Demand-driven Procurement

SAP Best Practices for Retail (France)

SAP Best Practices

Scenario Overview 1
Purpose and Benefits:
Purpose

This scenario begins with the required planning steps. The forecasting processes and different
consumption-based MRP procedures. The supply source determination schema in SAP R/3 is
then outlined in brief and the various options explained. The Purchase Order process shows
you how to work with the Planning Workbench. Order optimizing comprises quantity
optimizing, investment buying, load building and goods receipt capacity check. The last
section shows you how vendor evaluations can be used to optimize goods procurement.

Benefits

Alongside article-specific inventory management, the SAP R/3 System provides an accurate
data basis for using the comprehensive range of requirements planning methods. The main
task in requirements planning is to monitor stocks and, in particular, generate automatic order
proposals for purchasing.

With the planning workbench, extensive functionalities for order optimization and vendor
evaluation you can handle the whole process for demand-driven procurement.

Key process flows covered

Requirement Planning
Planning Run
Supply Source Determination
Contract Processing
Planning Workbench
Order Optimizing
Purchase Order Monitoring
Vendor Evaluation

Scenario Overview 2
SAP Applications Required:
Required

SAP EHP3 for SAP ERP 6.0

Company roles involved in process flows

Retail Non-Seasonal Purchaser

Retail Non-Seasonal Purchaser Power User
Retail Non-Seasonal Purchase Manager
Retail Replenishment Planner
Retail Replenishment Planner Power User
Retail Master data Manager
Retail Warehouse Clerk
Retail Store Manager

Process Flow Diagram

R. NonSeas.
Purch.
Power U

Retail
Replenishment
Planner

Retail Non-Seasonal Purchaser

Event

Requirement Planning
Unload
Materials
from
Truck

MRP Procedure
Automatic
reorder point
planning

MRP Procedure
Time-phased
planning

MRP Procedure
Time-phased
planning with
reorder point
planning

Carry out the

individual
Forecast from
the article
master

MRP Procedure
Forecast-based
planning

Alternative:
Carry out the
individual
Forecast from
the menu

Optional:
Planning File
Optional:
Reprocess the
Forecast
results

Carry out
Single-Item,
Single-Level
Planning

Optional:
Evaluating the
Planning
Results

Convert the
Purch.
Requisition to a
Purchase Order

Enter goods
receipt for
purchase order

Process Flow Diagram

Supply Source Determination

Supply Source:
Source List

Maintain
Source List

Release Order
for the Contract

Automatic
Conversion of
the Purchase
Requisition to a
Purchase Order

Retail Replen.
Planner Power
User

Retail NonSeas.
Purchaser

Retail NonSeas. Pur.

Power U.

Retail Replenish.
Planner

Event

Unload
Materials
from
Truck

Goods receipt
in DC

Supply Source:
Purchase Info
Record

Create Contract

Create
Purchase
Requisition

Create
Purchase Order
with reference
to P.
Requisition

Create
Purchase
Requisition
(Assign Supply
Source)

Process Flow Diagram

Comparison of
Evaluations

Create
Purchase Order
via eCATT

Plan
Workbench:
Online
Requirements
Planning

Executing an
Evaluation of
the Art./Merch.
Cat.

Ranking List

Order
Optimizing:
Investment
Buying Run

Order
Cancellation

Alternative:
Simulate
Investment
Buying Run

Order Release

Retail Replen.
Planner Power
User

Retail NonSeas.
Purchaser

Retail NonSeas. Pur.

Power U.

Retail Replenish.
Planner

RNS.
Pur.
Mngr

Purchase Order Process and Vendor Evaluation

Order
Optimizing:
Load Building:
Carry out
Single-Level,
Single Item
Planning

Convert
Purchase
Requisition to
Purchase Order

Manual Load
Building

Goods receipt
in DC

eCATT for
Vendor
Evaluation

Maintaining the
Vendor
Evaluation
Manually

Vendor
Evaluation
Automatic
Reevaluation

Create
Purchase Order

Return on
Investment

Investment
Buying
Analysis

Order
Optimizing:
Goods receipt
capacitiy check

Automatic Load
Building

Requirements Planning

Objectives

Automation of the procurement process on site level

Inventory monitoring of a site

Central + distributed application

Requirements Planning: Forecasting Model

Selection

Manual model selection with additional

automatic test

Manua
l

Constant model
Trend models
Seasonal models
Seasonal trend models
Models

Automatic

T: Test for trend

Automatic

S: Test for season

Model selection

A: Test for trend

and season
Parameters

Basic value

Basic value
Trend value

Basic value
Season indices

Requirements Planning: Overview

RP type
Forecast
indicator

Articles
Articles

Purchase
Requisition
Item 10

Consumption
values
10/2000
11/2000
12/2000

987
1000
1251

Item 20

Forecast
Requirements
Planning

Purchase Order
Item 10
Item 20

Forecast Applications

Forecast Application

Reorder Point
Reorder Point
Planning
Planning

Forecast-Based
Planning

Calculation of the reorder

point and the safety
stock by the forecast.

The forecast values are

copied as requirements
and replace the reorder

point.
Calculation of the reorder
point and the safety
stock by the forecast.

Time-Phased
Planning

The forecast values are

copied as requirements.
The planning run is only
carried out on predefined
dates.
Time-Phased planning can

be applied in combination
with Reorder Point
planning.

Source Determination

Purchase Order: Supply Source Determination

1
Quota arrangement
60%

Source list

40%
40%

PReq
Vendor ??
Art. 3214
20 pc
Art.
5110
15 pc

Purch . requisition
WITHOUT
supply source

Article PCS-04-MRP201
for VZ01 50 pc

Source list

3
Article
Article
Purch . order
Vendor PCS-V201

Supply source ind .

Find external source of
supply only
Find internal source of
supply only
Find internal supply source
first , then external
Find external supply source
first , then internal

Outline agreements
Purch info
. records
Regular vendor
Stock transfer deliv ery schedules
Supplying sites

Supply
region

Art. 3214

20 pc

Art. 5110

15 pc

MIT

Vendor
Vendor PCS-V201
R3001

Order Processing

Planning Workbench

Manual planning
Select worklist
- Site
- Vendor

Start variant

Material selection
- Stock planner
- Merchandise category

Default data

Internet services

- Item category
- Account assignment
category

Control data
- Sort algorithms

- Hide processed worklist

WWW

Application settings

- Sequence

- Expand levels with one

element
- Display symbols

- Display

Worklist settings

General settings

e-mail

Planning Workbench: Manual Planning

Planning workbench with integrated manual planning

Worklist personalization

Simple display navigation in tree format

Display of additional information, for example, site or vendor

master data

Direct access to the Internet or mail system

Worklist view personalization

Manual planning

Display of consumption and/or forecast data

Use of restriction profiles

Automatically

generated purchase requisitions

Order Optimizing

Quantity Optimizing: Rounding Profiles

Dynamic Rounding Profiles

Dynamic profile

Rounding method

Rounding rule

0 No rounding
1 Round up to a multiple of the order
units/sales units
2 Round up to order/sales/logistical units of
measure
3 Round up to order/sales/logistical units of
measure, or log. unit of measure, zero qty for
order units only

AUn
CAR
LAY
PAL

Unit of measure group

% Up % Down
70,0
10,0
80,0
10,0
90,0
10,0

Check the permitted units of measure

used by vendors or recipients

Investment Buying: Purpose

Investment buying is a method of determing procurement

proposals that take account of future price increases, and are
to be covered by external procurement

The aim of Investment buying is to purchase articles

in suitable quantities

in good time

as cheaply as possible

taking account of various influencing factors

Investment Buying: Overview

Purchase price
conditions

Select condition changes

Open
PO quantities

Stock on-hand

Select relevant articles

(Info Record)
ROI Parameters

Simulate
purchase price
Purchase price
higher than
future price

Forecast

Calculate ROI
Actual ROI
is lower than
required ROI

Purchase requisitions
Worklist

Log of items
Protokoll
found
relevant to
Purchasing

Calculate
order quantity

Purchase
orders

Investment
Buying
Analysis

Load Building

Definition

Load building is a process used to group together purchase

orders and other requirements, while taking account of
procurement restrictions, and thereby reduce procurement
costs.

Load Building Overview

Req. Planning

Investment buying
process

Promotion
orders

Purch.
Req.
. .... ...
Purch.
req
Purch.
Req.
. ...

Without existing
requirement
elements

Purchase requisitions

Automatic
load building process

other
order
processes
Purchase orders
Purch. order ...
Lieferant 326
Purch. Order...
Vendor
326

Simulation list process

Manual load building

EDI to vendor

Goods receipt capacity check

Up to now, there was no check for sufficient capacity for the delivery date of a
planned delivery in the goods receipt area of a warehouse. If the goods are delivered
to a warehouse door that does not have any free capacity, there can be a bottleneck
in the goods receipt area of a warehouse. At the same time, another warehouse door
might have enough capacity.

Advantages for the retailer and vendor:

Taking the goods receipt capacity into account prevents potential bottlenecks.

The vendor's delivery date planning utilizes the capacity of the retailer's goods

receipt areas.

The vendor can schedule the deliveries better since the planned time window for
inbound deliveries is binding.

Vendor Evaluation

Functions in Vendor Evaluation

Regular vendor
for
Article 1

Vendor A

?
Vendor C

Vendor B

Quality audits

Vendor Evaluation

Vendor C

Automatic Subcriteria: Overview

Main Criteria

Subcriteria

Price

Price level
Price development
GR inspection
Complaints
Audit
On-time delivery
Quantity reliability
Shipping instructions
Confirmation

Quality

Delivery

Service

Analyses for Vendor Evaluation

HIT LIST
General Vendor Evaluation
Total

Price
Preis

Qual .

Dlvy
Lief ..

Service

Vendor

90

92

90

93

85

Vendor

84

75

92

88

81

Vendor

81

90

76

74

84

Analysis for Article/ Merchandise category

Vendor Evaluation Evaluation
Total

Price
Preis

Qual .

Dlvy
Lief .

Vendor

88

81

93

92

86

Vendor

81

90

76

74

84

Evaluation Comparison
General Vendor Evaluation
Total

Vendor A

Service

84

Price
Preis

Qual .

Dlvy
Lief .

75

92

88

Service

81

Evaluation for Article 1

Total

88

Price
Preis

Qual .

Dlvy.

Service

81

93

92

86

Legend

<Function>

Symbol

Description

Usage
Comments

Band: Identifies a user role, such as Accounts

Payable Clerk or Sales Representative. This band
can also identify an organization unit or group,
rather than a specific role.

Role band
contains tasks
common to that
role.

Symbol

Diagram
Connection

The other process flow symbols in this table go into

these rows. You have as many rows as required to
cover all of the roles in the scenario.

Hardcopy /
Document

External
to SAP

External Events: Contains events that start or end the

scenario, or influence the course of events in the
scenario.

Business
Activity /
Event

Flow line (solid): Line indicates the normal sequence

of steps and direction of flow in the scenario.
Flow line (dashed): Line indicates flow to infrequentlyused or conditional tasks in a scenario. Line can
also lead to documents involved in the process flow.

Connects two
tasks in a
scenario
process or a
non-step event

Business Activity / Event: Identifies an action that

either leads into or out of the scenario, or an outside
Process that happens during the scenario

Does not
correspond to a
task step in the
document

Unit Process: Identifies a task that is covered in a

step-by-step manner in the scenario

Corresponds to
a task step in
the document

SubProcess
Reference

Proces
s
Decisio
n

Usage Comments

To next / From last Diagram: Leads

to the next / previous page of the
Diagram

Flow chart continues on the next /

previous page

Hardcopy / Document: Identifies a

printed document, report, or form

Does not correspond to a task

step in a document; instead, it is
used to reflect a document
generated by a task step; this
shape does not have any outgoing
flow lines

Financial Actuals: Indicates a

financial posting document

Does not correspond to a task

step in a document; instead, it is
used to reflect a document
generated by a task step; this
shape does not have any outgoing
flow lines

Budget Planning: Indicates a

budget planning document

Does not correspond to a task

step in a document; instead, it is
used to reflect a document
generated by a task step; this
shape does not have any outgoing
flow lines

Manual Process: Covers a task

that is manually done

Does not generally correspond to

a task step in a document;
instead, it is used to reflect a task
that is manually performed, such
as unloading a truck in the
warehouse, which affects the
process flow.

Existing Version / Data: This block

covers data that feeds in from an
external process

Does not generally correspond to

a task step in a document;
instead, this shape reflects data
coming from an external source;
this step does not have any
incoming flow lines

System Pass / Fail Decision: This

block covers an automatic
decision made by the software

Does not generally correspond to

a task step in the document;
instead it is used to reflect an
automatic decision by the system
that is made after a step has been
executed.

Financial
Actuals

Budget
Planning

Manual
Proces
s

Unit Process

Process
Reference

Description

Process Reference: If the scenario references another

scenario in total, put the scenario number and name
here.

Sub-Process Reference: If the scenario references

another scenario in part, put the scenario number,
name, and the step numbers from that scenario here

Process Decision: Identifies a decision / branching

point, signifying a choice to be made by the end
user. Lines represent different choices emerging
from different parts of the diamond.

Corresponds to
a task step in
the document

Corresponds to
a task step in
the document

Does not
usually
correspond to a
task step in the
document;
Reflects a
choice to be
made after step
execution

Existing
Version /
Data

System
Pass/F
ail
Decisio
n