8. Sap Supplier Relationship Srm Introduction26125075[1]

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SAP Supplier Relationship Management (SAP SRM): Features, Functions, Best Practices, and Infrastructure

Dan HarmonCIBER

1

Introductions

2

What We’ll Cover …

• What is Supplier Relationship Management (SRM)?• What is a typical SRM landscape or architecture?• What functions and processes does SAP SRM support?• What are the SAP SRM data sets?• What are the SAP SRM implementation scenarios?• Why consider SAP SRM if you are already using SAP

ERP MM-Purchasing?• Wrap-up

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What Is Supplier Relationship Management (SRM)?

Closes the loopbetween sourcing and procurement to realize negotiated benefits

Provides repeatable savingsthrough ongoing unit cost reductions

instead of one-time wins

Increases supplier participationto reduce effort, increase visibility, and manage risk of supply

Supports business changewith end-to-end processes thatensure purchasing compliance

SAP Supplier Relationship Management is a purchasing platform for

sustainable savings and value generation through enterprise-wide supply

management.

Source: SAP

4

SAP SRM — What Does It Really Mean?

• A suite of software from SAP fully integrated with other SAP application suites (SAP PLM, ERP, SCM, CRM)

• An Internet and intranet purchasing application for users

• Supports all tactical and operational purchasing activities and functions

• Role-based users — buyer, requisitioner, receiver, etc. • Flexible

Integration to single or multiple SAP ERP systemsIntegration to single or multiple non-SAP ERP systemsStandalone — no integration

5

SAP SRM High-Level Features

• Supports all types of purchases (direct, indirect, and services)

• An enabler of sharing purchasing data between your organization and your supply base

• Centralizes the procurement processes but allows for decentralizing the purchasing activities

• Direct material — an item used to manufacture a product or service (e.g., screws, bolts, steel, etc.)

• Indirect material — an item needed by a company but not used in the manufacturing process (e.g., office supplies)

• Services — legal, marketing, temporary, consulting, etc.

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6

SAP SRM Server 5.5 Software Components

• SAP SRM 5.0The backbone of the SRM applicationContains the Enterprise Buyer Professional (EBP) moduleEnd-user access via Internet browserMain data sets include shopping carts (requisitions), POs, receipts, contracts, and invoicesMain functions include data processing, master data management, approvals, and notifications (workflow)

• SAP Supplier Self-Service (SUS)Essentially a supplier portalIntegrates the supply base into the purchasing processes and data set exchangesImportant for Advanced Shipping Notification (ASN) and Purchase Order Response (POR) processing

7

SAP SRM Server 5.5 Software Components (cont.)

• Bidding engineProvides invitations for bidding and bid processingLive auctions via the InternetLive auction cockpit for auction monitoring

8

SAP SRM Catalog Software

• SAP Catalog and Content Management Version 2.0 (CCM)

Create and maintain internal catalogs and contentSAP-supported until 2013

• SRM MDM Catalogs SP 2Integrates with SAP NetWeaver® MDM for a complete solution for all master data requirementsAvailable for use with SAP SRM 5.0Must be used with SAP SRM 6.0

• The Requisite catalog solution is no longer supported by SAP

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9

Other SAP Software to Support SAP SRM

• SAP NetWeaver Business Intelligence (BI) Version 7.0Absolutely mandatory for SAP SRM reporting and analyticsSAP SRM provides no reporting capabilityHundreds of existing procurement-oriented reports

• SAP NetWeaver Process Integration (PI) Version 7.0Previously known as Exchange Infrastructure (XI)SAP middleware toolRequired for use with SAP SUS and catalog components

• TREX Version 7.0SAP search engineImproves catalog searching performance

• SAPGUI — needed by developers, configurators, administrators, and support team

10

Additional SAP Software to Consider

• SAP NetWeaver Portal 7.0Provides single sign-on capability for all systems (SAP and non-SAP)Internet and intranet capableUniversal Worklist (UWL) for all workflow tasks

• SAP Solution Manager Version 4.0Necessary for SAP Notes supportProject document repositoryProvides many other functions including service desk, change management, and system monitoring

11

Confused About Components and Versions?

Tip

Use a knowledgeable SAP SRM consultant and a good Basis person to determine what components and component versions are needed based on your requirements and existing systems.

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12




13

SRM Landscape — It Can Be Complicated!

SAP ERP or

SAP R/3PI SAP

SRM BIPortalMDM

orCCM

TREX

Note: Applications and servers are dependent on the functional scope and may not be required

PI (XI) — required for Supplier Self-Service (SUS)

TREX — required for catalog searching

BI — required for all SAP SRM reporting

SolMan

Don’t forgetSolutionManager!

14

Three-Tiered Landscape Is Always Preferred

SAPERP or

SAP R/3SRM BIPortal MDM

SAPERP or

SAP R/3SRM BIPortal MDM

SAP ERP or

SAP R/3PI SAP

SRM BIPortalMDM

orCCM

DEV, TEST (QA), PROD

Solution Manager and TREX typically do not require the three-tier strategy

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15

SAP SRM Architecture

LAC WPS = Live Auction Cockpit Web Presentation Server, JVM = Java Virtual Machine, Jco = Java Connector, IPC = Internet Pricing and Configurator

Source: SAP

SAP NetWeaver Portal 7.0

SAP NetWeaver AS Java 7.0

SAP NetWeaver AS Java 7.0SAP NetWeaver AS ABAP 7.0 (Incl ITS 7.0)

SAP NetWeaver AS ABAP 7.0 SAP NetWeaver AS Java 7.0

SAP NetWeaver Process Integration 7.0

SAP NetWeaver

BI 7.0TREX 7.0

16

SAP SRM Embedded Architecture with SAP ECC

• Example SAP SRM and SAP ERP 6.0 deploymentLow total cost of ownershipMaster data for organization management, business partners, and products is synchronizedSelf-service procurement implementation is simplifiedSAP SRM is self-contained within SAP ECCSingle point of administration and configuration

Source: SAP

17

Restrictions of Embedded SAP SRM Architecture

• SAP ERP 6.0 with SAP SRM as an add-on does not support any multiple back-end ERP functions or hub deployment for procurement

• Upgrade or migration from SAP SRM (with a release lower than Version 4.0) to SAP ERP 6.0 with SAP SRM as an add-on is not supported

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18




19

High-Level SAP SRM Functions

Supply

base

ratio

naliz

ation

Efficient purchasing execution and

higher contract compliance

Increase supplier participation and responsiveness

20

Key SAP SRM Processes

Supply

base

ratio

naliz

ation



Operational SourcingSourcing analytics

Supplier evaluation

RFx and auctions

Contract management


Supplier evaluation

RFx and auctions

Contract management


Supplier EnablementSupplier portal

Supplier connectivity



ContentContent consolidation

Catalog content management



Operational ProcurementSelf-service procurement

Plan-driven procurement

Services procurement




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21

SAP SRM Operational SourcingSup

ply ba

se ra

tiona

lizati

on



















Supplier evaluation

RFx and auctions

Contract management


Supplier evaluation

RFx and auctions

Contract management

22

SAP SRM Strategic Sourcing Features and Functions

• Integration with Live Auctions• Integration with Contract Management including

contract distribution out of SAP SRM• Integration with Vendor List in EBP• Integration with BI for vendor evaluations• Template management• Dynamic attributes• Approval workflow

23

Sourcing and Supplier Negotiation

• Supplier negotiation is the process of assessing the capability levels of suppliers, collaborating effectively, and selecting the best suppliers for supply needs

• Supplier negotiation consists of the following activities:Event preparationRequest for Quotation (RFQ)Reverse auctionBid evaluation and awarding

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24

A Sourcing Process Is Necessary for Success

• Standardize the evaluations• No short cuts, increase objectivity• Data needs to be collected, cleansed, and analyzed• No missed opportunities• Document the process and follow it• Perform regular reviews or audits against the process

SAP SRM

Strategic Sourcing

Sourcing Cockpit

RFICreation

RFQCreation

Sourcing Cockpit

ResponseHandling

(bids)

Winner Determination

(BI)(Request) Create PO/contract

Source: SAP

25

Strategic Sourcing Process and Tools

Bidder

Sourcing Cockpit

SAP SRM

Bidding Engine

Live Auction

Contract Manage-ment

Open requirements

Purchase Orders, Contracts

Firewall

Materials Management Systems

Enterprise Buyer Systems

Maintenance and Project Systems

Planning Systems

RFx

Spend Analysis, Vendor Scorecard, Vendor Portfolio

with BI

Demand from SAP R/3 back end or EBP is transferred to Sourcing

Create RFQ, Live Auction

Award Winner

Create PO in system where requirement was created (SAP SRM or SAP R/3 back end), or contract in EBP or SAP R/3 contract serverSource: SAP

26

Types of Auctions

• EnglishBasic reverse auction where lowest bid is considered best

• Rank OnlyBidder can submit a bid as long as it is lower than his/her own last bidWill not be ranked as first unless it is the lowest overall bid

• Blind BiddingSame as Rank Only except the bidder’s rank is only displayed when he/she is ranked first

• Company Best BidMore than one bidder from a companyBids are evaluated against the other bids from the company

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Auction Parameters

• Predetermined views and attributes based on the type of auction

• You can control what the bidders see and don’t see• Documents can be exchanged as part of the process• Factored cost bidding

Uses more than just the price to determine the winnerYou identify and configure weighted parameters

• You can also submit a bid on behalf of a supplier —surrogate bidding

28

Live Auction Cockpit

29

What Is a Contract in SAP SRM?

• An agreement with the supplier that contains:Prices, rebates, and discountsShipping informationTerms and conditionsExpected volume

• Types of contractsBy product or serviceBy product categoryBy supplier

• Can be hierarchical• Can be shared with back-end systems• Can be used across the organization — global

outline agreement

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SAP SRM Contract Features

• Hierarchies in contracts• End of contract notice• Versions• Authorizing• Approval and change requests• Quota arrangements• Replication to other systems• Electronic upload and download• Integration with the supplier• Analytics via BI

31

Why Are Contracts Important?

• Require purchasers to buy from approved vendors, reducing maverick buying

• Organization gets approved prices and rebates, reducing costs

• Helps with regulatory (legal) requirements — build the terms into the contract

• BI reports on what contracts are being used, improving spend analysis

• Central repository — better control of contract data

32

Contracts Improve Your Purchasing Process

• The right supplier at the best price• Operational procurement is not needed to make the

purchase • Reduce the procure-to-pay cycle time

ContractContractPurchaser(owner)

Purchaser(owner)

Supplier1

Supplier1

Supplier …

Supplier …

SupplierN

SupplierN

Req.1

Req.1

Req. …

Req. …

Req.N

Req.N

Contract????

Supplier1

Supplier1

Supplier …

Supplier …

SupplierN

SupplierN

Req.1

Req.1

Req. …

Req. …

Req.N

Req.N

OperationalPurchasing

OperationalPurchasing

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33

Consider a Contract Management Process

• It is more than just managing a document • Develop a contract management process and lifecycle

Delete cancelled contractsLock contracts in an update process

• Use SAP SRM tools to automate the processSet up alerts to know when contracts are about to expireWorkflow for contract approvalVersion management

• Become proactive, not reactive

34

Contract Management Lifecycle Using SAP SRM

Contract Renewal

Contract LifecycleFind New or Additional Suppliers

Sourcing

Multiple Suppliers, in

the Supply Market

RFI RFQ Auction

Contract ManagementDocumentsWorkflow Fulfillment, DistributionContract Monitoring and Compliance Control

Contract Management

Contract Preparation and Negotiation Contract

Source: SAP

35

Spend Analysis — The Really Big Problem

If you can’t report on it, how can you manage it?

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• To discover saving potentials and plan upon them, companies need to have access to high quality spend data from internal and external sources

• Lack of visibility and transparency inhibit companies to answer even simple questions

How much do I spend, on which products, with which suppliers, and authorized by whom?

• To overcome this, companies are looking for ways to:

Why Is Spend Analysis Important?

Collaborate with suppliers

Measure actual compliance

Evaluate supplier performance

Visualize global spend

Compare vendor prices

Identify duplicate contracts

37

Using BI to Report on SRM Processing

Shopping Shopping CartCart

PurchasePurchaseOrderOrder

Goods Goods ReceiptReceipt

InvoiceInvoice

Back end 1 EBP

Goods Goods ReceiptReceipt

InvoiceInvoice

PurchasePurchaseOrderOrder

Bidding engine

Bidding Bidding EngineEngine

CatalogCatalog

2

SUS/PISUS/PI

BI

Suppliers

Supplier Supplier PortalPortal

38

BI Processing

Extract

Extract, transform, and load data from any number of heterogeneous systems

Map

Map master data to determine duplicates, similarities, and assign standard classifications

Enhance

ODSCube

Info-Source

Enhance master data with the mappings and enrich operational data lacking master data information

Analyze

Analyze your spend across heterogeneous systems and organizational boundaries

Source: SAP

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39

Sample BI Reports

Who are my top five vendors? How much maverick buying do I have for a specific product?

40

Sample BI Reports (cont.)

From which suppliers did I buy a specific product?

For which product categoriesdid I spend most?

41

BI Supports Consolidating Purchasing Volume Across Different Systems• Business benefits include …

Better prices and reduced costs through consolidated purchasing volumeAbility to identify different prices and conditions with the same suppliers and products

• … Which lead to additional purchasing activities to:Renegotiate with suppliers for better prices based on higher volumeNegotiate lower total cost contracts

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42

Use BI to Rationalize the Supply Base

• Business benefits include …Identify duplicate vendors in the organization or systemIdentify multiple suppliers for the same product or product categoryEvaluate number of agreements contracts with suppliersImprove the supplier performance based on predefined Key Performance Indicators (KPIs)

• … Which lead to additional purchasing activities to:Shift volume onto preferred suppliersNegotiate lower total cost contractsWork proactively with suppliers to improve performance

43

Why Is Supplier Evaluation Important?

• In today’s purchasing world, it is more than just the lowest price per unit

Quality of product and servicePerformance of supplierShipping costs and methodsTaxes, tariffs, and regulatory fees

• Objectively pick the best supplier

44

Make Supplier Evaluation a Standard Process!

Define EvaluationProcess

Define evaluation criteria

CaptureEvaluationData

Capture data automatically during the process and/or manually via Web surveys

Analyze Vendor Performance

Evaluation via BI reports

Source: SAP

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45

BI Supplier Evaluation Features

SAP SRM

CaptureEvaluationData

Define EvaluationProcess

Analyze Vendor Performance

Decision support for operational sourcing Monitoring of vendor performancePerformance feedback to vendor Strategic sourcing analysis (e.g., portfolio analysis)

Source: SAP

46

Supplier Evaluation — Web Survey Questionnaire

• Develop parametersand conditions to analyze

• Assign rank and scale

• Be objective!

• Surveys can be implemented via SAP’s portal or SAP SUS• Use BI to gather and analyze the data

47

Develop Weighted Parameters for Improved Evaluations

• Quality is more important (3 weight) than on-time (1 weight) delivery

• The grouping of delivery is more important (2 weight) than prices and costs(1 weight)

• The total evaluation comes from many activities in the process

Goods Receipt

Goods Receipt InvoiceInvoice Vendor

ListVendor List

On-time Quality PriceTransparency

CostTransparency

Delivery Prices and Costs

Total Score

2 1

1 3 2 1

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48

Supply

base

ratio

naliz

ation

SAP SRM Operational Procurement


Supplier evaluation

RFx & auctions

Contract management


Supplier evaluation

RFx & auctions

Contract management


















49

Operational Procurement Definitions

• Operational procurement covers the purchase of goods and services for indirect and direct materials (even though they have very distinct requirements and processes)

Indirect materials: maintenance, repair, and operationsDirect materials: production

• With SAP SRM, the process is decentralized, but the purchasing organization centrally creates the controls that manage the process, roles, and sourcing objectives

• Assign roles to the activities that internal employees or external business partners perform in the process

• Use contracts to control spend and enforce compliance at individual plant locations

50

Types of Operational Procurement

• Self-service procurementReduce cost and increase speed of procurementIntegrated purchasing processesProcess and spend control

• Service procurementConnecting with suppliersIncrease speed and visibility for services procurementSpend control

• Plan-driven procurementSupplier selection efficiency and complianceCentralized purchasing and integration to external planning systems

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51

Self-Service Procurement in SAP SRM

• A purchasing platform that complements a typical ERP-based procure-to-pay process and adds integrated, catalog-based requisitioning to the process

Also referred to as operational procurement or E-ProcurementThe solution can also help you increase spend control for other categories

• An easy-to-use procurement environment that empowers every employee to search for and buy items

Also ensures that transactions comply with corporate purchasing policies and internal controls

52

Self-Service Procurement in SAP SRM (cont.)

• Decentralization of the process enables you to reduce overhead and allows purchasing professionals to focus on managing relationships instead of transactions

• Role-based tasks and workflows free up purchasing professionals to spend more time on high-value sourcing and procurement tasks

• Allows you to gain control of access to approved vendors and materials

53

Content broker or marketplaceExternal supplier owns catalog

CC

C

• Multi-supplier catalog• Maintained and hosted by

external catalog broker

C

C

C

C CC

Catalog hosted by company (intranet)• Purchasing department maintains catalog• Content is provided by suppliers

CC

C

Access via Internet

Access via Internet

2

3

1

Company boundary

• Supplier updates catalogs

Internal catalog• Purchasing from own stock

(within company boundary)

4DB

C CC

Cross-catalog search

Self-Service Procurement — Using Catalogs

Source: SAP

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54

One-screen shopping cart for speed

Wizard design for training

Self-Service Procurement — Creation of a Shopping Cart

Source: SAP

55

Shopping Cart Features

• Direct and indirect scenarios • Generate a requisition,

reservation, or purchase order

• Availability check• Assign sources of supply

ContractsApproved sources of supply

• Budget check and display• Purchasing budget for users• Procurement cards• Specify a preferred vendor• Changeable ship-to address

(on items)

• Spending and approval limits• Buy on behalf of other users• Saved shopping carts• Public templates• Attachments• Mobile access• Assign to assets, orders, and

projects• Automatic lead time

adjustment of delivery date• Customer fields• Distribute account assignment

56

Manage complex and custom approval processes

For the approver it’s easy:Line-item approvalChange shopping cart during approvalMobile access Add reviewer and approver

Ad hoc approvalsNotificationsWorkflow for purchasers to complete shopping cart before manager approval

Self-Service Procurement — Shopping Cart Approval

Source: SAP

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57

Your Approval Process Can Be Implemented

• No approval necessary (automatic approval)• Simple management approval by total cost of

shopping cart• Approval by product and/or product category• Regulatory and legal requirements• Complex and custom requirements• Ad hoc capability• Integration with SAP HCM for management structure

and authorization levels

58

Key Points About Your Approval Process

• Approval process is only as good as the data in the organizational structure

Bad data = bad process = delayed purchasesYou must keep the organizational structure up to date

• Increase accessibility with offline, email, and mobile approval

• Use delegation for out-of-office occurrences• The more approvals, the longer the process time• Consider re-engineering the process — keep it simple!• Custom approval strategies will take time to develop

and test

59

Self-Service Procurement — Order Management

• By using an approved source (catalog, contract, or vendor list), the PO can be automatically created

• If no source of supply is detected (free text entry), the requirement is sent to the sourcing cockpit to determine a source of supply

• Use your sourcing process to determine the best supplier

• Buyer sets up the supplier and creates the PO

Source: SAP

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60

Self-Service Procurement — Confirmation and Invoicing

Source: SAP

61

SAP SRM Invoicing Features

• Partial returns and credit memos

• Invoice exception processing• Invoice entry without

PO reference• Tolerances• Settings to process

erroneous and incomplete documents

• Delivery complete indicator• Invoice sampling• Collective invoices

• Evaluated Receipt Settlement (ERS)

• Catalog integration• Tax calculation• Texts and attachments• Central or desktop receiving

and invoice verification• Approval for

inbound documents• Express confirmation

and invoice

62

Self-Service Procurement — Check Status

Source: SAP

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63

Self-Service Procurement — Check Status Features

• Approval statusWho has approved and who is currently approving

• Change or edit shopping carts• Link to follow-on documents• View follow-on document information, such as PO

details, confirmations, and invoices• Track purchase order confirmations• Track shipping notifications• View shipping information for process visibility• Extensive search capability by numerous fields

Shopping cart status, product category, shopping cart name, shopping cart number, item description, role, and buy-on-behalf

64

Plan-Driven Procurement

Integrates operational procurement with existing supply chain management, plant maintenance, and project solutions for compliance enforcement, process efficiency, and supplier selection efficiency.

Materials Management Systems

Purchasing Systems

Maintenance and Project Systems

Planning Systems

SAP and Non-SAP systems

Requisition

Assign

OrderAssign Source of Supply

Spend, Scorecard,

and Supplier

Information

Winning Bids

ContractsContracts

SAPR/3

Consolidate Demands

Source: SAP

65

SAP SRM Capabilities• Automated order generation• Access to strategic sourcing results

• Contracts• Spend analysis• Vendor evaluation and scoring• Price comparison

• Integration to sourcing (RFx and auction)• Sourcing cockpit

• Configure the requirements that need purchasing intervention

• Workload reassignment• Open Partner Interface (OPI)

Provides purchasers with the controls and information, such as relevant sources of supply, vendor evaluations, and pricing comparisons, to make the best sourcing decision as fast as possible.

Business Drivers• Contract compliance

• Automated controls• Contract visibility• Manual comparisons

• Reduce procurement cycle time• Process efficiency• Workload balance

• Reduce offline processes• Information accessible online

• Source of supply accessibility• Third-party supplier directories

Supplier Selection Efficiency and Compliance

RFx = Request for a type of document

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66

Centralized Purchasing and Integration to External Planning Systems

A central hub provides purchasers with the capabilities to consolidate all demands, including demands from external planning systems, and to configure purchasing controls for compliance and efficiency.

SAP SRM Capabilities• External demand interface

• SAP and non-SAP systems• Plant maintenance integration• Project systems integration• Demand consolidation• Central contracts and contract distribution

• Scheduling agreements• Third-party processing

Business Drivers• Reduce manual processes

• For external demands • To consolidate demands

• Reduce the number of POs • Minimize order processing costs

• Ensure logistics cost optimization and timely delivery

• Customer response time• Central purchasing controls and

administration

67

Plan-Driven Procurement Features in SAP SRM

• Direct materials• Automated order generation• External demand interface• Central contracts• Sourcing cockpit• Demand consolidation• Access to strategic sourcing results• Scheduling agreements

68

Plan-Driven Procurement Functions

• Centralized purchasing and integration to external planning systems

• Scheduling agreementsIncrease managed spendAdaptive supply management

• Purchase order responseProcess visibility and better status checkingMore time for purchasers to make contingent arrangementsImprove supplier collaboration

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69

Plan-Driven Procurement Functions (cont.)

• Partial returns and credit memoReduce offline processesReturns process efficiency

• Invoice exception processingReduce offline processesImprove supplier collaboration

• Workload reassignmentProcess efficiencyReduce purchasing document processing delays

70

Service Procurement

Services processes are more complex and less standardized compared to products. Services procurement requires increased flexibility, greater collaboration, and judicious cost management.

InvoiceInvoice

ConfirmationConfirmation

OrderOrder

Request for ServiceRequest for Service

Supplier

Buyer

Invoice

Order

Monitor

Assign

Approve

Requisition

Confirm

Source: SAP

71

Service Procurement — Increase Speed and Visibility

Quickly and completely define the service requirement and track service performance for all service spend.

SAP SRM Capabilities• Shopping cart functions to create planned

and unplanned items in the shopping cart• Overtime and expense items

• Lump sum services• Two- and three-way match scenarios

(by vendor)• Invoice only• Confirmation and invoice

• Time sheet entry• Line-item approval

Business Drivers• Complete and accurate requisitions

• User determines the level of specificity• Visibility into more service spend areas

• Usability — all users can access• More complex service scenarios

• Right price determination • Contracted suppliers

• Improved service cost monitoring• Detail on overtime and expenses items• Configure the level of information

required• Reduce offline processes

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72

Service Procurement Shopping Cart Features

• Request for external staff• Availability check• Quick entry screen • Planned and unplanned items in the shopping cart

(item limits)• Approved sources of supply• Time and expense entry• Name service agent on item level• Lump sum services• Create skills profile in the request• Partial limits on contracts

73

Service Procurement: PO, Confirmation, & Invoice Features

• Vendor-initiated service entry• Time and expense entry• Collective invoices• Vendor evaluation• Two- and three-way match• Purchase order response• Item limit checks• Catalog access• Approval for all purchasing documents

74

Supply

base

ratio

naliz

ation

SAP SRM Supplier Enablement


Supplier evaluation

RFx & auctions

Contract management


Supplier evaluation

RFx & auctions

Contract management


















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75

Are You Faced with These Challenges?

• Many small suppliers with a low level of integration• Little transparency in supply base and master data• Insufficient coordination of purchasing methods• Competitive commodity supply markets

Supplier A

Headquarters

OperatingUnit 2

OperatingUnit 1

Supplier B

Marketplace

SME suppliers

SME suppliers

Supplier ?

Supplier ?Contract

Contract

Contract

AuctioningCatalog

Source: SAP

76

This Could Be Your Solution

SRM Hub

SRM Hub

Supplier A

Order ManagementCommunication Services

Non-SAPLegacy

Supplier B SME Suppliers Marketplace

OperatingUnit 1

OperatingUnit 2

Head-quarters

OperatingUnit n

Source: SAP

Most Enterprises Focus on Their Top Suppliers …• Top suppliers

Automated, optimized communication (such as EDI) with:

Expansive connectivity effortsPoor visibility of inventory and future requirementsUnsynchronized design and sourcing cycles Limited accuracy of supplier information

• Non-strategic suppliersUnstructured, un-optimized communication (such as phone or fax) with:

Non-structured communicationLong order cycle timesDisruptions from last-minute changesImmense data maintenance effortsHigh supply risk and costs

20% top high-volume

suppliers

80% smalllow-volumesuppliers

Source: SAP

77

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78

… Enabling Collaboration with All Suppliers Is Key

Expand your value proposition by linking any kind of supplierswith three appropriate and cost-effective channels.

Web browser

Web browser

SAP NetWeaver

SCMCollab. Replen.

PLMCollab. Design

ERPFulfillmentS

RM

Ord

er C

olla

b.

Low

-vol

ume BUYER

SUPPLIERS SAPPI

Hig

h-vo

lum

e

CRM systemCRM

systemSAP Supplier

Network

Supplierconnectivity

Supplierportal

BrowserXML

Source: SAP

79

Many Ways to Do Supplier Enablement

• Supplier enablement — incorporating your supply base into your procurement processes via automated and electronic data exchange

SAP SRM Supplier Self-Service (SUS)Third-party integration providers — B2B networks

SAP Supplier NetworkAriba Networkscc-hubwooPerfect Commerce

Direct connections with each supplier (EDI)Any combination of the above

Warning: Combined solutions require more development and support effort

Tip

There are many providers available. Take the time to perform the necessary due diligence to choose the right one.

80

Benefits of Supplier Enablement Solutions

• SAP SRM Supplier Self-Service (SUS)Probably the easiest to set up, use, and train onCan support suppliers that will not participate in an automated processCan support the entire process with a simple tool set (PI)

• Third-party integration providers (B2B)Allows you to focus on your business — let them deal with the supply base and do the developmentMany, many to choose fromVarious cost structures available

• Direct connections with each supplier (EDI)Proven, solid technologySupported and used by a majority of suppliersNo additional licensing costs

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81

Disadvantages of Supplier Enablement Solutions

• SAP SRM Supplier Self-Service (SUS)Additional hardware requirements for portal, SAP SUS, and PIAdditional licensing costs

• Third-party integration providers (B2B)Additional costsLack of control — SLAs, help desk, and additional overhead

• Direct connections with each supplier (EDI)Lots of development effort to support point-to-point interfacesNot as much validation possible as with other solutionsWill take additional effort to automate the entire process

82

Positioning Supplier Enablement Options

EDI/XML

Supplier Portal

cFoldercProject

SUS

Mail, Email, Fax

Num

ber o

f tra

nsac

tions

/qua

lity

of d

ata

Vendors

83

Goals of Supplier Enablement

• Efficient processesEnabling small suppliers to use an Internet-enabled package to perform common tasks

Order fulfillmentShippingInvoicingProduct and vendor data management

• Self-service registrationRegistration of new potential suppliersLinked with available categoriesQuestionnaire depending on categories

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84

SAP SRM Supplier Enablement Features

• Order management• Supplier-maintained content• Document exchange• Integration with Service Procurement (service entry

screen for temporary labor)• Integration with multiple buying systems• Integration of supplier evaluation scenario

85

Win-Win Situation for Both Buyers and Suppliers

Fewer phone and fax inquiries

Less mismatch of orders and invoices

Accurate information on supplier ability

Reduced risk of supply and delays

Improved order fill rates

Reduced inventory levels

Reduced downtime and overtime

Faster order-to-cash cycle

Fewer phone and fax inquiries

Insight into own performance

Better capacity utilization

Increased inventory turns

Increased order fill rates

Buyer Suppliers

Lowered inventory costs

Lowered procurement costs

Improved asset utilization

Increased revenue

Lowered costs

Improved asset utilization

86

Supplier Enablement Lessons Learned

• You will not get 100% supplier participationBe prepared to support a small percentage of suppliers manually and/or be ready to look for new suppliers

• Your supplier integration solution will require significant time and resources from your networking and security team

• Test every connection and every data set with every supplier

• Get a signed Trading Partner Agreement (TPA) in order to agree on terms and conditions

• Supplier integration and enablement can really be a whole project by itself

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87

Supply

base

ratio

naliz

ation

SAP SRM Content and Content Management


Supplier evaluation

RFx & auctions

Contract management


Supplier evaluation

RFx & auctions

Contract management


















88

SAP SRM Catalog Strategy

• SRM-MDM Catalog is positioned as the catalog application successor of:

Requisite Technology (SAP SRM 3.0 and SAP SRM 4.0)SAP CCM (SAP SRM 5.0)

• SRM-MDM Catalog can be run with any version of SAP SRM

V4.0 upward• And any version of SAP ERP

V4.6c upward• License included with SAP SRM and SAP ERP• No need to license SAP NetWeaver MDM

89

SRM MDM Catalog Functionality

• What can I do with it?Load catalog files from suppliersImport content from SAP ERP (purchase info records, contracts, and related material masters)Interface with SRM contractsManage imagesConsolidate contentApprove contentPublish on the WebBest-in-class performance and search experience

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90

SRM MDM Catalog Functionality (cont.)

• Which problems does it solve?Simple to complex product content management issuesConsolidation of catalog master data across suppliers and procurement systemsIntegration of master data with business processes (platform approach instead of application-specific approach)

91

Recommendations for Migration to SRM-MDM Catalog

Requisite technology SRM-MDM catalog

SAP Catalog Content Management 1.0 SRM-MDM catalog

SAP Catalog Content Management 2.0 * Keep SAP Catalog Content Management 2.0 *, then migrate to SRM-MDM Catalog

* SAP Catalog Content Management 2.0 is supported until 2013

Migration to SRM-MDM catalog does not require an upgrade of SAP SRM

… but when SAP SRM customers upgrade to SAP SRM 5.0

mySAP SRM 4.0, Requisite, or SAP Catalog Content Management

SAP SRM 5.0; SRM-MDM catalog

mySAP SRM 3.0, Requisite, or SAP Catalog Content Management

SAP SRM 5.0; SRM-MDM catalog

… and SAP SRM 6.0 ramp-up customers must run SRM-MDM catalog

SAP SRM support strategy

Current catalog solution Suggested solution

Current mySAP SRM version Suggested solution

Source: SAP

92

SAP SRM Catalog Solutions

C C

C

Multi-vendor catalogMulti-vendor catalog

Purchasing department’s catalog content is maintained by supplier

C

CC

22

Content broker/marketplaceContent broker/marketplaceMulti-supplier catalogmaintenance and hosting by external catalog broker

C

C

C

Access via

Internet

33

C CC

Company boundary

Procurementworldwide

C

C

CAccess via Internet

11

Supplier maintains catalog

Punch-out catalogPunch-out catalog

Internal catalogInternal catalog44DB

Purchasing maintainscontent and catalog

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93

Catalog Scenario Characteristics

YesNoBusiness logic (configurator)

HighLowNeed for an SLA

Approach

Frequency of changes

Size of catalog

Catalog- or supplier-based

Item-based

HighLow

BigSmall or medium

Punch-outInternal catalog

94

Catalog Scenario Pros and Cons

DiverseUniformUser interface

LowHighControl of data and process

Search scope

Investments (license, hardware, infrastructure, knowledge)

Labor-intensive (data check, loading, cleansing)

Response and continuity

Single-vendorMulti-vendor

LowHigh

LowHigh

LowHigh

Punch-outInternal catalog

95

Catalog and Content Management Process

Source: SAP

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96

General Catalog Best Practices

• Create a catalog Web site — search tool, catalog content, catalogs by country, catalog change requests, catalog issues

• Recommend one catalog coordinator per region to perform loading and mapping functions — schemas get locked

• Be ready to add custom fields from the catalog to the shopping cart, BI, bidding engine, and LAC

97

Round-Trip Catalog Lessons Learned and Best Practices

• Maintain UNSPSC conversion table at six-byte level where applicable

• Greater than two decimal places for unit price will need to be configured

• Request UOM and UNSPSC list from the supplier• Identify your biggest volume vendors to be first in line

for roundtrip implementation More than 1,000 line items

98

Round-Trip Catalog Lessons Learned and Best Practices (cont.)• Ensure that you have a test system set up and test as

many combinations of ordering as you can (e.g., currencies, UOM, quantity, UNSPSC, etc.)

• Vendor contact information is a must-have• Ask your integrators and distributors for quote

request functionality• Create audit reports and use first purchase price

as baseline

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99

SAP E-Sourcing

• SAP E-Sourcing is a Web-based application that fully integrates the RFx to contract management sourcing process

• Quick and easy installation, but also very scalableLive auctions implemented in as little as three weeks

• Partial integration with SAP ERPMust be on SAP R/3 4.6C or laterVendor master dataSome FI data

• Complete integration to SAP ERP available in 2008

100

SAP E-Sourcing Sourcing Modules

• ProjectsUsed to enforce a standard sourcing processDocument repositoryReport on work in progress, savings to date, etc.Enable collaboration with project team members

• RFxInformation, quote, proposal, etc.Inherit data from a projectTemplates and libraries for process standardizationResponse evaluation

• AuctionsInherit data from an RFxSupports many types of auctions

101

Additional SAP E-Sourcing Features and Functions

• Enterprise Contracts moduleData inherited from an auction or an RFxContract document libraryAgreements and master agreements Contract generation — templates, clauses, and metadataContract lifecycle management

• Vendor management• Reporting

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102

SAP E-Sourcing Implementation Options

• SAP E-Sourcing on-demand applicationDepartment-centricMinimal configurationBasic featuresTactical commoditiesFast savings

103

SAP E-Sourcing Implementation Options (cont.)

• HostedDepartment- and enterprise-centricConfigurableAdvanced featuresAll commoditiesLight integration

• On premisesAdvanced configurationHighly scalableExtensive integration

104

SAP Strategy for SAP E-Sourcing — SAP SRM Integration*

• Q1/2008Automated on-demand to on-premises data transferExtensive sourcing process functionalitySophisticated migration toolsConfiguration and integration services

• Q4/2008Unified architecture solution

*Disclaimer: Information gathered as of November 2007 and may be outdated.

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105

SAP E-Sourcing — Rapid Sustainable Savings

Source to Contract

ProjectManagement

BidOptimization

Contract Management

Advanced Supplier

Qualification

Extended Spend

Analysis

Advanced RFx/Auctions

Extend procurement’s reach to more spend management

Rapid and flexible deployment for fast adoption

Maximize savings through standard strategic sourcing

Improve compliance through effective contract management

Streamline supplier collaboration for increased efficiencies

740

Source: SAP

106

New Software Relative to SAP SRM: SAP xApp Spend Analytics (xSA)• New reporting and analysis tool• Bundled software and services, such as ETL and spend

cleansing and classification• Integration of master and transactional data from any

and all systems• Simple and easy-to-use user interface

107

New Software Relative to SAP SRM: SAP xApp Spend Analytics (xSA) (cont.)• End users can develop their own reports• Quickly deployable and easily customizable to meet the

ever-changing requirements of the business• Faster access to data for better decision making• Generally available in late 2007• Much more information at

www.sap.com/solutions/xapps/xsa/index.epx

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108

SAP xSA — Rapidly Identify Savings Opportunities

Deliver on Spend VisibilityDeliver a consolidated view of all spend

Best practice spend analysis through dashboards and reports

Extensive spend categories analysis via sophisticated enrichment

Accelerated savings and compliance via increased spend visibility

Improved decision making through actionable analytics

740

Spend Data Aggregation

User Reports & Dashboard

Spend Analytics

Briefing Book

Spend Data Enrichment

End User Analytics



Spend Analytics

Briefing Book


End User Analytics

Source: SAP

109

New Software Relative to SAP SRM: SAP xCLM

• SAP xApp Contract Lifecycle Management (SAP xCLM)Integration of legal and purchasing contract creationImproved workflow for contract approvalCentral contract repository for all contractsAbility to monitor contract performanceEnsure legal and regulatory requirements are satisfied

110

SAP xCLM — Optimize Contract Value

Creation, Visibility, and Management Accelerate time to value via

reduction in cycle times

Enforce correct contract types and increased stakeholder ownership

Reduce risk and improve regulatory compliance

Standardize best practices and increase visibility

Automate contract compliance and realize increased savings740

Dashboards & Reporting

Performance Management

Process & Project

Management

Compliance Management

Contract Repository

Contract Creation



Process & Project

Management


Contract Repository

Contract Creation

Source: SAP

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111

SAP SRM Application Portfolio

Optimize Contract Value



Process & Project

Management

Operational Procure to Pay

Standard Spend

Analysis

Standard Requisition

Spot Sourcing

Supplier Enablement

& Collaboration

Supplier Qualification

Operational Contracts

Deliver on Spend Visibility



Spend Analytics

Briefing Book


End User Analytics

SAP xSA

SAP xCLMSAP SRM

SAP E-SourcingRapid Sustainable Savings

ProjectManagement

BidOptimization

Contract Management

Advanced Supplier

Qualification

Extended Spend

Analysis

Advanced RFx/Auctions


Contract Repository

Contract Creation

Source: SAP

112




113

SAP SRM Master Data

MaintainedUsedStorage locations

MaintainedUsedG/L accountsUsedMaintainedContracts

MaintainedUsedMaterials

MaintainedUsedFunds or grants

MaintainedUsedProduct categoriesMaintainedUsedLocations (plants)MaintainedUsedPurchasing groupsMaintainedUsedPurchasing organization

MaintainedMaintainedDelivery information

MaintainedMaintainedVendor listsMaintainedUsedPayment terms

MaintainedUsedVendor masterSAP ERPSAP SRMMaster Data

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114

SAP SRM Master Data Key Points

• Required master data is dependent on the SAP SRM implementation scenario chosen

• Most of the master data synchronization between SAP ERP and SAP SRM can be accomplished through configuration and the creation of background jobs

• Multiple sources of master data to be synchronized with SAP SRM will require custom development

Consider the use of SAP NetWeaver MDM to help with this solutionSAP NetWeaver PI may also be required

• PI can be used to source master data from non-SAP systems to SAP SRM — custom development

115

SAP SRM Master Data Lessons Learned

• Add custom fields to the source systemDon’t try to perform two-way synchronization between source and slave systems

• SAP SRM material master has very few fields• Be cautious about adding custom fields

Each custom field may be needed on every data setCan quickly lead to significant development efforts

• Establish a master data overview organization

116

What Is the SAP SRM Organizational Structure?

• A hierarchy of the organization that defines approval strategies and responsibilities

• A relationship of master data such as company codes, plants, cost centers, users, etc.

• A key feature that provides the necessary levels of control, authorization, and compliance

Role-based securitySpending limitsApproval limits

• Combines two types of structuresHierarchical user and department relationshipsFinancial accounts (charter of accounts)

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117

SAP SRM Organizational Structure

ItalyFranceGreat Britain

Plant 1

Plant 2

Plant 3

Plant 4 Plant 5

Asia – PacificEMEAAmericas

Company ABC

Purchasing Group 1Purchasing Group 2

Purchasing Group 3

Vendor 1Vendor 2

Vendor 3

Financial and Purchasing Aspect

118

Position

OrganizationalUnit

Business Partner

User ID

Position

Business Partner

Business Partner

User ID

User ID

SAP SRM Organizational Structure: HR Aspect

Department or cost center

Manager position

Employees

Can roll up to other departments

SRM requirement

119

Standalone SAP SRM Organizational Structure

Pros• No dependencies outside of

the implementation project team

• Provides flexibility for a custom solution

• Better control for the project team and subsequent support team

• Less complicated setup

Cons• Dual maintenance of HR and

SRM org. structure• Difficult to automate changes

based on personnel updates• Ongoing manual maintenance• Cost of future integration with

HR org. structure

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120

Integrated HR and SRM Organizational Structure

Pros• No duplication of data• Less effort required to

maintain the data in SRM• Automated synchronization —

near real time• Facilitates position-based

security authorization and rollout

Cons• Will still require some manual

effort to maintain• Requires extra effort to work

with HR team• Sensitivity of HR data• Extremely strong project

dependency on HR team

121

Recommended SAP SRM Organizational Structure Approach

• Use an integrated approach if it is availableEnsures accurate and timely updates to the SAP SRM org. structurePrevents breakdowns in approval processesReduces data redundancy

122




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123

Classic Integration Scenario

• Supports end users in retrieving desired goods and services from predefined catalogs

The back-end system is the leading system for the purchase order document and subsequent documentsA copy is maintained in SAP SRMGoods receipt or invoice creation can take place in SAP SRM

Accounting (FI/CO)

MaterialsManagement

SAP SRM

SRM Server

Back-End System

Create Purchase

Requisition

Create Goods Receipt

COInformation

Accounts Payable

Create Shopping Cart Item

CreateGoods Receipt

CreateInvoice

Create Purchase

Order

Create Purchase

Order

CreateInvoice

Source: SAP

124

Classic Scenario Restrictions

• Plan-driven procurement requires significant development to make it work

• Service procurement shopping carts with limits are not possible

• You cannot use procurement cards with this scenario

125

Extended Classic Integration Scenario

• Supports the end-to-end procurement cycle in SAP SRM; a copy of the follow-on documents is stored in the back end

SAP SRM is the leading system for the purchase order document and subsequent documentsUsers in the back end have full visibility, without even touching SAP SRMGoods receipt or invoice creation can take place in SAP SRM

Accounting (FI/CO)

MaterialsManagement

SAP SRM

SRM Server

Back-End System

Create Purchase

Requisition


COInformation

Accounts Payable


CreateGoods Receipt

Create Purchase

Order

CreateInvoice

Create Purchase

Order

CreateInvoice

Replication of purchase

order

Follow-ondocuments

can be createdin back end orin SAP SRM

Source: SAP

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126

Extended Classic Scenario Restrictions

• A purchase requisition cannot be created without significant development efforts

• You cannot use procurement cards with this scenario• Material reservations will require development effort, but

there is a BAdI for this

127

Standalone Scenario

• Supports back-end integration that is required only to keep the underlying financial systems synchronized

SAP SRM is the leading system for the purchase order document and subsequent documentsAll tasks and activities take place within SAP SRMPurchasing invoices are posted into the underlying accounts payable system

Accounting (FI/CO)

MaterialsManagement

SAP SRM

SRM Server

Back-End System

Create Purchase

Requisition


COInformation

Accounts Payable


CreateGoods Receipt

Create Purchase

Order

CreateInvoice

Create Purchase

Order

CreateInvoice

Source: SAP

128

Standalone Scenario Restrictions

• No integration with a back-end materials management or ERP system

• Plan-driven procurement processes are not supported

GOTCHA!

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129

SAP SRM Scenario Data Set Comparison

N/AN/AOptional ERPCreate Stock Reservation

SRM or ERPSRM or ERPSRM or ERPConfirmation/Goods Receipt

SRM or ERP

ERP

Optional ERP

SRM or ERP

SRMClassic

SRM or ERPSRM or ERPInvoice Entry

SRMSRM with copy in ERP

Purchase Order Creation

Purchase Requisition

Approval Workflow

Shopping Cart Creation

N/AN/A

SRMSRM

SRMSRMStandalone

Extended Classic

130

Key Points About the Implementation Scenarios

• The Classic scenario relies on established procurement processes and data sets in the back end

Consider this scenario if you have a significant investment in the SAP ERP MM-PUR module

• Consider the Extended Classic scenario if you:Do not have well-established procurement processes and data sets in the back endWant your purchasing organization to access both SAP SRM and ERP for processing

• Consider the Standalone scenario if you:Want all your procurement processing done in the SAP SRM systemDo not have a back-end ERP system

• The Standalone scenario supports the use of procurement cards

131




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132

SAP SRM vs. SAP ERP MM-Purchasing

• SRM is Web-based with an easy-to-use, browser-based UI

• SRM supports the casual user with minimal training

• SRM supports three deployment scenarios to best meet business requirements

• SRM — shopping cart process

• SRM users are role-based

• MM-PUR — SAPGUI

• MM-PUR requires significant training

• MM-PUR has only one deployment scenario

• MM-PUR purchase requisition process

• MM-PUR users are authorization-based

133

SAP SRM vs. SAP ERP MM-Purchasing (cont.)

• SRM provides an integrated sourcing process

• SRM — complete contract lifecycle management process

• SRM — complete catalog and content management solution

• SRM is process-oriented• SRM supports multiple options

for supplier enablement

• SRM needs BI for reporting• SRM material master is limited• SRM vendor master is limited

• MM-PUR — very limited sourcing capability

• MM-PUR — limited contract capability

• MM-PUR — catalog solution requires SRM EBP plug-in

• MM-PUR is transaction-based• MM-PUR — only direct

interfaces for supplier enablement

• MM-PUR has built-in reports• MM-PUR — total MM definition• MM-PUR — total VM definition

134

SAP SRM and MM — You Really Need Both

• Use SAP SRM for your procurement processing• Use MM for all material-related processing

Costing, inventory, storage, etc.MM supports other functionality such as sales, planning, and accounting

• They complement each otherSAP ERP for master data and master data processesSAP SRM needs this master data to operate efficiently and effectively

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135




136

Resources

• New SAP SRM book — good, thorough presentation of SAP SRM

Sachin Sethi, Enhancing Supplier Relationship Management Using SAP SRM (SAP PRESS, 2007) ISBN 978-1-59229-068-0.

• SAP Insider SAP SRM articles (April/June 2007 edition)www.sapinsideronline.com/archive_index.cfm?session=&volume=volume_08_(2007)&issue=issue_02_(april-june)

• SAP Workflow Users’ Group List Server — SAP SRM is workflow driven (research workflow issues, post questions, get answers from experts)

http://mailman.mit.edu/mailman/listinfo/sap-wug• SAP SRM 2007 release strategy letter on conference CD

137

Resources (cont.)

• SDN SRM Wiki — requires SDN loginwww.sdn.sap.com/irj/sdn/wiki and click Supplier Relationship ManagementTons of good information to help you understand what SAP SRM can do

• SAP SRM forums — research issues, post questions, get answers from experts on SAP SRM topics

www.sap.com/community/pub/forums/ShowForumGroup.epx?ForumGroupID=17

• SDN SRM forums — more technical than other forumswww.sdn.sap.com/irj/sdn/forums Expert Forums > SAP Solutions > Supplier Relationship Management (SRM)

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138

Resources (cont.)

• SAP xApps informationwww.sap.com/xapps

• What’s coming in the next SAP SRM release (6.0)https://websmp108.sap-ag.de/~sapidb/011000358700006330942006D *

• Procurement organizations and Web sitesProcurement Strategy Council —www.psc.executiveboard.com/Public/Default.aspxInstitute for Supply Management — www.ism.ws Aberdeen procurement research —www.aberdeen.com/channel/procs.asp

*Requires login credentials to the SAP Service Marketplace

139

7 Key Points to Take Home

• Do not “pre-determine” the best SAP SRM scenario for your organization

Let the project team analyze the requirements and recommend the best solution

• SAP SRM is not a finance systemIt can do invoice processing, but there is not much there that can be customized

• Consider supplier enablement as part of your SAP SRM processing

Significant ROI as part of process automationLess manual data entry — more automation supports reduced process times and fewer data errors

140

7 Key Points to Take Home (cont.)

• Consider using SAP SRM for your direct material purchasing

Significant ROI as part of process automationLess manual data entry — more automation supports reduced process times and fewer data errorsLet your purchasing professionals concentrate on strategic activities and not transactions

• When doing supplier enablement, get your suppliers involved early

You need their input on the process and dataGive them time to do development on their own systems

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141

7 Key Points to Take Home (cont.)

• An SAP SRM project has significant master data requirements

Plan to analyze and clean up your master dataDo this before the project starts if you can

• Do you really want to connect SAP SRM to a non-SAP back-end system if you have future plans to go to SAP ERP?

You will throw away development and customizationThe development and customization will cost extra to support

142

Your Turn!

How to contact me:Dan Harmon

[email protected]

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