Price compliance is a key priority for procurement organizations. SAP Ariba Procurement offers features to ensure organizations make purchases at negotiated prices and terms. Integration between sourcing, contracts, purchase orders, and invoices is essential for adhering to negotiated prices throughout the procurement process. This blog explores how SAP Ariba products start that digital thread that creates a strong linkage for price compliance.
In our previous blog, we discussed sourcing principles for creating a fair and equitable marketplace. We recommend creating events with line items to begin price compliance. While it may seem easier to send suppliers RFPs via Excel or Outlook, line items in Sourcing offer more than you might realize.
Integration of line item details can occur at various stages post-award, directly from Sourcing to your ERP, from your Contract to ERP, from Contract to Ariba Catalog, or from Contract to Invoice. Integration depends on the integrations you enable and the buy channel that supports the goods or services requested.
SAP Ariba products integrate as a suite from S2P, and have seamless integrates to support buying from within your SAP ERP systems and the SAP Business Network, offering several benefits:
- Consistency and accuracy across procurement processes.
- Reduced manual effort and minimized errors.
- Efficient tracking and monitoring of price compliance metrics.
- Enhanced visibility into procurement spend and contract utilization.
To optimize price compliance, organizations should:
- Analyze historic spend data for opportunities in buy channel efficacy.
- Understand robust data integration between SAP Ariba products and SAP ERP systems.
- Conduct regular audits and reconciliation of line items across procurement documents.
- Provide training and guidance for procurement teams on maintaining price compliance for various buy channels.
Now that you have your Line Items ready to Award in Guided Sourcing, let’s review the various options for compliance:
Line Items in Sourcing: In SAP Ariba Guided Sourcing, line items capture detailed information about products/services, quantities, and negotiated prices. Integration with SAP ERP updates Purchase Info Records, automatically populating purchase orders and reducing errors. Next, let’s review how Ariba Contract Compliance can ensure compliance.
Transferring Price Compliance From Contracts: SAP Ariba Contracts integrates with SAP ERP to transfer price information from sourcing events to contract documents. Contract Line Items Document (CLID) aligns with sourcing line items, ensuring consistent pricing and terms, streamlining contract creation in SAP ERP.
If you would like to purchase from SAP Ariba, the Contract Terms document can create a Catalog Item for users to create POs from. Let’s review some options for Contract Compliance through Ariba Catalogs or Invoices:
Contract Terms: Integration with Purchase Orders: After a supplier is chosen in SAP Ariba Guided Sourcing, line item details go to the Contract Workspace for operationalization. Users can create an operational Contract Terms document to ensure price compliance in purchase orders. This can create a catalog item in Ariba to create a PO that complies with the terms of the contract!
For other types of contracts, it may make more sense to simply allow suppliers to submit an invoice against the contract terms. Let’s talk about Invoice against contract next.
Contract Terms: Ensuring Compliance in Invoices: Contracts can be created to ensure compliance with recurring spend without a PO. Invoices reconcile line items against the Contract Terms, detecting discrepancies and enforcing adherence to negotiated prices. This works well with services that need to happen and the time for creation and approval of a PO is not possible. These Contract Terms can allow the supplier to invoice against the contract without a PO.
SAP Ariba Suite Integration with or without ERP integration can transfer agreed upon pricing and terms from Sourcing to Contracts to Buying to Invoicing and ensure procurement objectives are achieved. SAP Ariba products offer the tools and features needed to build a solid base for price compliance, promoting accuracy, efficiency, and transparency across the procurement process.
For further discussion on enhancing your price compliance using these integration methods, please reach out to your CSP, who will connect you with the appropriate SAP resource.
