Preface

23

Target Audience

24

Objective

24

Structure of This Book

24

Acknowledgments

29

1 Introduction to Sourcing and Procurement

31

1.1 Sourcing and Procurement: From Basic to Strategic

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 Multitenant Cloud versus Single-Tenant Environment for ERP Systems

41

1.3.2 Strategic Sourcing

44

1.3.3 Procurement

45

1.3.4 Accounts Payable and Invoicing

47

1.3.5 SAP Fiori Roles and Applications

48

1.4 Summary

49

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

55

2.1.4 New Implementation versus System Conversion

56

2.2 On-Premise SAP S/4HANA

60

2.2.1 Complete Functional Scope

61

2.2.2 Installation

62

2.2.3 Activated Appliance

63

2.2.4 Information Technology Considerations

64

2.2.5 Integration Options

65

2.2.6 System Conversion to SAP S/4HANA

65

2.3 SAP S/4HANA Cloud

69

2.3.1 SAP Best Practices Scope

69

2.3.2 Information Technology Considerations

70

2.3.3 Standard Integration and Customization

71

2.4 SAP Ariba Central Procurement, Private Cloud Edition

71

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

74

2.5.1 Prebuilt Content and Templates

74

2.5.2 SAP Best Practices

75

2.5.3 Appliance Model and Enterprise Management Layer

75

2.5.4 SAP Activate

76

2.6 Summary

82

3 Organizational Structure

83

3.1 SAP S/4HANA Enterprise Management Organization Objects

83

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

86

3.3 Company Code

87

3.4 Plants

90

3.5 Storage Locations and Warehouses

92

3.5.1 Storage Location

93

3.5.2 Warehouse Creation

95

3.6 Purchasing Organizations

96

3.7 Purchasing Group Creation

100

3.8 Summary

100

4 Master Data

103

4.1 Material Masters and Material Groups

104

4.1.1 Activating a Material Master Field

105

4.1.2 Creating a Material Master

107

4.1.3 Creating a Material Group

109

4.1.4 Lean Services

110

4.1.5 Configuring Lean Services: Product Services Type (SERV)

112

4.1.6 Select Material Master Configuration Options

114

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

114

4.2 Batch Management and Serialization

115

4.2.1 Configuring Batch Numbers

116

4.2.2 Configuring Serial Numbers

117

4.3 SAP S/4HANA Business Partner Model

118

4.3.1 Suppliers as Business Partners

118

4.3.2 Loading Supplier Records in SAP S/4HANA

121

4.3.3 Setting Up the Supplier Master

122

4.3.4 Performing Customer/Vendor Integration

123

4.4 Summary

137

5 Operational Procurement

139

5.1 What Is Operational Procurement?

139

5.2 Self-Service Procurement

143

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

144

5.2.2 Carbon Footprint Tracking

146

5.2.3 Advanced Intercompany Sales

146

5.2.4 Confirmation and Return Delivery

147

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

151

5.2.6 Workflow

153

5.2.7 Machine Learning–Based Purchasing Functionality via SAP Business Technology Platform

154

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

156

5.4 Purchase Order Processing

159

5.5 Service Purchasing and Service Confirmation

161

5.6 Purchase Order Collaboration

162

5.7 Configuring Operational Procurement

163

5.7.1 Self-Service Procurement Requisitioning

163

5.7.2 Machine Learning–Based Procurement Functionality

173

5.7.3 Requirements Processing

181

5.7.4 Purchase Order Processing

182

5.7.5 Purchase Order Collaboration

182

5.7.6 SAP SuccessFactors

183

5.8 Summary

186

6 Automated and Direct Procurement

187

6.1 What Is Automated and Direct Procurement?

187

6.2 Materials Requirements Planning

190

6.2.1 MRP in SAP ERP versus SAP S/4HANA

191

6.2.2 Predictive MRP

194

6.2.3 SAP Fiori Apps for MRP

195

6.3 Forecasting and Planning

200

6.3.1 Forecast Planning

200

6.3.2 Reorder Point Planning

203

6.3.3 Time-Phased Planning

204

6.3.4 Forecast Collaboration

205

6.4 Contract and Source Determination

207

6.4.1 Purchasing Information Record

208

6.4.2 Source List

209

6.4.3 Quota Arrangement

210

6.4.4 Scheduling Agreement

211

6.4.5 Scheduling Agreement Release Collaboration

213

6.4.6 Blanket Purchase Order

214

6.4.7 Purchase Orders and Multitier Purchase Orders

215

6.4.8 Subcontracting

216

6.4.9 Consignment Stock

220

6.4.10 Consignment Orders

221

6.4.11 Quality Management Collaboration in SAP Business Network Supply Chain Collaboration

222

6.4.12 SAP Supply Base Optimization

223

6.5 Configuring Automated and Direct Procurement

225

6.5.1 Master Data

225

6.5.2 Document Types

225

6.5.3 Forecast Planning

230

6.5.4 Purchase Info Records

230

6.5.5 Source Lists

230

6.5.6 Quota Arrangements

231

6.6 Industry-Focused Solutions for Direct Procurement

231

6.6.1 CATENA-X

231

6.6.2 SAP Enterprise Product Development

232

6.6.3 SAP S/4HANA for Field Equipment and Material Logistics Planning and Execution

233

6.7 Integration with SAP Ariba and SAP Business Network

234

6.8 Summary

235

7 Inventory Management

237

7.1 What Is Inventory Management?

238

7.2 Stock Management in SAP S/4HANA

241

7.2.1 Material Identification

241

7.2.2 Location of the Stock

241

7.2.3 Usability of the Stock

242

7.2.4 Ownership of the Stock

243

7.2.5 Batch Identification

243

7.2.6 Serial Number Identification

244

7.3 Goods Movements

244

7.3.1 Goods Receipts

245

7.3.2 Goods Issues

259

7.3.3 Stock Transfers

262

7.3.4 Transfer Postings

273

7.4 Physical Inventory

274

7.4.1 Create Physical Inventory Documents

277

7.4.2 Schedule Physical Inventory Document Creation

277

7.4.3 Manage Physical Inventory Count

278

7.4.4 Manage Physical Inventory Documents

279

7.4.5 Cycle Counting—Classification

280

7.4.6 SAP GUI for HTML Apps

281

7.5 Reporting in Inventory Management

283

7.5.1 Inventory Overview Pages

283

7.5.2 Goods Movement Reporting Apps

286

7.5.3 Stock Balances Reporting Apps

287

7.5.4 Monitoring Financial Inventory Values Apps

293

7.5.5 Inventory Management Object Pages

295

7.5.6 Inventory Management Analytics

302

7.6 Configuring Inventory Management

307

7.6.1 General Configuration Elements

309

7.6.2 Goods Receipts and Goods Issues

310

7.6.3 Movement Types

313

7.6.4 Stock Transport Orders

319

7.6.5 Physical Inventory

322

7.7 Summary

326

8 Contract and Scheduling Agreement Management

327

8.1 What Is Contract and Scheduling Agreement Management?

328

8.1.1 Types of Purchase Contracts

328

8.1.2 Manage Purchase Contracts

329

8.1.3 Mass Changes to Purchase Contract

333

8.2 Contract Consumption

335

8.2.1 Value Contract Consumption

335

8.2.2 Quantity Contract Consumption

336

8.3 Contract Reporting and Analytics

338

8.3.1 Unused Contracts

338

8.3.2 Off-Contract Spend

339

8.3.3 Contract Leakage

340

8.3.4 Purchase Contract Items by Account Assignment

340

8.3.5 Monitor Purchase Contract Items

341

8.3.6 Contract Expiry

342

8.4 Configuration

343

8.4.1 Configuring Contracts

343

8.4.2 Manage Workflows for Purchase Contracts

347

8.5 Scheduling Agreement

349

8.5.1 Scheduling Agreement Types

349

8.5.2 Managing and Creating Purchase Scheduling Agreements

350

8.5.3 Monitor Purchase Scheduling Agreement Items

354

8.6 Customizing Scheduling Agreements

355

8.6.1 Define Document Types

355

8.6.2 Define Number Ranges for Purchase Scheduling Agreements

356

8.6.3 Allowed Item Categories

356

8.6.4 Maintain Release Creation Profile

357

8.7 Integrating with SAP Ariba Contracts

359

8.8 Summary

360

9 Enterprise Contract Management and Assembly

361

9.1 What Is Enterprise Contract Management and Assembly?

361

9.2 SAP Fiori Apps for Enterprise Contract Management Overview

363

9.2.1 Home Page and Enterprise Contract Management Overview

364

9.2.2 Manage Contexts

367

9.2.3 Categories for Legal Content

369

9.2.4 Manage Legal Documents

369

9.2.5 Manage Legal Tasks

370

9.2.6 Request Legal Contract

370

9.2.7 Manage Legal Transactions

372

9.2.8 Manage Workflow Templates

373

9.3 Customizing Enterprise Contract Management

374

9.3.1 Number Ranges

374

9.3.2 Reminder Types

375

9.3.3 Date Types

375

9.3.4 Internal Contacts

376

9.3.5 Entity Types

377

9.3.6 External Contacts

378

9.3.7 Technical Types for Linked Object Types

378

9.3.8 Linked Object Types

379

9.3.9 Content Types

380

9.3.10 Document Stamps

380

9.3.11 Profiles

381

9.3.12 Document Types

384

9.3.13 Background Job Definitions

389

9.4 Summary

389

10 External Sourcing

391

10.1 Sourcing Strategies

391

10.2 Request for Quotation

393

10.2.1 Sourcing with SAP Ariba Sourcing and SAP Business Network

393

10.2.2 Sourcing with Standalone SAP S/4HANA

394

10.2.3 Quote Automation for Procurement

394

10.2.4 Request for Price

394

10.3 SAP Fiori Apps for External Sourcing

395

10.3.1 Manage Requests for Quotation

396

10.3.2 Create Request for Quotation via the Process Purchase Requisitions App

396

10.3.3 Monitor Request for Quotation Items

398

10.3.4 Compare Supplier Quotations

399

10.3.5 Manage Supplier Quotations

400

10.3.6 Manage Workflows for RFQs

401

10.3.7 Manage Workflows for Supplier Quotation

401

10.3.8 My Inbox

403

10.3.9 Request for Quotation Types

403

10.4 Configuring Request for Quotation

404

10.4.1 Number Ranges

404

10.4.2 Document Types for RFQ

405

10.4.3 Document Types for Supplier Quotation

406

10.4.4 External Processing for Supplier Quotation Process

407

10.4.5 Activate cXML Message Types

408

10.4.6 Credentials and Endpoints

408

10.4.7 Assign Network ID to Company Code

409

10.4.8 Schedule Job

409

10.4.9 Output Parameter Determination and Use

410

10.5 Configuring Flexible Workflow

411

10.5.1 Scenario Activation

411

10.5.2 Register Event for Subsequent Workflow

411

10.5.3 Maintain Task Names and Decision Options

413

10.5.4 Visualization of SAP Business Workflow

414

10.5.5 Scenario Definition

415

10.5.6 Maintain Attribute for Workflow Task

416

10.6 Integration with SAP Ariba

418

10.7 Summary

418

11 Product Sourcing

419

11.1 What Is Product Sourcing?

420

11.2 Product Sourcing

423

11.2.1 Sourcing Project

424

11.2.2 Quotation Evaluation

429

11.2.3 Award Decisions

432

11.3 Procurement Planning

433

11.3.1 Parts Import and Assignment to Projects

434

11.3.2 Milestones and Task Scheduling

435

11.3.3 Parts Bundling per Sourcing Needs

436

11.4 Product Sourcing with Enterprise Contract Management

437

11.5 Product Sourcing and Commodity Pricing Engine

439

11.6 Quotation Management and Supplier Quotations

440

11.7 Mass Price Update

441

11.8 External Collaboration with Suppliers

442

11.8.1 SAP Business Network and Product Sourcing

444

11.8.2 Supplier Portal (Private Network)

444

11.9 Configuration Product Sourcing

445

11.10 Summary

450

12 Invoice and Payables Management

451

12.1 What Are Invoice and Payables Management?

451

12.2 Invoice Processing

452

12.2.1 Supplier Invoice Documents

453

12.2.2 Results of Invoice Processing

454

12.2.3 Types of Supplier Invoice Verification

455

12.2.4 Entry of Invoice Documents

456

12.2.5 Invoice Processing

460

12.2.6 Reporting in Invoice Processing

470

12.2.7 Object Pages

473

12.3 Accounts Payable

477

12.3.1 Supplier Payment Processing

477

12.3.2 Supplier Account Management

488

12.4 Invoice and Payables Management Analytics and Reporting

491

12.4.1 Accounts Payable Overview

492

12.4.2 Aging Analysis

494

12.4.3 Overdue Payables

495

12.4.4 Future Payables

496

12.4.5 Cash Discount Forecast

497

12.4.6 Cash Discount Utilization

498

12.4.7 Days Payable Outstanding

500

12.4.8 Days Payable Outstanding—Indirect Method

501

12.4.9 Invoice Processing Analysis

502

12.4.10 Supplier Payment Analysis (Manual and Automatic Payments)

503

12.4.11 Supplier Payment Analysis (Open Payments)

503

12.5 Configuring Invoice and Payables Management

504

12.5.1 Configuration Elements for Managing Incoming Invoices

505

12.5.2 Configuration Elements for Managing Invoice Blocks

513

12.6 Integrating SAP S/4HANA with SAP Invoice Management by OpenText

520

12.7 SAP Ariba Central Invoice Management for SAP S/4HANA Cloud

521

12.7.1 Upload Supplier Invoices

521

12.7.2 Manage Supplier Invoices Centrally

522

12.8 Taulia: Working Capital Management

522

12.9 Summary

524

13 Supplier Management

525

13.1 What Is Supplier Management?

525

13.1.1 Supplier Discovery, Qualification, and Onboarding

526

13.1.2 Classification and Segmentation

529

13.1.3 Evaluation

530

13.2 Classification and Segmentation

530

13.2.1 Create a Purchasing Category

531

13.2.2 Managing a Purchasing Category

534

13.2.3 Translating a Purchasing Category

534

13.3 Supplier Evaluation

534

13.3.1 Supplier Evaluation Scorecard

537

13.3.2 Individual Supplier Evaluation

537

13.3.3 Supplier Evaluation by Time and Quality

538

13.3.4 Supplier Evaluation by Price

539

13.3.5 Supplier Evaluation by Questionnaire

540

13.3.6 Combined Scorecard

540

13.3.7 Operational Supplier Evaluation

541

13.4 Configuration

542

13.4.1 Supplier and Category Management Configuration

542

13.4.2 Classification and Segmentation

544

13.4.3 Supplier Evaluation Configuration

544

13.5 Summary

546

14 Centralized Procurement

547

14.1 What Is Centralized Procurement?

547

14.2 Central Requisitioning

552

14.3 Central Purchasing

554

14.4 Central Sourcing

558

14.5 Central Purchase Contracts

559

14.6 Central Analytics

561

14.7 Integration with SAP Ariba and SAP Business Network

566

14.8 Configuring SAP Ariba Central Procurement, Private Cloud Edition

568

14.8.1 Prerequisites

569

14.8.2 Establishing Connectivity to ERP Systems

571

14.8.3 Validating Data and Identifying Gaps

576

14.8.4 Configuring SAP Ariba Central Procurement, Private Cloud Edition Scenarios

578

14.8.5 Integrating SAP Ariba Buying for SAP S/4HANA with Central Procurement

591

14.9 Summary

592

15 Sourcing and Procurement Analytics

593

15.1 Spend Visibility

593

15.2 Contract Expiration

596

15.3 Sourcing

597

15.4 Supplier Performance

599

15.4.1 Purchasing Document Reports and Embedded Analytics

600

15.4.2 Predictive Analytics

601

15.5 Reporting

602

15.6 Machine Learning and Artificial Intelligence

604

15.7 SAP Ariba Category Management

606

15.8 Configuration

607

15.8.1 Creating a Key Performance Indicator

608

15.8.2 Configuring Real-Time Reporting/Queries

608

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

609

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

612

15.8.5 Integration with Cloud Applications

613

15.9 Summary

614

16 Integrating SAP S/4HANA with SAP Signavio, SAP Ariba, SAP Business Network, and SAP Fieldglass

617

16.1 SAP Ariba and SAP Business Network Integration Projects and Connectivity Options

618

16.2 SAP Integration Suite, Managed Gateway for Spend Management and SAP Business Network

620

16.2.1 Configuring SAP Integration Suite, Managed Gateway for Spend Management and SAP Business Network

622

16.2.2 SAP Ariba Strategic Sourcing Suite Integration

623

16.2.3 SAP Business Network Commerce Automation

633

16.3 SAP Business Network Supply Chain Collaboration

640

16.3.1 Product Functionality

640

16.3.2 Configuration

646

16.4 SAP Business Network for Logistics

647

16.5 SAP Business Network for Asset Management

650

16.6 SAP Fieldglass

651

16.6.1 Key Technologies

652

16.6.2 Integrating SAP Fieldglass Contingent Workforce Management

653

16.7 SAP SuccessFactors

656

16.7.1 SAP S/4HANA Integration with SAP SuccessFactors Employee Central

656

16.7.2 SAP Cloud Integration with SAP SuccessFactors Employee Central

657

16.8 SAP Signavio

658

16.9 Summary

660

17 Customizing the User Interface

661

17.1 User Interface Options in SAP S/4HANA

661

17.1.1 SAP Fiori

662

17.1.2 SAP GUI

671

17.2 Configuring SAP Fiori

673

17.2.1 Installing SAP Fiori

673

17.2.2 Embedded and Central Hub Deployment for SAP Fiori

674

17.2.3 SAP Fiori Apps Reference Library

674

17.3 Customizing SAP Fiori

679

17.3.1 SAP Fiori Edit Mode

679

17.3.2 SAP Fiori User Settings

680

17.4 Summary

683

18 Conclusion

685

18.1 Future State of Procurement Solutions

688

18.2 Future State of the Procurement Supply Chain

689

The Author

691

Contributors

691