Setting Up Purchase Category in S/4HANA

Introduction:  

In this blog, Purchase Category key concepts, steps involved in setting up in S/4HANA are outlined. The need for Purchase Category and its relation with Material groups and Supplier also addressed. This will help users to define Purchase Category in S/4HANA Environment as per the business requirement.

Pre-requisite:

• Identification of Grouping of similar or related products (material groups) and corresponding Suppliers
• Identify the Purchasing category manager responsible for the respective purchasing category
• Identify the team to handle and manage the purchasing category

What is Purchasing Category?

• A business object is used to classify purchases made in a company. A range of a product purchased by a business organization is broken down into discrete groups of similar or related products; these groups are categorized as purchasing category
• Purchasing categories are an important structuring element in SAP Supplier Lifecycle Management, as they are assigned to, for example, suppliers to group them

Why do we need of Purchasing Category?

• Gain transparency of Supplier portfolio
• Group similar expenditure items, such as expenses for certain groups of materials
• Enhance spend analysis using real-time reports across purchasing categories
• Evaluate suppliers based on purchasing category

Relationship between Purchasing Category, Material Group, and Supplier

• Manage Suppliers according to specific Purchasing category that associates multiple material groups
• The relation is one-to-many, Which means one Purchasing category can accommodate a group of material groups and its associated suppliers

Difference between Purchasing Category and Material Group?

• Both the objects have similar characteristics
• Purchasing Category is a grouping of several material groups which comes under a single portfolio
• Cumulative of a similar group of products to analyze total spend against each Purchasing category. This will give a complete overview of spending and, the overall performance of assigned suppliers with associated material groups.
• The material group is a grouping of materials having similar attributes. Used for reporting and valuation.

 At which level  Purchasing Category created in S/4HANA?

• Purchasing category created at the Client level depends on groups of similar or related products.

Is Purchasing Category, mandatory for Supplier Evaluation in S/4HANA?

• No, purchasing category is not mandatory for supplier evaluation. The scoring for supplier evaluation is derived from the default weighting factor for supplier evaluation.

Can we assign a material group to a different Purchasing Category and vice versa?

• Yes, we can assign the same material group to different Purchasing categories. During the evaluation process, the system checks for the associated supplier to fall into the right purchasing category.

Creation of Purchase Category in S/4HANA using Fiori app: Manage Purchasing category

Enter a name for the purchasing category and assign a Purchaser responsible. The purchaser responsible is the Category manager. Select the inactive checkbox, if it is obsolete or not in use.

Under Suppliers, choose Add Supplier to assign dedicated suppliers to a purchasing category, that is, suppliers who can deliver goods that are relevant for this particular purchasing category

Under Material Groups, choose Add Material Groups to assign a similar group of material groups to a purchasing category.

Under Planned spend, choose Add Line, Assign the Planned spend for a specific date range From and To.

Under Team, choose Add Employee to build up a team that supports the category manager and helps him or her make decisions about suppliers and the goods they deliver. Specify whether an employee is a team member or an internal stakeholder, and describe his or her function

Under Attachments, choose Add Attachment. In the popup, use the browse function to select the file want to upload and enter a description. Ex:- Attachment could be some guidelines about the Purchasing category.

Conclusion:

• After going through the above blog, the user should have learned Purchase Category Key concepts and setup in S/4HANA
• Please provide your feedback/comments. You can ask Questions / Answer for the open Questions in the SAP Community here

Reference:

Purchase Category in S/4HANA:

https://help.sap.com/viewer/af9ef57f504840d2b81be8667206d485/1909.latest/en-US/ed740e568de83a35e10000000a44538d.html