Explaining the Buyer-Supplier Interaction through SAP Business Network

Objectives

After completing this lesson, you will be able to:

  • Restate buyer-supplier interaction through SAP Business Network

Buyer-Supplier Interaction through SAP Business Network

This lesson will provide a high-level overview of the standard procurement process and how buyers and suppliers transact on SAP Business Network.

The Procurement Process

What is the procurement process?

The procurement process is something that a business goes through on a daily basis, regardless of whether they use Ariba products. However, with the integration of SAP Ariba Buying and Invoicing with SAP Business Network, both suppliers and buyers are able to maximize the benefits of both solutions and reduce processing errors.

A basic buyer-supplier transaction looks as follows:

First, there are 4 key players involved:

  1. The requester
  2. Purchasing
  3. Accounts Payable
  4. The supplier

The 4 key procurement players

Requester: The requester is the end user who will receive the goods/services purchased by the buying company.

Purchasing: Purchasing is the internal department that handles all purchasing activity for the buying company.

Accounts Payable: Accounts payable is the internal department that handles any payment the buying company owes to another business.

Supplier: The supplier is the company providing good or services to the buyer.

Buyer-Supplier Transactions

The process begins when a requester creates a purchase requisition (or PR) and submits it to purchasing for review. SAP Ariba Buying and Invoicing simplifies the review process for purchasing and checks the PR for contract compliance automatically.

Next, SAP Ariba Buying and Invoicing sends notifications to the appropriate approvers according to the approval rules loaded into the SAP Ariba Procurement site. The document history tracks all actions and approvals.

Once the approvers fully-approve the PR, SAP Ariba Buying and Invoicing generates a purchase order (or PO). Then it automatically sends the PO to the buyer's account on SAP Business Network. Based on the trading relationships configured in the buyer's SAP Business Network account and the supplier's contact information that's stored in SAP Ariba Buying and Invoicing, SAP Business Network delivers the order to the supplier.

The supplier confirms the order on SAP Business Network and delivers the goods or services to the requester.

After providing the goods or services, the supplier submits an invoice on SAP Business Network. SAP Business Network sends the invoice to SAP Ariba Buying and Invoicing for accounts payable to approve.

When the requester receivers the goods/services, they submit a receipt in SAP Ariba Buying and Invoicing to confirm that they received what they requested.

SAP Ariba Buying and Invoicing automatically compares the supplier's invoice, with the original PO and the requester's receipt information to verify a three-way match between:

  • What the requester ordered
  • What the supplier provided
  • What the supplier billed

At the same time, it creates an invoice reconciliation document (IR) to track this comparison. If there are discrepancies, also known as invoice exceptions, it will forward the IR to the appropriate accounts payable groups for review. The approval rules configured in the site specify these groups.

One everything matches, SAP Ariba Buying and Invoicing sends a payment request document to the buyer's internal ERP system. The ERP pushes payment through to the buyer's bank and pays the suppliers based on the agreed-upon terms between the buyer and supplier.

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