Describing Indirect Materials Procurement of Process in SAP Ariba

SAP Ariba provides a full suite of procurement solutions that allow customers to cover their end-to-end source to pay process. ​

​SAP Ariba Spend Analysis: enables customers to discover category insights hidden within their unstructured spend data and ultimately, classify spend data using industry standards and custom taxonomies. ​

SAP Ariba Strategic Sourcing Suite: is a bundle of solutions covering the source to contract process. The suite includes four standalone solutions; SAP Ariba Strategic Sourcing, SAP Ariba Contracts, SAP Ariba Supplier Lifecycle and Performance and AP Ariba Supplier Risk. These applications enable buyers to register and qualify their supply base, negotiate costs through sourcing events with complex pricing terms and maintain contracts, while assessing risks at all stages. Through use of templates, customers can standardize their sourcing and contract management processes ensuring business rules and regulations are respected at all stages. ​

SAP Ariba Procurement: refers to the broad suite of SAP Ariba's procurement solutions, including innovations in guided buying, spot buy, and supplier and catalog enablement. The full suite includes various standalone SAP Ariba products but are typically bundled to comprise a set of modules tailor-made to address a company’s procurement needs. ​

SAP Ariba Buying & Invoicing: is the most popular SAP Ariba procurement product which provides a cloud-based end-to-end solution to enable efficient, cost-saving, and compliant procurement processes, from requisitioning all the way through to payment. The solution fosters supplier collaboration and integrates with existing systems, with an intuitive user interface designed for procurement professionals to easily perform common procurement tasks, manage processes, and run robust reports.​

The Guided Buying Capability: is an intuitive user interface that sits on top of the SAP Ariba Buying solution that further simplifies and streamlines the procurement processes. The guided buying capability is specifically designed for casual users (non-procurement professionals who make infrequent purchases) and functional buyers (who purchase goods and services for their own departments). The tool offers a consumer-like shopping experience that guides users to make compliant purchasing decisions while adhering to company policies.

After performing an analysis of their indirect spend and identifying the appropriate category management strategy for indirect materials, customers can integrate their already existing supply base from SAP S/4HANA to SAP Ariba. Once done, through SAP Ariba Lifecycle and Performance (SLP) they can mark supplier organizations as preferred for a certain commodity, start qualification processes or simply start registering new potential suppliers. ​

​Once suppliers are registered, buyers can use SAP Ariba Sourcing to create full projects for managing their indirect category. Every project will have its own team of buyers and commodity managers who use tasks and phases in their project workspace to streamline the sourcing process. Buyers can organize sourcing events, such as requests for information, proposal or auctions with complex pricing, reaching out to suppliers with clear requirements. In return, suppliers use their SAP Business Network accounts to engage with customers and submit responses to those events. ​

​After the sourcing activity for a certain commodity concludes, and one, or more suppliers, is awarded the business, the process is taken over by the legal team and contract managers. The SAP Ariba Contracts module allows for contract agreement authoring, negotiation and review rounds, as well as digital signatures. Contract Workspaces can contain pricing term documents which can be used to integrate line item details to SAP Ariba Buying and Invoicing (or to SAP S/4HANA). In the SAP Ariba Procurement tool, buyers can then create operational contracts for the goods and services they have negotiated on the sourcing platform. ​

​SAP Ariba Buying and Invoicing can accommodate the entire procure to pay part of the process. Administrators can either upload catalogs to the system, or subscribe to the catalogs their suppliers have made available in the SAP Business Network. A separate process can exist for goods or services available in contracts. Through the guided buying interface, buyers can browse the available items, and create and submit Purchase Requisitions (PRs). In their purchasing activity buyers are guided by the internal policies in force, which suggest to them pre-approved items, or directs them to a non-catalog item request. ​

A non-catalog request through guided buying can, also, be the starting point of tactical or strategic sourcing activity, transferring the process to SAP Ariba Sourcing.

In addition, buyers can use RFQ forms to trigger tactical sourcing scenarios for specific commodities and engaging with preferred suppliers. Administrators configure tactical sourcing policies, such as "3-bids and a buy" to reduce rogue spend and ensure compliance. ​

​Straight forward requests containing catalog items continue their lifecycle within SAP Ariba Buying and Invoicing. PRs go through an approval process based on business rules set by administrators. ​

An approved PR becomes a purchase order (PO) which is sent to the suppliers’ SAP Business Network account. Suppliers will use the platform to confirm the PO, create shipping notices and, finally, create an invoice based on that purchase order. ​

In return, on the customer side, procurement specialists can receive items and reconcile invoices. Once a supplier invoice has been reconciled against the PO or contract data, the invoice can be approved for payment. Invoice data is then sent to S/4HANA to be paid.