Outlining Contract Management with SAP Ariba Contracts (4AZ)

The Contract Management with SAP Ariba Contracts (‏4AZ‏) scope item belongs to the Sourcing and Contract Management business area which is part of the Sourcing and Procurement line of business.

The Contract Management integration with SAP Ariba Contracts and SAP S/4HANA Cloud is through SAP® Integration Suite, managed gateway for spend management and SAP Business Network(Managed Gateway for Spend&Network). Buyers using SAP Ariba Contracts can create and send contracts with the document category, outline agreement to SAP S/4HANA Cloud.

Contract Management with SAP Ariba Contracts enables users to connect seamlessly from Ariba Contracts to SAP S/4HANA Cloud. This integration helps to perform strategic sourcing activities and to integrate prices from SAP Ariba Contracts into SAP S/4HANA Cloud. With enterprise-wide management, you can identify opportunities to pursue and improve negotiation efficiency.

• In SAP Ariba Contracts, users can negotiate and determine prices and sign a legal contract with a supplier.
• Prices are passed to SAP S/4HANA Cloud, which the operational purchaser can use to buy materials or lean services as required.
• With enterprise-wide management of purchasing contracts, users can identify opportunities to pursue and improve negotiation efficiency.

The figure, Process Overview, shows the process diagram for Contract Management with SAP Ariba Contracts (‏4AZ‏).

The following is a list of benefits:

• Manage purchase contracts for materials and lean services
• Automate and accelerate the contract lifecycle
• Standardize and control contract development
• Minimize effort for tracking and administration of contracts
• Optimize the value of contracts by supporting full-scale reporting
• Strengthen operational, contractual, and regulatory compliance

The following outlines the key process flows:

• Create contract in SAP Ariba Contracts
• Set up and review contract terms
• Approve contract
• Send contract to SAP S/4HANA Cloud
• Automatically create operational purchase contract
• Automatically approve and release operational purchase contract
• Use operational purchase contract as source of supply
• Create purchase order against operational purchase contract

Contract Management with SAP Ariba Contracts enables you to perform strategic sourcing activities and to integrate prices from SAP Ariba Contracts into SAP S/4HANA Cloud.

You can integrate value and quantity contracts in Contract Management with SAP Ariba Contracts. These are agreements for your company to order certain quantities of products during a specified period.

In SAP Ariba Contracts, users can negotiate prices for goods and lean services to be procured, and they can sign a legally binding contract with a supplier.

In source determination in SAP S/4HANA Cloud, contracts can then be assigned in the source list as fixed sources of supply. Pricing details are passed on from SAP Ariba Contracts to the operational system, so that operational purchasers can use these prices to buy goods or services as required. Target groups of Contract Management with SAP Ariba Contracts are purchasing managers as well as strategic buyers and operational purchasers.

You can integrate item hierarchies in purchase contracts created in SAP Ariba Contracts with SAP S/4HANA Cloud using Managed Gateway for Spend&Network.

Currently, the following restrictions apply:

• Attachments are not yet supported in SAP Ariba Contracts.
• If the document type or the supplier is changed in an existing contract in SAP Ariba Contracting, these changes are not reflected in SAP S/4HANA Cloud.
• Purchase contracts transferred from SAP Ariba Contracts cannot be approved manually in SAP S/4HANA Cloud. Only automatic approval is supported.
• Multi-currency contracts are not supported.
• Extensibility of contracts is not yet supported.

Contract Management with SAP Ariba Contracts enables users to connect seamlessly from SAP Ariba Contracts to SAP S/4HANA Cloud, supporting the creation and transfer of scheduling agreements.

• Use of centrally negotiated prices
• Reduced transaction costs
• Scheduling agreements can replace many standard purchase orders

• Creation of contracts of the document category, scheduling agreement in SAP Ariba Contracts
• Business users can use SAP Ariba Contracts to negotiate and determine prices and create a purchase scheduling agreement with a supplier (LP/LPA).
• After approval in SAP Ariba Contracts the scheduling agreement is automatically created in SAP S/4HANA Cloud with status depending on the workflow configuration.
• Delivery schedules of the purchase scheduling agreement need to be maintained in SAP S/4HANA Cloud.

Using this app, you can get an overview of all existing contracts. You can create new contracts with a specific validity time frame and a target quantity or a target value. You can also renew contracts for which the target quantity or target value has been reached. Note that you can only access contracts if you have authorizations for the respective purchasing group, purchasing organization, and purchase contract type (quantity contract and value contract).

You can create a contract template, enabling you to reuse data from the template whenever you create a new contract.

In addition, you can check the contract value that has been consumed so far by all the release orders issued against this contract, along with the release order details. You can display the contract leakage percentage. Contract leakage is a KPI that identifies the spend of purchase orders that do not have a contract reference, although an existing contract could have been used.

You can also create purchase orders directly from valid purchase contracts.

Using this app, you can check a contract that was created in SAP Ariba Contracts after it has been successfully sent to the SAP S/4HANA Cloud System.

After approval and release, the purchase contract can be used in operational purchasing as a source of supply and as a purchaser you can create purchase orders against the operational purchase contract.

The following table lists the SAP Fiori apps that are used in the Contract Management with SAP Ariba Contracts (‏4AZ‏) Process steps.