SRM 7.
0 RKT COLLATERAL ON
Contract Management
Release 2008
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Table of Content:
Harmonization of Local Purchasing Contract and GOA ________________________ page 3
Changes to the User Interface ___________________________________________ page 5
- Additional Contract Information in Shopping Cart _____________________ page 5
- Payment terms On Item Level ____________________________________ page 6
- Multiple Alert Thresholds for contracts ______________________________ page 8
- Distribute Contract Items to Catalog _______________________________ page 10
- Change documents and Version management for Conditions ___________ page 12
- Exchange Rate Thresholds ______________________________________ page 13
- Currency on Distribution Level ___________________________________ page 15
- Grouping of Items _____________________________________________ page 16
- Discount based on Aggregate Release Value _______________________ page 17
- Records Management Integration ________________________________ page 19
- Revision Level _______________________________________________ page 19
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Harmonization of Local Purchasing Contract and Global Outline
Agreement
Use
Until the 7.0 release, SAP SRM offered two objects that represent operational contract
management functionality: Global Outline Agreement (GOA) and Local SAP SRM Contract.
The global outline agreement is created in SAP SRM and act like an umbrella agreement. It cannot
be used as source of supply in the SAP SRM application.
The local contract resides in SAP SRM and can be used as a source of supply for upcoming
requests residing in SAP SRM. The local contract cannot be used for source of supply
determination in SAP ERP.
Because the local contract provides more functionality and follow-on processes that are interesting
for SAP ERP customers, there was a need to offer the SAP SRM contract in SAP ERP as source of
supply.
The concept of harmonizing GOA and local SAP SRM contract into one business object is outline
as follows:
Build one central object that reflects a combination of both contract objects
Handle releases centrally in the central contract
Enhance central contract with SAP SRM global outline agreement functionality (such as
distribution, registration process, currency, and payment terms on item level)
Offer all existing functionality such as hierarchies, release-based rebates, negotiation
process and upload to SAP master data management (MDM) catalog.
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Central Contract Management
A central repository for contracts is available across SAP SRM and SAP ERP. Leverage the SAP
SRM contract (such as contract hierarchies, discount across contract hierarchies, and versioning)
for SAP ERP source of supply determination.
A central contract is created in SAP SRM, which could be used as source of supply in SAP SRM, as
well as in SAP ERP. The data, which are relevant for a source of supply determination, are sent to
SAP ERP through Enterprise Services Repository (for SAP ERP release 6.0 EhP4) or through
intermediate document (for earlier SAP ERP releases).
On SAP ERP side, either a specific type of contract or a scheduling agreement is created.
During each source of supply determination (such as purchase requisition, PO), you can search
directly for central contracts through new fields on the user interface and a new F4 search help
(SAP ERP release 6.0 EhP4).
To leverage conditions across contract hierarchies and to offer the most actual price and condition
calculation across all procurement organizations, the SAP SRM application is called for price
calculation before the PO from SAP ERP is posted.
Central Contract as Source of Supply in SAP ERP
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1. SAP SRM sends contract data to SAP ERP.
2. Contract data are stored in a specific object in SAP ERP.
3. Search for source of supply in SAP ERP yields specific object and assigns it to the source
list/purchase requisition.
4. When the PO is created out of the purchase requisition, contract completion data request is
sent to SAP SRM.
5. SAP SRM calls International Pepper Community (IPC) for latest pricing information.
6. Price calculation and evaluation of background information are performed, and contract
release information data is sent to SAP ERP.
7. After the PO has been released, release information is sent to SAP SRM in order to update
the contract.
8. Purchaser requisition document history is updated with contract and PO data.
Changes to the User Interface
a) Additional Contract Information in Shopping Cart
b) Payment terms On Item Level
c) Multiple Alert Thresholds for contracts
d) Distribute Contract Items to Catalog
e) Change documents and Version management for Conditions
f) Exchange Rate Thresholds
g) Currency on Distribution Level
h) Grouping of Items
i) Discount based on Aggregate Release Value
j) Records Management Integration
k) Revision Level
a) Additional Contract Information in Shopping Cart (SC)
As of SAP SRM 2007, you can enter additional contract information in the Shopping Cart.
The following additional contract information is displayed in the Source of Supply tab of the Create
SC process:
Contract Line Description
Supplier Part Number
Prioritization in the Supplier List
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b) Payment terms On Item Level
In new SRM 7.0, payment terms are available on the item and distribution level for the central
contract.
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However, neither the Purchase Orders in the backend system, nor the Purchase Orders in mySAP
SRM have the payment terms at the item level; only at the header level.
Therefore, if you search for a Source of Supply, the PO is now enabled such that the payment
terms are taken into account in this search. When searching for a matching contract, you can enter
payment terms as a search option. If you do so, the system only displays the contract positions that
have the specified payment term for the position. If you leave the payment terms search field blank,
the system displays all contracts with matching items without considering the payment terms.
If the Purchase Order (PO) header has no payment terms, the search for sources of supply
considers the payment terms at the item level of the contract. If the system finds payment terms at
the item level, this value is transferred to the Purchase Order line Item. If no payment terms are
maintained on the item level of a contract, the source of supply transfers the values of the contract
header to the Purchase Order header.
If the Purchase Order header contains payment terms, the search for sources of supply is carried
out as follows:
If the PO header payment terms match the contract item payment terms, the system
displays the payment terms in the Sources of Supply overview
If the PO header payment terms differ from contract item payment terms, the system
displays the payment terms in the Sources of Supply overview and displays a message
when the contract is assigned as the Source of Supply
If the PO header payment terms match the contract header payment terms, the system
displays the payment terms in the Sources of Supply overview
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If the PO header payment terms differ from the contract header payment terms, the system
displays the payment terms in the Sources of Supply overview and displays a message
when the contract is assigned as the Source of Supply
When creating backend contracts out of a Global Outline Agreement (GOA), different payment
terms on item level of the GOA are considered as split criteria. Header level payment terms of
backend contracts are populated with item level payment terms of the GOA if existing - if not, they
are populated with header level payment terms of the GOA. If you have activated grouping logic for
backend contracts, only line items with identical payment terms can be grouped together.
Effects on existing data: The payment terms are forwarded to the Purchase Order document and
subsequently considered in the Invoice. These payment terms overrule the settings that are made
in the business partner maintenance for the supplier.
c) Multiple Alert Threshold for Contracts
In SRM 7.0, alert parameters could be configured in customizing function with default values
instead of defining on the selection screen of the report BBP_CONTRACT_CHECK.
They could also be changed in each single contract.
Alert parameters (header) are as follows:
Relationship (unit: %): value (released)/value (total)
Expiration date (unit: days)
Alert parameters (item) are as follows:
Relationship (unit: %): value (released)/value (target)
Relationship (unit: %): quantity (released)/quantity (target)
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Changes on alert parameters in the contract are displayed in the “Tracking” screen.
Alert parameters belong to the “Main Data” authorization section.
Customizing Settings
To use Alerts on Contract Level function, you must make customizing settings in the
Implementation Guide (IMG) activity Supplier Relationship Management -> SRM Server -> Cross-
Application Basic Settings -> Enter Alert Threshold Data for Contracts
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d) Distribute Contract Items to Catalog
In SRM 7.0, line items of the contract can be sent to the catalog. Before this version, the distribution
of contract data was only possible on the header level.
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The following fields are transferred to the catalog:
Vendor, vendor ID, vendor part number
Product, product ID, product category
Price, price unit, percentage
Payment terms on item level
Customer fields in contract, which can be transferred by business add-in
If a contract is distributed to the catalog on the header level, all items are selected automatically.
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e) Change documents and Version management for Conditions
In SRM 7.0, change documents are available for conditions that allow an audit trail at the field level
in contract management.
You can also select different versions of a purchasing contract or global outline agreement and
compare changes to conditions at the header and item levels.
When you display a central contract in contract management and select “Tracking” tab page, you
will see the following:
Conditions that were changed at the header and item level
Old value and new value of the conditions
By whom the conditions were changed
When the conditions were changed
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Customizing Settings
To see Change Documents and Version Management for Conditions, you must make customizing
settings in the Implementation Guide (IMG) activity Supplier Relationship Management -> SRM
Server -> Cross-Application Basic Settings -> Switch On Version Control for Purchasing Documents
f) Exchange Rate Thresholds
As of SAP SRM 7.0, there is functionality to put tolerance checks on the exchange rate that is
allowed.
Contracts in a foreign currency frequently have fixed exchange rates. Fixed exchange rates can
incur a high risk for both the purchasing company and the supplier company; therefore, the
purchaser should be able to distribute the risk of currency fluctuations between the purchasing
company and the supplier.
In the exchange rate threshold section, the software determines the current exchange rate between
contract currency and additional or expected currencies.
If a PO will be created later on, the software calculates the current exchange rate for PO currency
and contract currency.
The current exchange rate is checked if the calculated exchange rate is covered by the defined
threshold. Only if the value is not between the lower and upper value of the threshold does the
software send a message that the current exchange rate will cause higher currency fluctuations
than expected.
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When creating or maintaining the contract, the buyer creates the following data from the “Exchange
Rate Threshold” tab:
Additional currencies in which a PO might be created (aside from the contract currency
which is defaulted in on this screen)
Contract exchange rate
Contract exchange rate date
Current exchange rate
Lower threshold (for currency exchange rate)
Upper threshold (for currency exchange rate)
Messaging
When you save or release the contract, or when a PO is created from this contract, an
information message, a warning message, or an error message is displayed if the
exchange rate is not between the upper and lower exchange rate thresholds.
When you create a PO from this contract, an informational message, a warning message,
or an error message is displayed if the PO currency is not maintained in the contract.
For informational and warning messages the buyer is prompted about whether he
or she wants to update the exchange rate threshold in the purchasing contract.
For error messages the buyer must update the exchange rate threshold in the
purchasing contract before the purchasing contract can be saved or released or
before the PO can be posted.
Effects on System Administration
System administrators can define the message type (information, warning, or error) in Customizing
for Supplier Relationship Management -> SRM Server -> Cross-Application Basic Settings -
> Message Control -> Influence Message Control. In the standard system, the message type is
set to warning.
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g) Currency on Distribution Level
In new SRM 7.0, currency is available on distribution level for the central contract.
The negotiated conditions in a Central Contract are in most cases valid for more than one
associated purchasing organization respective location.
Because the contracts are negotiated in different currencies for the single back-end systems, the
central contract needs to provide the currency on the distribution level instead of the header level.
For providing multiple different currencies within one global outline agreement, it was decided to
shift the maintenance of release authorized purchasing organization/location/document type from
header level to item level.
- The header distribution screen is disabled for changes during the creation of the central contract.
With every user interaction on the item distribution screen, the header distribution screen is
updated.
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- The header distribution screen values are accumulated across all items (identical released
authorized purchasing organization/location/document type/currency).
- If grouping logic is activated, currency has to be considered as grouping criteria as well.
The currency on item level is also offered in the bid invitation on the distribution level in the context
of central contracts (SAP SRM 7.0) under these conditions:
If the central contract is the follow-on document of a new bid invitation
If a central contract is in renewal (previous vendor or new bidders)
If a central contract is in negotiation
Benefits using the new Currency on Distribution Level function!
More flexibility in creating worldwide valid central contracts
More control on line item level
Possible reduction of contract documents in the back-end systems
Enhanced and improved contract distribution for central contract through sophisticated and
efficient grouping of contract line items across different locations of the same back-end
system
h) Grouping of Items
SRM 7.0 will now allow the items belonging to the same release-authorized purchasing
organizations but different locations to be grouped together into one back-end contract.
This leads to more sophisticated and efficient managing of the contract distribution, which results in
a reduction of contract documents in the back-end systems.
Grouping logic for central contract has to be activated in customizing.
If the grouping logic is active, the central contract has to have a 1:1:1 relationship between item,
released authorized purchasing organization and location:
Otherwise, number of items in central contract and back-end contract might be different,
which leads to complex synchronization logic after a central contract is changed (for
example, adding a new item).
Consequently, you can assign only one release-authorized purchasing organization and
one location per each item.
All single-location target values belonging to one released authorized purchasing organization are
bundled into one line on the central contract header distribution screen:
The target values are accumulated per released purchasing organization and document
type across all locations and items and are transferred to and accumulated in the back-end
contract.
If the grouping logic has not been activated, the software behavior remains as before:
Items with different locations are not grouped into one contract.
Only items referring to the same released authorized purchasing organization and location
can be grouped into one back-end contract.
Items can be assigned to more than one purchasing organization/location.
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With the configuration choice to activate the grouping or not, the customer is allowed to decide
which process and logic should be used.
Customizing Settings
To use Grouping of Items function, you must make customizing settings in the Implementation
Guide (IMG) activity Supplier Relationship Management -> SRM Server -> Cross-Application Basic
Settings -> Activate Grouping Logic for Locations in GOA
i) Discount based on Aggregate Release Value
If contracts are represented in a hierarchy and release-based rebates are used to reach better
conditions on the basis of aggregated release values of related contracts, the prices
and condition section must display the accomplishment of the calculated prices.
Therefore, the software shows per related contract the release-based rebate with the information to
which contract is related and the appropriate aggregated value.
When the purchaser would like to check what the aggregated release value is composed of, he or
she can get detailed information on the aggregated release value by using a link for the appropriate
contract or use the “Details Aggregated Release Value” button. Therefore, the purchaser must
select the appropriate line item for which more detailed information is desired.
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To avoid performance problems – because a seven-level hierarchy and an unrestricted number of
contracts within one level are offered – the software shows only the related contracts that lead to an
aggregated release value of one level below the selected aggregated release value.
Functions of Discount Based on Aggregate Release Value
The discount automatically takes effect with the next PO if the previous PO raised the
aggregated release value of the contract above the specified limit.
If you use contract hierarchies, the software automatically updates the release value and
aggregated release value for the contract plus the aggregated release value for the higher
level contracts in the contract hierarchy.
Each release value created in a contract is added to the higher level contracts in the
contract hierarchy.
The aggregated release value of the contract in which the conditions for aggregated release
discounts are assigned determines the basis for the discount.
The software determines the discounts according to the aggregated release value within
the contract hierarchy by using up to seven hierarchy levels.
Contract hierarchy used in example
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j) Records Management Integration
The integration of SAP SRM 2007 with SAP Records Management enables you to create records
for shopping carts, contracts, RFxs, and purchase orders.
The technical infrastructure changes are valid as of SAP SRM 2007; the corresponding screens
have been redesigned and Customizing has been enhanced.
Customizing Settings
Depending on the underlying technology (either the Internet Transaction Server or the Enterprise
Portal), you must perform the following IMG activities to complete the integration with SAP Records
Management:
Internet Transaction Server
SRM Server -> Integration with Other mySAP Components -> Integration with SAP Records
Management -> Activate Integration with SAP Records Management
SRM Server -> Integration with Other mySAP Components -> Integration with SAP Records
Management -> Define Paths for Link to Records Management System
SRM Server -> Integration with Other mySAP Components -> Integration with SAP Records
Management -> Create Shortcuts for SRM - RM Integration
SRM Server -> Integration with Other mySAP Components -> Integration with SAP Records
Management -> Define Transfer Conditions for Records Management
Enterprise Portal
SRM Server -> Technical Basic Settings -> Maintain Portal Information
SRM Server -> Integration with Other mySAP Components -> Integration with SAP Records
Management -> Activate Integration with SAP Records Management
SRM Server -> Integration with Other mySAP Components -> Integration with SAP Records
Management -> Define Transfer Conditions for Records Management
k) Revision Level
In discrete production processes, assembly parts are often modified slightly, so that they can be
used in the manufacture of other similar products. In many cases, a company must keep both the
original and modified parts in stock for production purposes. Instead of assigning a new plant
number to the modified part, both parts retain the same number, but are assigned different revision
levels (for example, original part = revision level A, modified part = revision level B).
As of SAP SRM 2007, a revision level assigned to a material in SAP ERP is available in SAP SRM
if the user has selected a product with the product type Material and if the product's master data
has been replicated from the SAP ERP back end. This assumes that the system landscape is
homogeneous, that is, the revision level for the product is the same in all back-end systems. The
SAP ERP back end must be SAP ERP 2005 or higher. As a result, documents in SAP SRM (for
example, shopping carts, purchase orders, contracts, RFx, RFx responses, global outline
agreements) can be based on a material and also the specific revision level.
In SAP SRM 2007, the revision level is displayed at line item level. A purchaser can change the
revision level in SAP SRM. The valid revision levels in the material master record in SAP ERP are
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offered for selection in SAP SRM. For documents to be created or replicated in SAP ERP (for
example, purchase orders, global outline agreements) the revision level in SAP SRM must be valid.
If it is not valid, an error message is displayed in the shopping cart and purchase order in SAP
SRM.
In documents maintained by bidders or suppliers (for example, RFx responses) and in live auctions,
the revision level is displayed only; bidders and suppliers cannot enter or change the revision level,
or check for existing values of the revision level in the SAP ERP back end.
This leads to a business benefit because the revision level provides more detailed information
about the product to be procured, also the product ID.
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