The order fulfillment process for direct materials involves approval of order confirmation data to better manage supply commits from the supplier and address any deviations. Today the suppliers are either instructed to submit order confirmations within the defined tolerances or buyer organizations use complex and custom framework developed in their ERP (ECC/S4HANA) to support such functionality. Either of them is non efficient as the buyers have very less control over the process and there is not enough flexibility to define which kind of deviations need approval and what is the mechanism to approve them. This gives rise to compliance and dispute issues and hence prolongs the order fulfillment cycle.
With the order confirmation deviation approval feature, suppliers can now submit an order confirmation even when it is out of tolerance (for quantity, delivery date and/or unit price). An alert is generated in the buyer portal and buyer can decide whether to approve, approve and update purchase order or reject the deviation. As a result, order confirmation deviations do not hit the customer’s ERP back-end system until proactively resolved by a buyer.
Configuration steps to activate Order confirmation deviation on Ariba network for suppliers/buyers.
- Activate Default transaction rules on Ariba network.
We have the flexibility to activate either of the three deviation types and choose the approval mechanism – single level (only on Ariba network) or multi-level( first level approval on Ariba network and second level approval in ERP) .
If we are using schedule lines in our Purchase orders, the validation of the tolerances can also happen on the schedule line level by activating the network rule.
- Definition of tolerance values in ERP and/or on Ariba network
Usually, the tolerances are defined in ERP on the material master/Purchasing info record (for quantity) and the confirmation control keys (for delivery date and price). If we want to make use of the same tolerances, we need not set the tolerance values on Ariba network, and those values will be transmitted to Ariba Network Purchase Order in the cxml.
Configuring price and delivery date tolerance in ERP using Confirmation control keys
Delivery date tolerances
Configuring quantity tolerance on material level using purchasing value key.
Purchasing value keys can be created using below spro node.
Purchasing value keys can be assigned in material master purchasing view of the material used in purchase order.
If we are not using our ERP to define these tolerances, alternatively we can define these values directly on Ariba network in either “Default transaction rules” (to make them applicable to all suppliers) or “Supplier group transaction rules” (to have different tolerance values for different group of suppliers)
Remember that the tolerance values set in ERP takes precedence and will override any tolerance values set on the Ariba network. So, if we wish to control the tolerance values directly in ERP, we will use the configurations directly on ERP side and not touch the Ariba network values.
- Activation of Supply chain monitor, confirmation alerts, roles, permissions, and authorization profiles for buyer approvers
The supply chain monitor is for buyer approvers to view both confirmation alerts and exceptions. The permissions required for the same are detailed below. Confirmation alerts tile activation is however done by SAP Ariba, and we need to raise a service request to them to activate this feature.
The buyer approvers who will handle these exceptions need new permissions to view and act on the deviations through supply chain monitor. We can either add these permissions to the existing roles or create new roles and assign the below permissions.
Additionally, if we want to configure specific approvers for different plants, purchasing orgs, purchasing groups, company code, planner code etc. we can create new authorization profiles and assign them to the appropriate AN buyer user. For eg. the approver having below authorization profile will only view and be able to act on the deviations of the purchase orders of plant DP11.
End to end process
For demonstration purpose, we are not setting up any tolerances on the material level in the ERP and showing single level quantity deviation approval process. The Ariba network tolerance will come into picture in this case and the rule setup is below.
- Buyer creates purchase order for material in ERP and send to Ariba network using Ariba message output configuration.
- Purchase order is available to supplier for confirmation on Ariba network.
- Supplier creates order confirmation with quantity deviation from the set tolerance on Ariba network.
- The supplier can see the alert message in the yellow color about “Approval required from buyer” for the deviation and can submit the confirmation for approval.
- The desired AN buyer approver will find this approval item is his Supply Chain monitor
- The buyer approver sees two option – “Approve” or “Reject”
While approving, there are two options, “Approve” or “Approve and update.”
Just using the “Approve” option will update the confirmation tab of the ERP Purchase order.
With Approve and update action, the ERP Purchase order line-item quantity will get changed as per the approved confirmation data.
- The Order confirmation deviation feature enables buyers and suppliers to seamlessly connect and collaborate on aforesaid deviations and significantly reduces the effort of managing complex business rules and custom development in ERP.
- The Ariba network rules standardize the way various organizational purchasing units work in handling the deviations and brings uniformity across the buying organization.
- The approval scenarios are integrated seamlessly with backend SAP ERP system and helps drive end to end efficiency across the process.
I will also cover the configurations and settings of price deviation in a separate blog post.
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