SAP SRM enables companies to streamline and automate procurement. SAP SRM supports different types of procurement and covers end to end functionality.
Types of Procurement Supported
- Self-service procurement - Self-service procurement allows every employee to buy things they need. It allows employees to create shopping cart using catalogue or non-catalogue items, create requisition and purchase order. Organizations can set approval workflow for better control and implement compliance along the shopping process. It helps reduce lot of burden on purchasing department as employees are able to shop for low value items themselves. It also helps reduce maverick buying as employees are less likely to try and circumvent the process. It also improves transparency as manual processes are eliminated.
- Plan driven procurement - Companies have been traditionally using ERP or other planning and operational software to procure direct inventoried products. SAP SRM enables companies to automate procurement of planned requirements from back end ERP or planning system.
- Service procurement - Service requirements are usually complex and difficult to automate. Every company needs to procure services such as IT support, Legal services, Cleaning services etc and Services make up a large proportion of organization’s spend. SAP SRM supports Service procurement.
Contract ManagementContract Management in SAP SRM helps companies with effectively managing contracts throughout the life starting from activities before contracts are created such as negotiating terms, execution and monitoring of contracts while they are active and storing for future reference once contracts have expired.
- Contract creation - SRM Contract Management functionality makes it easy for Buyers to create contracts. Buyers can use multiple means for creating contracts. They can search for existing contracts using contract attributes (such as Contract name, purchasing organization etc) or free form text in attachment. Buyer can then use contract as reference, copy and modify as per need. Other than existing contracts, buyer can also create and use templates for creating contracts.
- Using active contracts - Once contract is created, it can be sent to SAP MDM or similar system and can be stored as a catalogue. All the employees in the organization can then use catalogue for purchasing. This helps with contract compliance and use. SAP SRM can suggest optimum contract based on Service or Material requested.
- Monitoring contracts - SAP SRM allows effective monitoring of contracts using reports and alerts. Buyers can check vendor performance, and choose to renegotiate terms if past performance is not good. Buyers can also choose to receive alerts if contract is about to expire or is about to exceed target value. Effective monitoring capabilities ensure contracts are optimized for business benefits.
Supplier Self Service (SUS)Supplier Self Service component (SUS) enables supplier to connect to buyer organization’s procurement system. Supplier can perform all required transactions thru the portal.
- Suppliers can view or change the PO.
- They can respond to the PO changes.
- Suppliers can download or print POs for future references.
- Suppliers can acknowledge the PO, receive confirmations, and send invoices.
- PO process is handled completely online. Supplier can respond to PO submitted. Supplier can choose to agree to PO or change it supplier cannot meet certain conditions such as items, delivery time etc. Purchaser can accept the changes or choose to change again. The process continues until both parties accept the PO.
- Supplier can create confirmations for limit POs created. Confirmation is sent to Purchaser who can approve or reject it.
- Supplier can also create and send invoice using portal. Purchasing organization can accept or reject the invoice. If rejected, Supplier can send modified invoices.
SourcingSAP SRM helps companies run sourcing events online using bidding engine and live auction component. It allows supplier collaboration for sourcing. Here are the processes supported.
- Buyer organization can create RFX and invite qualified suppliers for bidding. RFX can be created without assigning a source of supply or from expiring contract.
- Companies can use dynamic attribute to assign quantitative parameters to selection process.
- Suppliers can use expressive bidding to offer alternatives or substitute to the product or service requested.
- Received bid can be easily converted into a PO or a contract.
- The scores can be assigned to a supplier for future decision making on quantitative factors such as price and qualitative factors such as quality of materials and services, delivery times, support provided etc.
- Companies can also run live auction such as reverse auction using bidding engine. In reverse auction, all bids are visible to all. So, suppliers bid against each other. Auction put suppliers in direct competition to each other. Suppliers receive a link to the auction to enter and participate in the auction.