Business approach for Central Procurement Hub in S/4HANA

Overview

Central Procurement Hub is capable of handling procurement process centrally and facilitate the procurement team to globally manage multiple ERP systems. This functionality provokes organization to have a central procurement team and to go for lean procurement process. CPH suits to organisation which has operations with multiple back-end ERP system. SAP S/4HANA for central procurement acts as interconnection point and hub between all back-end systems, SAP Ariba solutions, and Ariba Network.

Below are 2 basic deciding factors for the organisation to go for CPH

1. having more than one system
2. having central procurement team

Below are 2 benefits that can be brought in with CPH

1. Standardise and harmonize procurement process
2. Strength the cost-effective procurement and control spends activities

The solution covers the following components

• Central Requisitioning (2FI)
• Central Purchasing (2XT)
• Central Purchase Contracts (2ME)
• Central Sourcing (3ZF)
• Central Purchasing Analytics (1JI, 2ME, 2XT)
• Guided Buying for Central Procurement with SAP Ariba Buying (3EN)

Process flow and highlights

The flow covers the process steps under each component of CPH and the collaboration between them. The interface method between hub and back-end system are indicated. Following are highlights to understand CPH capabilities:

• Central requisitioning, purchasing and sourcing are independent process, but central sourcing has dependency with central purchase and sourcing.
• Central requisitioning supports only employee self-service procurement hence requestor should have employee master and business partner as employee is mandate
• Flexible approval workflow can be managed centrally or in connected system
• Functionality of Responsible management are used as filtering elements
• Central procurement team can switch on/off the purchasing activity at purchase requisition level
• Master data like material, vendor, source of supply – Inforecord, contracts are referred from connected system and no need create or migrate these masters to hub system
• Business partners as Supplier are created in Hub for central contracts process and option for value mapping facilitates to synchronise the suppliers with connected system

Conclusion

The need to modernize Procurement with SAP Intelligent Spend Management should always consider SAP S/4HANA for central procurement as a facilitator in an Multi-Backend Environment.