S/4HANA for central procurement – Central contracts

Introduction:

Central procurement hub is relatively new in SAP world and thus there is a kind of curiousness among many SAP customer, vendors and consultants on how it works and how everything looks like in the system. So, starting with central contracts, this blog aims to show in detail how everything comes together in Central Procurement Hub in S/4HANA.

Create central contracts:

To start with, central contracts are created in hub system with the app “Manage central purchase contracts”:

When we go in the app, on the right-hand side click on “Create” button:

The new screen will look like this:

All the header and item details are filled in same way as we do while creating normal contract. The difference is that here we also must create distribution for the contract. Now distribution can be created at header or item level. If all the items are distributed to same backend system, then we can directly maintain it at header level and if we want to distribute it to different backend system then we can maintain it at item level. Maintaining distribution is mandatory otherwise contract cannot be saved.

To create distribution, go to distribution tab and click “Create” button:

The new screen will look like this:

Here company code and purchase organization combination will decide, in which system the contract will be distributed. If F4 help is pressed for company code and purchase organizations, list of connected system is displayed, and we can directly select the target system from there.

Once all the relevant details are filled, we can go ahead with saving the contract. Once the contract is saved the distribution status of the contract is set to “In Distribution”.

Once the contract is distributed to backend system the status is changed to “Distributed”.

Once the contract is distributed, it can be viewed in the target system. We can find the contract number created in target system by going into “Manage central purchase contract” app, then clicking on the recently created central contract and then navigating to distributed outline agreements tab:

Once the contact is available in the backend system, it can be used by purchasers there.

Troubleshooting:

For troubleshooting, you can use app “Central procurement operations monitor”:

Alternatively, you can use below transactions to find the issues:

• /AIF/ERR – AIF Error Handling
• /IWFND/ERROR_LOG – SAP Gateway error log
• SXMB_MONI – Monitor for Processed XML Messages

Make sure to check these transactions in both hub and connected system.

Master data synchronization:

Although, central procurement focuses on decoupling of master data from hub and connected system, we still need to synchronize some of the master data in both the systems for central contract scenario. Following needs to be maintained:

• Supplier
• Pricing Schema
• Incoterms
• Payment Terms
• Unit of Measures
• Currency
• Tax code

Things to know:

There are few things to keep in mind while working with central contracts :

1. Central contracts cannot be deleted.
2. Editing only possible in hub system, they are non-editable in backend system.
3. Currently only account assignment category ‘U’ is allowed in central contracts.
4. They are only accessible via Fiori apps in hub system, but distributed contract can be accessed via GUI transaction in backend system.
5. Distribution can be done on percentage level or quantity level.
6. There is also option of flexible distribution of a contract (more than 100% consumption).
7. Activation of flexible workflows are mandatory, only approved central contracts are distributed.

Sources:

Configuration documents can be found below links:

• SAP help : https://help.sap.com
• SAP best practices explorer : https://rapid.sap.com
• SAP Community: https://solutionportfolio.net.sap/industry/HANAOP/object/42F2E964FAAF1ED89ED9D8B7155440CE

Conclusion:

I hope this blog helps in basic understanding of working of central contracts in the system, prerequisites and troubleshooting.

Disclaimer:

Everything mentioned in this blog is from my personal experiences and is subject to change.