract
As a result, we can release yet another great Machine Learning functionality which contributes towards the goal of full automation. This Machine Learning innovation is significantly automating the RFQ process. A common challenge for operational purchasers is that they have to process long lists of open purchase requisitions for materials that don’t have any source of supply yet.
This is where the new Machine Learning algorithm comes into play. It will scan the data in the system and will propose to send out an RFQ for those materials that don`t have any source of supply yet. In the new SAP Fiori App “Monitor Materials Without Contract”, purchasers can get a quick overview of all materials that have no purchase contract in place. In the embedded analytics sections, all materials for which the Machine Learning algorithm proposes to create a RFQ are highlighted in the orange color. Checking out the line item section below you can receive more details on it. For all materials for which a proposal exists, a ranking will be displayed. The scale of the ranking spans 0-100, 100 being the best score possible. Clicking on the ranking, you can retrieve details on what it is based on, such as total gross amount, number of PO items, days between first/last order, number of suppliers, days since last order and delivery time in days. After selecting a material for which a proposal exists, purchaser can easily create an RFQ for it by clicking on the “Create RFQ” button.
This significantly automates the RFQ process for important materials boosting the efficiency of the overall process.
Determination of Purchasing Group Based on Material Group
Another intelligent highlight that helps in automating the purchasing process is addressing the processing of purchase requisitions. Using a self-service configuration user interface (SSCUI), you can configure a relationship between material groups and purchasing groups.
You can use this feature to segregate duties, so that each purchasing group is responsible for a certain set of material groups. Once you have set up these relationships, the responsible purchasing group will be automatically prepopulated by the system whenever a material group is entered in the professional purchase requisition app. This way, purchase requisition will be forwarded and processed to the correct purchasing groups and no other can procure the requested material. As you can see this not only further automates the purchase requisition process, but also ensure compliance to company policies.
Analytics for Central Contracts
Already back last year, we launched the SAP S/4HANA Central Procurement Hub. This is especially relevant for all SRM customers that are considering moving to SAP S/4HANA. You can connect SAP S/4HANA and SAP ECC 6 EHP6 systems to SAP S/4HANA Cloud using this as a central hub system to centralize procurement activities. Over the last releases we enabled the main functionalities, such as central purchase requisitions, central purchase orders and central purchase contracts. Now we take the next step and provide first analytical capabilities for central purchase contracts.
Global purchasers of the headquarters can now view and monitor the contract consumption and contract usage of the connected back-end systems in their central SAP S/4HANA Cloud system. Gaining information on the contract usage across subsidiaries on the fly, enables purchasers to take the right action at the right time to ensure business operations without any disruption. In case a global purchaser identifies much higher demand in a subsidiary than he originally anticipated when distributing the contract to the subsidiary, he can immediately remedy the issue.
With 1808, we also enable centralized scheduling agreements as well as the central approval of purchase orders for the central procurement hub.
Purchasing integration to advanced variant configuration
Another crucial innovation of our 1808 release is the integration of advanced variant configuration to procurement processes. Purchasers can now procure configurable materials. They can view and change the configuration of configurable material in the two apps purchase requisition advanced and purchase order advanced processing.
This is crucial for manufacturing companies that rely on very individualized material for their production.
Budget Check in Procurement (Order and Invoice)
Finally, I also want to highlight that we now enable budget checks in procurement for orders and invoices. For both purchase orders and invoice an automatic check against WBS elements is now available. In case the posting of the purchase order or the invoice against the WBS element will exceed the budget tolerance limit at 90%, the user will receive a warning. Whenever the posting would exceed 100% of the budget of the respective WBS elements, the user will receive an error and the purchase order or invoice can only be saved in held status. Project managers can get an overview of the budget consumption of an WBS element in the SAP Fiori app “Project Cost Report”. To enable the budget check, the availability control profile needs to be set to active for the project. This can be done in the “Project Control” app.
Using this new functionality, project managers gain transparency into their project spending and can ensure that their projects don`t run over budget.
For more information on SAP S/4HANA Cloud, check out the following links:
- SAP S/4HANA Cloud release info: http://www.sap.com/s4-cloudrelease
- Best practices for SAP S/4HANA Cloud here
- New SAP S/4HANA Cloud User Community: register here
- Feature Scope Description here
- What’s New here
- Help Portal Product Page here