4BL - SAP Ariba Sourcing Integration using SAP Integration Suite, managed gateway for spend management and SAP Business Network.

Source-to-pay (S2P) cycle encompasses everything in Procurement from finding, negotiating with, and contracting the supplier of goods. It ends with the final payment for those goods.

The S2P cycle usually one of the key components of a Procurement transformation journey that an OEM or a components manufacturer goes through.

Sourcing has always been done in a very disconnected way. One of the most common and complex problems in the manufacturing industry is to make the S2P process transparent.

Whether it is Strategic Sourcing or Tactical Sourcing, the power lies with the Purchasing Agents who end up awarding the business.

Malpractices are very common in the purchase departments across organisations all around the world.

Purchase Heads find it very hard to control how the business is awarded.

SAP offers standard out of the box integration between SAP ECC / SAP S/4HANA and SAP Ariba Sourcing.

Buyers can integrate SAP ECC or SAP S/4HANA Cloud with SAP Ariba Sourcing using SAP Ariba Cloud Integration Gateway.

4BL enables you to identify sources of supply for the Planned requisitions in SAP S/4HANA, using SAP Business Network and SAP Ariba Sourcing solution. All data is routed through SAP Ariba CIG.

In the past few years I got a chance to implement this for a UK based Banking Corporation as well as an Indian FMCG conglomerate.

What i have noticed is that companies are in a habit of using multiple applications but , in silos.

Integrating the systems makes it very convenient.

Although there was a lot of push back from the people working at the procurement desks.

We took a Top Down approach where we first took the Purchase Head into confidence followed by the Category heads. Once these people give a thumbs up , having purchasing agents adopt the new processes becomes much easy.

The screenshot below depicts the typical process flow for the Strategic Sourcing Scenario.

1. An MRP run creates a purchase requisition for a material that has no source of supply.

2. Buyer responsible creates a RFQ (request for quotation)for one or several purchase requisitions using the Tcode ME41.

3. The RFQ is transferred from SAP S/4HANA Cloud Public Edition to SAP Ariba Sourcing via SAP Integration Suite, managed gateway for spend management and SAP Business Network. A Dummy Supplier needs to be added to the RFQ to transfer the request.

4. This RFQ is available in Ariba Sourcing as a Sourcing request which is picked up by a Sourcing Agent to create a RFP/Auction out of it.

5. Sourcing Event is run and bids are invited from the participating suppliers.When bids come in, the sourcing manager awards a supplier or suppliers and decides whether to create a purchase order(ME21N) or purchase contract(ME31K) at the end.

6. Awarded quotes are routed to the backend system.

7. Purchase orders / Purchase contracts with reference to the quotations are automatically created in SAP S/4HANA

Note : Product Sourcing which is especially designed for Direct materials procurement is similar to this integration. Material Master and Supplier Data are the 2 key elements that need to be in sync between S/4HANA and Ariba Sourcing.

There are some technical as well as functional Pre Requisites in order to set up 4BL.

This involves the configuration of 3 systems

1. SAP ECC or SAP S/4 HANA - Installing CIG Add-On

2. Ariba CIG - Creating Integration Project

3. Ariba Sourcing - Enabling the required Web Services

For more details please check 4BL- Feature Overview

Some of the common Restrictions are listed below:

• Currently 4BL does not support service line items in RFQs

• Currently 4BL does not support custom fields in RFQ

• Ariba does not support adding new line items in RFQ.

For the complete list of Restrictions refer to the SAP Note : 3235434

In case of Tactical Sourcing scenario the process starts directly in Ariba Sourcing.

Buyer runs a Sourcing Event and ends the event by awarding a Purchase Contract to a supplier.

This contract is then used in the backend to create Purchase Orders when needed.

The purpose of this article is to throw some light on this standard offering from SAP which is a game changer for the OEMs when it comes to achieving their transparency goals during the Procurement Transformation journey.

Please feel free to add any more information in the comments which you feel would be helpful to the readers.