5.5 Collaborative Sourcing and Contract Management
The sourcing function plays an important role in identifying new sources of supply (suppliers) for purchase requisitions without a source of supply, creating contracts with suppliers, and maintaining valid sources of supply per business requirements.
In this section, we’ll review how SAP S/4HANA can be integrated with Ariba Network to identify sources of supply and how to use analytical SAP Fiori apps to monitor the source of supply and status of contracts.
5.5.1 Source Assignment
Many different sources of supply are available to fulfill procurement needs. In SAP ERP, the buyer needs to navigate to multiple transactions (Create, Change, and Display) to maintain contracts, quota arrangements, source lists, and PIRs. It’s also difficult for buyers to view source of supply validity due to having to navigate through multiple transactions.
SAP S/4HANA offers the Manage Source of Supply app, which provides a holistic view of the sources of supply in a single dashboard with the source of supply validity. Buyers can also create and edit source lists and contracts from this SAP Fiori app. Individual SAP Fiori apps such as Manage Info Record, Manage Contract, and Manage Source List are also available. Figure 5.13 shows the Manage Sources of Supply app with Sources of Supply for materials with validity.
Figure 5.13 Source of Supply with Validity
For unsourced demand (purchase requisitions without a source of supply) and for new sourcing needs (from RFQs), buyers can initiate sourcing events from SAP S/4HANA to SAP Ariba sourcing.
SAP S/4HANA offers native (built-in) integration to the Ariba Network for sending RFQs to create sourcing requests in SAP Ariba sourcing. The sourcing manager is notified to review sourcing requests. Based on a relevant template, the sourcing project allows sourcing managers to manage supplier collaboration, monitoring, and execution; scoring of supplier response; and awarding the supplier. After awarding a sourcing event, the awarded supplier quotation is sent to SAP S/4HANA. The purchase order is created in SAP S/4HANA based on the approved supplier quotation. Figure 5.14 shows the standard integration for sending a sourcing request from SAP S/4HANA to SAP Ariba.
Figure 5.14 Sourcing Request from SAP S/4HANA to SAP Ariba
5.5.2 Operational Contract Management
Contract management involves the process of creating contracts with suppliers and monitoring contracts to ensure contract compliance. SAP S/4HANA offers the Manage Purchasing Contracts app. This SAP Fiori app helps you monitor important information such as contract target value, consumed value, valid from, valid to, and validity status in a single dashboard. Buyers can sort, filter, and drill down to individual contracts and supplier master data. Buyers can also renew the contracts from this screen. Figure 5.15 shows the display of contracts along with the status in the SAP Fiori app.
Figure 5.15 List of Contracts and Statuses
SAP S/4HANA offers analytical SAP Fiori apps for contract management. The detailed information about contracts has been covered in Section 5.9.