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A Completely End to End and integrated contract management solution provides better compliance with negotiated terms and operational contract execution because of seamless integration. Key Functionality is – End-to-end integration between legal contract, operational contract, and contract execution Central contract repository for operational contracts Central contract with distribution into back-end systems running the SAP ERP application and materials management software Centralized compliance reporting Sourcing integration of operational contract Online and offline mass change for operational contracts Benefits 1 – Heinz can realize savings through: Improved contract management Integrated, solid contract database Complete, central access to contract information Central monitoring capabilities for central purchasers Identification of maverick buying 2 - Customers can reduce project risks through: Implementation of a proven standard solution Service-based upgrade path for customer-specific add-ons Contract Cycle :-

Contract Mgmt

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Page 1: Contract Mgmt

A Completely End to End and integrated contract management solution provides better compliance with negotiated terms and operational contract execution because of seamless integration.

Key Functionality is –

End-to-end integration between legal contract, operational contract, and contract executionCentral contract repository for operational contractsCentral contract with distribution into back-end systems running the SAP ERP application and materials management softwareCentralized compliance reportingSourcing integration of operational contractOnline and offline mass change for operational contracts

Benefits

1 – Heinz can realize savings through:Improved contract managementIntegrated, solid contract databaseComplete, central access to contract informationCentral monitoring capabilities for central purchasersIdentification of maverick buying

2 - Customers can reduce project risks through:Implementation of a proven standard solutionService-based upgrade path for customer-specificadd-ons

Contract Cycle :-

With in SRM 7.0 followings can be done

Renegotiation of an expiring contract by converting an expiring contract into a sourcing event / Creation of a new contract from a winning bidUpdate of an existing operational contract from a winning bidMass update and appending of contractsUsing contract for sourcingIn SAP SRM, creating Shopping Cart or PO against contractIn SAP ERP, creating Requisition or PO against contract

Page 2: Contract Mgmt

Contract Negotiation –

Contract Negotiation in SAP SRM enables: Renegotiation of an expiring contract by converting an expiring contract into a sourcing eventCreation of a new contract from a winning bidUpdate of an existing contract from a winning bidMass update and appending of contracts from a winning bid

Contract Execution –

Contract execution in SAP SRM enables:Centralized creation and usage of contracts in materials management software in SAP ERP through the distribution of the central contract in SAP SRMA flow-on benefit of the central contract, which is the ability to use the central contract as source of supply in systems running SAP SRM and SAP ERP in parallel, providing the opportunity to attain better purchasing conditions through release aggregationSophisticated integration between contract and catalogIntegration to records managementFlexible pricing and complex discountsContract hierarchies with release-based discountsOnline and offline operational contract mass change functionalityPowerful authorization concept for contractsOffline approval functionality through e-mailContract release notification to strategic purchasersVarious alerts with flexible configuration of receiver and contentExchange rate thresholds on the contract level to control and mitigate currency fluctuation riskIntroduction of revision levelMass change of contracts out of response and award

Central Contract Repository –

Centralized web-based document management environment for operational contracts and attachmentsFull-text search for terms in contracts and attachmentsTREX full text search through attachments, internal texts, and supplier textsAttach scanned, faxed or major file types such as Word, PDF, Excel, PPT,

image files and morePossibility to upload contracts to SAP Records Management

Page 3: Contract Mgmt

Contract Monitoring -

Contract monitoring in SAP SRM enables:Seamless integration among operational contract, contract execution, and contract monitoringMonitoring contract usage and contract compliance across multiple instances of SAP ERP and SAP SRMMonitoring compliance through alerts on target value and target quantity against released value and released quantityMonitoring expiration of contract through reception of configurable alerts

In Heinz a central contract is created which could be used as source of supply in SAP SRM, as well as in SAP ERP.

Heinz is using SRM 7.0 and with in SRM 7.0 followings new has been added –

Additional Contract Information in shopping Cart.

Following additional contract information is displayed in the source of supply tab of the SC create process.

Contract Line Description Supplier Part Number Priortization in supplier List

Page 4: Contract Mgmt

Payment terms on Item Level

Payment terms are available on the item and distribution level for central contract. Neither purchase order in back end not in SAP SRM have the payment item at item level, they only have it at Header Level.

There fore if you search a source of supply the PO is now enabled in such a way that payment terms are taken into account for search. When searching for matching contract you can enter payment terms as a search option. If you do so system only display the contract position which has the specific payment term for that position. If you leave the payment term search field blank , the system display all the contracts with matching item with out considering the payment term.

Multiple Alert Thresh Hold for Contract

In SRM 7.0 alert parameters could be configured in customizing function with default values instead of defining on the screen selection of the report BBP_Control_Check. They could also be changed in each single contract.

Alert Parameters (Header) are as follows –

Relationship: 1 - Value (Released) / Value (Total) 2 - Expiration Date (Days)

Page 5: Contract Mgmt

Alert Parameters at Item level is :-

Relationship: Value (Released) / Value (Target) Quantity(Released) / Quantity (Target)

Page 6: Contract Mgmt

SPRO Configuration SRM Server Cross Application Enter alert thresh Hold data for contract

Distributed contract item for catalog.

Line item of the contract can also be sent to the catalog. Before this version 7.0 contract data was only transferred at Header level.

The following fields are transferred to catalog.

o Vendor , Vendor ID , Vendor Part Number .o Product , Product ID , Product Category . o Price , Price Unit , Percentage. o Payment Terms on item level.

Page 7: Contract Mgmt

If the contract is distributed to the catalog on the header level, all items are selected automatically.

Change Document and version management for conditions.

When you display a central contract in contract management and select the tracking tab page, you will see the followings –

o Conditions that were changed at header and item level . o Old Value and new value of Conditions. o By whom the conditions were changed. o When the conditions were changed.

Customizing the SPRO –

Page 8: Contract Mgmt

SRM Server Cross Application Switch on Version Control for purchasing document

Exchange rate of Thresh holds.

There is a functionality to put tolerance check on the exchange rate that is allowed. Contracts in a foreign currency frequently have fixed exchanged rates . Fixed exchange rate can incur a high risk for both the purchasing company and the supplier company there fore the purchaser should be able to distribute the risk of currency fluctuation between purchasing company and supplier.

In the exchange rate thresh hold section the software determine the current exchange rate for PO Currency and contract currency. If PO created later on the software calculates the current exchange rate for PO Currency and contract currency.

Page 9: Contract Mgmt

Currency on distribution level.

Because the contracts are negotiated in different currencies for the single back end system. The central contract need to provide the currency on the distribution level , instead of header level.