1. 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 :-
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 bid
• Update of an existing operational contract from a winning bid
• Mass update and appending of contracts
• Using contract for sourcing
• In SAP SRM, creating Shopping Cart or PO against contract
• In SAP ERP, creating Requisition or PO against contract
2. Contract Negotiation –
Contract Negotiation in SAP SRM enables:
• Renegotiation of an expiring contract by converting an expiring contract into a
sourcing event
• Creation of a new contract from a winning bid
• Update of an existing contract from a winning bid
• Mass 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 SRM
• A 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 aggregation
• Sophisticated integration between contract and catalog
• Integration to records management
• Flexible pricing and complex discounts
• Contract hierarchies with release-based discounts
• Online and offline operational contract mass change functionality
• Powerful authorization concept for contracts
• Offline approval functionality through e-mail
• Contract release notification to strategic purchasers
• Various alerts with flexible configuration of receiver and content
• Exchange rate thresholds on the contract level to control and mitigate currency
fluctuation risk
• Introduction of revision level
• Mass change of contracts out of response and award
Central Contract Repository –
• Centralized web-based document management environment for operational
contracts and attachments
• Full-text search for terms in contracts and attachments
• TREX full text search through attachments, internal texts, and supplier texts
• Attach scanned, faxed or major file types such as Word, PDF, Excel, PPT,
image files and more
• Possibility to upload contracts to SAP Records Management
3. Contract Monitoring -
Contract monitoring in SAP SRM enables:
• Seamless integration among operational contract, contract execution, and contract
monitoring
• Monitoring contract usage and contract compliance across multiple instances of
SAP ERP and SAP SRM
• Monitoring compliance through alerts on target value and target quantity against
released value and released quantity
• Monitoring 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
4. • 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)
5. Alert Parameters at Item level is :-
Relationship: Value (Released) / Value (Target)
Quantity(Released) / Quantity (Target)
6. 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.
7. 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 –
8. 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.
9. • 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.
