SAP Business Suite powered by SAP HANA | Fact Book
Procurement
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SAP Business Suite powered by SAP HANA | Fact Book
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All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially
from expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as
of their dates, and they should not be relied upon in making purchasing decisions.
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SAP® Business Suite powered by SAP HANA ®
Procurement
While companies often focus on revenue, procurement savings
can increase profits many times more. The key to maximizing
Procurement's success in this critical role is to deliver
consistent quality, savings, and compliance over time.
SAP Business Suite powered by SAP HANA paves the way to
greater procurement effectiveness in the following areas:
Source-to-Pay Process .......................................................................... 4
Spend and Contract Management....................................................... 15
Smart Business for Purchasing........................................................... 15
Inventory Management ........................................................................ 19
Smart Business for Inventory Management ........................................ 19
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Source-to-Pay Process
Business Practices Today
Under competitive pressure, many enterprises absorb the increasing cost of
commodities, components, goods, and services rather than passing them to
their customers. They try to protect profitability by finding new ways to boost
productivity and drive innovation in procurement processes and practices to
lower costs. Slow and costly paper-based processes are replaced with
efficient workflows to cut down transaction cost, eliminate errors, and reduce
maverick spend.
Ambition
We have identified transformational levers to find and realize cost-saving
potential in procurement.
Increase transparency by integrating real-time analytical information into
the procurement process.
Lower procurement operational costs by simplifying the purchasing
process.
Integrate new technologies to drive process innovation.
Increase efficiency by providing users with a holistic, fully configurable,
and consumer-grade user experience when using their business
applications to drive procurement processes and transform insight into
action.
We are harnessing the power of SAP Business Suite powered by SAP
HANA and the SAP HANA platform to create applications that support the
next business practices in procurement.
Challenges
~ 280x
faster material
document list*
Many approaches to reduce procurement cost and maximize spend under
management run into typical issues.
Complex, manual, and time-consuming processes with a high volume of
purchasing documents and line items bog down many Procurement
organizations but contribute little strategic value.
Real-time procurement decisions require real-time information about all
procurement-relevant activities and insights. Today, key information is
frequently outdated or distributed in multiple transactional and analytical
systems, so a real-time view of product quality, vendor reliability, cost, or
procurement process performance is out of reach.
Many procurement applications have been built for the professional
procurement expert and lack user-friendly interfaces for the casual user.
As a result, people run procurement-related activities such as vendor
qualification or bid management manually and outside the procurement
system. This removes data from the holistic procurement view and
reduces process efficiency.
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~ 58x
faster stock
overview list*
Business Practice Innovation with SAP HANA
Our business practice innovation focuses on three key areas.
Faster processes: We have accelerated key procurement processes
that suffered from many line items or a long purchase-order history.
Smarter analytics: Sophisticated analytical reporting in procurement can
be integrated or performed side by side to help ensure real-time data in a
high-performance and modern user interface. This supports fast business
decisions and user adoption.
Simpler user experiences: We offer flexible configuration options for
procurement analysis on modern, intuitive-to-consume user interfaces.
~ 23x
faster reservation list*
Innovation in Detail
Performance optimizations of existing transactions
Most transactions benefit almost immediately from running on SAP HANA. In
addition, we have analyzed and optimized a number of transactions related
to the procure-to-pay process. Below is an overview of the additional
optimizations in materials management.
Streamline central-functions modules for tasks such as retrieval of
purchase-order history. Improve performance for many operational
reports and transactions dealing with purchase orders with a long history
of goods receipts.
Make performance improvements in retrieving purchasing documents for
a selected vendor or material through standard reporting transactions
(ME2L/M/N/K).
Optimize transactions for purchase-requisition release, assignment, and
list display (ME5A, ME55, and ME57).
Improve performance for operational reporting transactions such as stock
overview and stock-on-posting date (MB5B, MB5K, and MB24 or MB25).
The following transactions are optimized with the help of special SAP HANA
platform artifacts – stored procedures:
MB5B – Stock-on-posting date
MB5K – Stock consistency check
Function module ME-READ-HISTORY
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Transactions optimized with the help of SAP SQL Anywhere® suite:
MMBE – Stock overview
MB24 / 25 – Reservation list
MI24 – Physical inventory list
MI20 – Physical inventory list
MB5M – Expiration date list
MBLB – Stocks at subcontractor
MB58 – Display consignment and returnable packaging stocks at
customer level
MB5T – Display stock in transit
MB53 – Plant availability
MI22 – Physical inventory document for material
MB54 – Display consignment stocks
MBGR – Material documents with reason for movement
MB5U – Analyze conversion differences
MIDO – Physical inventory overview
MM60 – Material list
MBBS – Valuated sales order and project stock
MB5L – List of stock-value balances
MB51 – Material document list, factor 280
MB52 – Display warehouse stocks of material
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Better contextual navigation with fact sheets
Navigation through fact sheets offers an innovative way to get a quick
overview. The purchaser receives detailed information on all procurementrelevant documents including the contextual information related to these
documents. Fact sheets are available for the complete source-to-pay cycle,
providing simpler access and intuitive navigation.
As an example, the supplier fact sheet shows all relevant information in one
view.
General supplier data including contact information for easier supplier
collaboration
Related documents such as purchase orders, goods receipts, contracts,
and invoices
Analytical information such as quality key performance indicators (KPIs),
evaluation KPIs, and annual spend
Actionable insights gained from navigation to purchase orders, goods
receipts, and contract and invoice fact sheets
Figure 1: Supplier fact sheet compiling information from multiple business objects
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We deliver the following fact sheets for materials management:
Supplier
Purchase information record
Purchase contract
Purchase order
Purchase-requisition item
Supplier invoice
Service master data
Service-entry sheet
Material
Goods receipt
Material movement
Goods issue
Physical inventory
We deliver the following fact sheets for supplier relationship management
(SRM):
Shopping cart
Purchase order (SRM)
Central contract (SRM)
RFx
RFx response
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Improved user experiences for managers and employees
We have built a number of SAP Fiori® apps to simplify the user interface for
employees and managers who are only occasionally involved in procure-topay processes.
For materials management:
Approve purchase requisitions
Approve purchase order
Approve purchase contract
Track purchase order
Create purchase order from purchase requisition
Approve supplier invoices
Approve service-entry sheets
My purchasing document items
For supplier relationship management:
My shopping cart
Track shopping cart
Approve shopping cart
Approve purchase order (SRM)
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Figure 2: SAP Fiori apps for managers to review and approve purchase orders
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Figure 3: SAP Fiori app for processing and reviewing purchasing document items
Cutting-edge analytics
Discover different configuration options for procurement analysis through
virtual data models and representation of various views in popular user
interfaces such as SAP BusinessObjects Explorer® software.
Warehouse stock quantities
Nonspecial warehouse stock quantities
Stock overview for valuated materials
Stock overview for special stock with valuated materials
Stock overview for valuated materials without special stock
Purchasing group analysis
Purchase order value, delivery to invoice
Purchase order average delivery time
Purchase order value
Vendor comparison through purchase value
Order value per vendor over time
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Figure 3: Analysis of purchase order, goods received, and invoice volume in a dashboard in
SAP BusinessObjects Explorer
Figure 4: Analysis of valuated inventory of materials in a dashboard in SAP BusinessObjects
Explorer
Benefits
The optimizations in the source-to-pay process increase process efficiency.
They offer innovative ways to navigate and analyze procurement information
with fact sheets and real-time analytics – providing user experiences for
managers and employees that drive user acceptance in real-time procure-topay processes.
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Faster order and invoice processes
Streamlined processing of goods receipts and invoices with large
numbers of items in preceding documents
Faster data provisioning, processing, and display of purchase-order
history data
Greater flexibility to create real-time results by avoiding nightly batch
processing
Real-time availability instead of precalculation
Better insight into the procure-to-pay process
Advanced search functionalities such as full-text and freestyle search are
combined with a beautiful and intuitive user interface to significantly improve
the overall search experience on business entities.
Simpler business exploration
Contextual navigation functionalities across SAP Business Suite software
enable intuitive and efficient exploration.
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More insight leading to smarter action
The fact sheets enable a consistent 360-degree view on business entities by
enriching traditional transactional business data with analytical information.
This additional insight enables better decisions and faster execution.
Road Map and Outlook
Calculated views in list-based reports
We intend to explore the potential to use technology provided by SAP
HANA, including calculated virtual data models and the possibility to
generate SAP Fiori apps for a wide range of standard and customer-specific
list reports. This will also allow us to enrich the user interface with fuzzy
search. First prototypes are receiving favorable customer feedback.
Workplace for purchaser
We intend to enable the use of a unique, homogeneous, and configurable
workplace for purchasers with an updated user interface – accessing all
relevant procurement content and analytics to perform daily business and
turn insight into action.
Product Details and Prerequisites
Release 6.0 of the SAP ERP application with enhancement package 7
Release 7.0 of the SAP Supplier Relationship Management (SAP SRM)
application with enhancement package 3
Release 7.40 of the SAP NetWeaver® technology platform
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Spend and Contract Management
Smart Business for Purchasing
Business Practices Today
To get an overview of contracts and purchasing spend in the system and
make decisions, a purchaser has to use different transactions within SAP
ERP or explore different systems to find the necessary information.
Ambition
SAP Smart Business for purchasing provides the necessary data from
different business objects on one page for a fast overview of the status and
use of contracts. It also triggers contract-related actions such as
identification of deviations in actual versus planned spend. It also provides
the purchaser with information about invoice price changes for a dedicated,
individually configured evaluation base.
React to off-contract spend and increase spend under management.
Monitor KPIs and alerts with corresponding actions to solve issues.
This innovative approach to consolidating contract views by integrating
information along the procure-to-pay process optimizes KPIs for process
performance, compliance, and cost savings.
Challenges
Late action: The compilation of a full contract overview from a transactional
and analytical system can be a time-consuming process. A purchaser has to
use different transactions within the system or check other systems to get an
overview of system contracts. This can make consolidation quite difficult.
Outdated insight: Contract-related decisions are based on periodic,
outdated reports from data warehouses.
Zero simulation: Combined spend reports can’t simulate the future to
predict contract exceptions or budget overruns.
Disconnected insight and action: Insight into contract status is
disconnected from the transaction system. This effectively keeps business
know-how out of the procure-to-pay process and system – making it nearly
impossible to trace how business insight leads to corrective action.
Overlooked information: Without contextual search capabilities, users
have to navigate to multiple places where they hope to find relevant
information.
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Business Practice Innovation with SAP HANA
Smart Business for Purchasing
SAP Smart Business for purchasing includes the basic virtual data models
and KPI definitions to set up customer-specific KPIs for contract and
purchasing spend management, with the help of a KPI modeler. These KPIs
are available within the launchpad for SAP Fiori. Along with transactional
SAP Fiori apps, the cockpit provides an environment for the purchaser to
deal with contract tracking and approval tasks in purchasing.
Set up a set of contract KPIs as follows:
Figure 5: SAP Fiori launchpad including SAP Smart Business for purchasing optimizes contract
and spend management by monitoring KPIs
Contract usage: Compare the expected release amount against the actual
release amount of contracts in a specific time frame. Contract usage shows
an expected amount compared to the released amount in percentage,
expected amount, released amount, and target amount. Related topics
about the contract status include the actual call-off value, a projection of
when the target value will be reached, and analysis of whether it is
necessary to renegotiate the contract.
Expiring contracts: Identify purchasing contracts that will expire in a
specific time frame to analyze the spend allocated to these contracts. This
analysis results in the decision to renegotiate or replace the contracts.
Unused contracts: Identify contracts for which a release has not occurred
within the specified period. Those contracts require attention because they
could carry substantial business risk. They might be fulfilled, dormant, or
overlaid with parallel contracts or maverick purchases.
Off-contract spend: Analyze the total spend amount in relation to purchase
orders that do not have a contract reference. Off-contract spend is an
important KPI to monitor for compliance with sourcing and procurement
processes. Off-contract purchasing is typically more expensive, more risky,
and less compliant with internal policies and external regulation.
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Nonmanaged spend: Spend for suppliers might not match up to a purchase
order as a percentage of the total spend. Keeping the spend volume low
outside the purchasing organization is important to help ensure process and
compliance standards.
Contract leakage: The use of existing contracts within the procurement
process helps ensure that the optimal price is used for purchasing goods.
With contract leakage, you can identify the purchase-order-spend items that
do not have a contract reference, even if an existing contract could have
been used. Keeping the percentage low can have a positive impact on the
savings.
Invoice price change: This KPI measures the success of a purchasing
organization in terms of achieving savings. Therefore, purchasing
organizations monitor material price changes in invoicing spend for a
specific period of time. Precisely compare price changes for a specific
supplier, material, and material group between two periods.
Purchasing spend comparison: Compare the purchasing spend of
purchase orders according to two different sets of filter criteria. For example,
compare the purchasing spend of your suppliers overall and in specific
regions. This helps the purchasing organizations to monitor the relation
between various criteria of purchasing spend.
Open purchase orders: Determine the effective value of open purchaseorder items for which goods receipts are expected within a predefined period
of time.
We intend to make the SAP Smart Business cockpit for purchasing available
within the launch-pad for SAP Fiori and in combination with the transactional
SAP Fiori apps, such as contract approval, purchase-order tracking, contract
call-offs, change of contracts, or change of purchase orders. This would
provide an environment where the purchaser can deal with the most
important tasks.
Benefits
The new approach to managing purchasing contracts with SAP Business
Suite powered by SAP HANA directly connects to the KPIs for contract
management and purchasing practices.
Cost savings: Reduced off-contract spend, less contract leakage, and more
spend under management give purchasing a longer lever for price, quality,
and contract negotiation.
Early alerts: Finding expiring contracts and taking action early improves the
negotiation position with suppliers and helps ensure the availability of
materials to avoid impact on production schedules and order-fill rates.
Better compliance: More spend under management and better use of
existing contracts reduce the risk of purchasing that does not conform to
internal policies and external regulation.
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Road Map and Outlook
We intend to expand our contract-management capabilities with intuitive
interfaces for employees and managers in the areas of contract monitoring,
alerting, drill-down, collaboration, and predictive analytics. Navigation to fact
sheets and transactional applications should be possible on any drill-down
level.
We are pursuing significant optimization potential with the integration of
unstructured information coming from social media and collaboration with
peer groups.
Product Details and Prerequisites
SAP ERP 6.0 with enhancement package 7
SAP NetWeaver 7.40
SAP Smart Business
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Inventory Management
Smart Business for Inventory Management
Business Practices Today
Inventory accountants regularly monitor key inventory figures and analyze
inventory variances. If key figures or variances seem out of line, they
perform an in-depth analysis. The accountant starts with a periodical display
of key figures, such as inventory turnover, inventory level, inventory value,
slow-moving items, dead stock, or stock account and variance account
balances. He or she then uses hit lists and drill-downs to understand
changes or pinpoint the source of variances. Inventory analysis is typically
based on data warehouse information that is compiled across multiple
systems in periodic batch processes.
Ambition
Future business practices of inventory management can be based on realtime information from the top-level KPIs to the individual material. Real-time
inventory management can prevent more out-of-stock situations while
reducing inventory levels – resulting in more revenue, lower cost, better
asset utilization, and higher customer satisfaction.
Challenges
The current inventory management practices have several needs.
Combined analysis and correlation of stock and goods movement
Insight-to-action support to proactively take measures and collaborate
Graphical visualization of goods movements to efficiently spot deviations
Compiled reports that provide the most up-to-date information
Reliable access to real-time inventory information
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Business Practice Innovation with SAP HANA
Smart Business for Inventory Management
SAP Smart Business for inventory management includes the basic virtual
data models and KPI definitions to set up customer-specific KPIs. It provides
an overview of the inventory situation including alerting and analytical drilldown with the help of a KPI modeler. We intend to make these KPIs
available within the launch-pad of SAP Fiori. Along with transactional SAP
Fiori apps, the cockpit can provide an environment for the warehouse
manager to optimize the inventory. Trends and deviations from target values
are highlighted to guide the user to the areas that need attention.
SAP Labs preview
Figure 6: Inventory management application showing KPIs and their trends
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Configure a set of contract KPIs as follows:
Days inventory held: This KPI shows the time between a goods receipt and
a goods issue. Stock or inventory generates cost, so a low number of days
inventory held is preferable.
Range of coverage: This KPI calculates how long the current inventory will
last based on average daily usage. The application supports setting a period
and drilling down into the components of the KPI (average consumption,
stock-on-end date, and average stock).
Inventory turnover: This KPI calculates how often the average inventory of
a material was consumed in a period. High inventory turnover rates reduce
capital tied up in inventory and inventory-related risks.
Slow-moving inventory: This KPI is closely related to inventory turnover
and indicates materials in stock that have not been moved for a specified
number of days, or the usage rate of which is significantly below the
historical or expected average.
Valuated stock value or quantity: This KPI measures closing and average
valuated stock value or closing and average valuated stock quantity on a
specific end date.
Benefits
The inventory-management KPIs set up by the customer offer a quick
overview of inventory-management-relevant KPIs in real time.
Customers can reflect on their inventory-management practices with
innovative KPIs.
Inventory level and value can be monitored in real time.
Real-time, graphical visualization and interactive correlation between
stock and movement information can help analyze impending out-ofstock situations.
A simpler explanation of inventory trends can be achieved through indepth analysis, monitoring of inventory key figures, and tracking of
variances.
A single source of truth for transactional and analytical processes means
no discrepancies between analytical and operational figures.
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Road Map and Outlook
We intend to expand our inventory management capabilities with intuitive
interfaces for the inventory accountant or warehouse manager in the areas
of inventory monitoring and alerting, drill-down, collaboration, and predictive
analytics. We also intend to integrate the stock-in-transit process and
manage out-of-stock situations. Navigating to fact sheets and transactional
applications should be possible on any drill-down level.
We’re pursuing the integration of unstructured information coming from
social media and collaboration with peer groups.
Product Details and Prerequisites
SAP ERP 6.0 with enhancement package 7
SAP NetWeaver 7.40
SAP Smart Business
* Source: SAP internal lab tests as of Sept. 2013. All performance KPIs are preliminary. SAP internal lab measurements and productive customer
performance can deviate.
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CMP28553 (14/08)
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could cause actual results to differ materially from expectations.
Readers are cautioned not to place undue reliance on these forwardlooking statements, which speak only as of their dates, and they
should not be relied upon in making purchasing decisions.
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