Outlining Central Purchasing (2XT)

Throughout this training content, if not otherwise specified, when SAP S/4HANA Cloud mentioned, the public edition of the SAP S/4HANA Cloud meant (i.e. SAP S/4HANA Cloud stands for SAP S/4HANA Cloud, public edition).

The Central Purchasing (2XT) scope item belongs to the Central Procurement business area, which is a part of the Sourcing and Procurement line of business.

The following is a list of features of the multi-backend system:

• SAP S/4HANA Cloud system acts as a central system.
• Handles Central Purchase Requisitions, Central Purchase Contracts, and Central Purchase Orders.
• Distributed to local operational back-end systems, such as SAP S/4HANA and SAP ERP (starting from SAP ERP 6.06).

The following systems are supported as connected systems:

• ERP system from release ERP 6.06 releases and above, with add-on HUBERPI
• SAP S/4HANA On-Premise system release 1709 OP, with add-on HUBS4IC
• SAP S/4HANA Cloud system release 1902 CE

Central Purchasing provides centralized access and visibility to processes across industries with deep integration in the system landscape. It is connected to the customer's ERP systems and exchanges purchasing documents, such as purchase requisitions and purchase orders, in the connected systems. It also offers central approval process, central portal, central output management, analytics, and responsibility management of product categories.

This scope item offers one platform where a procurement specialist can work centrally on purchase requisitions and purchase orders from different connected systems. Operational procurement processes are not the only tasks to gain from the hub approach. Strategic procurement tasks, such as Supplier Management, benefit from the transparency and the ability to initiate strategic activities from a central digital procurement control center.

The Central Purchasing process is an integral building block of Central Procurement. The Central Purchasing scenario of SAP S/4HANA Cloud gives a single point of access and manages purchasing documents such as purchase requisitions and purchase orders in the connected business units/connected SAP ERP and SAP S/4HANA and also SAP S/4HANA Cloud systems. It offers a central approval process, analytics, and responsibility management of product categories. Central purchasers or global purchasers are the end users of these business solutions. These users can access all the purchase requisitions and purchase orders across different plants of the organization.

Global purchasing departments are seeking unified visibility and control over the local purchasing processes across all the plants of the company. Analytics, such as spend visibility and automation of the purchasing processes across different plants, is needed to take informed decisions and simplify business processes.

SAP S/4HANA Central Purchasing caters to the needs of the headquarters to centrally manage procurement business processes for all the connected systems. This business solution provides the flexibility of connecting multiple connected systems to a single SAP S/4HANA system and carrying out procurement processes centrally. This helps to reduce the TCO from a company perspective and also gives a consolidated overview of the overall business.

The figure shows the Integration Scenarios in Central Purchasing.

The End-2-End Process Flow through Central Procurement diagram shows the high level process overview for Central Purchasing.

The figure, Process Overview of Central Purchasing, shows the process steps of Central Purchasing with the corresponding roles.

The following is a list of business benefits:

• Monitoring of purchase requisitions and fulfillment of unsourced requirements across all plants
• Monitoring of purchase orders and overdue items of the purchase orders across all plants
• Centralized approval for Central Purchase orders to control spending and process optimization across the business organization
• Management of purchasing documents from the Central Purchasing app as a single access point
• Centralized approval for Central Purchase Requisitions to control spend and process optimization across the business organization
• Centralized output for purchase orders
• Responsibility management in Central Purchase Requisitions Management, Central Purchase Orders Management, and centralized approval
• Situation handling for overdue items of purchase orders in connected systems

The following points outline the key process flow:

• Maintain purchase requisitions centrally

• Maintain purchase orders centrally

• Approve purchase orders centrally

• Update edited purchase orders and purchase requisitions to the relevant backend systems

• Purchase requisitions from all connected back-end systems are constantly updated into an SAP S/4HANA Cloud-sided PR cache
• One central worklist displays all replicated proxy requisitions, including detailed display in the purchase requisition object page
• The central purchaser can (re-) assign any available source of supply from the respective backend system using direct F4-help
• Direct UI integration into the corresponding backend system is planned to allow for editing of the purchase requisition in the backend system itself
• View notes that are maintained and extracted from the connected systems to the hub system for the selected purchase requisition

• Reset automation status during delta or ad-hoc extraction of purchase requisitions.

• Create, view, and edit purchase requisitions in the SAP S/4HANA Cloud connected system, using the app Manage Purchase Requisitions – Professional.

• Create sourcing project from purchase requisitions.

• View and edit the purchase orders created from purchase requisitions in the SAP S/4HANA Cloud connected system, using the app Manage Purchase Orders.

• Process purchase requisitions marked for central processing in Expert Mode. Navigating to Process in Expert Mode will automatically unblock the purchase requisitions marked for central processing. You will be able to successfully save or order the purchase orders from Expert Mode navigation.

• Create purchase orders in Expert Mode in the SAP S/4HANA connected system, using the app Manage Purchase Orders.

• Automatically convert open purchase requisitions to central purchase contracts

  The purchase requisition automation rule framework provides a standard rule to automatically convert the open purchase requisition to central purchase contracts in SAP S/4HANA.

• Add unsourced requisition items to an open purchase order or contracts that contain the same materials

  Minimize the time as the purchase requisition items are added to already-open POs and suppliers are informed without the creation of a new PO from scratch.

  Minimize the contract negotiation time through the ability to add an item to an open contract.

• Assign named processors to one or multiple centrally managed purchase requisitions and filter a central purchaser’s workload based on this assigned processor.

  
  • Assign a purchaser as a responsible processor for one or multiple purchase requisition line items within the work list of the SAP Fiori app Process Purchase Requisitions Centrally using the search help for users authorized to process requisitions centrally or by self-assignment of your own central purchaser user .
  • Filter the work list of purchase requisition line items using the filter for the assigned processor user or using the additional radio button showing the requisitions the current user is personally responsible for.

• Reassign a purchasing group to purchase requisition items to facilitate central purchasers to transfer the workload from one purchasing group to other based on personnel availability.

  
  • Reassign the purchase requisition from one purchasing group to another purchasing group.
  • Enter a comment with the reason for reassignment.
  • View the reason for reassignment for the respective purchase requisition items.

You can create central contracts from the Process Purchase Requisitions Centrally app.

You get the following benefits:

• Reduced risk of possible human error because the system transfers the data and manual efforts are not required to create a central contract from scratch
• Improved efficiency in the procurement process

As a purchaser you can directly see the automation status and all of the failed automation rules for each of your requisitions and can instantly interact with them. After having taken corrective measures, you can re-trigger the processing of these rules, so that the purchase requisitions get reprocessed a second time.

• You can display the failed automation rules and their corresponding error messages within the purchaser’s central cockpit for processing of purchase requisitions centrally
• You can restart all the failed rules or only individual rules in the background including a manual refresh option of the updated rule results

You can reduce operation costs by using Purchase Requisition Business Processes Automation. The purchasing department can manage rules that are required to automate various business processes, such as purchase requisitions. Based on the rules that are activated and configured, the purchasing department can automate actions like Assign Source of Supplier and Purchase Order creation.

Using the Manage Rules for Automation of Business Processes app, you can create and monitor rules that are required to automate various business processes. With this app, you can configure predefined complex actions, such as the automatic creation of central purchase contracts for purchase requisition items.

Gaining fast access to and having high transparency over the main business documents is key for a central purchaser of a multi-ERP procurement landscape.

You can make use of the powerful Enterprise Search within SAP S/4HANA in order to search the relevant purchase requisitions and purchase orders from all connected satellite systems, as well as any centrally negotiated contracts.

• Search for central purchase contracts and centrally managed purchase requisitions and purchase orders directly via the integrated Enterprise Search of the Fiori launchpad
• Display the main data of the found business objects in the search result section along with filter options and navigation links into the object page and corresponding Fiori apps

• Ability to approve purchase requisitions, which were created in the connected backend software system in the central procurement hub
• No need to configure the workflow or release strategy in the connected backend system
• Reduced TCO for the customer
• Enable the central approval of purchase requisitions from the SAP S/4HANA Cloud connected systems

• The situation is triggered based on overdue purchase orders, potential expiration of central contract expiry, and central contract consumption.
• The system pro-actively alerts the central procurement team about purchase order and contract-related risks.

You can create situation types for overdue centrally-managed PO items.

When a purchaser logs on to the SAP Fiori launchpad, they get a notification that says Purchase order item overdue. The delivery date criteria can be maintained in custom situation types. The framework checks if the delivery date of the purchase order from the connected system is less than or equal to the delivery date that is configured in custom situation types. A situation is then triggered, and a notification is sent. The purchaser can navigate from the SAP Fiori notification to the item object, and then choose to dismiss the situation and take corrective action. Dismissing a situation ensures that no further situation message is triggered for the same situation type and purchase order number. The purchaser can choose from the one of the following reasons to dismiss the situation message:

• Obsolete

• Resolve

• Invalid

• Purchase orders from all connected backend systems are constantly updated into a SAP S/4HANA-sided PO cache.
• One central worklist displays all replicated proxy purchase orders including a detailed display in the purchase order object page.
• Customers can choose to centrally approve all backend POs in the SAP S/4HANA Cloud hub.
• Direct UI integration into the corresponding backend system is planned to allow for editing of the purchase orders in the backend system itself.
• View notes that are maintained and extracted from the connected systems to the hub system for the selected purchase order.
• Manage outputs for centrally managed purchase orders. You can send outputs manually, resend outputs that are in Error status, or move outputs to Completed status. You can also view the output details for centrally managed purchase orders in PDF format. Each output is displayed with all its parameters.
• Create, view, and edit purchase orders in the SAP S/4HANA connected system, using the app Manage Purchase Orders.
• View service entry sheets for a purchase order document.

Add custom fields from the connected systems to the standard set of fields in Manage Purchase Requisition and Purchase Order Centrally.

• Add custom fields in the central procurement hub and map them to custom fields from connected systems using standard extensibility options, such as BAdIs and Custom Logic.
• Key Users can adapt the User Interface to display custom fields in Manage Purchase Requisition Centrally and Manage Purchase Order Centrally.

Using this app, you can monitor and diagnose the issues that result in errors in the Central Procurement scenarios. The app displays the overview cards for the scenarios: Central Requisitioning, Central Contract Management, and Central Purchasing. From each card, you can navigate to the detailed application to view the issues and their causes.

• Monitor the number of extraction jobs for purchase requisitions that have failed due to errors. Selecting the Failed Purchase Requisition Extraction Jobs option opens the Central Procurement Job Monitor app.
• Monitor the number of extraction jobs for purchase orders that have failed due to errors. Selecting the Failed Purchase Order Extraction Jobsoption opens the Central Procurement Job Monitor app.
• Monitor the number of text extraction jobs that have failed due to errors. Selecting the Failed Text Extraction Jobs option opens the Central Procurement Job Monitor app.

The Central Procurement Job Monitor app provides more detailed information about the failed job and allows you to restart the job if necessary.

Monitor the business operations and their compatibility with the corresponding versions of the connected systems, that are required for the business operations to function.

• Monitor and diagnose the issues that result in errors in Central Procurement scenarios.
• Identify which business operations are compatible, not compatible, and not configured based on their corresponding functions.
• Information on connected systems, bounded context, API version, API name, feature pack type, feature pack version, software component, minimum support pack requirement, and more is provided.

You can schedule a job to check the status of connected systems and view the latest status in the Central Procurement Operations Monitor app.

• Schedule an application job to run at a time and frequency in accordance with your business need.
• Monitor, copy, or cancel jobs that have been scheduled.
• Display the connected systems, their status, and when their status was last checked.

The Manage Central Supplier Confirmations app enables you to centrally process and manage supplier order confirmations for purchase orders residing in the local, connected systems.

Using this app you can:

• Create central supplier confirmations, using either Quick Create or Create.
• Edit, delete, or withdraw central supplier confirmations.
• View confirmation data like reference purchase order, connected system ID, created by, purchase order date, and supplier contact data. At confirmation item level, you can also view the confirmation lines and schedule lines.
• Search for central supplier confirmations, using filters like editing status, purchasing document, supplier reference, processing status, created by, supplier, and more.

As a configuration expert, to prevent creation of supplier confirmations in the connected system, ensure that the central supplier confirmation scenario is active in the connected system, as follows:

• In your configuration environment, use the search function to open the item: Central Procurement – Settings in Connected Systems (Sourcing and Procurement: Integration).
• Click Configure for the step Activate Central Settings for Purchase Orders, and select the Activate Central Supplier Confirmation checkbox.By default this checkbox is unselected.

Especially, when navigating from the central procurement hub system to any of its connected SAP S/4HANA satellite systems, the user experience should become more seamless and intuitive. Thus, the central purchaser should no longer be taken to the connected S/4HANA's WebGUI transactions, like ME51n or ME21n, but should navigate to the object pages of either the Fiori requisition, or Fiori purchase order.

• Navigate into SAP Fiori app Manage Purchase Requisition - Professionalof an SAP S/4HANA connected system when
  • using the Open Document link in the proxy purchase requisition's object page
  • creating a backend purchase requisition in the connected system from scratch
• Navigate into SAP Fiori app Manage Purchase Orders of an SAP S/4HANA connected system when
  • using the Open Document link in the proxy purchase order's object page
  • creating a backend purchase order in the connected system from scratch
  • bundling purchase requisitions into a backend purchase order in the connected system (except via the Expert Mode option)

Customers are able to have their central purchasers proactively receive intelligent proposals for incorrectly assigned material groups within their centrally managed purchase requisitions. Requisitions that are created in any of the central procurement hub’s satellite back-ends are automatically scanned by a machine learning algorithm if matches with a higher probability could be found. The purchaser gets alerted to any mismatches and can increase his data quality with a click of his mouse adjusting the incorrect material group in the back-end requisition.

• Highlight material group recommendations to purchasers in their central cockpit for extracted back-end requisition lines with a higher intelligent match than the currently assigned material group
• Provide proposals of recommended material groups with confidence scores based on a machine learning algorithm analyzing matching demands in previous back-end purchase orders
• Make a one-click change to the material group in the connected system based on the selection carried out by the central purchaser from the list of proposed recommendations

1. Prerequisite Check for using Machine Learning use case in ISLM Management.
2. Training scheduler for extracting data relevant for training of models.
3. Monitor Training status from ISLM app.
4. Deploy and Activate model.

5. Schedulers for Inferencing. These inferences will be consumed in central purchasing.

   • Initial load inference
     • Get all the inferences for all the possible combinations used in existing Purchase Requisitions
   • Ad hoc inference
     • Extract PR to hub system
     • Material Group available as text in PPRC as there is no Recommendation available
     • Run Ad Hoc inference for extracted PR
     • Material Group recommendations available for PR items in PPRC
   • Delta inference
     • All PRs extracted between present time stamp and previous inference scheduler run time.

The following table lists the SAP Fiori apps that are used in the Central Purchasing Process steps.

In Sourcing and Procurement, several Self-Service Configuration UIs (SSCUIs), also referred to as configuration steps, are available in the Manage Your Solution app. The following SSCUIs affect the area of Central Purchasing: