Exploring Requisitions

A purchase requisition is your initial request for goods and services. It is an approval document that will have a unique system ID that begins with PR, followed by a series of numbers.

A user requests goods and services by creating a purchase requisition and then submitting it for electronic approval.

The purchase requisition will be routed to all users in the approval flow based upon your preconfigured business rules.

Approvers will have the option to either approve or deny the purchase requisitions.

If the purchase requisition is approved, one or more purchase orders will be generated and routed to different suppliers.

If the purchase requisition is denied, it will be sent back to the request.

A purchase requisition (PR) is an approvable document that is created when you submit a request to purchase items. Each PR has a unique ID (such as PR3248) to identify it as it moves through the purchasing process.

Purchase requisitions are the first step in transactional procurement:

1. A user requests products or services by completing a PR and submitting it for approval.
2. The PR is routed to everyone identified in the approval flow based on preconfigured business rules.
3. Approvers approve or deny the PR. If it is fully approved, one or more purchase orders (POs) are created for each supplier. If the PR is denied, the user can withdraw it or edit it and resubmit it for approval.
4. Suppliers receive the PO, optionally send an order confirmation, and ship the ordered products or provide the ordered services.
5. You receive the items and submit receipts as the items arrive. If the items arrive in batches, the purchase order remains open until all items have been received.

There are several different ways to start a requisition.

You can use the create drop down menu and select requisition.

You can search and select the catalogue items using the search content item.

Or you can browse and select catalogue items using the catalog tab.

Any of these options will route you to your catalog homepage. Once you begin adding items to your cart, the system will generate and reserve a requisition number for your use.

There are three ways to start a requisition:

• Choose Select Requisition from the Create menu.
• Search the catalog through the Search content item.
• Browse the Catalog through the Catalog tab.

Any of these options takes you to the SAP Ariba catalog. Once you add an item to your cart within the catalog, the system will reserve a Requisition number for your use.

When creating purchase requisitions, you may want to add comments and attachments as supporting documentation or to assist your approvers in evaluating the request.

Comments are simply a free form text field. While attachments are physical documents.

SAP Ariba supports all the common document extension types.

If you need your supplier to see these comments and attachments, simply check the visible to supplier’s checkbox and they will be copied to your purchase order.

Once you've finished entering all the details for your purchase requisition, it is a good idea to review the approval flow.

You can expand the approval flow by clicking on the show approval flow button.

This will display which users and groups will be required to approve the requisition based on the item types, total dollar amount of the requisition, as well as other attributes.

Changing any of these attributes could possibly change the approval flow.

When you're finished entering all the details and reviewing the requisition, you will need to click the submit button to route the request for approval.

Once your requisition is submitted, the status will change from composing to submit it.

Comments can be internal or also sent to the supplier. Examples:

• "Equipment needed for the Johnson project."
• "Lab supplies for office 27"
• "We’ll accept blue or green, whichever is available."

Attachments allow you to send supporting documentation. Like comments, these may be internal or also sent to suppliers.

When you begin creating your requisition, the status will be composing.

When you click the Submit button, the status changes to submitted and will remain in the submitted status until all users in the approval flow have approved.

Your fully approved purchase requisition will then move from approved to either ordering or ordered status depending on the supplier routing method.

Once you have begun to receive goods or services have been rendered, the status will change to receiving or servicing and remain in that status until the items are fully received or services are fully rendered when the status will change to received or serviced.

If you submit your requisition and realize that you have either made a mistake or need to hold the purchase, you will have the option of either editing or withdrawing the requisition.

Editing will remove the requisition from the approval process. Open the PR in and edit screen and change the status back to composing.

You can then make your necessary changes and resubmit.

You would use the withdrawal option if you no longer need it to make this purchase or delay.

Once your purchase requisition is fully approved and a purchase order is generated, you will no longer have the option to edit or withdraw.

If you need to make changes, you will need to open the original purchase requisition and click the Change button.

The system will add a version number to the end of the purchase requisition number and allow you to make the necessary changes to the order.

You will then click the Submit button and the purchase requisition will again route through the approval flow.

Composing - The author is working on the requisition and has not yet submitted it. The requisition is private to the user who created it.

Submitted - The requisition has been submitted for approval. It has not yet been fully approved or denied, but it is somewhere in the approval process. There is at least one person who still needs to take approval action.

Denied - Someone in the approval chain has refused the request. After a request has been denied, it typically stays in the Denied state indefinitely, until either the preparer chooses to resubmit the request, or the person who originally denied the request decides to approve it.

Ordering - The requisition was fully approved and is in the process of being converted to one or more purchase orders. For Requisitions being sent to suppliers via Ariba Network, this state might last only seconds.

Ordered - The purchase orders were successfully dispatched to the designated suppliers. A requisition stays in Ordered state until one of two things happens:

• The requester receives some or all items from the requisition.
• The requester decides to cancel the order.

If you cannot find the item you need in your catalog, you may choose to add an ad hoc or non-catalog item to your purchase requisition.

When you click the non-catalog button, the system will prompt you for the item details. You will simply enter a description and all required fields as well as any optional fields and then click OK to add the non-catalog item to your requisition.

Please note that requisitions with non-catalog items may be routed to an additional approval.

If you cannot find what you are looking for in the catalog, you can add a non-catalog item (also known as an ad hoc item) to your purchase request. You manually enter text to describe these items. The SAP Ariba prompts you for the price, commodity code, and item description. All other fields are optional.

To add a non-catalog item:

1. Enter a description for the item.
2. Select a commodity code for the item from the list.
3. Select a supplier from the list. When you select a supplier, the contact field will automatically be filled in. If the name in this field is underlined, you can click it for further details.
4. Enter a price for the item.
5. (Optional) Enter the supplier part number, quantity, and unit of measure if you know these values.
6. Click OK to add the item to your requisition.

Requisitions that contain non-catalog items might be routed to your purchasing group, which checks your entries and fills in any missing information after communicating with the supplier.

Non catalog items are generally used for one off purchases and it is recommended that you minimize their usage.

One way to do this is by having your supplier add those items to your catalogs to drive as much spend through your catalogs as possible.

In addition to the extra approval of non-catalog items, those purchases may also have longer lead times from your supplier.

You can control which users have permissions to create non catalog items as well as configure your system to generate separate purchase orders for non-catalog items.

• Non-catalog items are generally used for infrequent, one-off items.
• In general, you should seek to minimize use of non-catalog items:
  • They require review and approval by the purchasing department, and therefore can take longer to approve (and cost more to process).
  • Suppliers often have longer lead times for non-catalog items.
• Administrators can control which users are allowed to create non-catalog items.
• Non-catalog items can be configured to appear in separate purchase orders from catalog items to streamline supplier fulfillment.
• Minimize the need for non-catalog items by:
  • Driving spend to catalogs where possible.
  • Using item-level contracts to generate catalog subscriptions for items that are standard, but not numerous enough or purchased frequently enough to warrant the supplier furnishing a catalog.
  • Generating your own catalog files on behalf of your suppliers to standardize the items.

Classification codes or commodity codes are used to group like products or services into categories.

Each product or service in your catalog must have a commodity code associated with it.

There are several industry standards for classification codes, such as the United Nations Standard product and services codes or UN SPSC.

While the UN SPSC codes are one of the most common, SAP Ariba offers a flexible architecture that supports transactions using any classification code schema.

Your organization can choose its own set of commodity code standards.

The system will then use a set of mapping files to translate the selected commodity code standards to other classification schemas on both inbound and outbound transactions.

A subset of the UN SPSC classification code schema will be loaded into your system with your initial configuration.

Like commodity codes, a unit of measure must be applied to each catalogue and non-catalog item.

Units of measure specify the details on how items are shipped, delivered or packaged.

SAP Ariba recommends the use of the UNC fact standard when possible, but again, the flexible architecture enables you to use other systems as well, such as NCUON.

Catalog Item Specification: Unit of Measure

Each catalog and non-catalog item has a unit of measure (UOM), which specifies how that item is shipped, delivered, or packaged. SAP Ariba recommends the use of the UN/CEFACT standard when possible, but provides a flexible architecture that allows other systems such as ANSI/UOM.

All catalog and non-catalog items need a UOM, which describes how the item is packagedSAP Ariba supports UN/CEFACT and other schemes.

Purchase requisitions can also be created and then designated as a service order.

Some examples of services would be marketing real estate, field services, facilities management, or operations.

Service orders can also contain line items for goods that are directly related to those services.

A requisition can be created for Services

• Service purchase order, service PO or service order is a request for intangible material or immaterial goods

Examples of Services:

Marketing

• Print services
• Market research
• Studio services
• Events
• Promotions
• Advertising/ media brokerage
• Creative agencies

Real Estate

• Leases
• Construction

Field Services

• Equipment repair
• Field Maintenance

Facilities Management

• Waste management
• Landscaping
• HVAC and other equipment
• Utilities
• Food services
• Copier/reprographics

Operations

• Plant Maintenance

Requisitions for services can be created for both planned and unplanned services.

Planned services are those whose details are known and defined at the start of the purchase.

These requisitions will be created with apparent line item that includes the maximum spend as well as the starting and end dates for the service.

Child line items would then be created describing all the specific service details.

An example of planned services would be like scheduling your automobile for routine maintenance.

You know that for a set price, the oil will be changed, the joints will be lubricated, and the fluids checked.

Unplanned services or those whose details are not readily known at the beginning of the purchase.

In our automobile maintenance example, unplanned services might be discovering that your brakes and tires also need to be replaced.

These requisitions are also created with apparent line item describing the maximum spend and service dates but contain no child lines.

The supplier rendering the services would then create child line items as service entry sheets with the details of the service completed.

Note that the supplier will not see the maximum amount on the purchase order but will not be able to exceed the expected maximum amount.

Requisitions can be created for planned services or unplanned services

Planned services

• Planned services are services whose nature and scope is defined at the start of a procurement project

  These requisitions would include parent lines that includes the maximum spend, start date and end date for the expected service

• Child lines are created, which include all items that would be included in the overall service
• Suppliers create service sheets based on the details in the Purchase Order received without adding additional services or materials

Unplanned services

• Unplanned services are services whose nature and scope are not initially known and the details might not be completely described in the early phase of the procurement process
• The requisitions are created with a parent line with a mandatory maximum amount, start and end date, but no child line items under it
• Supplier performing the service would create a service sheets adding child lines with the details of the work completed, as well as any material goods they used
• Suppliers never see maximum amounts, but can not exceed the expected maximum spend

This describes the main terms used with service orders.

The service item is the line item that describes a service to be rendered by a supplier.

The material item is a line item that describes the specific goods that are associated with a service line item.

The service hierarchy basically defines the structure within the service order when it has both parent and child line items.

The parent line item is the top level of the hierarchy containing the total amount of spend as well as the start and end dates of the services.

The child item or items are below the parent line item and describe the details of the services to be rendered.

This chart details several by channels for services.

The last three rows highlight the details and procedures for service orders, including a simple service order.

And service orders for both planned and unplanned services.

This table highlights the service buying channel scenarios, the process for each, and examples.

SOURCE → PROCURE → PAY

Creating a requisition with the service line item begins the same as any other requisition.

By adding a catalog or non-catalog item to your requisition and then proceeding to checkout.

Next you will Scroll down and place a check in front of the line item.

Using the actions dropdown menu beneath the line item, click edit details.

Scroll down to the line item details and click yes for service item.

Enter the maximum amount of service which will be the same or greater than the expected amount.

Be sure to enter the service start and end dates, and then click OK to update the item in your requisition.

This item now represents your parent line item.

Creating a Requisition with a Service Line Item.

A Service Item could be a catalog item or Non-Catalog item. Once the item is in the cart, click Proceed to Checkout.

To convert the item to a service item:

1. Edit the line item by clicking Actions then Edit Details.
2. Click "Yes" for the Service Item.
3. Enter a Max Amount that is the same or greater than the Expected Amount.
4. Enter a Service Start Date and a Service End Date.
5. Click OK to add the item to your requisition.

Requisitions line item now includes a Service Line Item. This is a Parent Line in your Service Requisition.

Next, you may enter a child line item beneath the parent line item. While you can use child line items for unplanned services, they are required for plan services.

These child line items will include all of the details of the service, as well as any goods related to that service, and can be either catalog or non-catalog items.

Once you add the items to your cart, click proceed to checkout.

Please note the sum total of the child line items beneath the parent line item cannot exceed the maximum total amount entered on the parent line item.

Adding Child Line Items to a Service Requisition

Adding child line items may be required for unplanned service, but are required for planned services. Child lines can include details of the service and/or goods and can be catalog or non-catalog items:

1. Select the Parent Line Item.
2. Click More then Add Child Line Item.
3. This brings you back to the catalog page,
4. Add catalog or non-catalog, multiple items can be added.
5. Click Proceed to Check Out.

Note

The total amount of the child line items added to the Parent can not exceed the Max Amount entered on the Parent Line Item.

The Child Lines will be appear on the requisition under the Parent.

Requisitions can be removed from the approval process at any time before it is fully approved by using the edit or withdrawal buttons.

To make changes to the requisition, click the Edit button.

The requisition will be withdrawn from the approval flow reverted back to a composing status in an edit screen.

You can then make your changes and resubmit the requisition for approvals.

If you need to remove the requisition from the approval flow without editing, you can use the withdrawal button.

Withdrawing the requisition will place it back into a composing status and an additional action will have to be taken to open the requisition and resubmit if needed.

Budgets are checked during requisitioning only; they are not checked during invoicing. If your organization receives non-PO invoices or charges for tax, shipping, or special handling on invoices and you want them to apply against a budget, those charges must be entered through a budget adjustment.

If your organization uses budget checking, then every requisition must be associated with a budget, unless a system parameter (Application.Budget.FailCheckOnNoBudget) is turned off. Turning off this parameter results in checking only requisitions that specify a budget.

If budget checking is enabled, a new tab named "Budgets" appears in each purchase requisition. This tab display the budget amount that the requisition consumes, the remaining budget amount, and the time period during which the budget is active.

Your organization has the option to either prevent requisitions from being submitted when budget check fails or allow them to be submitted and then route them for special approval.

• Budgets are checked during requisitioning only
• The system checks for adequate funding
• Approval flow based on budget check configuration (or prevent submission of requisitions altogether)
• Budget checking is standard functionality but not enabled by default

The SAP Ariba budget checking is a standard feature but is disabled by default.

If you are using budgets, the budgets will be checked while creating requisitions. When the system verifies sufficient funds for the amount of the requisition.

You can create approvals to verify the budget check or simply prevent the requisition from being submitted within adequate funds.

When you are using budget checking, each requisition will display an additional tab titled Budgets, which displays the amount of the budget that requisition will consume. The remaining budget amount as well as the time for which the budget is active.

When you were using budget checking, all requisitions that are created and submitted in the SAP Ariba system must be associated with an active budget.

The approval flow for a requisition using budget checks may be modified based on the configuration of your budget check feature.

Your configuration will determine whether or not to submit the requisition if the budget check fails, or to allow the requisition to be submitted using special approvals.

The budget approver will have special permissions to either change the budget code or to skip the budget check altogether and allow the requisition to go through.

If you do not wish to perform budget checking for all purchases, you can configure your system to allow budget checking only for requisitions that have special accounting assignments corresponding to a particular budget.

By default, if budget checking is enabled, every requisition that is created and submitted in the SAP Ariba system must be associated with an active budget.

The approval flow for submitted requisitions is based on the configuration of the budget check feature. The configuration determines not to submit the requisition if the budget check fails, but it can also allow the requisition to be submitted adding the budget approver role to the approval flow. The budget approver can assign a different budget code to the requisition or skip the budget check altogether.

Some organizations do not have budgets for all purchases. They have budgets for purchases from specific cost centers or for projects. These organizations turn off the Application.Budget.FailCheckOnNoBudget parameter so that the system performs budget checking only against those requisitions that have accounting assignments that correspond to a defined budget.

When the requisition is approved and one or more purchase orders are created from the requisition, the budget’s funds are encumbered (reserved) and the necessary logs are created for the export integration event.

If the requisition is changed, the budget check is performed again and adjustments are made to the amount encumbered. If changes in requisition line amounts (associated with the same budget code) results in either an increase in the total requisition amount or re-distribution of the originally reserved amount among the line items (keeping the total reserved amount the same), the accumulators are recalculated and kept current.

If the requisition is cancelled, the reserved/encumbered funds are released back to the budget pool.

The system allows you to review your budgets before or after submitting your requisition.

Before submitting a requisition, you can see your budget details in the shopping CART summary and a link that displays the budget details.

While viewing the budget details, the system will display all details of all budgets associated with that requisition, as well as the budget check status.

To view your budgets after submitting the requisition, you can click on the Budget tab, which will display all of the budget details.

You can view budget summary and details both before and after submitting a requisition.

• Viewing Budgets before Submission - When viewing requisitions prior to submitting, you can see budget information in the Cart Summary. A link displays the Budget Details.
• Viewing Budget Details - The Budget Details page displays the details of all budgets associated with the requisition and the Budget Check Status.
• Viewing Budgets after Submission - Budget information is available for review during the approval process and anytime after the requisition is submitted by clicking the Budget tab, which displays the Budget Details page.

This shows some examples of the different budget checking exception scenarios with corresponding expected outcome and user experience.

You can see that when the budget approver is added to the workflow it is more of a warning than a failure as the result is dependent on the action of the budget approver.

In addition to the approval rules, you can establish thresholds and tolerances which help determine the action taken after the budget check is compared to the thresholds and tolerances.