Reviewing the Demand and Aggregation Process

Demand aggregation is an additional feature in your SAP Ariba procurement module that allows you to accumulate and hold line items from different requisitions in order to better leverage tiered pricing contracts.

These line items will ultimately be consolidated into one aggregated requisition to generate and send one purchase order to that supplier.

Your administrator will configure the rules that determine how these line items will be consolidated.

Members of the purchasing agent or purchasing manager groups will use the purchasing work bench in order to view and take action on any of these held line items.

The one caveat is that demand aggregation is not applicable to punch out items, catalog kits, spot buy items or service items.

Demand aggregation enables buying organizations to aggregate multiple purchase requests into a single purchase requisition and take advantage of the following benefits:

• Tiered pricing and volume discounts
• Savings on shipping and handling costs
• Reduced efforts for tracking multiple purchase orders and deliveries as well as purchasing efforts such as procurement time and costs
• Supplier options by initiating a sourcing request

Line Items may be held based on configured rules. Held line items may be:

• Assigned to a Purchasing Agent or Purchasing Manager group
• Found in the Purchasing Workbench
• Aggregated Automatically or Manually

How Demand Aggregation works with the requisition process:

• Aggregation occurs after a requisition has gone through the workflow and has been fully approved
• The system rules that have been configured dictate the requisition line items that will be held for aggregation
  • Demand Holding Rules – Identify items for purchasing workbench or auto-aggregation
  • Demand Assignment Rules – Assigns held items to a buyer or purchasing agent
  • Demand Aggregation Rules – Groups the held items for auto-aggregation, then scheduled tasks converts these groups or items into aggregated requisitions
• Users assigned the group of Purchasing Agent or Purchasing Manager will be able to access the lines held for aggregation within the Purchasing Workbench
• The aggregated lines will be held within the Purchasing Workbench until they are manually processed or automatically aggregated per the scheduled tasks

The aggregation process begins by creating and submitting a requisition.

Once the purchase requisition is fully approved, any line items that are not to be aggregated will be separated from the aggregated line items and a purchase order will be generated and immediately routed to the supplier for fulfillment.

Line items to be aggregated will become visible in the purchasing workbench.

Members of the purchasing agent or purchasing manager group will then aggregate those line items at the proper time and submit the aggregated requisition.

The aggregated requisition will then be routed for post aggregation approvals if necessary.

Aggregated Requisition Process Flow

Users create and submit requisitions. The requisition goes through the standard approval process. After the requisition is fully approved any line items configured for Aggregation are held for consolidation and become visible in the Purchasing Workbench. The preparer of the requisition receives notification that the requisition has been fully approved, and included in the email is a table listing any items that are being held for Aggregation. The total dollar amount reflects only line items that are not being held for aggregation.

Held line items are aggregated into a new requisition. The aggregated requisition is submitted, and the Purchasing Agent or Purchasing Manager becomes the Preparer and Requester, while the line items retain information from the original requisition.

Optionally, any requisition may be sent for a Sourcing Request and will automatically be updated when the payment terms are completed in Strategic Sourcing.

The aggregated requisition goes for post aggregation approvals (as needed). Note: when setting up approval rules there will be a field to choose either the Default approval rule or Aggregate Requisition approval rules.

Your demand aggregation rules will determine if a line item is to be held for aggregation.

It will determine the group or user that is responsible for that held line item based on commodity code, call center, etc.

It will also determine if the line item is to be processed manually by a user or automatic.

This is a quick example of how demand aggregation works.

In this example, the first user creates a purchase requisition with two-line item.

Line item one will not be aggregated and has generated their purchase order to be sent to the supplier.

Line item two is sent to the purchasing Workbench and held for aggregation.

User two creates a requisition with just one line item which will be sent to the purchasing Workbench be held for aggregation.

The purchasing agent or purchasing manager that has been assigned to these items will review the items in the purchasing workbench and create the aggregated requisition containing line item two from the first purchase requisition and line item one from the second purchase requisition.

The aggregated requisition will then be submitted for approvals if necessary, and the second purchase order will be generated and routed to the supplier.

The image above shows an example of how Aggregation works.

User 1 created PR1 with two line items.

• Line item 1 will not be aggregated
• Line item 2 will be aggregated.

User 2 created PR2

• Line item 1 will be aggregated

PR1:

• Line item 1 goes is approved and becomes a PO.
• Line item 2 is approved, but goes to the Purchasing Workbench for Aggregation.

PR2:

• Line item 1 is approved, but goes to the Purchasing Workbench for Aggregation.

Purchasing Agent or Purchasing Manager assigned to the item, views the items in the Purchasing Workbench and creates a new requisition, PR3 including:

• PR1 Line Item 2
• PR2 Line item 1

As mentioned earlier, purchasing agents and purchasing managers will use the purchasing Workbench to manage all held line items and create the associated aggregated requisition.

You can access the purchasing workbench by using the managed dropdown menu and selecting purchasing work bench in your SAP Ariba dashboard.

As a member of one of the applicable groups, you have the ability to search for any particular line item.

You can view the line items that are assigned to you.

You can view those line items that are marked for auto aggregation or you can view all unassigned items.

You can also take action on any of the line items by aggregating them into a new requisition, adding them to an existing aggregated requisition that has not yet been submitted. Or you can assign the items to a particular purchasing agent.

And you can also cancel the line items.

Purchasing Agents and Purchasing Managers use the Purchasing Workbench to manage the held line items and create Aggregated requisitions.

• Purchasing Workbench displays all held line items that are:
  • Assigned to the Purchasing Agent or Purchasing Manager or the group
  • Not assigned to any user or group
• Within the Purchasing Workbench you can search for and view line items:
  • Assigned to you
  • Unassigned items
  • Marked for Auto-Aggregation
• Line item actions:
  • Aggregate line items into a new requisition
  • Add items to an existing requisition
  • Assign to a selected Purchasing Agent
  • Cancel line items

Demand aggregation has an optional feature that allows you to create a sourcing event from within the aggregated requisition.

This will allow for negotiating with suppliers to possibly obtain better pricing.

If this functionality is turned on in the SAP Ariba strategic sourcing module, the create sourcing request button will be available when you're creating your aggregated requisition.

The sourcing request will be sent through the SAP Ariba Strategic Sourcing module to the suppliers and once the sourcing activity is complete, the updated pricing and terms will be sent back to SAP Ariba procurement and the aggregated requisition will be updated.

Additional options:

• Demand Aggregation includes the optional step to creating a Sourcing Request in the SAP Ariba Strategic Sourcing
• This may allow for the updated quotes of large purchases, potentially taking advantage of volume discounts
• To create the Sourcing Request
  • Click the Create Sourcing Request button to create a Sourcing Request in the SAP Ariba Strategic Sourcing module
  • The sourcing request will follow the normal sourcing event process steps
  • Upon sourcing completion and the award, pricing is sent back to SAP Ariba and the Aggregated Requisition is updated

This shows the status of the demand aggregation process, including the two additional statuses sourcing request sent and pricing terms received, if the create sourcing request feature is active.

Additional information:

• Original Requisition remains in Approved status until canceled or the aggregated requisition is ordered
• Aggregate Requisition statuses:
  • Composing: The Purchasing Agent or Purchasing Manager has added held line items, but not submitted the requisition.
  • Sourcing Request Sent: A request has been sent to sourcing and a project has been created in SAP Ariba Strategic Sourcing.
  • Pricing Terms Received: Once a sourcing project is completed the pricing terms will automatically be updated in the aggregate requisition.
  • 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.
  • Approved: 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.