Hello there! Ever heard of SAP Ariba?, well if you don’t let’s have a quick look at it.
SAP Ariba is a cloud-based purchasing and procurement software. It assists purchasers with all of their traditional activities while also ensuring the digital transformation of the purchasing process. The system, in addition to many strategic tools, serves as a B2B marketplace where businesses and their suppliers can communicate and trade electronically.
The interface offers the ease of use for a B2C marketplace users who are generalized to private e-commerce purchases. Buyers, on the other hand, have access to significantly excessive organization management features as a part of their new digital backend. By aligning towards the buyers and sellers POV, all elements in the procurement process can be digitally mapped.
Now knowing what is it, it’s very essential for business owners to understand the importance of SAP Ariba in managing their business processes effectively. Let’s see how SAP Ariba aids business.
Why should Businesses opt for SAP Ariba?
The complexity of the procurement process, like any process, lies in the milestones and intricacies. The principal-agent problem, demand planning, suppliers, buyer agreements, consumption of commodities, invoicing, and analysis are some of the essential factors to consider and difficulties to overcome in the procurement process.
We’ll talk about the SAP Ariba technologies that assist businesses to overcome the following obstacles in this section.
- Principal-Agent Problem
A conflict of interest that can arise when a representative acts on behalf of an organization is referred to as the principal-agent problem often referred to as the agency problem. In most procurement agreements, there is no winning or losing; suppliers either get the contract and work with the purchasing company, or they don’t.
Suppliers are tempted to find an “advantage” wherever they can to win the bid when they are under pressure to succeed. As a result, the purchasing agent in this interaction is in a position of strength because they have the authority to determine or even influence the outcome of the interaction in favor of a particular provider. In actuality, the interests of the principal and the purchasing agent cannot always coincide.
In order to direct the deal to the preferred source, it becomes necessary for the agent to work in collusion with the provider and take bribes or less obvious types of payment in kind. Organizations can try to set up system checks and balance procurement operations to avoid this conflict of interest. In order to prevent the principal-agent dilemma, SAP Ariba offers a stringent set of controls, procedures, and workflows in all the solution areas.
- Demand Planning
Reacting to demands that have arisen and that the organization needs immediately satisfy places the organization in a more difficult negotiating position with suppliers and leads to inefficiencies since various divisions and players within the organization must wait for goods and services to arrive. Strategical procurement’s last-minute, reactive quality can be alleviated with a certain type of demand planning, which is based on well-known targets, goals, historical demands, and external circumstances.
Buyers can develop a proactive understanding of their procurement needs and then develop procurement strategies to meet those needs with the help of SAP Ariba Supply Chain Collaboration for Buyers and the vast reporting capabilities offered by SAP Ariba in general.
SAP Ariba’s Supply Chain Collaboration for buyers enables you to develop procurement strategies based on well-known targets, goals, historical demands, and external circumstances
- Supplier Management
Once a need has been established and/or raised, it is necessary to find potential providers and set up a procurement strategy. How do you narrow down the pool of potential suppliers, generate interest in and competition over your requirements and choose the best deal, item, and supplier?
You can find new suppliers in the Ariba Network by using SAP Ariba Discovery, which enhances the sourcing events and activities offered by SAP Ariba Sourcing. Finally, your firm can iteratively enhance supplier interactions and management procedures utilizing SAP Ariba Supplier Lifecycle and Performance.
- Processing Purchase Agreements
A contract or purchase order (PO) must be defined for the specific goods or services being purchased after negotiating with potential suppliers and choosing the best one. This contract must specify payment conditions and other details in detail and be applicable at the operational level in order to be used. The platform for drafting and managing contracts offered by SAP Ariba Contracts works as a linking element between the various procurement solutions offered by SAP Ariba and the digital core of SAP S/4HANA.
- Governing Goods Consumption
The product or service must be prepared for use or deployment by your business once an order or contract has been placed. How are staff supposed to locate and use this item while following the right procedures and approvals?
The challenge is to keep company approval procedures and financial requirements in mind while yet making your employees’ experience with the “finding” phase of the process intuitive. Experts and users can use SAP Ariba Buying and SAP Ariba Catalog to locate and use the goods and services that the company’s procurement department has reviewed and negotiated.
- Managing your Invoices
If the agreement didn’t call for payment in advance, the supplier starts submitting bills as soon as a corporation starts using the things after the previous steps. In either case, a business needs a method for processing bills: one that compares invoices to real requests in order to make sure that payments made to suppliers accurately represent the terms of the contract and the sums that the provider actually requested and provided.
Managing the entry and intake of invoices, ensuring accurate invoices up front, and enabling you to obtain additional discounts and payment efficiencies during the payment phase of the procurement process are all made possible by SAP Ariba Invoice Management and SAP Pay, which together offer a seamless solution.
- Spend analysis
Once the payment has been confirmed, the procedure can be repeated, hopefully with more knowledge gained from the previous cycle of procurement. In this field, organized data and analytics are required, along with the computing capability to quickly analyze enormous amounts of transactions and other data.
To ensure that there may be ongoing improvements, SAP Ariba Spend Analysis assists finance and procurement departments in gaining this improved understanding of their procurement operations.
Final Thoughts
The current shift is that procurement is no more a backdoor department solely responsible for obtaining supplies, negotiating the best bargain, and signing documentation. It has been surpassed by the power of the internet, and it is now more vital in exploiting strategic relationships with suppliers and in the world’s emerging geopolitics.
It has finally been given tools to examine huge data in order to make more educated decisions. SAP Ariba has used Intelligent Expenditure Management to bring together spend data from all sources and categories, allowing for wiser, faster spending decisions. Companies may enable meaningful collaboration with their existing providers by harnessing the capabilities of the SAP Ariba Network. They can uncover suppliers with whom they have never done business before by opening up a new world of potential with Ariba Discovery.
We at Kaar Tech will be thrilled to demonstrate how SAP Ariba works for you, feel free to get in touch with our expertise!
FAQ’s
What is SAP Ariba?
SAP Ariba solutions operate in tandem with other SAP procurement solutions to deliver tools, services, and knowledge that help to decrease financial and operational interruptions, fulfil worker and customer demands, and reduce supplier risk and market unpredictability.
What are the key solutions provided by SAP Ariba?
SAP Ariba offers a number of tools that work together to assist procurement operations and supplier management. The key solutions include sourcing and procurement, supplier management, supply chain collaboration, and spend analysis.
How does SAP Ariba facilitate procurement processes and supplier management?
Its helps businesses to identify new suppliers, negotiate contracts, and successfully oversee supplier performance. The platform enables organisations to make educated purchasing decisions by providing expenditure analysis, e-invoicing, and catalogue management features.
Why business need to adopt SAP Ariba for their procurement activites?
SAP Ariba solutions operate in tandem with other SAP procurement solutions to deliver tools, services, and knowledge that help to decrease financial and operational interruptions, fulfil worker and customer demands, and reduce supplier risk and market unpredictability.
