Understanding supply processes and concepts in SAP SRM

In this section, learn the components that make up SAP SRM, understand the concepts of core supply processes and the underlying business scenarios within each core process. Find out how supplier enablement provides an avenue for suppliers and customers to collaborate along the supplier relationship lifecycle.

Enhancing Supplier Relationship Management Using SAP SRMEnhancing supplier relationship management using SAP SRM

Chapter 2: SAP SRM -- An Introduction

In this section, learn about core supply processes in SAP SRM and the underlying business scenarios, and find out how supplier relationship management enables supply chain communication. 

Enhancing supplier relationship management using SAP SRM, Ch. 2


2.4 Dissecting my SAP SRM

There are a few terms and concepts that we need to define in order for you to properly understand the makeup of SRM. SAP constantly changes the SRM framework and often introduces new concepts for arranging the constituents SRM. Fundamentally there three key concepts to understand: core supply processes, business scenarios within each core process, and underlying technology components that enable the business processes.

It should be noted that for the implementation of each business scenario, one or more SAP components or third-party applications might be required. For example, the Supplier Enablement business scenario is powered by a number of underlying technology components, such as, Supplier Self Services (SUS), Biller Direct, Enterprise Portal, Inventory Collaboration Hub (ICH), to name a few.

2.4.1 Core Supply Processes

SAP defines three core supply processes that collectively make up the SAP SRM solution, which are:

  • Operational procurement
  • Strategic sourcing
  • Supplier enablement

Chapters 3, 4, and 5 are dedicated to each one of these core supply processes.

2.4.2 Operational Procurement

Each core supply process has multiple business scenarios that I'll describe here:

  • Self-Service Procurement
    Indirect procurement enables your employees to create and manage their own requirement requests. This relieves your purchasing department of a huge administrative burden while making the procurement process both faster and more responsive.
  • Plan-driven Procurement (direct procurement)
    This automates and streamlines ordering processes for regularly needed core materials. Because SAP SRM is integrated with planning, design, and order-processing systems, you can link your procurement processes to a plan-driven strategy that gets you the materials you need for core business processes exactly when you need them. Plan-Driven Procurement integrates seamlessly with back-end systems such as enterprise planning and production. The scenario allows you to integrate operational procurement with your existing supply-chain management solution.
  • Service Procurement
    E-procurement has produced great opportunities for saving costs in the purchasing process. However, companies generally fail to extend cost saving measures to services, even though services amount to more than 50% of annual purchasing volumes. The Service Procurement business scenario within SAP SRM covers a wide range of services such as temporary labor, consulting, maintenance, and facility management.

2.4.3 Strategic Sourcing

It is estimated that sourcing accounts for up to 75 % of the total opportunity for procurement savings within an enterprise. The following business scenarios enable the strategic sourcing capabilities within SAP SRM to fulfill supply needs, negotiate supplier contracts, and evaluate supplier performance:

  • Catalog Content Management
    This scenario provides a solution for creating, maintaining, and managing catalog content within your e-procurement application. This concept will be discussed in detail in Chapter 6.
  • Strategic Sourcing and Contract Management
    This application in SAP Enterprise Buyer provides professional purchasers with a wide range of actions and information to help them source their requirements. As a purchaser, you can use the interface to process the requirements and determine the best source of supply. Once you have done this, you can create a purchase order or contract directly from the sourcing application or SAP Bidding Engine. Save it either locally or in the back-end system, depending on the technical scenario you are using (Classic, Extended Classic or Standalone).
  • Spend Analysis
    This is a decision-support application that enables you as a purchaser to analyze your total spending across system and organizational boundaries. You can perform the analyses per supplier, per product or per product category.

2.4.4 Supplier Enablement

Supplier Enablement provides a quick and easy process for suppliers and customers to collaborate along the supplier relationship lifecycle. Supplier organizations can connect to a customer-hosted portal to communicate across a number of supplier related activities. Let's examine them here:

  • Supplier Self-Registration
    With this application, organizations can provide a simple Web-based self-registration process for potential suppliers. The main aim for this process is to allow strategic purchasers to identify new suppliers for doing business; accepted suppliers can then participate in strategic sourcing events such as bidding and auction events.
  • Design Collaboration
    This scenario allows organizations to involve suppliers beginning with the product design stage which enables collaboration on design objects like specifications and bills of materials. Organizations using the product lifecycle (PLM) application can use C-folders to invite suppliers to participate in the design aspect of acquiring specialty products and services.
  • Order Collaboration
    Organizations can use the supplier self services (SUS) component to exchange business documents with their suppliers. Purchase orders, purchase order acknowledgements, invoices are examples of some of the business documents that can be exchanged with suppliers using a Webbased application hosted by the customer. Suppliers only require a Web browser to log in to the application and receive purchase orders and can collaborate on all procurement-related activities.
  • Collaborative Replenishment
    Collaborative replenishment optimizes the supply-chain performance by enabling suppliers to access customer inventory data and making them responsible for maintaining the inventory levels required by customers through exception-based replenishment.

This excerpt from Enhancing Supplier Relationship Management Using SAP SRM by Sachin Sethi is reprinted here with permission from SAP Press; Copyright 2007.

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