Summarizing SAP Direct Spend Sourcing Benefits and Framework

Objectives

After completing this lesson, you will be able to:

Describe Key Benefits and Capabilities when using SAP Ariba Solutions for Direct Spend
Recognize Industry-Specific Offerings

Why SAP Ariba Solutions for Direct Spend?

DMS Benefits

Reduce Raw Material Cost	Digitalize the Process and Improve Efficiency	Improve Compliance
Top performers can achieve: 3-5% average annual savings rate Increased frequency, volume, and quality of sourcing events 6x lower cost of engineering change center Increased focus on upfront cost avoidance versus post-R&D cost reduction	Top performers can achieve: 9-25% reduction in sourcing cycle time 7-20% faster time to market for new products 15-42% faster creation of new contracts 62-83% reduction in supplier onboarding cycle time	Top performers can achieve: 6-17% higher addressable spend under contract Increased consistency of sourcing processes across all categories of spend Increased collaboration between engineering, sourcing, and suppliers Better BOM visibility and integration with sourcing processes

SAP Ariba solutions for direct spend integrate with product lifecycle management (PLM), ERP, and SAP Integrated Business Planning systems.

This integration results in the following key benefits:

Faster time-to-market and time-to-volume
Quick and accurate sourcing
Source all materials and services for multi-level BOMs on a single platform, and move smoothly towards volume production
Effective supplier collaboration
Identify potential shortages before they occur
Better product cost management
Stronger compliance
Complete supply chain visibility
Collaborate with multiple tiers of suppliers to manage your non-liner and external supply chains, reduce inventory levels, increase fill rates, and increase team productivity

Direct Spend Sourcing Key Capabilities

Electronic, template-based RFIs, RFPs, RFQs, auctions, and project management tools with integrated workflows, document management, and approvals to obtain bids and award suppliers.
Dynamic and real-time event views, integrated reporting, and what-if scenarios for decision support.
Innovative and configurable dashboards for materials and bills of materials (BOMs).
Tagging for materials and BOMs to provide easier access and visibility.
A 360-degree view for insights into material price history and trends, sourcing activities, and sources of supply.
Integration with product lifecycle management processes and systems for importing BOMs and engineering change notifications.
Support for sourcing events for a BOM, subassemblies, and materials.
Simplified comparisons of BOMs, with clear visibility into the differences between them.
Early visibility into product costs with cost roll-ups, and clear visibility into pricing trends.
Integration with the SAP ERP application or SAP S/4HANA so that you can use demand data to jump-start the sourcing process, with outcomes. Transferring to procurement systems used to create follow-on documents.
Ability to calculate total landed cost, including logistics costs, import duties, and taxes, to compare supplier prices with different International Commercial Terms (Incoterms).
Source to Contract Solution Framework and Capabilities
- Process efficiency across all spend categories
- Increased spend under management
- Contract compliance through ERP integration
- Faster sourcing and contracting with integrated master data across systems
- Better management of complex bills of materials with product lifecycle management (PLM) integration
- Greater pricing and forecasting visibility
- Improved supplier selection and lower risk

Industry-Specific Offerings within Direct Spend Sourcing

Industry-Specific Offerings

The direct sourcing capabilities provide separate offerings for the following industries:

Process Manufacturing (Product sourcing with a material)

Total landed cost calculation and governance
Greater quality through collaboration
Comprehensive process management
Material 360
Cost breakdown analysis

Benefits for Process Manufacturing

Capture more savings by increasing spend under management and reducing direct spend cost
Improve the quality of recipes and bills of materials by collaborating with suppliers and external manufacturers
Accelerate time to market
Increase average savings by using competitive sourcing methods, such as auctions
Identify cost reduction opportunities by gaining visibility into supplier cost structures, pricing, and forecasting

Retail Sourcing (Retail sourcing with an article)

Simplified RFx development
Retail system integration
Automation of repetitive processes
Improved sustainability performance
Electronic RFQ and bid comparisons

Benefits for Retail Sourcing

Accelerate time to market for private-label products
Digitize information from the supplier to the product information management system
Reduce source-to-contract cycles by up to 50%, as reported by SAP customers
Automate repetitive sourcing processes for perishable goods, such as produce and dairy, to increase the efficiency of your buyers

Discrete Manufacturing (Product sourcing with a Bill of Materials (BOM) and material)

Electronic RFx and bid comparisons
Outsourced manufacturing and BOM collaboration
360-degree view of supply
Integration to PLM systems

Benefits for Discrete Manufacturing

Capture more savings by increasing spend under management
Accelerate time to market for new products
Manage complex bills of materials more effectively with product lifecycle management integration
Gain greater pricing and forecasting visibility

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