Sourcing or the procurement of materials and services is an essential task of the purchasing department for many companies. The goal is to identify the best sources for the required materials and services with regard to quality, sustainability, and costs including price, as well as to ensure the highest possible supply security.

Overview of contents:

  • Definition: Sourcing
    • Objectives of optimal sourcing
  • The problem: S/4HANA alone is not enough
    • SAP inquiry (“Request for Quotation”)
    • The solution: Sourcing with SAP Ariba
  • Automated bidding for purchasing
    • Price inquiry (“Request for Price”)
    • Manage requests for quotation
    • Create requests for quotation
    • Monitor request for quotation items
    • Compare supplier offers
    • Manage supplier offers
  • An alternative: Simple Sourcing by BeNeering

Definition: Sourcing

The word “Sourcing” derives from the word “source”. In the context of procurement activities, “Sourcing” refers to the process of identifying suitable, ideally the best sources in terms of supply security, quality, sustainability, costs, and potentially other criteria to satisfy the demands of various departments within a company.

Objectives of optimal sourcing

The objectives of optimal sourcing are:

  1. Creating maximum transparency
  2. Identifying potential cost reductions
  3. Tapping into these cost reduction potentials
  4. Increasing speed and efficiency in collaboration among procurement teams
  5. Reducing risk by finding better suppliers and innovation partners.

The basic framework of an order

An order consists of a document header, an item overview, and individual line items. The information contained in the header pertains to the entire order, such as payment and delivery terms. Each line item is associated with a specific procurement type.

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Create Request for Quotation ("RfQ")

To create a request from a purchase requisition (“PR”), it is best to open the Fiori app “Manage Purchase Requisition”. From there, select the desired purchase requisition and click on the “Create Request for Quotation” button.

This action will take you to the “Create Request for Quotation” screen. There, data such as request type, deadline for submission of offers, and organizational data such as company code and purchasing organization are entered. After entering all required and desired header and item data, as well as data transfer from the purchase requisition, bidders are selected and the request is transferred to SAP Ariba Sourcing for further processing.

Monitor Request for Quotation Items

This app allows the buyer to monitor bidding positions. It provides a list view of all bidding positions in table form, along with a chart for awarded and submitted bid values. The chart is displayed by default by supplier, but can be changed to show display by company code, plant, purchasing organization, and other options. The chart type can also be varied, such as a bar chart, line chart, or pie chart. The display results can be filtered by bid number, bid type, submission deadline, procurement category, material group, company code, plant, etc. The user can select a bidding position to view the corresponding offers and general information about the supplier or material.

Compare Supplier Quotes

With this app, the buyer can compare received quotes from suppliers or bidders with each other and with the request in order to select the best offer. It can also be used to display offers for a specific request and to determine if each supplier or bidder has submitted an offer.

In this quote comparison, only the price is used as a criterion. Other criteria, such as supplier evaluation, are not considered.

In this app, the buyer can directly place the order and create a purchase order or contract.

Manage Supplier Quotes (“Angebote von Lieferanten verwalten”)

This app enables the buyer to view all quotes from suppliers that have received different requests. The following functions can be performed with it:

  • Search for quotes by request number, type, status, submission deadline, supplier, etc.
  • Display detailed information about an offer after selecting the corresponding request.
  • Display item details of an offer, such as the current position with quantity and price information.
  • Submit quotes that are in edit mode.
  • Edit quotes that are in edit mode or submitted mode.
  • Delete quotes that are in edit mode.
  • Accept quotes.

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Do you also want to utilize the sourcing function by BeNeering?

The problem: S/4HANA alone is not enough

SAP S/4HANA as well as its predecessor SAP ERP systems are not designed to directly connect third parties, i.e. suppliers, to the system for the exchange of requests and offers. Instead, SAP developed the product SRM (Supplier Relationship Management) and used it in many companies. After the planned end of maintenance for SAP SRM, SAP clearly recommends Ariba.

SAP Request for Quotation

A request in SAP called “Request for Quotation is sent to the supplier(s) so that they can create and submit an offer based on it. The following options are available to the user in procurement:

  • Copy of already created requests with the desired data transferred: Particularly suitable for recurring requirements (same specification)
  • Transfer of data from a purchase requisition (“PR”): Particularly suitable for one-time requirements (new specification)
  • Manual creation of the request without reference to an existing purchasing document: In exceptional cases (e.g. specification was not described in the purchase requisition)

For lean services, requests are created with the product type group “Services”.

The solution: Sourcing with SAP Ariba

SAP’s strategy is to make Ariba the system of choice for data exchange with suppliers. This process involves creating the request from S/4HANA and transmitting it to the sourcing module of Ariba. In this module, a “Sourcing Request” is created with the request type “External Sourcing Request”.

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Automated procurement for purchasing

If the buyer only wants to request prices, quantities, or transport costs, the so-called quote automation can be used. In S/4HANA, the request type “External Price Inquiry” is used and transmitted to the Ariba supplier network. After processing by the suppliers, the quotes are sent back to S/4HANA. There, the buyer can compare the quotes and place the order with a purchase order or a contract.

Price inquiry ("Request for Price")

This process supports the buyer in creating inquiries in SAP S/4HANA and sending them via email or post. The internal request type is used for this purpose. The bidders also respond via email or post with their offer. The buyer manually creates the offers in the “Manage Quotes” app in S/4HANA. The entered offers are compared with each other and the best one is selected. There are three options available for awarding the contract in S/4HANA:

  1. Directly in the offer with a click on “Accept”
  2. In the list of the “Manage Quotes” app
  3. In the list of the “Compare Quotes” app

After accepting the offer, a follow-up document, a purchase order or a contract, is generated from it in S/4HANA. Inferior offers should be manually rejected or closed. After completing this process, the request itself should be set to the “Completed” status.

Even though it is advantageous to have historical offer data in the system, the manual effort for the purchaser to manually create the offers can be enormous. This is one of the reasons why SAP recommends using Ariba in addition.

Managing Request for Quotation

This app is used to create requests in the S/4HANA system. These requests go to SAP Ariba Sourcing where the sourcing process is executed. The accepted offer is played back to S/4HANA to create a purchase order or contract.

In this app, requests can be sorted and filtered by the following parameters:

  • Request number
  • Request type
  • Status
  • Company code
  • Purchasing organization
  • Purchaser group
  • Submission deadline for offers

This app allows both copying of solicitations, creating new solicitations from scratch, and deleting solicitations.

additional details about our solution

Do you also want to utilize the Sourcing function by BeNeering?