The procurement functions of SAP SRM complement a typical ERP-based procure-to-pay process with integrated catalogue-based requisitioning, often referred to as operational procurement or e-procurement

Being web-based and easy to use, SRM can typically be used by any end user in any company who needs to purchase indirect materials and services (goods and services used for maintenance, repair, and operations) and direct materials and services (things that directly affect production).

SRM covers three procurement scenarios:

1. Self service procurement

This covers the ability to requisition and buy goods or services. Typical tasks include:

• employese buying office stationery or IT equipment from supplier catalogues
• employees buying items that are not covered in catalogues from centrally agreed contracts, for example procurement of services.
  

Catalogues can be either internally managed or maintained by the supplier and items retrieved from the supplier's web site using punch out technology.

2. Service procurement 

SRM covers a wide range of services. It promotes supplier collaboration for services such as temporary labour, consulting or facilities. The real business value here is in the enhanced supplier collaboration to define service requirements and align resources more accurately. Planned and unplanned items can be mixed in one shopping cart.

3. Plan driven procurement

This scenario is relevant for direct procurement. In a highly integrated and automated procurement process, demands for products and services can come from many different planning systems that reside outside of SAP SRM, such as MRP or APS systems. SRM integrates with SCM and plant maintenance.

Deployment Options

Although it makes more sense to implement SAP SRM along SAP ERP so to benefit from existing fully integrated functionality, SRM can also sits on top of any other ERP system and can be fully integrated with any existing procure to pay process.

SRM offers three options for deployment. The choice of implementing one or the other depends on how much the company wants to use SRM for its Materials Management functions instead of the ERP system. This often comes down to how complex the P2P processes are.

1. Classic deployment

SRM is implemented with one or more ERP systems. All Materials Management (MM) is mapped in the ERP system. Accounting (FI) and Controlling (CO) are processed in the ERP system.

2. The extended classic deployment

SRM is implemented with one or more ERP systems. The complete procurement process takes place in SRM. The purchase order in SRM is the leading purchase order and the ERP backend system gets updated from SRM. Goods receipts (confirmations) and invoices can be pre-entered in SRM but data is updated from the backend system.

3. The standalone deployment

In this deployment scenario, there is no Materials Management (MM) in the ERP system and the MM functions of SRM are used for all non-production procurement. Accounting (FI) and Controlling (CO) can be connected. However, this is optional.

Typical benefits

Clearly, the number one benefit Bluefin have observed in the past in every organisation where we have implemented SRM is the possibility to achieve the decentralisation of the procurement function.

At first this might sound wrong when today centralisation is often seen by organisations as a way forward to improve their purchase to pay process. On the contrary, in the SRM context, decentralisation of procurement promotes centralisation by empowering employees with self-service procurement. This can be achieved because SRM is so easy to use, and because purchasing and budgetary approvals can be done directly in the system by being automatically routed to the relevant people. So any end user can order goods or services without going through the purchasing department and hence reduce overheads. This allows purchasing professionals to focus on managing relationships instead of transactions.

Since SRM can be accessed internally or externally, organisations with a large portion of service technicians in the field will also find the mobile capabilities of this integrated system particularly useful.

Automation of procurement process and faster procurement execution through online approval reduce procurement cycle time and increase efficiency.