Sourcing & Procurement in SAP S/4HANA Cloud 2005
as we promise to deliver on a regular basis, this blog will cover the release of SAP S/4HANA Cloud 2005 focusing on Sourcing and Procurement. Please watch the video below to get a crisp overview on the highlights for this release.
If your goal is to get a detailed understanding – congrats! – You are at the right spot when reading through this blog post. The following topics will be covered – just click on the link if you are interested in a specific one.
Enterprise Contract Management and Assembly
Our daily business circulates around the intelligent enterprise. SAP’s developers work hard and passionate to come closer to our vision. Now, we introduce the integration of SAP Ariba Contracts with Central Procurement (see the section on Central Procurement below to get more updates in that area). We make the integration available through a new scope item 4B0. By that we help to run strategic sourcing activities, for example when integrating prices from SAP Ariba Contracts into the operational system SAP S/4HANA Cloud. Integrated with Central Procurement it is possible to scale contracts across the enterprise. This integration connects SAP Ariba Contracts to one connected system in Central Procurement, e.g. SAP ERP or SAP S/4HANA, and exchanges business documents to ensure end-to-end business processes that run in the connected system. Follow the official documentation for further information here. Please be aware that this is available as soon as SAP Ariba 2005 is released.
No – I do not want to confuse you 😉 We delivered the integration of Contract Management with SAP Ariba Contracts in 2002 already (4AZ) – so the above innovation is all about Central Procurement.
Fig. 1: Process flow of SAP Ariba Contracts integrated with Central Procurement (4B0).
Furthermore, the guided buying capabilities between SAP Ariba Buying and SAP S/4HANA Cloud are improved such that we support the transfer of line-level attachments within a purchase requisition from SAP Ariba to SAP S/4HANA Cloud. The exchange of attachments is needed to facilitate end-to-end business processes. For more information see the what’s new documentation. In addition, we now support quantity based pricing for items of a purchase requisition in SAP Ariba Buying tobe transferred to SAP S/4HANA Cloud. Please be aware that this is available as soon as SAP Ariba 2005 is released.
Like the previous integration scenarios, we also improved the integration with SAP Ariba Sourcing. Now we support the transfer of notes on header and at item level of an request for quotation from SAP S/4HANA Cloud to SAP Ariba Sourcing. This enables SAP Ariba buyers to communicate the required information to the suppliers when creating a sourcing event. The suppliers can provide their comments during the bidding process. Lastly, SAP Ariba buyers send the comments from the suppliers back to SAP S/4HANA Cloud, along with the award information, which are then displayed in supplier quotations at item level (documents are transferred via the EDI output channel) in SAP S/4HANA Cloud. That is what we call ‘awesome’. See the full documentation here. Please be aware that this is available as soon as SAP Ariba 2005 is released.
Fig. 2: Process steps of sourcing with SAP Ariba Sourcing.
There are three improvements that come for the Source to Pay process with SAP Ariba Network. First, the integration with SAP Ariba Network is also enhanced by the support of attachments on header level. For example, a purchaser in SAP S/4HANA Cloud could add a technical drawing as attachment to a request for quotation and send it to the supplier in SAP Ariba Network to ensure the details of the request can be understood. Second, it is now possible to add a rejection reason for a service entry sheet. When rejecting a service entry sheet in SAP S/4HANA Cloud, purchasers can now specify a rejection reason and send it to SAP Ariba Network, where it can be reviewed by the supplier. And lastly, the creation of a goods receipt for deliveries or advanced shipping notification includes automatically the reference to the respective object and can be displayed to the supplier in SAP Ariba Network respectively. Please be aware that this is available as soon as SAP Ariba 2005 is released.
As introduced with 2002, the third-party service procurement process describes the need to cover certain lean services, e.g. external workforce, by procuring those services from an external supplier. With 2005, we enhanced this process into one aligned process, from an incoming service order to the confirmation of the delivered services. Configuration experts can now create a workflow that assigns the service order responsible as an approver to the respective service entry sheet. Want to know what needs to be configured, watch the video:
In addition we added more automation to the process. That is, once the service entry sheet is approved a service confirmation in the service order is created automatically. To understand how the third-party service procurement process looks like, check this out:
“Great things are done by a series of small things brought together” [Vincent Van Gogh] – this quote captures what comes next. We have done small but powerful enhancements to our ‘Manage Purchase Orders‘-app. That’s why they deserve a place in this blog. We hope you like them as much as we do:
- Add attachments at item level on the item object page. Purchasers can also copy item attachments from referencing and upstream documents to purchase order items when converting purchase requisitions to purchase orders.
Fig. 3: Adding attachments to purchase orders at item level.
- Users can display confirmation information for a purchase order, including the confirmations for lean services. The confirmation status is relevant if confirmations are mandatory or optional for an item according to confirmation control.
Fig. 4: Display the supplier confirmations for lean services within your purchase order.
- We had it already in SAP GUI for HTML applications, but not yet in the Fiori App: Users can now manage a tax date in addition to the tax code. The tax date is the date on which the tax value should be taken into consideration for a document. This date may be relevant for a VAT change, for example. However, as a prerequisite to make use of this feature, the time-dependent taxes feature needs to be enabled for the relevant country.
Fig. 5: Manage a tax date in addition to the tax code.
- And last: As an administrator you can add the supplier email address, that is available in the supplier entity, in the existing custom form template to make that information available to end users in the purchase order output.
We did several user interface enhancements that will make our users feel more comfortable. In this case the maintenance of the delivery address, while creating a self-service purchase requisition item, is simplified. The new field ‘Address Type’ brings more structure and clarity to distinguish between a manually entered delivery address and the standard plant address. Check the documentation for more information.
Fig. 6: Select the address type while creating a self-service purchase requisition.
Commitment indicates the budget reserved in anticipation of a consumption. Purchasers can view a table of commitments of purchase requisition items, whose account assignment is commitment-relevant. For more information, see the documentation.
Fig. 7: New button in the top right corner – visible if commitments are available for a purchase requisition item.
The Purchasing Spend Dashboard that we introduced with release 2002 provides real-time insights into purchasing spend across various dimensions, such as spend by quarter, supplier, material group, purchasing organization and group, plant, and supplier country. The dashboard is one of many that SAP delivers out-of-the box and is powered by SAP Analytics Cloud.
Now – the ‘Purchasing Spend Dashboard‘-app offers the possibility to analyze non-contract purchases in addition. This means items, where no negotiated pricing or blanket purchase agreements are in place when they are purchased. Users in the role of a buyer can now analyze the total spend amount in relation to purchase orders that do not have a contract assignment. Ideally the rate of off-contract spend in your company is low. Thus we added this information within two new pages ‘Off Contract Overview’ and ‘Off Contract Spend’:
- The Off Contract Overview provides transparency about ratio of purchasing spend and off-contract purchasing spend. Business users can analyze the off-contract spend across quarters and across various time frames and top dimensions.
- Off Contract Details offers to drill down and link your analytics across various dimensions. Analyze top highest purchase orders posted without contract reference.
Fig. 8: The Purchasing Spend Dashboard with Off Contract Overview and Off Contract Details pages.
With this release we improved the ‘Monitor Purchasing Analytics Operations‘-app that enables configuration experts to monitor missing exchange rates for the currencies used in purchasing documents, like Purchase Order or Purchase Contract, and maintain them. It is now possible to maintain exchange rates for the target currencies, such that mandatory fields are populated with respect to the entries selected. This reduces error rates and makes usage more convenient. Just for your information in case you wonder: “Source Currency” is renamed to “Document Currency”, which is the currency in which the document is posted.
Fig. 9: Monitor missing exchange rates.
You want to understand the reason for the price variance and improve the efficiency of your supply chain management? The ‘Material Price Variance‘-app provides essential information to derive insights. The app has been enhanced with this release and displays additional information showing the moving average price for material over a certain period of time. Strategic buyers can analyze the price deviations of different documents, like purchase orders, contracts, and invoices. For more information on this app, check out the documentation.
Fig. 10: Additional KPI showing the moving average price for material.
It is just natural that you want to get an understanding of your suppliers’ performance 😉 To support your business, we offer different KPIs (e.g. ‘Supplier Evaluation By Price‘ or ‘Supplier Evaluation By Quantity‘) to monitor the evaluation of suppliers in order to obtain a basis for promoting your business relationship and to optimize the supply base. It is now possible to analyze suppliers’ evaluation with respect to the amount of purchase orders and purchase order items. That way, users can instantly benchmark performance and perform analyses needed to identify relevant suppliers to manage them effectively.
Fig. 11: Adjust the settings to show the Number of Purchase Orders and Purchase Order items.
Fig. 12: Display the Number of Purchase Orders and Purchase Order items to identify relevant suppliers.
Let me spend some overall words first. Central Procurement offers purchasers one central place to work on purchasing documents from different backend systems like SAP S/4HANA, SAP ERP or SAP Ariba. Thus, it provides centralized control and compliance within a company’s multi-ERP landscape. Companies benefit from reduced costs by centering transactions and simultaneously gain greater visibility into purchasing decisions.
For a complete overview on Central Procurement, check out this blog.
Fig. 13: Overview on Central Procurement (*future planning).
Customers often implement custom fields in addition to the standard in order to cover their business needs. Adaptation of standard business software increases user productivity through harmonized business processes. That is one of many reasons why we came up with the following feature. The Central Procurement hub system is now able to display these extended fields from a connected system in the respective application. For example, the purchase requisition of a connected system (e.g. SAP ERP) has been configured with a custom field – now – this field and the respective value can be displayed in the ‘Manage Purchase Requisition Centrally‘-app in Central Procurement. There are several steps that need to be taken upfront in order to display those fields. Please watch the video below to understand the different steps:
First – understand which custom fields in the connected system exist and which of them are important to be visualized in the ‘Manage Purchase Requisition Centrally‘-app and/or ‘Manage Purchase Orders Centrally‘-app.
Second – business experts need to add the same number of custom fields to the Central Procurement hub system by using the ‘Custom Fields and Logic‘-app which is part of the standard In-app extensibility. In addition, the new created fields in the Central Procurement hub system and the fields of the connected system need to be mapped against each other. This can be achieved by implementing the respective BAdIs (Business Add-In): ‘BAdI for Central Purchase Requisition Field Mapping‘ and ‘BAdI for Central Purchase Order Field Mapping‘.
After successful definition of the mapping logic you can schedule an import job. For example to extract new purchase requisitions from the connected system into the Central Procurement hub system. FYI – In the demo below, we do a one-time import, but you can also schedule it and let it run automatically.
Almost through 🙂 but there is a one-time adjustment that needs to be done in the quality system in order to make the fields visible to end users. As part of the standard extensibility – on the object page of a purchase requisition or purchase order – a business expert needs to adapt the UI accordingly and add the custom fields to the respective object to make them visible.
A demo is more worth than thousand words…So watch the video to understand the configuration process to make custom fields available for end user consumption.
With the introduction of Commodity Pricing in central contracts key users can apply complex pricing formulas, commodity weights and price conditions in an easy way in Central Procurement. If the company has a contracted material that consists of precious metals like copper or aluminium, the material surcharges can be calculated automatically. This results in better accuracy in distributed contracts from centrally controlled market prices. Commodity pricing gives central purchasers the possibility to include formulas in their pricing such that the stock market price of a commodity is taken into account. Now if a central contract is being created (i.e. using the ‘Manage Central Purchase Contracts‘-app) the purchaser can see the calculated surcharges in a Gantt chart that displays each price validity per main condition and provides filters for a convenient overview. We introduce commodity pricing this release with a first basic scope supporting manual entered market prices. So please stay tuned for future releases in this context. Watch the video for a quick overview:
With 2005 we provide Version Management in Central Purchase Contracts in Central Procurement. Business users can see the revision level of a central purchase contract and understand the history. This increases transparency to a high extent and changes of central purchase contracts become traceable.
Fig. 14: View the version history in a central purchase contract including date and reason.
To make use of this functionality, a new configuration app in the ‘Manage Your Solution‘-app enables configuration experts to set up the version management for end users: First activate version management, then define which fields of the central contract shall be change-sensitive, i.e. once a respective field is changed a new version of the contract is being created. In addition, define if the central purchaser who did the version-relevant modification needs to leave a comment.
Fig. 15: Manage Your Solution – Configure Version Management for Central Contracts.
We enhanced the ‘Central Procurement Operations Monitor‘-app by providing information of the status of all connected systems (Monitor Connected Systems), i.e. online or offline, as well as an overview card on the feature and system compatibility (Monitor Compatibility of Central Procurement Operations), i.e. compatible, not configured and not compatible. With a click on one of the cards we provide more detailed information:
- Monitor the business operations and their compatibility with the corresponding versions of the connected systems, that are required for the business operations to function. Information on connected systems, bounded context, API version, API name, feature pack type, feature pack version, software component, minimum support pack requirement, and more is provided.
- Information on connected systems, bounded context, API version, API name, feature pack type, feature pack version, software component, minimum support pack requirement and more is provided.
Fig. 16: Central Procurement Operations Monitor showing two new overview cards.
Enterprise Management and Legal Assembly**
SAP S/4HANA Cloud for Enterprise Contract Management and Assembly (ECMA) is an integrated application with SAP S/4HANA Cloud that runs on SAP Cloud Platform. ECMA facilitates the authoring and assembly of legal content for efficient and effective contract management.
Stamps indicate the actions that have been performed on the document, e.g. approved or signed. With 2005 the stamps can be automatically added to documents once a respective workflow step is taken. Hence, a mandatory prerequisite is the configuration of those steps in a workflow.
Within the workflow configuration, a new facet ‘Step Properties’ helps the configuration expert to define per step type which stamp shall be set automatically. Every configured stamp can be used for this automation feature. However, stamp duplicates are restricted:
Fig. 17: Defining workflow steps to enable automatic document stamping.
Once the workflow is active and the all steps have been entirely completed the stamp will be assigned to the document. This innovation increases automation and saves time for business users.
Fig. 18: The document objects page providing a history on applied stamps.
Our striving for improvement drives us on. With this release we improve the navigation between the ‘Manage Legal Tasks’-app and the ‘Manage Legal Transactions’-app. A user can now access the Manage Legal Tasks application directly from within the Legal Transaction. Intuitive and quick access facilitates your users work. By the way, we also added the name of the recipient of a task in the task within the ‘Manage Legal Tasks’-app. Users can then easily find the person that has to perform the outstanding task.
Fig. 19: Select one legal transaction task from within the ‘Manage Legal Transactions‘-app.
Fig. 20: Easy and fast access to relevant task information for end users.
I hope you like what we do 🙂 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
- Beth’s blog on 2005 updates for Workflows
- Sven Denecken’s SAP S/4HANA Cloud 2005 Release Blog
- The Link Collection for Sourcing & Procurement here
- Early Release Webinar Series here
- Inside SAP S/4HANA Podcast here
- Best practices for SAP S/4HANA Cloud here
- SAP S/4HANA Cloud Customer Community: register here
- Feature Scope Description here
- What’s New here
- Help Portal Product Page here
- Implementation Portal here
For more information on SAP S/4HANA & SAP SRM:
- Can I integrate SAP SRM with an SAP S/4HANA system and what do I need to do?
- Considerations for customers with SAP SRM
If you face any issues or questions, please check out the following video that guides you to the right access point: