How to Configure and Implement Global Percentage Bidding for External Service Procurement

  • by Patrick Imhen, Business Analyst and Senior SAP MM/SD/PM Functional Consultant, ZOCODE Limited
  • December 28, 2017
Learn how global percentage bidding (GPB) is configured and implemented to accelerate the management of service specifications for external service procurement. Discover how this functionality reduces the time and cost of procurement in organizations.
Learning Objectives

By reading this article, you will learn:

  • An overview of global percentage bidding (GPB) and how it reduces the time and cost of procurement
  • Step-by-step configuration of GPB
  • How to process GPB to accelerate vendor selection (with business scenarios)
Key Concept
Global percentage bidding (GPB) is a request for quotation document type in an SAP system that is used to handle the process of requests for bidding in SAP procurement for external services. It reduces the workload of the purchasing department during the vendor selection stage in the procurement process. GPB can be used only for external service procurement, and it is a process within the SAP materials management (SAP MM) module.

For organizations that deal with numerous vendor quotations for service specifications, the cost of managing the activity is usually high owing to the workload. SAP has provided the global percentage bidding (GPB) process that simplifies the managing or maintenance of service specifications. Unlike the standard request for quotation (RFQ) process, in the GPB process, the purchasing department is responsible for setting the prices and service descriptions for service specifications. Bidders respond in their quotation by indicating if they can deliver the service specifications for more or less than the rates estimated in the document by submitting quotations showing a percentage addition to or deduction from the specified prices.

I show you how I configured GPB for clients and explain how it is best used to accelerate the vendor selection process.

Overview of GPB and How It Reduces Time and Cost of Procurement

GPB is a business process with a different concept of sourcing for a vendor exclusively for external service procurement. In the standard RFQ business process, the purchasing department sends the RFQ with service specifications to selected vendors requesting them to send in their quotation with prices, conditions, and how long it may take for them to complete the job. When vendors send in their different quotations based on the quotation submission deadline, the purchasing department then enters the vendor’s quotation data such as prices, vendor-specific service descriptions, and other conditions, in the quotation document in the SAP system. This task usually consumes a lot of time when it involves external service quotations with many service specifications, which in turn incur more cost for the purchasing department.

I have recommended the GPB business process to organizations that handle a lot of service specifications in the RFQ to reduce the purchasing department workload. With this process, the purchasing department sets the prices and conditions and defines the service descriptions in just one document.

The purchasing department then sends a request for the GPB document to several bidders. These bidders are expected to send in their bids within a deadline. In a standard RFQ the vendors set their prices and other conditions, including service descriptions. With GPB, however, these parameters are set by the purchasing department and sent to the different bidders, who in return indicate whether they are ready to deliver the service by submitting their quotations showing a percentage addition to or deduction from the proposed prices.

This percentage addition or deduction is the only data required to be entered from the bidder’s quotation in the SAP system using a special condition type as a percentage surcharge (percentage addition) or percentage discount (percentage deduction). In an SAP system standard setting, the condition types KR01 (header discount) and KZ01 (header surcharge) are used. With this GPB implementation, the workload compared with using the standard SAP RFQ process is reduced and less time is needed to maintain quotations and select a bidder.

Another benefit of the GPB process is that it gives more price control to the purchasing department, thereby helping them to minimize the cost of procuring external services.

In implementing GPB, the purchasing department should set realistic prices for procuring proposed external services.

Step-by-Step Configuration of GPB

To enable the competitive GPB process in external service procurement in an SAP system, an important factor is knowing how to configure the document type and the price determination schema. In the SAP standard setting, document type AB and MS0002 price determination schema with condition types KR01 (header discount) and KZ01 (header surcharge) have been defined for GPB. Before configuring new GPB parameters, check if the existing standard parameters meet your requirements.

In this example, I show you how to configure the parameters for GPB. First, I explain how to define a request for a GPB document type.

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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