SAP Ariba Supplier Risk solutions deal primarily with two things: number one is bringing you closer to understanding the risk element of dealing with your supplier, and number two is wrapping up the risk management aspect in seamless integration with your procurement process.

SAP offers two solutions: the first one is by supplier performance, and the second one is supplier risk.

Cloud-based spend and procurement solutions such as SAP Ariba help you manage both aspects systematically, transparently, and organized manner. This article will introduce you to the SAP Ariba Supplier Management solution along with its features, benefits, and workflow.

What is SAP Ariba Supplier Management?

SAP Ariba Supplier Management Portfolio consists of two individual and related solutions – 

• SAP Ariba Supplier Lifecycle and Performance (Ariba SLP), to help with the performance aspect of supplier management. 
• SAP Ariba Supplier Risk (Ariba SR), to help with the risk aspect. 

Together Ariba SLP and Ariba SR streamline your total supplier performance risk management with data-driven proactive decision-making and advanced risk-mitigation tools. In addition, to offer greater accessibility, the SAP Ariba Supplier Management Portfolio seamlessly integrates with SAP Business Suite and Ariba Network.

Picture 1: SAP Ariba Supplier Management Portfolio

Now we will take a closer look at the capabilities and features of both solutions.

SAP Ariba Supplier Lifecycle and Performance: Overview

The main objective of SAP Ariba Supplier Lifecycle and Performance (Ariba SLP) is to assist you in comprehensively managing your supplier performance from onboarding and throughout the entire supplier lifecycle in a coordinated manner. It seamlessly connects with your procurement process and enables you to maintain compliance in all stages. 

Key Features of Ariba SLP

The key features of Ariba SLP include: 

• Synchronization with SAP ERP: Ariba SLP seamlessly syncs data with SAP ERP in both directions. So whenever you make any changes in any of your ERP components, the supplier data will instantly be updated automatically, and vice versa. 

• Supplier’s ease of access: Suppliers can easily access the portal by themselves through Ariba Network and keep their information updated. 

• Cross-application integration: Ariba SLP supports integration with all other suites under other SAP Ariba, making it easy for you to keep data consistent across your business. 

• All-in-one supplier data with multiple metrics: Ariba SLP provides a comprehensive 360-degree view of supplier performance and quality data based on numerous metrics combined at the same place. You can also customize the performance metrics depending on your company’s nature of operation and policies.

Now we will do a quick overview of Ariba SLP to understand how to manage the workflow: 

SAP Ariba SLP: Process Flow

Ariba SLP categorizes the entire supplier lifecycle process flow in four stages, and the application is designed to distribute the tasks accordingly with options for customization. Here are the four stages:

1. Request creation: Here, your concerned officials and procurement professionals from the company will have access to create requests for new suppliers. Self-registered suppliers can also complete their requests. You can set multiple approval stages for a request to be approved. There are three modes of approvals – approve, deny and request additional information. 

1. Registration: Here, the suppliers can provide their detailed profile information, capabilities, certifications, and past achievements. You can set the registration process in two phases – initial registration and update. You can also set multiple levels of approval at this stage. 

1. Supplier qualification: This stage requires the suppliers to answer a more detailed questionnaire on the items they will deliver to your business. Every specification is defined at this stage. 

1. Setting up the preferred supplier: At the final level, you can set a preferred supplier based on up to five categories, such as commodity-wise, region-wise, or department-wise, or based on a combination of categories. 

So far, we have discussed how you can manage the performance issues related to suppliers. Let’s now move on to see how the other component, Ariba Supplier Risk (Ariba SR) helps you manage the supplier risks. 

SAP Ariba Supplier Risk: Features

Traditional manual risk scoring method for supplier’s risk assessment has low reliability as it does not include a complete overview of the suppliers and market factors. Ariba SR addresses all those shortcomings by allowing you to segment your suppliers based on specific risk profiles. Additionally, it lets you factor in all categories of business risks in your decision-making process by conducting comprehensive due diligence. 

Key Features of Ariba SR

Similar to the Ariba SLP, it also provides a 360-degree view of your supplier’s risk management. The core features are designed to mitigate supplier risk by addressing three key risk management areas, which are: 

1. Assessment,
2. Monitoring, and
3. Mitigation. 

Picture 4 – SAP Ariba Supplier Risk (Ariba SR)

SAP Ariba Supply Risk Features:

• Comprehensive supplier profile: Ariba SR gathers supplier information from multiple sources and combines them to create a unified supplier information report. Sources include Ariba Network, external sources, and suppliers’ procurement profiles. 

• Diverse data source: To ease macroeconomic and external risks, you have access to over 600,000 data sources integrated within Ariba SR that include news agencies, government and private sources, and disaster management sources. Previously Ariba SR successfully anticipated more than 200 risk events and warned users. 

• Compliance and reporting: Ariba SR will produce country-specific risk profiles and disasters management profiles for suppliers to make the compliance and due diligence process easier for you. You will also get a clear view of the production linkages. In addition, you will get an instant report on forced labor and environmental sustainability issues out-of-the-box. 

• Supplier classification: Ariba SR categorizes the suppliers based on your chosen criteria and risk classifications. You will also get relevant risk reports on suppliers at the time of supplier on-boarding, and through different stages of the suppliers’ lifecycle. 

• Ongoing monitoring: The suppliers’ risk profile will automatically update continuously, helping mitigate your financial, legal, and operational risk exposures. 

• Self-accessibility of suppliers: Suppliers will also be able to update their profile information in real-time as the tool is connected to your SAP Ariba sourcing solutions. 

Now, let’s get familiar with Ariba SR’s process flow. 

SAP Ariba Supplier Risk: Process Flow

SAP Ariba SR divides the total risk assessment approach into four steps, which are: 

1. Soliciting engagement: A company professional identifies a potential risk area and creates an engagement request. 
2. Providing details: Concerned personnel sends detailed risk assessments to suppliers and other stakeholders. 
3. Answering the assessment: Suppliers and stakeholders provide answers to the assessment. 
4. Evaluation and risk scoring: Based on the responses and your organizational policies, you can assign risk scores to different categories according to your risk profile. 

Final Words

To deal with the 21st century’s business challenges and supply chain disruptions, especially in the post–covid era, you need to manage your supplier performance risk system with an integrated and holistic approach instead of considering it a detached process. Unified, all-in-one, cloud-based solutions like SAP Ariba Supplier Lifecycle and Performance and SAP Ariba Supplier Risk can cover both performance and risk aspects of your supplier performance risk system.