Identifying the Components of Central Procurement

Objectives

After completing this lesson, you will be able to:

  • Identify the components of Central Procurement

Central Procurement

Paige Discusses Central Procurement

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Paige discusses Central Procurement in SAP S/4HANA:
Note

This structure presented in this video is based on the SAP S/4HANA 2023 Feature Scope Description document (which can be found using www.help.sap.com) and the SAP Best Practices for SAP S/4HANA‎ for release2023.

Central Requisitioning

Central Requisitioning contains Self-Service Requisitioning functionality using a central Cloud or On Premise server, with various ways of communicating with all related connected systems.

With Central Requisitioning, it is possible to send requisitions from the hub system (SAP S/4HANA) to connected back-end systems for further processing. If necessary, a purchaser in the back-end system can assign sources of supply to the requisitions. If the requisition has a valid source of supply, a purchase order can be created automatically in the back-end system.

A requirement for a scenario like this is harmonized master data: both material groups and purchasing groups need to be harmonized across the systems involved.

Central Purchasing

Requisitions can be managed centrally. Source of supply assignment can also be done centrally, both with various ways of communicating with all related connected systems.

With Central Purchasing, it is possible to centrally display and manage all the purchase requisition items in SAP S/4HANA (which acts as the hub system). The purchase requisitions can be those that are created in the hub system, or the ones that have been extracted from other connected back-end systems. SAP S/4HANA (on-premise), SAP S/4HANA Cloud, and SAP ERP can all act as connected back-end systems.

It is also possible to create purchase orders with reference to purchase requisition items. The purchase orders can be created in the hub system or in the connected back-end systems, depending on where the purchase requisitions were initially created.

There are no specific requirements for a scenario like this in terms of harmonized master data.

Central Purchase Contracts

Purchasing contracts can also be managed centrally. Again, with various ways of communicating with all related connected systems.

Central Contract Management enables a customer to create, change, and display contracts centrally in the hub system. A central purchasing contract is a global long-term agreement between an organization and a supplier regarding the supply of materials or the performance of services within a certain period as per predefined terms and conditions. This enables purchasers from various parts of a company at different locations to take advantage of the negotiated terms and conditions. The central purchasing contracts are created in SAP S/4HANA (which acts as a hub system) and distributed to the connected systems. SAP ERP, SAP S/4HANA Cloud, or SAP S/4HANA (on-premise) can all act as connected systems.

A requirement for a scenario like this is harmonized master data across the systems involved for suppliers, conditions, the used pricing schema, incoterms, payment terms, unit of measures, currencies and tax codes.

Central Sourcing

Central Sourcing provides a purchaser with an overview of all requirements across various plants and allows the purchaser to carry out the sourcing of the requirements appropriately. It provides the (strategic) purchaser with visibility of all the purchase requisitions in the connected plants/back-end ERP or SAP S/4HANA systems and it also allows this purchaser to carry out sourcing for these purchase requisitions. Purchasers can create requests for quotation (RFQs), and also quotations on behalf of the supplier and generate a central contract or purchase order as follow-on document for such a supplier quotation.

Note

The are more capabilities in SAP S/4HANA that touch the features described here as part of Central Procurement.

An example of this is SAP Central Invoice Management, which caters to the needs of the headquarters of a company to centrally manage invoice processes for all connected systems. It provides the flexibility of connecting multiple systems to a single SAP S/4HANA system and carrying out invoice processes centrally. This helps to reduce the TCO from a company's perspective and also gives a consolidated overview of the overall business.

More information on SAP Central Invoice Management can be found for example via https://help.sap.com/viewer/product/CENTRAL_INVOICE_MANAGEMENT/SHIP/en-US.

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