Operational vs Strategic SourcingOperational sourcing is more operational in nature i.e. the demand comes from the requesters and the request is linked directly to the operations of the organization. Operational sourcing is highly critical for manufacturing organizations that rely heavily on the "Direct" or "MRO" materials. Strategic sourcing is more strategic in nature. The starting point for strategic sourcing process typically could be -- Spend Analysis, or Strategic Initiative from the top management. The operational sourcing can be handled well by both SRM and SAP Sourcing. The main differentiator of ESourcing solution is that it can handle not only the operational sourcing but also the strategic sourcing. In operational sourcing scenarios, the demand always gets started by the requesters (e.g. shopping carts, purchase requisitions). The procurement / sourcing / purchasing team tries to fulfill these requests from operations. The purchasing team might utilize strategically defined contracts or agreements with various suppliers to source these requirements. In Strategic Sourcing scenarios, the demand does not come from requesters or operations. The strategic team performs the analysis of spend and sets the goal for sourcing activities e.g. reduce IT spend by 10%, reduce travel spend by 20%. Then, a strategy or a plan is devised to achieve this savings goal, supplier development goal, or contract renewal goal. Team responsible for strategic sourcing creates contracts, agreements with various vendors to increase savings. They generally utilize RFI, RFP, RFQ, Auctions etc. for this activity. To support these strategic sourcing scenarios, SAP Sourcing has the following features that are not available in SRM solution. Project Management capabilities Robust RFI / RFP / Auction capabilities Contract authoring capabilities Contract Lifecycle Management Integration with SPM (Spend Performance Management)

Sourcing 9A central contract in SAP SRM itself integrates seamlessly with SAP ERP and in fact, provides capability of integrating with multiple ERP systems. Thus the current integration between SAP Sourcing agreements and the SAP SRM central contract extends the multi-back end capability to SAP Sourcing agreements too. This integration bridges upstream strategic sourcing and contract management processes with downstream operational procurement processes and thus extends the value to entire organization.

The following benefits can be attributed to the integration between agreements in SAP Sourcing and SAP SRM central contracts: 1. Brings together the legal contract and operation contract and provides single view of complete contract. 2. Provides complete end to end contract management solution 3. Binds together the upstream strategic sourcing and contract management with downstream operational procurement 4. Helps drive better contract compliance

SAP Sourcing CLM agreement integration with SAP SRM central contract:Version 9 supports the replication of agreements to create central contracts in SAP SRM synchronously. The trigger of replication is manual and is controlled by user action. When the replication process is successful the agreement will be updated with the central contract reference number. In case of unsuccessful replication user will be informed about the error. This integration assumes that there is common master data between SAP Sourcing and SAP SRM such as materials, suppliers, plants, purchasing organization, etc...

Integration scenarios in Sourcing 9.With line itemsThis process typically starts in SAP Sourcing with the creation of an RFx, including line items to be sourced. The supplier responses within the RFx can be analyzed and during awarding an agreement can be created which includes negotiated prices for line items along with other terms and conditions. A legal contract can be negotiated as part of the agreement. After approval of legal contract, the agreement can be replicated to SAP SRM and can be used as a source of supply within SAP SRM for self-service procurement process or can be replicated to ERP systems and used as source of supply. In this scenario, changes can be done in the agreement in SAP Sourcing and can send updates to central contract. Changing central contract directly in SAP SRM will be not possible.

Without line itemsThis process typically starts with creation of an agreement directly to create the legal contract, while all operational negotiations will happen in SAP SRM. An agreement in such cases will not have any line items on SAP Sourcing. After approval of the legal contract, the agreement can be replicated over to SAP SRM to create a central contract without any line items. Further central contracts can be enhanced with line items and prices. However the line items will not be updated back to the agreement in SAP Sourcing. This scenario is important for procurement of complex materials, services and large contracts.

Support for centralized sourcing:With version 9, SAP Sourcing supports importing materials from multiple ERP systems and include them in a single sourcing document, which enables central sourcing of strategic materials by global purchasing organization. This helps in efficient execution of the corporate strategy centrally by responsible single global purchasing organization. This also helps combining the requisitions from different subsidiaries and gain tactical advantage for better negotiation. A single agreement can contain materials from different ERP systems and this can be replicated over to the SAP SRM central contract. Furthermore, the SAP SRM central contract can be distributed to multiple ERP systems and used as source of supply.

Implementation RequirementsYou must implement the information contained in the following SAP Notes before beginning the integration process: SAP PI/XI is required for this integration. Process Integration is required to transfer the Central Contract from SRM to ECC. This can also be done using Web Services. SAP Note 1551800: SAP Sourcing Integration with SAP SRM Central Contracts. This note includes corrections related to metadata management and the display of additional fields in the Contract user interface. SAP Note 1609208: SAP Sourcing / SAP SRM Integration. This note includes corrections related to the processing of incoming XML messages from SAP Sourcing. SAP Note 1598641: SAP Sourcing Integration with SAP SRM Central Contracts. Additional information to SAP Note 1551800.

SAP Note 1651629: Header Condition Does Not Get DeletedThis note describes issues related to the removal of contract header conditions.

Implementation RecommendationsSAP recommends that you use the highest version of SAP NetWeaver Process Integration (PI). Currently this is SAP NetWeaver PI 7.3. For more information, see SAP Note 1515223 and SAP Note 1388258.

Create Business System for SAP SRM in SAP SourcingThe SAP SRM system must exist before you create it as a business system in SAP Sourcing. A business system represents an SAP SRM system that is integrated with SAP Sourcing. SALE > Basic Settings > Logical Systems >Assign Logical System to Clients Select the CLIENT and choose Details

The Logical Client name is in the form: CLNT This number is then used in the Sourcing system for configuration.

SAP Sourcing Agreements and SAP SRM Central Contract IntegrationThis business process integration enables you to initiate the creation, update, and cancellation of SAP SRM Central Contracts from SAP Sourcing Agreements.

Maintain Customizing Data for Business Document IntegrationTransaction Types for SAP SRMCreate Transaction Type in SAP SRM SPRO > SAP Implementation Guide > SAP SRM > SRM Server > Cross-Application Basic Settings > Define Transaction Types. Choose Contracts (BUS2000113) and double click on Transaction Types Sub folder on the left.

By default, two Transaction Types CCTR (Central Contract) and PCTR (Purchasing Contract) are delivered by SAP. You can create a new transaction type by clicking New Entries.

Double-click one of the transaction types (existing or newly-created) and verify all of the configuration settings (such as Number Ranges, Text Schema, Event Schema, and Partner Determination Procedure). You should assign any newly-created transaction type to organizational Units as an attribute using Transaction Code PPOMA_BBP. Typically, this assignment is done at a high-level organizational unit such as the company/purchaser organization or department. All suborganizational units automatically inherit this attribute. The Transaction Type CCTR, PCTR and any new ones created in SRM need to be replicated in Sourcing.

Text IDsCreate Text IDs in SAP SRM

These steps are for creating text IDs required in the SAP Sourcing Master agreement to SAP SRM central contract replication.SPRO > SAP Implementation Guide > SAP Supplier Relationship Management > SRM Server > CrossApplication Basic Settings > Text Schema > Define Text Types Under Text Types, select the BBP_PD text object, and double-click the dialog structure to ensure that text ID ETXT is available. Otherwise, create a new entry for the text ID ETXT with description External Text.

SPRO > SAP Implementation Guide > SAP Supplier Relationship Management > SRM Server > CrossApplication Basic Settings > Text Schema > Define Text Schema Create a new schema or use the standard text schema CTR. Click on Text for Schema on the left side dialog structure.

Make sure the text IDs listed below are available:. ID: ETXT Description: External text Headr/Item: Header and Item Visible: For all Users

These Text Ids created in SRM have to be replicated in Sourcing. This can be done manually or using a CSV file. If an SAP SRM Text Id entry has the value Header and Item in the headr/Item column (in Step 6), you must create two separate entries in SAP Sourcing for that SAP SRM Text Id; one for the header and another for the item type.

Price ConditionsConfiguring Pricing Condition Types for Header and Item in SAP SRM This is required to allow us to setup the pricing condition types that are required for SAP Sourcing Master Agreement to SAP SRM Central Contract replication. SPRO > SAP Reference IMG > SAP Implementation Guide > SAP Supplier Relationship Management > SRM Server > Cross-Application Basic Settings > Pricing > Process Condition Types

Here we can create the different condition types that are necessary for SAP Sourcing integration. SPRO > SAP Reference IMG > SAP Implementation Guide > SAP Supplier Relationship Management > SRM Server > Cross-Application Basic Settings > Pricing > Process Condition Groups

Add the following condition for the Contract Header along with the one shown in the pic above: Application Usage Cond Table Cond Table Description BBP PR SAP019 01AG Discount %age Add the following conditions for the Item level Condition Grp (0100) Application BBP BBP BBP BBP Usage PR PR PR PR Cond Table SAP016 SAP016 SAP016 SAP016 Cond Table 0100 01CT 01RA 01RP Description Price (old) Contract Absolute discount Percentage Discount

Authorization Provision for New Pricing Condition Types ProcedureStandard SRM roles for strategic purchasers provide access to a predefined set of condition types. In order to allow the usage of new conditions by strategic purchaser, you must extend the standard role of the strategic purchaser. The steps below are for adding & configuring an authorization object for the Strategic Purchaser Role. 1. Use the transaction PFCG and make a copy of the SAP Standard role for Strategic Purchaser in the customer namespace with all available authorizations. 2. Edit this role and click the Authorizations tab. 3. Next to the Change Authorization Data field, click Edit. 4. Search for the /SAPCND/CM authorization object. 5. Click +manually to manually add the new authorization object. 6. Enter the name of the authorization object as /SAPCND/CM. 7. Specify values listed in the table below: Field Value BBP /SAPCND/AP (Application as Condition Technique)

/SAPCND/CT (Condition Table)

/SAPCND/TY (Condition Table)

SAP001 SAP016 SAP019 SAP068 SAP116 0100 01AG 01BE 01CG 01CT 01PB 01PV 01RA 01RH 01RP 01SP

/SAPCND/US (Usage for Condition Technique) ACTVT (Activity)

PR

01 (Create or Generate) 02 (Change) 03 (Display)

8. Save the role. 9. Assign the role to the user/strategic purchaser who manages Central Contracts. The Pricing Conditions created in SAP SRM are then created in SAP Sourcing. It can be done either by: 1. Manually creating the conditions in Sourcing 2. Exporting the conditions from SRM as an XML file (SE38 > /ESOSRMIN/BBP_ CONDDATA_EXTRACT) and then importing this XML into sourcing.

Further ReadThe new features in the Strategic Sourcing module in Sourcing 9 are:

http://scn.sap.com/community/sourcing/blog/2011/12/06/new-features-in-sap-sourcing-wave-9-part-1strategic-sourcingThe new features in the CLM module in Sourcing 9 are:

http://scn.sap.com/community/sourcing/blog/2011/12/08/new-features-in-sap-sourcing-wave-9-part-2contract-lifecycle-management-clm

ReferencesConfiguration Guide Integration of SAP SRM and SAP Sourcing 9.0 http://scn.sap.com/community/sourcing/blog/2012/03/19/sap-sourcingsap-clm-integration-with-sap-srm