Exploring Service and Material Procurement

Objective

After completing this lesson, you will be able to evaluate the key components and processes of service and material procurement.

Introduction

Who This Lesson Is For

Welcome to our lesson on Service and Material Procurement, designed for individuals eager to dive into the world of procurement processes. This lesson aims to equip you with a holistic understanding of the procurement systems, thereby enabling you to step up the service level you provide to your clients.

Whether you're a newcomer in this field or an experienced professional hungry for more knowledge, we've got you covered. This course will navigate you through the essentials of procurement, from service procurement and goods for consumption purchasing to third-party order processing.

Moreover, you will learn about the integral steps involved in each procurement sub-process, from creating requisitions and purchase orders to processing supplier invoices. You will also gain insights into optional yet crucial processes such as contract creation, all of which directly contribute to achieving efficient, cost-effective procurement. Remain attentive as each unit of this course will gradually unveil the strategies to master service and material procurement.

Why This Course

Imagine a business faced with inefficient buying processes. This leads to service delays, higher costs, and unhappy customers. As a newcomer to Service and Material Procurement, this course will give you the basic knowledge to solve these problems.

You'll learn how to make procurement operations smoother, simplify buying workflows and improve the quality of purchases. With these skills, you can offer your clients expert solutions that significantly improve their operations and customer satisfaction.

Furthermore, you'll understand procurement processes involved in projects. This includes hiring external services, buying materials, and setting up third-party orders. You'll help your clients handle different procurement processes more effectively and optimize the process from start to payment. This will help your clients easily join SAP's supplier network.

By understanding these areas, you'll not only add great value to your clients but also boost your career in procurement management. So, get ready to take your procurement skills to a new height!

What You Will Be Able To Do

Upon completion of this course, you will have a deeper understanding of the essential elements and procedures involved in procuring services and materials. You will be well-equipped to analyze and assess the key components of the procurement process, enabling you to make informed decisions and optimize the acquisition of resources for your organization.

Moreover, you will gain insight into the various stages of the procurement lifecycle, from identifying requirements and sourcing potential suppliers to negotiating contracts and managing vendor relationships. This knowledge will empower you to streamline the procurement process, ensuring that your organization receives high-quality services and materials in a timely and cost-effective manner.

Additionally, you will develop the skills to evaluate and select the most suitable suppliers based on a range of criteria, including quality, reliability, and value for money. You will also learn how to effectively manage and monitor supplier performance, ensuring that they consistently meet your organization's standards and expectations.

By understanding these critical aspects of service and material procurement, you will be able to drive efficiency, reduce costs, and mitigate risks within your organization. You will become a valuable asset to your company, contributing to its overall success and competitiveness in the marketplace.

What To Expect

In this course, you'll engage with a variety of materials to enhance your learning experience.

  • You'll read detailed content that covers the fundamentals of SAP Professional Services.
  • Informative graphics will help you visualize key concepts and processes.
  • You'll also watch demonstration videos showcasing the Professional Services software in action, providing practical insights into its features and capabilities.
  • Additionally, content-related videos will further explain and illustrate important points, helping you to better understand and retain the information.

This mix of reading, visuals, and videos will ensure a comprehensive and engaging learning experience. So if you are ready, let’s begin.

Unit One Key Topics

Welcome to your journey through Service and Material Procurement! By the end of this course, you should have a comprehensive understanding of the different procurement sub-processes, their key steps, and why they are important in a professional services setting.

Before we get into the course, here are some key concepts to familiarize yourself with:

  • Service Procurement: This involves arranging for an external company to provide a specific service. The processes include ordering the service, getting confirmation, receiving and processing the invoice. Two examples of this are hiring a contractor or subcontractor for a project, and comparing their service entry sheets against their purchase orders.
  • Material Procurement for Consumption: This process involves ordering a particular piece of equipment or material for a specific project or for a customer. Various stages in this sub-process include creating and sending the purchase order, receiving the goods, and inputting the details of the supplier invoice.
  • Third-party Order Processing: In this case, material is ordered for an end-customer, but instead of being delivered to your company, it is shipped directly to the end-customer by the supplier.
  • Process Steps: Each procurement sub-process consists of specific steps, varying with what is being procured. For instance, the service procurement process features steps such as creating and sending the purchase order, confirming service, and creating the supplier invoice.
  • Contracts: Creating contracts is an optional, but critical part of the procurement process, and can be done from scratch or based on a purchase requisition.

You will also be introduced to specific procurement-related terms such as My Purchase Requisitions, Post Expenses, Goods Receipt and Invoice-to-Pay. Each of these will be explored in depth during the course.

Diving into the Service and Material Procurement processes will help streamline your procurement activities, optimize your resource usage, and enable efficient integration with SAP supplier network natively.

Service and Material Procurement

Service and Material Procurement Process Flows Overview

The figure displays an overview of the process flows for the Service and Material Procurement (J13) scope item.

Service Procurement - Project-Based Services: SAP S/4HANA System: Involves the project manager for commercial services, purchaser, and accounts payable accountant (ordering company). Customer System: Involves the external service agent. Service and Material Procurement - Project-Based Service: SAP S/4HANA System: Involves the project manager for commercial services, purchaser, business network, and accounts payable accountant (ordering company). Procurement for 3rd Party Order Processing: SAP S/4HANA System: Involves the purchaser, project manager for commercial services, accounts payable accountant, and project assistant (warehouse clerk role). External System: Involves the customer. Ariba Business Network: Involves the supplier. Service and Material Procurement - Project-Based Services (Contract Creation): Customer System: Involves the purchaser. SAP S/4HANA System: Involves the purchaser and project manager for commercial services.

Description

The Service and Material Procurement scope item covers all relevant procurement processes of the professional services scenario.

Possible procurement sub-processes are:

  • Service procurement: You order an external service. The external service company confirms the purchase order and performs the service. The supplier invoices the service. You enter and process the supplier invoice.

    Example 1: purchasing the services of a contingent worker or contractor to be staffed to the project, capture time, and then automatically have their service entry sheet updated against their purchase order for comparison upon receiving the supplier invoice.

    Example 2: A sub-contractor is used to perform a specific service on the project (for example graphics services) and their services are confirmed against the supplier invoice that is received.

  • Material procurement for consumption: A material is requested for a customer or internal project. You create a purchase order and send it to the supplier. The supplier delivers the material, and you enter the goods receipt. Finally, you enter and process the supplier invoice.

    Example: A specialized piece of equipment (for example high-spec laptop) is required for a data analysis project which is to be ordered and received by the project team and charged to the project (optional: to be charged to the customer).

  • Procurement for third-party order processing: You order a material for an end-customer. The supplier ships the material directly to this end-customer.

    Example: As part of the contract agreement, the customer has purchased a server to be used in an implementation project for which the delivering company will raise the purchase order, pay the supplier invoice but the server will be delivered directly to the customer.

Key Process Steps

  • Procure services:

    • My Purchase Requisitions - New

    • Create and approve purchase order

    • Send purchase order to supplier

    • Confirm service from supplier

    • Post expenses of service

    • Create supplier invoice

  • Procure material for consumption:

    • My Purchase Requisitions - New

    • Create and check the purchase order

    • Send purchase order to supplier

    • Post and check goods receipt

    • Create supplier invoice

  • Procure for third-party order processing:

    • My Purchase Requisitions - New

    • Create and check the purchase order

    • Send purchase order to supplier

    • Post and check goods receipt

    • Create supplier invoice

  • Create contracts (optional):

    • Create contract from scratch

    • Create contract based on purchase requisition

Benefits

  • Optimize and streamline procurement process to professional services scenario requirements.

  • Simplify procure-to-pay, invoice-to-pay.

  • Integrate to the SAP supplier network natively (SAP Ariba Network).

Unit 1 - Understanding Service and Material Procurement for Professional Services Projects – Material Procurement focuses on service procurement.

Understanding Service and Material Procurement for Professional Services Projects (J13)

Note

An SAP S/4HANA Cloud training system is required to complete the following exercise.

Training Systems for Self-Paced Students: If you are working through the training content self-paced in the SAP Learning Hub, please purchase an SAP Learning System Access contingent to access the training system designed to accompany exercises in the training course content. Navigate to SAP Learning System Access Quick Start and search for the course code to locate the correct training system.

To execute this exercise with best system performance you can remove any other business roles assigned to your user except for S4C Generic Role provided. You can assign further roles as required in the subsequent exercise anyway and can perform this task in the same step if necessary.

Some exercises use the characters ### as placeholders for your three digit user number. Once you are on the SAP Fiori Launchpad of the training system, open the user profile icon in the upper right corner. There you will see your user: A followed by digits. Please use the last three digits of your user consistently instead of ### whenever you see ### in an exercise.

Prerequisites

Check User Authorizations

Make sure the following roles are assigned to your user:

Business Role IDBusiness Role
BR_PURCHASERPurchaser
BR_PURCHASING_MANAGERPurchasing Manager
BR_WAREHOUSE_CLERKWarehouse clerk
BR_AP_ACCOUNTANTAccounts Payable Accountant
BR_EMPLOYEE_PROCUREMENTEmployee - Procurement
BR_PROJECT_MANAGER_PROFProject Management – Professional Services
BR_OVERHEAD_ACCOUNTANTCost Accountant - Overhead
BR_BPC_EXPERTConfiguration Expert - Business Process Configuration
BR_GL_ACCOUNTANTGeneral Ledger Accountant

How to:

Look for and open the SAP Fiori application Maintain Business Users and select your username in the search section. Click on the username item or select it and click on Edit. In the user details Assigned Business Roles section make sure the required roles are present. If they are not, click on Add, search by the business role description in the exercise and add them to your user. You need to add one role at a time. Save your business user after you finish adding roles.

Note

Some roles may enable new spaces in SAP Fiori. You may need to refresh your screen in order to see them.

Task 1: Create a Purchase Order for an External Service

Steps

  1. From the application "Manage Purchase Orders", create a purchase order for services and materials.:

    FieldValue
    Supplier10305001 (Domestic DE Supplier CP5001)
    Company Code1010
    Purchasing Organization1010
    Purchasing Group001
    Material (service)T001
    Plant1010
    Order Quantity10 H
    Net order Price100 EUR

    Assign the item to the Explore work package from your project.

    1. Open application Manage Purchase Orders and select Create. Enter the data from the following table:

      FieldValue
      CurrencyEUR
      Purchasing Group001
      Company Code1010
      Purchasing Organization1010
      Supplier10305001 (Domestic DE Supplier CP5001)

    2. Click on Create to add the first item to the purchase order.

      Enter the data from the following table:

      FieldValue
      MaterialT001 (Junior Consultant)
      Plant1010
      Order quantity10
      Unit of measureH
      Net price100

    3. Click on the arrow icon at the left side of the item to open the details screen. Continue completing the following field: Account Assignment Category: Project (P).

    4. In the account assignment segment click on the arrow at the left of the item to open the account assignment details.

    5. Continue completing the following field: WBS Element. Search and assign the Explore work package from your project.

    6. Click on apply to go back to the item detail screen.

    7. Scroll down to the Tax section and input Tax Code V0 (Input Tax non taxable).

    8. Scroll down to Schedule Lines and input:

      • Start of performance period: Start date of the assigned project work package.
      • End of performance period: End date of the assigned project work package.

      Click on Apply.

Task 2: Order a Material in the Same Purchase Order

Steps

  1. In the same purchase order created in Task 1, add an additional item to order 10 units of material NS0001, with a net order price of 80 EUR per unit.

    1. In the purchase order item section, click on Create to add a new item, and click the arrow icon at the left of the newly added item to open the item detail screen.

      Enter the data from the following table:

      FieldValue
      MaterialNS0001
      Plant1010
      Order Quantity10
      Net order price80
      Account assignment categoryProject (P)

    2. Open the account assignment details and add the same work package as item 10 in the WBS element field.

    3. Click on Apply to return to the previous screen.

    4. Select tax code V0.

    5. Click on Apply to return to the main purchase order screen.

    6. Click on Order to save the purchase order.

    7. Note down the number of the Purchase Order.

      Number Purchase Order: _________________________

Task 3: Create a Manual Entry Sheet for the Procured Services and Goods Receipt for Materials

Steps

  1. Using the application Manage Service Entry Sheets – Lean Services, create a service entry sheet for the purchase order created previously posted to your project.

    1. Open the application Manage Service Entry Sheets – Lean Services and chose Create.

    2. Enter a description for the service sheet, for example, "Services from Junior Consultant" and enter the Number Purchase Order (PO) you created in previous tasks.

    3. In the pop-up that opens after the PO is entered, the available service items in the PO are offered. In this example only one item is available as the second item in the PO is for a material.

    4. Select the item and click Add.

      Enter the data from the following table:

      FieldValue
      Performance PeriodCurrent date, click two times to select just one day.
      Stated quantity5H
      Work item IDSelect one of the work items from the work package if available.

      Note

      To fill out the Work Item ID, you can either select Settings on the service entry sheet item table and enable "Work Item ID" from the drop down list, or navigate to the details of the service entry sheet item by clicking on the arrow at the right end of the item.

      Select Apply.

      Select Create.

  2. Using the application Post Goods Receipt for Purchasing Document, create a goods receipt for the material item in the PO created in previous tasks.

    1. Open the application Post Goods Receipt for Purchasing Document and select the PO created previously in this exercise.

    2. The material item in the PO is automatically displayed in the Items section of the screen. Select it to open its detail screen.

    3. In Delivered (Unit of Entry) field, change the default units to 5 PC.

    4. Select Apply.

    5. Select Post.

Learning

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