Understanding SAP Ariba Indirect Spend

Here we can see the three procurement disciplines outlined. In this course, we will be focusing on indirect material procurement.

Direct materials procurement focuses on the design-to-build cycle of products to be sold.

This process includes:

• Creation of a part list (BOM – Bill of Materials)
• Managing part and product lifecycle through the supply chain
• Collaboration with suppliers on future needs, quality, and pricing

Indirect materials procurement focuses on the procure-to-pay cycle of the goods needed to run a business, like IT equipment and office supplies.

This process includes:

• Finding suppliers and negotiating pricing and contracts
• Sending purchase orders and receiving invoices
• Monitoring spend

Services procurement focuses on finding, hiring, and onboarding employees for short- or medium-term projects.

This process includes:

• Creating a list of services required and associated skill profile
• Managing contractor data
• Tracking completion of services rendered and generating payment

In this course, we will be discussing:

• The primary modules which make up the SAP Ariba applications
• The basic functionality supported by each module
• The indirect procurement business processes which are enable by combining those individual modules together

We will not be discussing:

• Configuration or implementation of the modules
• Detailed, in-depth use of each module
• Direct materials processes or any processes which occur outside the SAP Ariba applications

Let's watch the introduction video which explains SAP Ariba's capabilities from end to end which will set the stage for the rest of the course.

It includes Procurement and related activities:

• Searching in the catalog
• Purchase requisition creation Approval
• Purchase order generation
• Purchase order confirmation by supplier
• Shipping notice
• Receipt
• 3-way invoice match and supplier payment

It includes Sourcing and related activities:

• Spend analytics
• Supplier management
• Sourcing event
• Bid evaluation and awarding
• Contract creation

Sourcing and procurement

• Are we buying from our preferred suppliers at our negotiated prices?
• How do I find procurement savings opportunities?
• How can I use my company’s spend data to negotiate with suppliers better?

Finance, treasury, and accounts

• How do we improve cash flow?
• Are we realizing the contract terms negotiated?
• How can we optimize terms for days payable outstanding with suppliers?

Supply chain and corporate social responsibility

• Are we at risk from our suppliers?
• Is our supply chain green?
• Is my supply chain diverse?