SAP Ariba in Sourcing and Procurement 

In the challenging and uncertain business environment of the post-covid era, having an efficient procurement and sourcing system is incredibly important for any business. Modern cloud-based ERP solutions can significantly close the gap between business buyers and suppliers. SAP Ariba, with its backbone known as SAP Ariba Network, now under the umbrella of the Business Network is at the forefront of global ERP solution providers.

Several sourcing and procurement solutions provided by SAP Ariba cover every stage of a procurement process, from procuring to pay. Being one of the most frequently used components of SAP Ariba, the SAP Ariba Sourcing aims to connect buyers and suppliers with the world’s largest business network to simplify sourcing across all business spend types.

This article will give you a clear idea about SAP Ariba Sourcing – how it can benefit your business, and what are the limitations. You will also learn the technical functionalities of SAP Ariba Sourcing and its user interface.

What is Sourcing, and What are the Main Sourcing Activities?

In a traditional sense, many of us often look at sourcing with a narrower view: finding a supplier and negotiating to secure the lowest possible price. But can the lowest price always guarantee you the highest savings for your business? For a very short-term, it might. However, if you consider long-term prospects, you will have to consider many additional factors where the concept of sustainable savings comes into play. You will have to factor in the total sourcing cost, including the price for creating contracts, time factors, and transportations, not just the direct purchase cost. You will also see a difference between two terms – sourcing and strategic sourcing.

Sourcing Vs. Strategic Sourcing

Sourcing is simply the process of identifying the suitable suppliers for your business to procure products and services at the optimal price. However, strategic sourcing is a larger concept that aims to improve the procurement process of your business and ensure the lowest cost for the whole process.

To realize long-term benefits sustainably for your business, having a great relationship with the best possible suppliers and having perfect strategic sourcing are essential.

What Are the Main Sourcing Tasks?

Let’s get familiar with the essential activities related to sourcing, as it will help you understand the true potential and purpose of SAP Ariba Sourcing:

• Analyzing spend categories: First, you will need to comprehensively examine your spend categories across all the departments and identify options for savings.

• Evaluating supplier market: Next, you will need to identify opportunities from the supplier market by researching and shortlisting the potential ones.

• Requesting information: You can request primary information from the shortlisted suppliers.

• Planning for sourcing: You will need to decide your complete process flow for the sourcing plan, including RFx events, auctioning, or keeping your existing supplier.

• RFx events: Moving on, you will conduct RFx events as needed. It is an excellent strategy to consider Total Cost of Ownership (TCO) instead of focusing only on the lowest procurement cost.

• Choosing supplier: Based on RFx events and evaluations of different performance metrics, you will pick the most optimal supplies for your business.

• Ongoing evaluation: To ensure cost savings over a sustained period, you will need to monitor and evaluate supplier’s performance and quality on an ongoing basis.

Several individual solutions integrated into the SAP Strategic Sourcing suite can significantly simplify and organize the above-mentioned sourcing tasks. For the remainder of this article, we will focus exclusively on the benefits, functionality, and implementation of SAP Ariba Sourcing.

What is SAP Ariba Sourcing?

SAP Ariba Sourcing is the most widely used software as a service (SaaS) solution for sourcing and procurement, trusted by over 295,000 buyers and 6.7 suppliers globally. With its end-to-end process management capability and integration with SAP S/4 HANA, it streamlines every sourcing activity from defining product specifications and requesting proposals to managing contracts.

The SAP Ariba network connects the supplier and buyer portals, and both parties can participate in different stages of the bidding and sourcing process across more than 20,000 categories for spend management.

SAP Ariba Sourcing primarily handles the following sourcing tasks::

• Strategy formulation and opportunity assessment.
• Negotiation and sourcing.
• Evaluation of suppliers and contract management.

SAP Ariba Sourcing: Technical Capabilities

Now let’s take a closer look at the technical capabilities of SAP Ariba Sourcing.

• RFx Management: Ariba RFx management tools are capable of creating and managing requests for information, proposals, and auctions. Additionally, you will also get the following features integrated:
  • Supplier discovery tools, and instant RFx creation,
  • Competitive and sealed envelope bidding management and optimization tools,
  • Decision support tools based on several criteria along with team grading,
  • Support for more than 220 currencies and 19 languages,
  • Supplier response management and communication tools
  • Conditional content and event creation.
• Category management: SAP Ariba Sourcing helps you manage categories based on projects, workflow, documentation, knowledge, and resources.

• Additional features: You will also be able to analyze and report sourcing activities and accurately track your savings pipeline with SAP Ariba. Moreover, you can also use web services and file channels to connect it to third-party solutions.

• Community features: Subscription to SAP Ariba will give you access to some exclusive community benefits, such as:
  • SAP Ariba Network, consisting the world’s largest trading community for supplier discovery and negotiation support.
  • Ariba Exchange User Community, a great place to promote networking and share knowledge.

Functional Capabilities: How Does SAP Ariba Sourcing Benefit Your Business?

There are several benefits of using SAP Ariba Sourcing for your business. Here we have summarized a few for you:

• Strategic Sourcing: You can comfortably manage your sourcing activities with SAP Ariba sourcing process flow throughout the complete sourcing lifecycle. Full visibility and analysis of your spend management in real-time will help you with data-driven decision-making.

• Prioritizing Opportunities: Ariba Sourcing is compatible with any spend management tools letting you identify the most value-adding opportunities for your business. You can enter into agreements of varying timeframes and products and get the flexibility of purchasing from different sources.

• Data-driven sourcing: You will always have access to all the information you need in real-time. You will easily maintain compliance with procurement and coordinate across different regions and departments.

• Documentation and reporting: The solution can help you document and report your sourcing activities. For example, you can easily track your savings in different stages, such as forecasted, negotiated, and actual. Historical data is also accessible at your fingertips.

• Free access to SAP Ariba Discovery: As a buyer, you will get free access to SAP Ariba Discovery, a separate tool to find new suppliers from outside your network. It facilitates smooth communication with new suppliers making it easy for you to get them on board.

• Support services: As an Ariba Sourcing subscriber, you will enjoy Level 1 and Level 2 customer support and all necessary coaching and guidance to adapt to the platform quickly. The company also facilitates your online business deals through event day management services.

In summary, the tool is designed to give you speed, flexibility, and efficiency improvement throughout your sourcing process. In addition, you will promptly identify risk areas and eliminate them with access to the Ariba supplier network and real-time communication tools.

SAP Ariba Sourcing: User Interface

Now it’s time to get familiar with the SAP Ariba user interface. We will begin with knowing the essential tools and then proceed to implementation.

Application Dashboard

The SAP Ariba login page will take users to the application dashboard. Users can personalize content while administrators can control which items must remain visible on the user end.

In general, the dashboard includes a personal calendar with specific user events, to-do lists, events, and sourcing updates, announcements, documentations, and essential company news from customizable RSS feeds.

Sourcing Requests

The SAP Ariba Sourcing process flow starts with creating sourcing requests. Users can create a sourcing request from the Create menu or the sourcing request button on the left side. Then, based on the values entered by users, a sourcing request template would appear.

The template includes all the sourcing essentials such as item documentation, custom headers, request process tasks, approval workflow, and team members with specific roles in the process. Approvers can view the requested items on their dashboard or by email, and they can either approve or deny the request with the option to include a reason.

Sourcing Projects

After approval, a sourcing agent or sourcing manager can create a sourcing project from a customizable template under the documents tab. It includes all the relevant events such RFx, auctions, bids, negotiations, and surveys. Searchable savings forms are also part of sourcing projects enabling users to track prices at different stages of the sourcing process.

Users can either opt for a full-fledged sourcing project with multiple events or a quick sourcing project with a single event.

Sourcing Events

Sourcing events are categorized in different statuses, from creating a request to awarding contacts. The template creator team has access to modify an event template.

There can be multiple sourcing events for one sourcing project as the sourcing manager or agent decides. For example, you can first invite potential suppliers from a large pool through an RFI event and then conduct an auction within the shortlisted candidates.

• Sourcing Event Content: The sourcing event type will define the contents included in a sourcing event. For example, RFIs typically have a small set of primary questions, whereas RFPs include a more comprehensive questionnaire on specific production lines. Again, there are many built-in templates for you to use.

• Event Types: You can create more than 10 types of sourcing events with different features to suit your needs. A few examples are RFx, Reverse Auctions, Dutch Auctions, Forward Auctions, Japanese Auctions, and Total Cost Auctions.

Communications during the Event Process

You can create and share several types of messages and reports with team members during the event process.

• Messages: Buyers and suppliers can share real-time project details using the message tab in the form of private messages, project messages, and notifications.

• Reports: You can create reports of different types such as supplier activity, RFI, audit log, tasks, custom analysis, and several others to supervise the event process efficiently.

Implementation Planning: How Would You Deploy SAP Ariba Sourcing?

To help you deploy SAP Ariba Sourcing in your organization, you will get assistance and active engagement from the SAP Ariba Sourcing team. The project manager, sourcing functional lead, shared services lead, technical lead, and integration lead will collaborate with your team from the Ariba side. In addition, the project sponsor, manager, functional lead, and subject matter experts will engage from the customer end.

The implementation process consists of four steps. Here are they:

Prepare

The Prepare phase begins after you complete your initial discussion with SAP Ariba’s sales team to finalize project details such as scope, timelines, and budget. After onboarding all the stakeholders from both sides, the deployment kickoff is started. In the Prepare phase, you will define goals objectives, performance metrics and build the project implementation team. The project team then defines roles and responsibilities for each team member and decides project methodology.

Explore

The Explore phase will organize several sessions and design workshops to know requirement details and identify any problem areas. Afterward, the SAP Ariba Sourcing Lead will conduct breakout and integration sessions to familiarize your team with the overall solution. The project team discusses master data, reporting tools, and blueprinting of sourcing requests, sourcing projects, and sourcing events during the sessions. Active participation from the subject matter experts is crucial for a successful outcome at this stage.

Realize

This is where you would do the actual configuration and testing of the solution after finalizing the business requirements. First, the Ariba Sourcing team configures it to check all the functionalities within a test environment carefully. Then, the functional lead and shared services lead from the Ariba side collaborate to work on the following areas:

• Preparing sourcing templates including approval workflows and event configurations.
• Loading the master data about all concerned parties including suppliers, departments, and regions.
• Enabling any integrations as defined in the scope, for example, with SAP ERP.

Deploy

Here the system would go live for the customer for a smooth transition. After User Acceptance Testing (UAT) is done, the SAP Ariba team will assist you to migrate the system from the test environment to your actual production and procurement environment.

How to Configure SAP Ariba Sourcing?

After you have deployed SAP Ariba procurement, you can proceed with configuring it to serve your procurement needs ideally.

Configuration Types

There are four major areas that you would configure within your sourcing solution. Those are:

• Sourcing requests,
• Sourcing projects,
• RFx events,
• Sourcing library, and,
• Approval tasks.

You can use and customize ready templates for the configuration process. There will be tabs such as overview, documents, tasks, team, and conditions under the configuration types to keep it organized.

Sourcing User Types

Ariba Sourcing can be used as a buyer or as an Ariba network supplier. The sourcing manager or sourcing agent can create sourcing projects or events and afterward can include potential suppliers to compete in the process. The suppliers must start using SAP Ariba SLP before contracts are awarded.

Both existing and new suppliers can participate in the sourcing process after receiving a buyer’s invitation. Suppliers will receive email notifications and have options to either accept or decline a sourcing request. Before accessing sourcing events, the new suppliers must register themselves to the Ariba Network and use the Ariba login.

SAP Ariba Sourcing Price

So now as we know much about implementing SAP Ariba in your business, you must be wondering how much you need to pay for using the service. The pricing for the standard version depends on the number of users. It is as low as USD 230 per user per month for over 200 users.

For 1 to 25 users, the price will be USD 650 per user per month, and you can purchase it for a minimum of 5 users and at least 36 months.

Billed annually, you will have to pay USD 39,000 per annum if you subscribe for 36 months with 5 users.

Few Drawbacks

Despite its excellent capabilities and functionalities, there are some drawbacks of using SAP Ariba sourcing for your business, such as:

• Expensive: Firstly, the solution is costly to purchase and implement. There are also no free trial versions to let you explore the functionalities.

• Complicated: It has a steep learning curve, and you will need professionals to realize its true potential. The implementation process demands a significant amount of time and effort from your team members.

Due to its large-scale deployment nature, complexity, and implementation costs, the SAP Ariba Sourcing may not always be feasible for small and medium-sized businesses. However, if you are wondering about more wallet-friendly solutions for a small business, there are other solutions to consider.

Concluding Note

SAP Ariba Sourcing has excellent potentials to make your sourcing process fast, efficient, and accurate. Its end-to-end process management covers everything from identifying your sourcing requirement to awarding contracts to suppliers and monitoring their performance. In addition, the integrated report and analytics contribute to your business transparency.