Summarizing SAP Direct Spend Sourcing Benefits and Framework


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 CostDigitalize the Process and Improve EfficiencyImprove 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

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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