S/4HANA-ECC Integration with Ariba for Procure to Pay Business Process
This article helps to understand integration of S/4HANA/ECC with Ariba network for various procurement business process and its flow between both the systems. This will be helpful for the consultants, subject matter experts in the procure to pay area to understand the integration architecture. It is explained in a simple and easy way.
Ariba Network Integration with S/4HANA enables collaboration with suppliers via the Ariba Network. For example, buyer can send electronic purchase orders to the suppliers, receive purchase order confirmations, advanced shipping notifications and electronic supplier invoices from the Ariba Network. cXML messages help to exchange data.
There are three ways of connecting SAP S/4HANA with the Ariba Network:
Direct connectivity without middleware.
Mediated connectivity using SAP Cloud integration.
Mediated connectivity using PI middleware.
Out of the above connectivity method, SAP cloud integration using SAP Ariba Cloud integration Gateway is more popular and efficient for both master data and transaction data integration and it involves the following architecture and the pre-requisite requirement for SAP ECC and S/4HANA as under,
SAP Ariba Cloud Integration Gateway, add-on for SAP ERP to be installed on SAP ECC and it enables SAP ECC to communicate with Ariba Network and SAP Ariba solutions through SAP Ariba Cloud Integration Gateway.
SAP Ariba Cloud Integration Gateway, add-on for SAP S/4HANA to be installed on SAP S/4HANA and it enables SAP S/4HANA to communicate with Ariba Network and SAP Ariba solutions through SAP Ariba Cloud Integration Gateway.
SAP cloud connector allows to efficiently and securely transfer data between SAP Ariba Cloud Integration Gateway and SAP ERP or SAP S/4HANA. The cloud connector is a software component to connect to cloud applications
SAP Ariba Cloud Integration Gateway allows to map and transform the data as well monitor the transactions between SAP ERP or SAP S/4HANA and Ariba Network.
SAP Cloud Platform Integration service helps you to connect cloud and on-premise applications with other SAP and non-SAP cloud and on-premise applications.
Existing middleware from the current landscape can be leveraged in the new integration landscape. An add-on needs to be configured to communicate to SAP Ariba cloud integration gateway. In case of middleware includes in the landscape, all the documents will be routed through the middleware to SAP Ariba Cloud Integration Gateway. SAP Cloud Platform cloud connector will not be required in this landscape.
The Cloud Connector serves as a link between SAP Cloud Platform applications and on-premise systems. It runs as on-premise agent in a secured network. Provides fine-grained control over, On-premise systems and resources that can be accessed by cloud applications. Cloud connector cannot be used in S/4HANA Cloud system
Types of Business collaboration:
Purchase order and Invoice:
Sending Purchase orders to Ariba Network: Buyer can send purchase orders and changes to purchase orders or cancellations from SAP S/4HANA to Ariba Network. The following Purchase order item types are supported:Standard items, Limit items, Third-party items, Service items, Subcontracting items
Purchase orders can be transferred including the header level attachments. OrderRequest cXML Message type can be used for this.
Receive purchase order confirmations from the suppliers via Ariba network through ConfirmationRequest cXML message type
Receive advanced shipping notifications from the suppliers via Ariba network through ShipNoticeRequest cXML message type
Send goods receipts confirmation back to supplier via Ariba network is option and it can be achieved through ReceiptRequest cXML message type
Receive invoices from the suppliers via Ariba network through InvoiceDetailRequest cXML message type. The cXML message also transfers a PDF version of the invoice. The transfer of additional attachments is also supported. Error-free invoices can be posted automatically in SAP S/4HANA.
In contract manufacturing, large organization such as Pharma, aeronautical and packaging industries transfers some parts or the entire process of manufacturing the finished or partially finished goods to third-party contract manufacturers. They use contract manufacturers to assemble individual components into partially finished products or to build complete finished products.
The buyer creates a subcontracting purchase order (item category L – subcontracting) containing component items required to manufacture finished goods and sends the subcontracting purchase order (OrderRequest) to the supplier. The line items in the subcontract purchase order can contain components from the bill of material and standard items.
The supplier views the subcontracting purchase order containing the component information required for the manufacture of the fully or partially-finished goods on Ariba Network. When there is a change to the items in the subcontracting purchase order, the buyer sends a change subcontracting purchase order to the contract manufacturer supplier.
The buyer ships the components and sends the component ship notice (ShipNoticeRequest) to the contract manufacturer supplier on Ariba Network.
The contract manufacturer supplier receives the components and sends the component receipt(ReceiptRequest) to the buyer. The buyer receives the component receipt. This is also called the one-step movement type or Proof of Delivery.
The buyer sends an overview of the component inventory (ProductActivityMessage) available on the SAP ERP system to the contract manufacturer supplier on Ariba Network.
The supplier sends the buyer an overview of the components (ComponentConsumptionRequest) used to manufacture the finished goods required by the buyer. This report provides the manufacturing visibility for the components consumed by the contract manufacturer supplier on Ariba Network.
The supplier confirms the purchase order and sends the purchase order confirmation (ConfirmationRequest) to the buyer.
The supplier sends the details of the components used in the manufacturing of the finished goods (ComponentConsumptionRequest) to the buyer. The SAP ERP buyer also sends the real-time consumption message to the contract manufacturer supplier on Ariba Network.
The supplier sends the ship notice (ShipNoticeRequest) to ship the manufactured goods the buyer requested.
The buyer receives the manufactured goods from the supplier and sends a receipt (ReceiptRequest) acknowledging the goods.
The supplier invoices the buyer against the subcontracting purchase order and sends an invoice (InvoiceRequest) to the buyer’s ERP system.
The buyer creates a consignment item on an order (item category K – consignment). The buyer sends the consignment purchase order (OrderRequest) to the supplier on Ariba Network. When there is a change to the items in the consignment purchase order, the buyer sends a change consignment purchase order to the supplier.
The supplier sends the purchase order confirmation (ConfirmationRequest) to the buyer.The supplier sends the ship notice (ShipNoticeRequest) to the buyer. The buyer sends a goods receipt for the consignment (ReceiptRequest) to the supplier.
The consignment withdrawals is posted from the consignment stock to the buyer’s own stock using 411 (K) movement type. The buyer sends an updated overview of the component inventory (ProductActivityMessage). The suppliers can view this inventory as a report on Ariba Network.
Once the materials are transferred from consignment stock to buyer’s own stock, the buyer pays the supplier for the consumed stock. As the supplier is unable to track withdrawals directly, there is no invoicing from the supplier. The supplier manages the consignment stock by tracking deliveries to the buyer and payments from the buyer.
The buyer sends the settlement against withdrawn consignment (ProductActivityMessage) to the supplier. Finally, the buyer sends a non-PO invoice request (CopyRequestInvoiceDetailRequest) to the supplier on Ariba Network.
Return Purchase order (161 movement type):
The buyer sends a purchase order (OrderRequest) to the supplier on Ariba Network with the return indicator marked for the line item to be returned. The buyer creates an outbound goods return (ReceiptRequest) with reference to the purchase order. The return delivery document is sent from the SAP system to Ariba Network.
The supplier creates a credit memo in Ariba network with reference to the return purchase order. The credit memo (InvoiceDetailRequest) is sent from Ariba Network to the SAP system.
Tahe supplier can cancel a credit memo with reference to the credit memo. The canceled credit memo is sent to the SAP ERP system using the InvoiceDetailRequest message.
Return Delivery (121 movement type):
The buyer sends the standard purchase order (OrderRequest) to the supplier on Ariba Network. The buyer creates an outbound goods receipt (ReceiptRequest) and sent to Ariba Network. The buyer or the supplier can create an invoice using the InvoiceDetailRequest message.
The buyer creates an outbound return delivery with reference to the Material document number (ReceiptRequest) and sent to Ariba Network.
The supplier creates a credit memo with reference to the standard purchase order and the standard invoice InvoiceDetailRequest and sent from Ariba Network to the SAP ERP system using the t message.
The supplier can cancel a credit memo (InvoiceDetailRequest) with reference to the credit memo. The canceled credit memo is sent to the SAP system.
Supplier Managed Inventory:
The supplier reviews the forecast and commits the quantity and schedule for material items for shipping and sends the ProductReplenishmentMessage to the buyer’s SAP system through the cXML routing method and it updates the associated purchase requisition, scheduling agreement, or planned orders.
The supplier sends the ship notice (ShipNoticeRequest) for the materials or products to the buyer SAP system. The buyer acknowledges the goods and sends a receipt to the supplier on Ariba Network.
The supplier creates an invoice and sends it to the buyer SAP system.
Supplier Managed Inventory – Replenishment:
The buyer sends the inventory, demand, and forecast of the materials for supplier-managed inventory.
The supplier navigates to the Planning Collaboration tab in Ariba Network to view the supplier managed inventory plan and finalizes it.The supplier clicks Create replenishment order to send a replenishment order for the material to the SAP system of the buyer using the SalesOrderRequest cXML interface.
The SAP system of the buyer generates a purchase order for the material to be replenished for supplier managed inventory based on an existing contract between the buyer and the supplier or a purchase info record and sends it to Ariba Network.
Ariba integration overview with S/4HANA and ECC has been explained in this article in a detailed way along with different business collaboration methods. 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)