How to Bolster Your Purchasing Operations with SAP S/4HANA Cloud

  • by Patrick Imhen, Business Analyst and Senior SAP MM/SD/PM Functional Consultant, ZOCODE Limited
  • July 19, 2017
Discover the impact of the SAP S/4HANA Cloud streamlined procure-to-pay business solution on purchasing operations. Learn about the procure-to-invoice process with insight on certain new features.
Learning Objectives

Reading this article, you will learn:

  • How SAP S/4HANA Cloud improves purchasing operations in an organization in terms of spending, efficiency, effectiveness, and business agility
  • An overview of the embedded predictive analytics capabilities of the SAP S/4HANA Cloud streamlined procure-to-pay business solution
  • The purchase-to-invoice process (a new method of transactional flow from the creation of a purchase order to the posting of a goods receipt and a supplier invoice) with highlights on some new features such as embedded analytics
Key Concept
SAP S/4HANA Cloud leverages software-as-a-service (SaaS) ERP and uses a role-based applications launchpad powered by SAP Fiori. One of the business solutions within the SAP S/4HANA Cloud is the streamlined procure to pay.

Based on my testing experience, I explain some of the functionalities of the streamlined procure-to-pay business solution within the SAP S/4HANA Cloud 1705 release. In this release, the streamlined procure-to-pay functionality is one of the first business solutions that leverages predictive analytics within SAP S/4HANA Cloud.

I provide you with some insights about how operational procurement leverages embedded predictive analytics to provide business insight within SAP S/4HANA Cloud. I also explain how the procure-to-invoice business transactions run within SAP S/4HANA Cloud.

How SAP S/4HANA Cloud Can Help Your Organization Become a Smart Business Operation

The streamlined procure-to-pay business solution within SAP S/4HANA Cloud provides organizations with the visibility and insights required to perceive buying patterns, vendor performances, opportunities to reduce costs, and increased savings. Companies can rapidly adopt new strategies base on embedded real-time analytics in the purchasing transactional process. This is a paradigm shift from what was obtainable in the purchasing operations on traditional ERP systems such as SAP ERP Central Component (ECC). Even the procure-to-pay process in SAP S/4HANA on premise is not at the same pace as in SAP S/4HANA Cloud. Organizations can continuously experience high-technology innovations because of the quarterly software updates by SAP.

Overview of the Embedded Predictive Analytics Capabilities of the SAP S/4HANA Cloud Procure-to-Pay Business Solution

The SAP S/4HANA Cloud leverages SaaS for ERP (SaaS ERP). The whole idea is to transform your Big Data to intelligent data using the logic of process-centric embedded predictive algorithms to obtain precise analytical insights. The procure-to-pay business solution within SAP S/4HANA Cloud has some available embedded process predictive analytic features, such as embedded predictive analytics for contract consumption in procurement, Stock Champion Solution Proposal spend analysis, real-time monitoring of expiring contracts, overdue purchase orders or urgent purchase requisitions, and requests for quotation items for which no bids were submitted in time for the deadline. Real-time insights of these features obtained from the Procurement overview page are based on some defined key performance indicators (KPIs).

Stock Champion Solution Proposal is an analytic application within SAP S/4HANA Cloud that makes projections on the state of stock based on real-time insights and proposes ranked solutions for stock expirations and shortages before they become a real issue.

The embedded predictive analytics for contract consumption in Procurement is a new feature in SAP S/4HANA Cloud. With this capability, a contract consumption rate can be predicted based on historical data. Consider, for instance, that an existing procurement quantity contract of two years’ tenure with 500,000 pieces of pedals as the target quantity has been released up to 90 percent as at the 16th month due to high production of bicycles. (A two-year contract is 24 months long, and this statement indicates that the contract has reached month 16 of the 24-month period.) That implies that only 50,000 pieces of pedals will be left for the remaining eight months. The predictive analytic functionality embedded in the contract consumption process can predict when this contract is likely going to be consumed 100 percent. This insight can help a purchaser to proactively call up a renegotiation of the contract that could lead to a possible reduction in price.

If you want to learn more about how to manage procure-to-pay processes with SAP software, read the transcript of SAPinsider's Q&A, "Digitize & Transform Procure-to-Pay with SAP Ariba Solutions," with experts from SAP and B4 Consulting. To read the transcript, click here.

Patrick Imhen

Patrick Imhen is a business analyst and a certified SAP ERP consultant with proficient knowledge, skills, and experience in Materials Management (MM), Sales and Distribution (SD) and Plant Maintenance (PM) gathered from successful SAP implementations projects, support, training, business process analysis, modeling, unit testing, and integration testing. He has profound understanding of the supply chain process across industries and helps organizations cut the cost of operation and improve process optimization. He has more than 10 years’ experience in the business environment and six years’ experience in the SAP domain.

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