Preface

23

Target Audience

24

Objective

24

Structure of This Book

24

Acknowledgments

28

1 Introduction to Sourcing and Procurement

31

1.1 Sourcing and Procurement Basics

31

1.1.1 Sourcing

32

1.1.2 Operational Procurement

33

1.2 Sourcing and Procurement from End to End

35

1.2.1 Ideal Procurement

36

1.2.2 Source-to-Pay and Procure-to-Pay

37

1.2.3 Key Process Areas

37

1.3 Procurement with SAP S/4HANA

40

1.3.1 Cloud versus On-Premise ERP Systems

41

1.3.2 Strategic Sourcing

44

1.3.3 Procurement

45

1.3.4 Accounts Payable and Invoicing

46

1.3.5 SAP Fiori Roles and Applications

47

1.4 Summary

48

2 Implementation Options

51

2.1 Implementation Overview

51

2.1.1 Deployment Options

52

2.1.2 Cloud

53

2.1.3 On-Premise

57

2.1.4 New Implementation versus System Conversion

58

2.2 On-Premise SAP S/4HANA

62

2.2.1 Complete Functional Scope

63

2.2.2 Installation

64

2.2.3 Activated Appliance

65

2.2.4 Information Technology Considerations

66

2.2.5 Integration Options

68

2.2.6 SAP S/4HANA System Conversion

69

2.3 SAP S/4HANA Cloud

74

2.3.1 SAP Best Practices Scope

74

2.3.2 Information Technology Considerations

75

2.3.3 Standard Integration and Customization

76

2.4 SAP S/4HANA for Central Procurement

77

2.5 Quick Start Approaches and Materials for SAP S/4HANA

79

2.5.1 Prebuilt Content and Templates

80

2.5.2 SAP Best Practices

80

2.5.3 SAP Model Company

81

2.5.4 SAP Activate

81

2.5.5 SAP Activate Roles

88

2.6 Summary

89

3 Organizational Structure

91

3.1 SAP S/4HANA Enterprise Management Organization Objects

91

3.2 SAP S/4HANA Sourcing and Procurement-Specific Organization Structure Objects

95

3.3 Company Code

96

3.4 Plants

98

3.5 Storage Locations and Warehouses

100

3.5.1 Storage Location and Warehouse Creation

102

3.5.2 Warehouse Creation

104

3.6 Purchasing Organizations

105

3.7 Purchasing Group Creation

108

3.8 Summary

109

4 Master Data

111

4.1 Material Masters and Material Groups

112

4.1.1 Activating a Material Master Field

113

4.1.2 Creating a Material Master

116

4.1.3 Creating a Material Group

119

4.1.4 Creating a New Product Services Type (SERV)

120

4.1.5 Select Material Master Configuration Options

121

4.1.6 Material Master Field Character Expansion in SAP S/4HANA

121

4.2 Batch Management and Serialization

122

4.2.1 Configuring Batch Numbers

123

4.2.2 Configuring Serial Numbers

124

4.3 SAP S/4HANA Business Partner Model

125

4.3.1 Suppliers as Business Partners

126

4.3.2 Loading Supplier Records in SAP S/4HANA

129

4.3.3 Setting Up the Supplier Master

129

4.3.4 Performing Customer/Vendor Integration

131

4.4 Summary

146

5 Operational Procurement

147

5.1 What Is Operational Procurement?

147

5.2 Self-Service Procurement

151

5.2.1 Creating a Requisition or Shopping Cart in SAP S/4HANA

152

5.2.2 Confirmation and Return Delivery

154

5.2.3 Shopping Cart versus Requisition-to-Pay and Migrating SAP SRM Shopping Carts

159

5.2.4 Migrating SAP SRM Shopping Carts to SAP S/4HANA

159

5.2.5 Workflow

160

5.2.6 Machine Learning-Based Purchasing Functionality via SAP Cloud Platform and SAP Leonardo

162

5.3 Requirements Processing in SAP S/4HANA Sourcing and Procurement

163

5.4 Purchase Order Processing

166

5.5 Service Purchasing and Service Confirmation

168

5.6 Purchase Order Collaboration

169

5.7 Configuring Operational Procurement

170

5.7.1 Self-Service Procurement Requisitioning

170

5.7.2 Machine Learning-Based Procurement Functionality

182

5.7.3 Requirements Processing

190

5.7.4 Purchase Order Processing

191

5.7.5 Service Order Processing

192

5.7.6 Purchase Order Collaboration

193

5.7.7 SAP SuccessFactors

195

5.8 Summary

198

6 Automated and Direct Procurement

199

6.1 What Is Automated and Direct Procurement?

199

6.2 Materials Requirements Planning

202

6.2.1 MRP in SAP ERP versus SAP S/4HANA

204

6.2.2 SAP Fiori Apps for MRP

207

6.3 Forecasting and Planning

214

6.3.1 Forecast Planning

214

6.3.2 Reorder Point Planning

218

6.3.3 Time-Phased Planning

219

6.3.4 Forecast Collaboration

220

6.4 Contract and Source Determination

222

6.4.1 Purchasing Information Record

224

6.4.2 Source List

225

6.4.3 Quota Arrangement

226

6.4.4 Scheduling Agreement

227

6.4.5 Scheduling Agreement Release Collaboration

230

6.4.6 Blanket Purchase Order

231

6.4.7 Purchase Orders and Multitier Purchase Orders

233

6.4.8 Subcontracting

234

6.4.9 Consignment Stock

239

6.4.10 Consignment Orders

240

6.4.11 Quality Management Collaboration in SAP Ariba Supply Chain Collaboration for Buyers

241

6.4.12 SAP Supply Base Optimization

242

6.5 Configuring Automated and Direct Procurement

245

6.5.1 Master Data

245

6.5.2 Document Types

246

6.5.3 Forecast Planning

251

6.5.4 Purchase Info Records

251

6.5.5 Source Lists

252

6.5.6 Quota Arrangements

252

6.6 Integration with SAP Ariba

253

6.7 Summary

254

7 Inventory Management

255

7.1 What Is Inventory Management?

256

7.2 Stock Management in SAP S/4HANA

259

7.2.1 Material Identification

260

7.2.2 Location

260

7.2.3 Usability

260

7.2.4 Ownership

262

7.2.5 Batch Identification

262

7.2.6 Serialization

263

7.2.7 Goods Movements

263

7.3 Goods Receipts

264

7.3.1 Posting Goods Receipts

265

7.3.2 Processing Goods Receipts via Inbound Deliveries

271

7.4 Goods Issues

277

7.4.1 My Purchase Orders—Due for Delivery

278

7.4.2 Manage Outbound Deliveries

280

7.5 Stock Transfers

280

7.5.1 One-Step and Two-Step Stock Transfers

281

7.5.2 Stock Transfer Execution Using Shipping Integration

284

7.5.3 Stock Transfer Reporting

284

7.6 Transfer Postings

286

7.6.1 Stock Identity

286

7.6.2 Stock Usability

286

7.6.3 Stock Ownership

287

7.7 Physical Inventory

287

7.7.1 Physical Inventory Execution

289

7.7.2 Physical Inventory Monitoring and Reporting

300

7.8 Reporting in Inventory Management

305

7.8.1 Inventory Overview Pages

305

7.8.2 Goods Movement Reporting

309

7.8.3 Stock Balances Reporting Apps

310

7.8.4 Apps for Monitoring Financial Inventory Values

316

7.8.5 Inventory Management Object Pages

318

7.8.6 Inventory Management Analytics

327

7.9 Configuring Inventory Management

332

7.9.1 General Configuration Elements

334

7.9.2 Goods Receipts and Goods Issues

338

7.9.3 Movement Types

344

7.9.4 Physical Inventory

350

7.10 Summary

354

8 Contracts Management

355

8.1 What Is Contract Management?

356

8.1.1 Contract Creation

356

8.1.2 Types of Contracts

356

8.1.3 Manage Purchase Contracts

357

8.1.4 Mass Changes to Purchase Contract

362

8.2 Contract Consumption

363

8.2.1 Value Contract Consumption

364

8.2.2 Quantity Contract Consumption

365

8.3 Contract Dashboard Reporting and Expiration Notification Setting

367

8.3.1 Unused Contracts

368

8.3.2 Off-Contract Spend

369

8.3.3 Contract Leakage

371

8.3.4 Purchase Contract Items by Account Assignment

372

8.3.5 Monitor Purchase Contract Items

372

8.3.6 Contract Expiry

373

8.4 Configuration

374

8.4.1 Configuring Contracts

374

8.4.2 Manage Workflows for Purchase Contracts

378

8.5 Scheduling Agreement

381

8.5.1 Scheduling Agreement Types

381

8.5.2 Creating Scheduling Agreements

382

8.5.3 Manage Scheduling Agreement

383

8.6 Customizing Scheduling Agreements

388

8.6.1 Define Document Types

388

8.6.2 Allowed Item Categories

389

8.6.3 Maintain Release Creation Profile

390

8.7 Summary

391

9 Enterprise Contract Management and Assembly

393

9.1 What Is Enterprise Contract Management and Assembly?

393

9.2 Enterprise Contract Management Overview App

395

9.2.1 Manage Contexts

398

9.2.2 Categories for Legal Content

401

9.2.3 Request Legal Content

401

9.2.4 Manage Legal Documents

404

9.2.5 Manage Legal Tasks

404

9.2.6 Manage Legal Transactions

405

9.2.7 SAP S/4HANA Cloud for Enterprise Contract Assembly

406

9.3 Customizing Enterprise Contract Management

407

9.3.1 Number Ranges

408

9.3.2 Reminder Types

408

9.3.3 Date Types

409

9.3.4 Internal Contacts

409

9.3.5 Entity Types

410

9.3.6 External Contacts

411

9.3.7 Technical Types for Linked Object Types

412

9.3.8 Linked Object Types

413

9.3.9 Content Types

413

9.3.10 Document Stamps

414

9.3.11 Profiles

414

9.3.12 Document Types

418

9.3.13 Background Job Definitions

422

9.4 Summary

423

10 External Sourcing

425

10.1 Sourcing Strategies

426

10.1.1 Sourcing Process Flow

426

10.1.2 Sourcing Optimization

426

10.2 Request for Quotation

428

10.2.1 Sourcing with SAP Ariba Sourcing

428

10.2.2 Quote Automation for Procurement

429

10.2.3 Request for Price

429

10.2.4 Manage Request for Quotation

430

10.2.5 Create Request for Quotation

432

10.2.6 Monitor Request for Quotation Items

433

10.2.7 Compare Supplier Quotations

434

10.2.8 Manage Supplier Quotation

435

10.2.9 Manage Workflows for RFQs

436

10.2.10 Manage Workflows for Supplier Quotation

437

10.2.11 My Inbox

438

10.3 Configuring Request for Quotation

439

10.3.1 Number Ranges

439

10.3.2 Document Types for RFQ

439

10.3.3 Document Types for Supplier Quotation

441

10.3.4 External Processing for Supplier Quotation Process

443

10.3.5 Activate cXML Message Types

443

10.3.6 Credentials and Endpoints

443

10.3.7 Assign Network ID to Company Code

444

10.3.8 Schedule Job

445

10.3.9 Output Parameter Determination and Use

445

10.4 Configuring Flexible Workflow

446

10.4.1 Scenario Activation

447

10.4.2 Register Event for Subsequent Workflow

447

10.4.3 Maintain Task Names and Decision Options

449

10.4.4 Visualization of SAP Business Workflow

450

10.4.5 Scenario Definition

451

10.4.6 Maintain Attribute for Workflow Task

452

10.5 Integration with SAP Ariba

454

10.6 Summary

454

11 Invoice and Payables Management

455

11.1 What Are Invoice and Payables Management?

455

11.2 Invoice Processing

456

11.2.1 Supplier Invoice Documents

457

11.2.2 Results of Invoice Processing

459

11.2.3 Types of Supplier Invoice Verification

459

11.2.4 Entry of Invoice Documents

461

11.2.5 Invoice Processing

465

11.2.6 Reporting in Invoice Processing

477

11.2.7 Object Pages

480

11.3 Accounts Payable

483

11.3.1 Supplier Payment Processing

484

11.3.2 Supplier Account Management

495

11.4 Invoice and Payables Management Analytics and Reporting

499

11.4.1 Accounts Payable Overview

500

11.4.2 Aging Analysis

503

11.4.3 Overdue Payables

504

11.4.4 Future Payables

505

11.4.5 Cash Discount Forecast

506

11.4.6 Cash Discount Utilization

507

11.4.7 Days Payable Outstanding

509

11.4.8 Days Payable Outstanding—Indirect Method

510

11.4.9 Invoice Processing Analysis

511

11.4.10 Supplier Payment Analysis (Manual and Automatic Payments)

512

11.4.11 Supplier Payment Analysis (Open Payments)

513

11.5 Configuring Invoice and Payables Management

513

11.5.1 Configuration Elements for Managing Incoming Invoices

514

11.5.2 Configuration Elements for Managing Invoice Blocks

521

11.6 Summary

528

12 Supplier Management

529

12.1 What Is Supplier Management?

529

12.1.1 Supplier Discovery, Qualification, and Onboarding

530

12.1.2 Classification and Segmentation

534

12.1.3 Evaluation

534

12.2 Classification and Segmentation

535

12.2.1 Purchasing Categories

535

12.2.2 Supplier Activities and Tasks

539

12.3 Supplier Evaluation

542

12.3.1 Supplier Evaluation Scorecard

544

12.3.2 Individual Supplier Evaluation

544

12.3.3 Supplier Evaluation by Time

545

12.3.4 Supplier Evaluation by Price

546

12.3.5 Supplier Evaluation by Questionnaire

546

12.3.6 Combined Scorecard

548

12.3.7 Operational Supplier Evaluation

548

12.4 Configuration

549

12.4.1 Supplier and Category Management Configuration

550

12.4.2 Classification and Segmentation

552

12.4.3 Supplier Evaluation Configuration

552

12.5 Summary

555

13 Centralized Procurement

557

13.1 What Is Centralized Procurement?

557

13.2 Central Requisitioning

562

13.3 Central Purchasing

564

13.4 Central Purchasing Contracts

566

13.5 Central Analytics

567

13.6 SAP S/4HANA for Central Procurement with SAP Ariba

571

13.7 Configuring SAP S/4HANA for Central Procurement

574

13.7.1 Establishing Connectivity to ERP Systems

576

13.7.2 Validating Data and Identifying Gaps

583

13.7.3 Configuring SAP S/4HANA for Central Procurement Scenarios

585

13.7.4 Integrating SAP Ariba Guided Buying with Central Procurement

596

13.8 Summary

597

14 Sourcing and Procurement Analytics

599

14.1 Spend Visibility

600

14.1.1 Multidimensional Spend Reporting in SAP S/4HANA Cloud

601

14.1.2 Navigation and Procurement Overview Page

601

14.2 Contract Expiration

602

14.3 Sourcing

604

14.4 Supplier Performance

606

14.4.1 Purchasing Document Reports and Embedded Analytics

607

14.4.2 Predictive Analytics

609

14.5 Reporting

609

14.6 Machine Learning

611

14.7 Configuration

612

14.7.1 Creating a Key Performance Indicator

613

14.7.2 Configuring Real-Time Reporting/Queries

613

14.7.3 Exploring Virtual Data Model and Core Data Services in SAP S/4HANA

614

14.7.4 Integration of SAP S/4HANA with SAP Analytics Tools

615

14.7.5 Integration with Cloud Applications

617

14.8 Summary

618

15 Integrating SAP S/4HANA with SAP Ariba and SAP Fieldglass

619

15.1 SAP Ariba Integration Projects and Connectivity Options

619

15.2 SAP Ariba

623

15.2.1 Key Integration Technologies

624

15.3 SAP Ariba Cloud Integration Gateway

625

15.3.1 SAP Cloud Platform Integration and the SAP Ariba Cloud Integration Gateway

625

15.3.2 Configuring the SAP Ariba Cloud Integration Gateway

627

15.3.3 SAP Ariba Strategic Sourcing Integration

628

15.3.4 SAP Ariba Buying and Invoicing Integration

639

15.4 SAP Ariba Supply Chain Collaboration

650

15.5 SAP Ariba Supply Chain Collaboration Configuration

658

15.6 SAP Fieldglass

660

15.6.1 Key Technologies

661

15.6.2 Integrating SAP Fieldglass Contingent Workforce Management

661

15.6.3 SAP SuccessFactors

664

15.7 Summary

666

16 Customizing the UI

669

16.1 User Interface Options in SAP S/4HANA

669

16.1.1 SAP Fiori

669

16.1.2 SAP General User Interface

680

16.2 Configuring SAP Fiori

681

16.2.1 Installing SAP Fiori

681

16.2.2 Embedded and Central Hub Deployment for SAP Fiori

682

16.2.3 SAP Fiori App Library

683

16.3 Customizing SAP Fiori

688

16.3.1 SAP Fiori Edit Mode

688

16.3.2 SAP Fiori User Settings

689

16.3.3 SAP CoPilot

692

16.4 Summary

694

17 Conclusion

695

17.1 Future State of Procurement Solutions

698

17.2 Future State of the Procurement Supply Chain

699

The Author

701

Contributors

701