SAP S/4HANA: A Guide to Streamlined Source-to-Pay Excellence

Nov 15, 2023

operations
automotive
chemicals
SAP

Empower your Procurement Team to enhance efficiency, uphold quality, and collaborate effectively, all while smartly reducing costs...

As many new and existing customers are aware, SAP’s support of ECC6 is coming to an end in 2027, meaning that businesses are faced with the task of migrating their existing systems to SAP S/4HANA. For those within the Source-to-Pay function, this shift represents a long-awaited upgrade, bringing with it a wealth of transformative enhancements. In this blog, we will be highlighting the pivotal differences between the ECC and S/4HANA Procurement capabilities, demonstrating the benefits of a streamlined, automated source-to-pay process will bring.

40% of organisations reported improvements in their decision-making capabilities following their migration to SAP S/4HANA.

(Source: SAP 2021)

Central(ised) Procurement

In contrast to the separate Purchasing, Inventory Management and Accounts Payable processes offered by ECC, S/4HANA introduces an integrated procurement strategy that unifies Purchasing, Inventory Management, and Accounts Payable processes within a single solution, facilitating a more efficient and streamlined source-to-pay workflow.

SAP S/4HANA Central Procurement provides role-based visibility across the entire ERP landscape, allowing lead buyers to access company-wide contract, requisition, order and spending information.

Purchasers can efficiently manage the sourcing of direct materials for various plants, oversee sourcing projects, collaborate with competitive suppliers, evaluate quotations, negotiate, select the best suppliers and generate necessary procurement documents for operational procurement.

Global oversight of regional and local systems enhances transparency, potentially resulting in cost savings through improved negotiations, reduced maverick spending and enhanced economies of scale.

Integrated Business Partners

In S/4HANA, customer and vendor data are merged into a single master data entity known as SAP Business Partners, which differs from ECC where customers and vendors are maintained as distinct data objects. As a result, Business Partner is the leading data object and single point for maintaining Supplier master data, allowing for:

Maintenance of multiple addresses with corresponding address usages;
Association of multiple roles to the same business partner;
Maximised data sharing and reuse of data, leading to easier data consolidation;
Maintenance of multiple relationships via the same Business Partner;
Maintenance of time dependency at differing sub-entity roles, addresses, relationships, bank data etc.

Modern User Interface

The conventional ECC6 user interface has given way to a contemporary, mobile-first suite of applications known as SAP Fiori, offering a fresh user experience. SAP Fiori seamlessly adapts to various devices, including computers, tablets, and smartphones, empowering procurement teams to access critical information at their convenience - fostering enhanced collaboration and facilitating informed decision-making anytime, anywhere.

Improved Material Ledger

Whereas in ECC Material Ledger was an optional feature in SAP ECC, it is now obligatory in S/4HANA and offers a wealth of new functionality:

Multi-currency valuations: ECC offers valuation using single currencies, whereas S/4HANA offers valuation in two added currencies, enabling businesses to expand the flexibility and functionality of their inventory management.
Multi-Valuations: the Material Ledger enables three different valuation options for a corporate group operating in multiple countries - namely Legal, Group and Profit Centre.
Actual Costing: costing in SAP S/4HANA makes a huge difference. Actual Costing combines the advantages of using standard price with the advantages of using moving average price.
High-volume transactions: technical innovations available in SAP S/4HANA supply a significant increase of transactional data throughput for high-volume transactions, especially goods movements.

Streamlined and Automated Procurement Processes

Automating low-value, time-consuming tasks yields substantial time and cost savings. Cloud-based software transforms business functions like procurement by reducing expenses and enabling real-time information sharing between companies and suppliers. SAP S/4HANA leverages intelligent automation technologies such as machine learning and AI to automate repetitive tasks, reduce errors and streamline the sourcing and procurement process. Your procurement teams will benefit from:

Quicker approvals and release processes;
Reduced order cycle time;
An efficient, standardised contract management process;
Streamlined spend management;
Machine learning-based analytics that accurately predict contract consumption.

54% of organisations that have completed their SAP S/4HANA migration have reported improved data visibility and analytics capabilities.

(Source: SAP 2021)

Enhanced Visibility

ECC's complex data structure has been replaced with a simplified model, resulting in faster data processing and a streamlined source-to-pay process. As a result, S/4HANA offers enhanced visibility of production, procurement and inventory status' - enabling procurement teams to make quicker, better-informed decisions based on real-time insights.

These improvements provide advantages throughout supply chain operations by simplifying segmentation and policy management through embedded analytics, offering better insights into inventory management, supplier lead times, and production patterns, and enabling rapid goods movement and back-flushing updates for more efficient re-planning and order commitments.