This article helps SAP Procurement consultants to understand the S/4 HANA central procurement component and related functional customization setup needed to start central procurement process. It also explains associated benefits for the difference scenario. Consultants who works on ECC platform gets more insight in to central hub process.
It is a transformation from Sophisticated SRM to S/4HANA central procurement. The transformation starts with S/4HANA 1709 on-premise edition. Customers with large scale SRM setup can still use SRM as central hub until 2025.
The following diagram shows the distribution model between SRM and S/4HANA central procurement.
With S/4HANA central procurement, S/4HANA on-premise system acts as a central hub, connect to the regional SAP ERP, S/4HANA cloud as well as S/4HANA on-premise. Minimum system requirement for the connected SAP ERP is 6.0 EHP 6.0.
The following customization settings are relevant to S/4HANA on-premise edition starting 1709.
Activate SAP S/4HANA Procurement Hub and Scenarios:
It enables SAP S/4HANA as a procurement hub system as well activate hub scenarios. The scenarios are as under,
- Central Requisitioning
- Central Purchase Contracts
- Central Purchasing
Note: These settings cannot be changed after activation scenario setup. Procurement hub activation is the prerequisite for hub scenario activation.
IMG>Materials management>Purchasing>Central Procurement-Settings in Hub System>Activate SAP S/4HANA Procurement Hub and Scenarios
Let us see the overview of the different scenarios,
Central Requisitioning: The valid purchase requisitions get replicated to the relevant connected systems, SAP ERP or SAP S/4HANA. The same purchase requisition gets converted to purchase order automatically in the backend systems.
Central Purchase Contracts: It is a global agreement between parent organization and its supplier. The agreement can be created for materials or supply of services. With this central purchase contracts, purchasers from different locations takes advantage of the negotiated terms and conditions defined by the central team.
Central Purchasing: Starting S/4HANA on-premise version 1809, SAP provides central purchasing scenario and it provides more flexibility to buyer in central hub in terms of assigning source of supply for the connected ERP PRs, convert PR to PO including change and approval
Define Company Code, Plant, Purchasing Organization for Connected System:
In this step, first add the connected system details such as system Id, connected system and logical system name. with reference to the connected systems, add the relevant company codes and plants as well purchase organization as per the screenshot shown below. Here, connected system also refer to the relevant back-end system.
The entries in this customizing table facilitate the activation of SAP S/4HANA system as a procurement hub system. The data maintained in this customizing allows the extraction of material along with the related source of supply such as info records and contracts maintained in the SAP S/4HANA front end system.
IMG>Materials management>Purchasing>Central Procurement-Settings in Hub System>Define Company Code, Plant, Purchasing Organization for Connected System
Define Additional Filter Options for Source of Supply Extraction:
It helps to define the additional filter options for extraction of source of supply such as contracts, Info records and materials for a combination of connected system, backend company code and backend plant.
Prerequisite for this setting to perform the activity, configure the settings in Define company code, plant, purchasing organization for connected system
For a combination of connected System, backend Company Code and backend Plant, the following filter options can be defined.
- Extract contracts
- Extract info records
- Extract materials without sources of supply.
After the first successful full import run for a combination of connected source system, backend company code and backend plant with setting of each filter option, you cannot uncheck the filter options again for the combination.
IMG>Materials management>Purchasing>Central Procurement-Settings in Hub System>Define Additional Filter Options for Source of Supply Extraction
Maintain Condition Type Mapping for Purchasing Documents:
It enables the mapping of conditions for central purchase contracts in the SAP S/4HANA hub system with the conditions for central purchase contracts in the connected systems. With this activity, conditions for the central purchase contracts in the SAP S/4HANA hub system can be mapped with the conditions for central purchase contracts in the connected systems. This configuration is applicable in case if the condition types in the hub system differs from the condition types in the connected systems.
IMG>Materials management>Purchasing> Central Procurement – Settings in Hub System> Maintain Condition Type Mapping for Purchasing Documents
Enable Automatic Creation of PO from Replicated Central PR:
It helps, automatic creation of purchase orders from central purchase requisitions that are replicated from the SAP S/4HANA hub system to connected backend system.
This activation is required in the respective backend connected systems
IMG>Materials Management>Purchasing>Purchase Order>Enable Automatic Creation of PO from Replicated Central PR
Define Number ranges for Central Contract:
Defines new number ranges for central contract
IMG>Materials management>Purchasing>Central Procurement-Settings in Hub System> Central Purchase Contract> Define Number Ranges
Define Document Types:
In this step, the following can be customized,
Create new document types
Define allowed item categories
Define a default document type
IMG>Materials management>Purchasing>Central Procurement-Settings in Hub System> Central Purchase Contract> Define Document Types
Assign Output Channels:
In this step, output type Central_contract can be assigned to the central_purchase_contract object type
IMG> Cross-Application Components> Output Control> Assign Output Channels
Application Object Type : CENTRAL_PURCHASE_CONTRACT
Output Type : CENTRAL_CONTRACT
Assign form Template:
IMG> Cross-Application Components> Output Control> Assign Form Template
Application Object Type : CENTRAL_PURCHASE_CONTRACT
Output Type: Central_Contract
Form Type: Output Forms (Gateway Interface)
Form Template ID: EV_CENTRAL_CONTRACT
In addition to the above specific to S/4HANA central procurement customization, the following standard customization needs to be completed in S/4HANA hub system to harmonize the purchase group, material group and accounting assignment categories.
1.) Define Material Groups from Respective Connected System into the HUB system
2.) Define Purchasing Groups from Respective Connected System into the HUB system
3.) Define Account Assignment Category and Purchasing Requisition Document Type from Respective Connected System into the HUB system
This article provided the overview and the required customization settings to start central procurement process. Please feel free to contact in case of any queries and clarifications as well feedback.
Mohamed Hasan Rifaie M, Senior consultant at Larsen & Toubro Infotech Ltd (LTI)