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SAP Supplier Relationship Management (SRM) is a component of SAP Business Suite, and implementing it is a logical extension of the SAP ERP Materials Management (MM) component.
Indeed, one of the most important things to understand to grasp an SAP SRM overview is that, when companies find they need more functionality than what MM offers, SRM can handle advanced procurement features.
The highest level SAP SRM overview is that SRM is on-premises procurement software that can be implemented as stand-alone software or integrated with the MM component of SAP ERP Central Component. SRM is also available outside a company's firewall as a web client to enable suppliers and vendors to interactively participate in a company's procurement process.
It's worth noting that integrating SRM and MM and using both is common, since they provide complementary processes.
An important aspect of an SAP SRM overview is learning about the deployment models, commonly known as scenarios.
In this scenario, SAP SRM is the primary procurement system and ERP MM is secondary. All the procurement activities are processed in SAP SRM. During the procurement process, these four elements are created: purchase requisition (purchasing cart in SRM), purchase order, goods receipt and invoice receipt. The invoice data from SAP SRM flows into the SAP ERP Financial Accounting component, which then enables the company's accounts payable department to pay for the material or services procured.
This SRM deployment model is best suited for a company that wants most of their procurement activities to take place in SAP SRM and to have very limited interaction with the SAP ERP system. Further, with this scenario, the company uses a supplier's catalog for ordering products and services instead of creating the entire product catalog's data in its own system. This scenario also offers a payment card option.
In this scenario, the business user creates a shopping cart in SAP SRM while all the remaining processes, such as purchase orders, goods receipts and invoices, are all processed in the ERP MM component. In other words, ERP MM is the primary procurement solution, while SAP SRM is a secondary one.
This scenario is more suited for companies that still want to primarily use ERP MM for procurement activities, while SAP SRM enables a company's employees to create shopping carts (purchase requisitions) through a web client.
Due to its integration with the ERP system, a confirmation in SAP SRM automatically creates a goods receipt in the ERP MM component.
Extended classic scenario
In this scenario, the business user creates a shopping cart, and all follow-on documents, such as goods receipts and invoices, are created and processed in SAP SRM. The system replicates the purchase order created in SAP SRM into ERP MM. To maintain data integrity, changes to purchase orders are only allowed in SAP SRM.
This scenario is best for companies that want to use the extensive functionalities of SAP SRM, such as its sourcing capabilities. Here, a purchase order created in SAP SRM replicates and is available as read-only in ERP MM to prevent any data and information inconsistencies between the two systems.
Further, options like goods receipt confirmation and service confirmation are possible with a single transaction in SAP SRM, as compared to two transactions in ERP MM. The payment card option is also available in this scenario (and not in the classic scenario).
This SAP SRM deployment model, or scenario, uses the previous three scenarios in parallel based on the product category. For example, SAP SRM can be the primary system for services procurement, while ERP MM may be the primary system for procurement of stock items. This scenario is the best fit when a company wants to follow different procurement processes for procuring different types of products or services.
Knowing these four types of SAP SRM deployment scenarios can enable a company to choose either SAP SRM or ERP MM as a primary procurement system that automatically replicates the data into the secondary procurement system to eliminate data mismatch between the two systems, and also to eliminate redundant data entry efforts.
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