How SAP S/4HANA Makes Sourcing & Procurement Processes More Intelligent

SAP S/4HANA Sourcing and Procurement

SAP’s current vision and mission is to help organizations become “intelligent enterprises” with its Business Suite SAP S/4HANA. Digitalization also opens up new options and changes purchasing processes. “Toronto Innovation College” training with a SAP S/4HANA expert reports from its own consulting practice how it is possible to better design and further automate the procurement process with S/4HANA; how real-time data, analyses, and simulations can be used; and what the intuitive Fiori interface truly offers when it comes to simple, mobile use.

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What are purchasing departments currently focusing on with digitalization?

True, in many purchasing departments, our customers continue to use totally analog methods. There is still a lot of printing and faxing going on every day. Classic approval processes require signatures. Companies, on the other hand, want to take the next step toward digitization by switching to SAP S/4HANA. Several variables contribute to this development. On the one hand, there are more stringent compliance procedures, both internally and externally. clients are demanding more open audit processes from manufacturers, and producers must respond in order to continue servicing clients in their industries, whether they are in the food, pharmaceutical, or chemical industries, or as automotive suppliers. A traceable dual control approach for approval processes, for example, is important in this context. Other essential topics include supplier assessment and clear, traceable reference source location, which should be feasible to handle while on the road. All of these topics are driving company digitalization and playing a role in the transition to S/4HANA.

Where precisely does S/4HANA come into play?

Many medium-sized businesses that are still using SAP ECC systems manage their purchasing activities on-premise. Thus, the new S/4HANA system becomes the digital core and technological foundation for digital change at these firms, and it has a significant impact on how they handle procurement operations. New functionalities made available by the S/4 system, such as machine learning and artificial intelligence; subjects including electronic inbound invoice processing, contract monitoring, and transparent inventory overview; Stock in transit for intercompany business will become increasingly significant. SAP has some interesting aspects on its development roadmap, and the intelligent features in S/4HANA will be greatly expanded. And we’re not talking about years of development here, but rather modifications that will most likely appear in future releases over the next twelve to eighteen months.

Where can S/4HANA provide benefits as compared to SAP ECC?

On the one hand, the technological foundation of S/4HANA is a substantially higher-performance HANA database running beneath the application layer. This can provide the user with far more detailed and accurate information in real time at the click of a button. Of course, firms want to exploit this extensively and be able to entirely overhaul their processes. In contrast, the SAP ECC system takes a pull strategy. This means that the user must actively look for and extract data from the ECC system. He logs into the system, picks a function, and provides various He selects parameters, executes the function, and then receives information from which he can conclude that there is a specific emergency problem at his organization to which he must respond promptly. We can convert this pull method into a push approach by taking advantage of the Fiori features and the HANA database’s capabilities. The SAP S/4 system may immediately alert users to crucial situations using events, analytical dashboards, and relevant Fiori tiles, sometimes known as live tiles. As a result, the user no longer needs to search the system; instead, the system notifies him directly, allowing him to respond accordingly. Another advantage of the Fiori approach against the old ECC environment is much increased collaboration. When it comes to data transmission within the firm, whether between departments or among personnel.

What is the typical content of projects that are companies implementing in this sector?

Supplier assessment is a hot topic among our food sector customers. Customers want to be able to demonstrate, at the click of a button and in real time, that they have control over their whole supply chain down to the supplier. The S/4 system has a number of intriguing visual elements.

Another significant aspect of procurement is the approval process. Today, as previously said, these are typically still analog. Our customers want to digitize and mobilize these procedures as they transition to S/4. This mobile feature of the ECC system was generally only possible with the assistance of third-party software. With S/4HANA and Fiori, we have a high-performance tool that allows us to meet these needs much more effectively because Fiori includes them out of the box.

In addition, our consumers are concerned about cost concerns. We can now assess the price-performance ratio for suppliers considerably faster and more easily than we could with the ECC system, thanks to enhanced visualization capabilities in Fiori apps. Quality and pricing are instantly put into perspective, which can now be graphically displayed extremely well. As a result, the purchaser may quickly determine which provider is most suited to his procurement procedure.

Finally, our customers want to maintain their inventories as low as feasible. Purchasers have far more efficient tools than they did under ECC, thanks to real-time inventory monitoring capabilities. Furthermore, new capabilities are being introduced, such as

contract monitoring, which monitors when a contract ends. This makes it easier to secure cost-effective suppliers in the long run using S/4HANA.

What recommendations can you make for optimizing purchasing processes?

Recommendation 1:

In general, you should leverage the transition from ECC to S/4HANA to verify processes that have been in place at the organization for years. Specifically in purchasing, we regularly encounter undigitized flows in the process. That is precisely the time to break away and orient processes toward the future in order to fully realize S/4’s optimization potential.

Recommendation 2:

Bring on an expert partner with S/4 experience. You should not ignore the fact that S/4HANA is new software; some of the proven capabilities from the ECC world remain, but SAP is innovating quickly. One innovation release succeeds another, and new features arrive on a quarterly basis, making it difficult for businesses to stay on top of things and detect and use the features that are relevant to them. As a result, it is prudent to seek for a partner who is constantly working with S/4HANA. Specifically, in purchasing, the new, modern interfaces provide considerable possibilities that can typically only be fully realized by experts.

Recommendation 3:

Pay attention to a lean, transparent approach to introducing S/4HANA initiatives. From our perspective, traditional blueprint projects using a waterfall technique are simply out of date. They’re also time-consuming and costly. Meanwhile, we’ve created strategies for handling such jobs more efficiently. That benefits both consumers and consultants, as project progress can always be transparently tracked.

Source: https://www.valantic.com/en/blog/sap-s4hana-procurement-processes/