Examining Direct Material Sourcing Enablement

Objective

After completing this lesson, you will be able to summarize the enablement steps for the functionality for direct materials in the SAP Ariba Strategic Sourcing Suite.

Direct Materials Sourcing Features and Parameters

When enabled as part of the Strategic Sourcing Suite, SAP Ariba Sourcing allows for additional features for the sourcing of direct materials to be configured.

The SAP Ariba Strategic Sourcing Suite includes a layer of innovations to support the sourcing of direct materials. It includes a product sourcing functionality.

This product sourcing functionality enables product costing and sourcing activities throughout the lifecycle, facilitating collaboration with trading partners:

  • Coordinate with suppliers on new products
  • Drive spend reduction across your enterprise

It provides companies with a better understanding of costs by removing the walls between engineering, sourcing and supplier by exposing materials and components of a BOM in an early stage to the supplier. This capability is essential during the new product development process, facilitates cost breakdowns and it increases the speed to get products quicker to market and stay in cost control.

Product Sourcing

Customers who purchase the SAP Ariba Strategic Sourcing Suite can turn on the Product Sourcing functionality. They have to enable a series of features and parameters which will allow them to use the Product Sourcing dashboard to manage their direct materials and bill of materials. Users with the appropriate system permissions can view details of their materials and initiate sourcing events from the dashboard.

Note

The Product Sourcing functionality in SAP Ariba Sourcing is also known as Direct Material Sourcing (DMS). It should not be confused with SAP Ariba Direct Materials Sourcing for Automotive and Industrial Manufacturing in SAP S/4HANA, which is an S/4HANA-based application. For the purposes of this course, we will call it Direct Material Sourcing.

Direct materials sourcing features are designed for three broad use cases:

  • BOM-based product planning and sourcing that provides a cohesive view of various materials and sub-assemblies that form a product and enables users to collect quotes for entire BOMs and view and track rollup costs for BOMs.
  • Materials-only sourcing that enables users to import materials from the material master, view the material details, collect prices for materials, and view historical pricing data for the materials.
  • Hybrid mode that combines the capabilities of both BOM-based and materials-only modes.

Parameters

Administrators can enable most of the site parameters required for Product Sourcing directly in the SAP Ariba Strategic Sourcing Suite without assistance from SAP Ariba Support. The parameters listed below are among the most important for enabling Direct Material Sourcing.

ParameterDescription
BOM_QUOTE.ENABLEEnable the ability to trigger BOM quote from the BOM page.
BOM_QUOTE.USE_AML_SUPPLIEREnable the ability to add AML suppliers to BOM quote.
DEPLOYMENT_MODE.ADD_PLANT_FROM_MASTER_DATAEnable plant information synchronization from material master.
DEPLOYMENT_MODE.MATERIAL_GROUPEnable synchronization of material data from material master with product sourcing.
ENABLE_CIG_INTEGRATIONEnable the use of SAP Ariba Managed Gateway for integration with SAP ERP. If this is disabled, you need an SAP Ariba Cloud Integration adapter for the integration to work.

Play the video to learn how to enable parameters through the Product Sourcing Manager menu.

Direct Materials Sourcing Personas and Groups

The direct materials sourcing process accounts for different business user persona activities in various workflows for direct materials.

The direct material sourcing functionality introduces new system groups which can be assigned to users and personas involved in the process. To be able to perform the tasks, each of the personas must be part of the user groups that have the necessary permissions. Please see below the site permissions needed for each persona.

Product Sourcing PersonaUser GroupsKey Tasks
Sourcing Operations

Materials Manager

Sourcing Agent

Item360 Viewer

  • Review new BOMs
  • Assign owners
  • Review BOM rollup and costing
Sourcing Manager

Materials Viewer

Sourcing Agent

Item360 Viewer

  • Review new items
  • Review estimated costs
  • Obtain pricing through RFx events
  • Review pricing
Sourcing Administrator

Materials Administrator

Master Data Manager

BOM Manager

  • Manage master data
  • Upload historical pricing, legacy data, data import
  • Monitor BOM queue
  • Monitor PIR message queue
  • Monitor SAP Ariba strategic sourcing solutions master data loads

To create quote requests, you must be a member of one of the following groups:

  • Category Manager
  • Commodity Manager
  • Customer Administrator (access to this group must be approved by SAP Ariba)
  • Event Administrator (access to this group must be approved by the SAP Ariba Market Coordination Team)
  • Junior Procurement Agent
  • Junior Sourcing Agent
  • Limited Event Administrator (access to this group must be approved by the SAP Ariba Market Coordination Team)
  • Procurement Agent
  • Sourcing Agent
  • Sourcing Approver
  • Sourcing Project Administrator (access to this group must be approved by the SAP Ariba Market Coordination Team)

Note

Assigning one of the quote creation permissions will consume a user license.

Material Owner

A Sourcing Operations user can assign either a Sourcing Operations user or a Sourcing Manager user as a Material Owner. A Material Owner can perform the following tasks in addition to the tasks the user persona has access to:

  • Accept prices.
  • Manage AML and BOM splits.
  • Enter estimated costs.

Direct Materials Sourcing Scenarios

SAP Ariba provides features for the sourcing of direct materials and collaborating with suppliers once the supply base is established.

SAP Ariba Direct Material Sourcing encompasses two primary scenarios: sourcing of direct materials for new product development and/or sourcing for direct materials that have already been identified as necessary for production.

You can import materials or BOMs from SAP S/4HANA into SAP Ariba Sourcing once they have been identified by the Engineering team. Suppliers, whether they are new or already on the Approved Manufacturer List, can then be invited to participate in sourcing events. Suppliers can use their SAP Business Network account to answer queries regarding material specifications and pricing. Once the material demand is confirmed, you can also import it into SAP Ariba, and request vendors to submit quotes for the exact quantity you require. Additionally, the SAP Ariba Contracts application can be utilized to generate contracts digitally with the suppliers.

SAP Ariba enables customers to request information and pricing from suppliers and select the best supplier for their direct material needs.

Once appropriate vendors are engaged, after the sourcing process is completed, all relevant details regarding the materials or bills of materials are transferred to SAP S/4HANA as a purchase info record, a purchase order, or an outline agreement for the procurement activities related to the manufacturing of bicycles. Additionally, the SAP Ariba Contracts software can be utilized to generate contracts digitally with the suppliers. This means that buyers will use SAP S/4HANA to buy direct materials from their suppliers.

Summary

  • SAP Ariba Strategic Sourcing Suite facilitates direct material sourcing, improving product costing and supplier collaboration.
  • Product Sourcing functionality supports BOM-based, materials-only, and hybrid sourcing modes for efficient material management.
  • Direct Material Sourcing requires appropriate user group membership and permissions for quote requests and supplier engagement.
  • Users can import materials from SAP S/4HANA to SAP Ariba for sourcing events and contract generation.
  • After sourcing, material details can be transferred to SAP S/4HANA for procurement activities.

Learning

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