SAP S/4HANA 2021 Release Highlights for Sourcing and Procurement (Update February 2022)
SAP S/4HANA 2021 was released in October last year and now it’s time for an update for SAP S/4HANA Sourcing and Procurement. Note that this blog still does not cover the complete range of new features and functions as I had to select some innovations to spotlight.
For Operational Procurement, Sourcing and Contract Management and Procurement Analytics the following innovations might be from interest for you:
- Self-Service Requisitioning: Limit Items
- Service Purchasing and Recording: ERS procedure for Service Entry Sheets
- Requirements Processing: Flexible Workflow for Purchase Requisitions
- Purchase Order Processing: Situation Template: Delivery Insights for Ordered Items
- Product Sourcing: Sourcing of Direct Materials
- Procurement Analytics: New CDS views for Analytics
For Central Procurement and the integration of SAP S/4HANA with SAP Ariba I would like to draw your attention to the latest innovations:
- Price History for Central Purchase Contracts
- Contract Consumption Display and Print Preview in Central Purchase Contracts
- Central purchase contracts: Output control, attachments, and third-party integration
- Quote automation with Central Procurement
- Sourcing and Central Procurement with SAP Ariba Sourcing
- Service Procurement with Ariba Network and SAP Fieldglass
Self-Service Requisitioning: Limit items
In the My Purchase Requisitions app and the purchase requisition fact sheet the display of approval steps and approver details is available for requestors of self-service purchase requisitions. Limit items in self-service purchase requisitions including the fields for expected value and overall limit are now supported through the Create Purchase Requisition app and the My Purchase Requisitions app. What does that mean in practice? As an example we take the following scenario: You wish to add a limit item to an existing purchase requisition. We are adding a limit item to the purchase requisition “4000087493”, in order to procure minor office supplies for the period 7 July 20XX to 17 July 20XX. As the exact details such as price and quantity are not known at the time of ordering, we create a limit item, that is item with Purchasing Document Item Category ‘A’. We can provide the amount we expect to spend on this item using the field, “Expected Overall Limit Amount”, which is 100 EUR in this case. The overall limit or upper limit of the amount that can be spent on this item is provided using the field “Overall Limit Amount”, which is also 100 EUR in this case. The expected amount must not exceed the overall limit amount. If the expected value exceeds the overall limit you will receive an error message.
Service Purchasing and Recording: ERS procedure for service entry sheets
With this feature, you can now revoke a service entry sheet although an invoice exists. For this, the Evaluated Receipt Settlement (ERS) has to be actived in the referenced purchase order item as well as in the supplier masta data.
Requirements Processing: Flexible Workflow for Purchase Requisitions
The Flexible Workflow for Purchase Requisitions allows you to flexibly define approval processes according to your business requirements. In this case you can configure workflows to optimize the approval process for purchase requisitions through the My Inbox App. You can always add one or more approvers to the PR approval workflow to determine who is responsible to approve or reject the Purchase Requisition. With the Review Activities in PR Approval Workflow app you can even define multiple reviewers in PR Approval Workflows, along with review steps that can be defined with step conditions like determination rules including deadlines for the reviewer tasks. Reviewers are then responsible for monitoring the progress of the workflow. This helps to monitor the progress of the PR approval workflows and provides great transparency by showing who has reviewed the task in approval details.
Fig. 2 Flexible Workflow
Purchase Order Processing: Situation Template Delivery Insights for Ordered Items
Using Delivery Insights for Ordered Items you will get a notification if the goods that you ordered have been damaged during delivery.
The handling units of ordered items are equipped with sensors in order to monitor the product’s environmental conditions. You can monitor all kinds of sensor data such as temperature, humidity, acceleration, location, or radiation. As soon as sensor data exceeds a threshold that was defined in SAP IoT, a notification to the relevant parties (Purchaser, Supplier etc.) in SAP S/4HANA is triggered. Based on the Situation Handling framework, this notification not only provides detailed contextual information but also allows direct insight to action. Thus, involved parties can proactively react to critical supply situations, anticipate potential quality issues, increase on-time delivery performance, and ultimately improve customer satisfaction.
Note: This scenario requires an additional subscription to SAP IoT service
Fig. 3 Notification of a critical situation
Sourcing and Contract Management
Sourcing of Direct Materials: Product Sourcing
For all your Sourcing requirements of direct materials across various plants, the optimized sourcing of direct materials is supported. The process allows sourcing managers to get an overview of all requirements of sourcing of direct materials across various plants in different connected systems and then to start the sourcing process. This innovation addresses especially the direct material sourcing needs of Automotive and Industrial Machinery & Component industry customers.
For example with the Manage Preferred Supplier Lists app for Product Sourcing, you can create and manage lists of suppliers that your company advices you to use during the sourcing process. This includes standard supplier lists that are available for all users, as well as user-specified supplier lists created for your own use, such as by material group or purchasing category. The time-consuming manually search for suppliers is eliminated and you can find the best suppliers by using your own supplier list. To support the entire sourcing process, many applications are available for SAP S/4HANA like Sourcing Projects, Supplier Quotations, Awarding Scenarios etc. Here you will find more detailed information.
Please note that the features of Product Sourcing might require additional licenses.
Fig. 4 Create Supplier List
With the data-extraction enablement you are now able to extract detailed data on purchasing documents and this data can be further used to feed business intelligence systems to conduct detailed analysis and identify trends over time. Extract the scheduling agreement header, scheduling agreement items and scheduling agreement schedule lines, purchase info records, purchase requisition items, and source list via ABAP CDS-based extraction. You can extract the mentioned business documents data from SAP S/4HANA systems.
Using this new SAP Fiori app, you can monitor the price and condition history of central purchase contracts leveraging embedded analytics. Analyzing prices in the context of contract history and condition changes provides an additional perspective for evaluation, adds to the foundation of future negotiations, and offers increased transparency into price volatility.
To highlight a few capabilities:
- Price trends for central contract line items
- Differentiation by plant-independent and plant-specific price conditions
- Reasons for price changes on the price-condition level stored within the line-item history of the central contract
Contract Consumption Display and Print Preview in Central Purchase Contracts:
For increased transparency, the SAP Fiori object page for central purchase contracts has been enhanced with an embedded chart to visualize the contract consumption. Furthermore, the usability has been increased through an integrated print preview. As a Central Purchaser you are automatically informed when an item of a central purchase contract is about to be consumed. This minimizes the risk of central purchasers missing to react in case of the complete consumption of items in a central purchase contract.
Central purchase contracts: Output control, attachments, and third-party integration
You can create central purchase contracts with item type “material group” (item type U) to represent contractual agreements for a material group, where users can enter contract items without material master specifications and use output control for SAP S/4HANA to send out central contracts to the corresponding suppliers through the output channels print, mail, and electronic data interchange (EDI). The integration of the flexible workflow approval facet into the object page of the central purchase contract is now enabled. Furthermore you can apply at once plant-independent header price conditions, such as surcharges or discounts, including scales to all line items of a central contract. The integration of externally (output) relevant attachments linked to the header level of a central purchase contract into the central contract output is now supported and the configuration of review steps within the central purchase contract workflow, which sends a review task to one or multiple reviewers is now possible.
Fig. 7 Central Purchase Contracts
Quote automation with central procurement
Central Procurement with SAP Ariba Sourcing: If the integration with SAP Ariba Sourcing is enabled for central procurement, you can bundle purchase requisitions from different SAP S/4HANA or SAP ERP backend systems into external sourcing requests and transfer them to SAP Ariba Sourcing through SAP Ariba Cloud Integration Gateway. Based on the supplier quotations that are received and awarded in SAP Ariba Sourcing, follow-on documents are created in the SAP S/4HANA hub system or in the connected backend systems.
Use the Guided Sourcing UI for improved usability, faster adoption, and satisfaction for end-users with drastic time reduction in creating the Sourcing event in SAP Ariba Sourcing for PRs from the Central System. Users can still work with integrated scope items 4BL and 4QN without Guided Sourcing, and thanks to an easy configuration they can switch to Guided Sourcing anytime at their convenience and without disruption.
Enhanced native source-to-pay integration with Ariba Network
Automation of Source-to-Pay with Ariba Network (42K) enables you to seamlessly connect from SAP S/4HANA to your suppliers in Ariba Network. You can send them requests for quotations, asking for price and quantity information as well as for shipping costs. You can also send electronic purchase orders and goods receipts to your suppliers using Ariba Network, and you can receive electronic order confirmations for materials, advanced shipping notifications, and invoices in SAP S/4HANA from your suppliers. You can also send payment advices in electronic form to your suppliers in Ariba Network. All data is routed through SAP Ariba Cloud Integration Gateway.
The following features are now enabled:
- Discount management
- Order collaboration enhancements
- Support of confirmation for enhanced limits for services and materials
- Purchase order plant and storage location
- Material document notification
- Inbound delivery
- Payment advice and payment advice cancellation
A seamless digital process from requisition to payment through SAP S/4HANA, Ariba Network, and SAP Fieldglass. Use SAP S/4HANA to manage contract data, requisitions, Purchase Orders, invoice management, and payment. SAP Fieldglass solutions for external workforce and proof of service management and the Ariba Network for supplier portal, supplier system integration, and supplier invoicing.
Thanks for reading and stay tuned!
For the complete SAP S/4HANA scope, you may want to check:
If you are also interested in other LoBs, I would like to draw your attention to the blog collection: SAP S/4HANA The Link Collection