This document discusses how SAP and SAP Ariba solutions can help make direct procurement easier through integration and innovation. It notes that cost reduction remains a top priority for companies amid market uncertainty. SAP extends its digital capabilities with cloud procurement solutions to address all types of spend, including direct materials. SAP Ariba is being integrated with SAP S/4HANA SCM products to increase process efficiency and supplier visibility across the supply chain. Benefits of the SAP Ariba solutions for direct material procurement include sourcing and supply chain improvements, productivity gains, working capital optimization, and spend compliance.

1. Integrated Direct Procurement Made
Easier with SAP and SAP Ariba Solutions

2. 2Innovations in Direct ProcurementCopyright © 2017 Deloitte Development LLC. All rights reserved.
Cost reduction is still the number one priority, amid market uncertainty and the
need to fund planned product and market expansion objectives. As CPOs look to
increase levels of engagement across the organization, procurement must deepen
its role as a trusted business partner.
—2017 Global CPO Survey
Spending on supplier networks will grow by 24% in 2016 to $1.5 billion, and services
procurement will grow by 20% to $0.7 billion. One of the leading drivers of supplier
network revenue growth is the shift of direct material purchases from EDI-based
networks to the Ariba Network and similar PO/invoice networks
—Forrester

3. Innovations in Direct ProcurementCopyright © 2017 Deloitte Development LLC. All rights reserved. 3
Today’s complex direct materials challenges
Key issues facing industry today
Marketplace pressuring companies to
continuously innovate, improve
operations, and drive cost out of
manufacturing
Continuous
Cost
Reductions
Continuous product switching and variable
part demand is driving up cost - constant
resets of the labor learning curve, part
proliferation, and volume variability
Product
Phase-
In/Phase-
Out
Capacity constraints due to volume
swings, risk of quality/delivery, and added
complexities due to alternatives in
manufacturing technologies/design options
Supply Risk
Commodity market dynamics, ability to
find approved sources, and ability to scale
across regions creating pressure
Commodity
Volatility
Multi-tier supply chains increase
complexity and reduce transparency into
cost and supply chain risks
Visibility
and Control
of Supply
Tiers
Changing economics in emerging markets
forcing reevaluation of manufacturing
locations and improvements in
manufacturing technology
Supply
Market
Shifts
Evolving EPA, SEC, and international
standards require a consistent, top-down
strategy for ensuring compliance
Regulatory &
Compliance
Risk
Complexity of sourcing, product
management, product switching, and
reliance on proprietary/specific material
grades
Product
Complexity
and
Technology
Cost & Margin
Improvement
Increase Speed
to Market
Product Quality &
Differentiation
Supply Risk &
Regulatory Compliance
Market
Challenges

4. Innovations in Direct ProcurementCopyright © 2017 Deloitte Development LLC. All rights reserved. 4
Companies often fail to optimize Direct Material management because of a perception of risk and
an challenges communicating the opportunities
Direct materials: The single biggest cost on the P&L
Missed opportunities to enhance Direct Materials
because:
1. Perceived risks and limited understanding of
what it takes
2. Engagement across the business to fully
understand and address risks
3. End-to-end ownership of the complete value
chain
4. Ability to secure boardroom support to address
key Direct Materials challenges
100%
65%
20%
15%
Sales COGS Eng & SG&A EBITDA
Distribution 7–9%
Direct Labor 8–12%
Overhead 15–25%
Direct
Materials
60–80%
The OpportunityP&L Breakdown
Manufacturing

5. Innovations in Direct ProcurementCopyright © 2017 Deloitte Development LLC. All rights reserved. 5
“This past year—2016—undoubtedly represented a significant point in modern history. It marked
greater political instability, retrenchment from globalization, emerging market challenges, and
social and economic uncertainty.”
Deloitte Global CPO Survey 2017
New/emerging technology Traditional technology
Technology areas that will have the most
impact in the next two years
The top four business priorities for
CPOs in 2017 show an increased
focus on cost reduction and cash flow
Key procurement levers
CPOs are primarily focused on the
following procurement levers to deliver
value over the next 12 months.
Cost reduction remains the top priority for CPOs as they look to support growth in an
uncertain market.
Technology
areas that
will have
the most
impact in
the next two
years
The top four
business
priorities for
CPOs in 2017
show an
increased focus
on cost reduction
and cash flow
Key
procurement
levers

6. Innovations in Direct ProcurementCopyright © 2017 Deloitte Development LLC. All rights reserved. 6
Core
Solutions that are already
Procurement mainstays
Maturing
Solutions that are transforming
Procurement with minimal
investment
Emerging
Solutions that could impact
Procurement in the future
Leaders invest in maturing capabilities and combine technologies to maximize value
E-SourcingSpend Analytics
Contract Management
E-Invoicing
Electronic Catalogs
E-Procurement
E-Auctions
Cognitive / Artificial
Intelligence
Robotics
Visualization
Intelligent Content
Extraction
Predictive /
Advanced
Analytics
3D Printing
Collaboration
Networks
Crowdsourcing
Sensors /
Wearables
Blockchain
Cyber
Tracking
Virtual Reality /
Spatial Analytics
B
High Current Deployment in Procurement Low
Supplier Information Mgmt.

7. Innovations in Direct ProcurementCopyright © 2017 Deloitte Development LLC. All rights reserved. 7
SAP extends digital core capabilities with cloud procurement solutions, to address all angles of
spend, including indirect and direct.
Core + Cloud Sourcing and Procurement from SAP
Collaborative
planning and
sourcing
Self-service
procurement
Travel and
expense
management
Invoice workflow
and
management
Services
management
and
procurement
Business Network
Enabled Supplier
Collaboration
SAP S/4HANA Enterprise Management
Enterprise Management Procurement
• Self-service
requisitioning
• Approval
• Manage purchase
requisitions
• Purchase order
processing
• Order confirmation
• Operational
contract
management
• Invoice processing
• Analytics
• Classification and
segmentation
SAP S/4HANA Enterprise Management natively integrated into the Ariba Network

8. Innovations in Direct ProcurementCopyright © 2017 Deloitte Development LLC. All rights reserved. 8
Ariba Network is being integrated with SAP S/4HANA SCM products to Increase Process
Efficiency & Supplier Visibility
Building a single business network
Ariba Network
Purchase Order
Confirmation
ASN
GR status
Invoice
SAP S/4HANA
Purchase Order
Inbound Delivery
Goods Receipt
Invoice Management
Payment Run
Scheduling
Agreement release
Remittance Advice
Purchase Requisition
Documents in scope:
• Purchase Order
• Confirmation
• Advance Ship Notice
• Goods Receipt
• Invoice
• Remittance Advice
Cloud
Integration

9. Innovations in Direct ProcurementCopyright © 2017 Deloitte Development LLC. All rights reserved. 9
Core and cloud procurement capabilities can be integrated to drive the needed digitalization for
seamless collaborative supply chain
Collaborative direct material procurement use case
Trigger
Payment
RemittanceInvoice
Receive
Invoice
Create Goods
Receipt
Goods
Receipt
Create
Shipping
Notification
Receive
Shipping
Notification
Create Purchase Order
Create Order
Confirmation
Receive
Order
Confirmation
Sub Contract PO
Consignment PO
PO & Releases
Transfer
Component
to Vendor
Component
ASN
Component
consumption
recording
Component
Inventory
Summary
Component
Acknow-
ledgement
Real time
component
consumption
Inventory
SAPSAPAriba
SAPAribaSAP
Consignment
Movement
Post
Settlement
Invoice (F)
Consignment
Settlement
Create Goods
Receipt as
consignment
stock
Transfer
Consignment
Stock to
Own stock
SAPAribaSAP
Sub-contracting Consignment
Goods
Receipt
2
2
3
3Schedule Agreement1
Schedule line
release
Schedule
Agreement
Releases
Schedule line
created from
MRP
SAP
1

10. Innovations in Direct ProcurementCopyright © 2017 Deloitte Development LLC. All rights reserved. 10
Recognizing the value of single cloud-based collaboration platform across the supply chain, SAP
is rapidly developing its capabilities in the Direct Procurement Space
Benefits of SAP Ariba solutions for Direct Material Procurement
Sourcing & Supplier Management
• Better sourcing: visibility and collaboration
• More sourcing: shorter bid and contracting
• One-off savings from tactical sourcing (three
bids and a buy)
Supply Chain Process improvement
• Reduce time scheduling and planning
complex orders
• Reduce time overseeing contract
manufacturers and drop ship suppliers
• Reduce time tracking, rescheduling, and
verifying changes
Productivity Improvement
• Reduce lost purchase orders
• Streamline and automate processes
• EDI cost reduction: eliminate hardware/software
maintenance and support
• Reduce costs: legacy technology, paper, checks
Working Capital Management
• Optimize early payment discounts
• Improve cash flow with supply chain finance
• Improve working capital via DPO extension
• Terms management
Inventory Optimization
• Reduce idle materials
• Reduce on-hand materials
• Reallocate working capital to revenue-
generating programs
• Reduce finished goods inventory
• Reduce the interest expense
• Reduce cost of goods sold by housing unneeded
inventory
Spend Compliance
• Ensure purchases and invoices are based
on negotiated contract pricing & terms
• Expand usage of catalog content
• Reduce overpayment errors, tighten AP
tolerances
Spend Management
• Sourcing savings
• Contract compliance
• Visibility on supplier level payment terms
• Supply chain diversity and sustainability
• Reduced cost on procurement
• Mitigated supplier risks

11. Innovations in Direct ProcurementCopyright © 2017 Deloitte Development LLC. All rights reserved. 11
Standard PO
Scheduling
agreement
Consignment
Sub-Contract
Supply
managed
inventory
Returns
Technology through process path steps – Direct Procurement
The future state process paths will standardize end-state S2P business process
3
1
2
4
5
6
Process
Path
Non-applicable
Source PayProcure
Contract
Create
Requisition
Identify
Supplier
Inventory
snapshots
PO Process
Receipt /
Order
Confirmation
Invoice
Receipt
Payment QualitySource
Sourcing
Sourcing
Contracts
CSC
CSC
CSC
CSC
CSC
CSC
CSC
CSC
CSC
CSC
CSC
CSC
CSC CSC
CSC CSC
CSC
ICS
CSC
ICS
CSC
ICS
CSC
ICS
CSC
ICS
CSC
ICS
CSC
CSC
CSC
CSC
CSC
CSC
CSC
CSC
CSC CSC
CSC CSC

12. Innovations in Direct ProcurementCopyright © 2017 Deloitte Development LLC. All rights reserved. 12
Transforming the underlying source-to-pay technology is a daunting task for many procurement
organizations
The Digitalization of Supply Chain as a journey
Amid SAP’s ever
evolving road map,
our Deloitte Ariba
Accelerator helps
instill confidence by
showcasing leading
technologies, and
solving for key
imperatives
SAP Ariba Supply Chain
Collaboration
• Purchase order
collaboration
• Scheduling agreement
• Subcontracting
• Quality collaboration
• Consignment
• Order returns
• Forecast
• What are my business objectives
and priorities?
• What functions or capabilities are
we missing?
• What products should I use and
how do I integrate them?
• Do these products satisfy all my
buying channels?
• What collaboration features am I
interested in and are they
available now?
• Do we have to build out a Proof-
of-Concept (POC)?
• Can I see a demo and then
decide?
• Buy-side exception monitors
• Supplier managed inventory
• DMS integration
• Multi-tier doc visibility
• Third-party logistics provider
integration scenarios
• Integration with SAP
Integrated Business
Planning—forecast commit
scenario
Current Features Future Innovations
The imperatives The accelerators The journey

13. Innovations in Direct ProcurementCopyright © 2017 Deloitte Development LLC. All rights reserved. 13
Deloitte offers a range of Supply and Demand Solutions
Solutions embedded in our platform
Solutions in progress
Supply Chain Analytics/Monitoring
Business Objects, Tableau, SAP Fiori, Supply Chain Control Tower*
SNC
Supply Network Collaboration
SAP Ariba Supply Chain Collaboration
Supply Chain Collaboration
APO/IBP (Supply & Response)
DP, SNP & PP/DS
EIO/IBP IO
Ent. Inventory & Service Level Optimization
IBP (S&OP)
DSiM*
Demand Signal Management
IBP (for Demand)
GATP and CTP
Integrated Business Planning Demand Shaping and Sensing
SAP S/4HANA (Digital Core on 1610)
EWM TM (9.2) EM GTS
DA2 Ariba Direct Materials Preconfigured solution

14. Innovations in Direct ProcurementCopyright © 2017 Deloitte Development LLC. All rights reserved. 14
Our clients are all asking the same question: How do we get started?
Join an immersive experience (e.g.,
technology demo with your data)
to explore the “art of the possible”,
inspire ideas, and build a culture of
innovation.
Immerse Yourself in Innovation
Leverage solutions that layer on to
existing infrastructure and leapfrog
major investments in systems.
Champion your success to build
momentum behind your Digital
Procurement journey.
Rapidly Validate, Market Success
THINK BIGSTART SMALL ACT FAST
CONNECT WITH DIGITAL SUPPLY NETWORK STRATEGY
Align efforts with a broader Digital Supply Network strategy to maximize the potential benefits across the end-to-end supply chain.
Begin with a small number of solutions
that “meet you where you are” in
terms of your existing systems & data.
Pick One or Two Solutions

15. Innovations in Direct ProcurementCopyright © 2017 Deloitte Development LLC. All rights reserved. 15
Global professional services firm
 Tax
 Financial Advisory Services
 Assurance & Enterprise Risk Services
 Consulting
World-class consulting practice
 Strategy & Operations
 Technology
 Human Capital
Deloitte has nearly 200,000 individuals
worldwide, with over 2,000 in its Supply
Chain Management practice, 500 of
which are focused on Sourcing &
Procurement business, advisory, change
management, and technology
implementation.
Service Offerings
 Making the right technology selections
 Providing the right level of spend visibility
 Creating transparency to support risk management and compliance
 Designing and implementing technologies to sustain cost reduction strategies and vision
 Enabling quicker time-to-value with pre-built platforms, templates, and integrations
Best-In-Class Tools
Differentiating Factors
IndustryPrintTM and
Enterprise Value
DeliveryTM
Vendor
assessments
Software
evaluation models
S2P business
case tool
Sourcing-On-
Demand
Deloitte delivers
value to our
clients by…
Design &
Implementation
Strategy
Advisory &
Execution
Comprehensive
Approach
Deloitte has specific experience with sourcing and
procurement strategies for more than 300 spend
categories
Copyright © 2013 Deloitte Development LLC. All rights reserved.6
3. Catalog Content Management
 Load & Enrich
 Approve
 Publish
 Connect via Punch-Out
4. Operational Procurement
 Shopping Cart/Requisition
 Spend Approval
 Purchase Order
 Tactical Bidding (RFx)
 Execution Contract Management
 Goods/Services Receipt
1. Category Management/Sourcing
 Develop Category Sourcing Strategy
 Manage Sourcing Initiatives/Projects
 Execute Category Sourcing (RFx,
Reverse Auctions)
 Manage Supplier Relationship
and Monitor Performance
2. Contract Lifecycle Management
 Create and Manage Buy-Side Contracts
 Manage Legal Templates and T&Cs Library
 Report on Contract Performance
 Electronic Signature (EchoSign)
Key Source-to-Pay Processes Supported
6. Invoice Verification
 Invoice Entry
 Routing and Sorting
 Review and Exception Handling
 Approval
 Scheduling for Payment
SSTP
5. Supplier Collaboration
 Order Management (PO, PO
Response, PO Change)
 Advanced Shipping Notification
 Confirmation / SES
 Invoice Entry via Portal
 Demand Forecasting
 Supplier Managed Inventory
 Release Processing
7. Supplier Lifecycle Management
 Registration
 Qualification
 Evaluation
 Data Maintenance
9. Mobile Procurement
 Shopping Cart Approval
 Mobile Analytics
8. Reporting & Analytics
 Transactional Reports
 Spend Analytics
 Management Dashboards
Pre-configured SAP
System
Indirect strategic
sourcing
Direct materials
value
transformation
Spend and
sourcing
analytics
Governance and
operating model
design
S2C & S2P
process and
technology
Organizational
design and
transformation
Capabilities Overview
Deloitte is a recognized leader in evaluating, designing, and implementing technologies to enable
best-in-class sourcing and procurement, and has delivered sustainable results for 300+ clients
globally.
Deloitte’s Sourcing & Procurement Technology Practice

16. 16Innovations in Direct ProcurementCopyright © 2017 Deloitte Development LLC. All rights reserved.
Q&A

17. Innovations in Direct ProcurementCopyright © 2017 Deloitte Development LLC. All rights reserved. 17
Continue the Conversation!
www.deloitte.com/sap
sap@deloitte.com
@DeloitteSAP
@1Ted_Brennan1
@HernanDLT
Ted Brennan, Managing Director, Deloitte Consulting LLP
edbrennan@deloitte.com
Hernan De la Torre, Senior Manager, Deloitte Consulting LLP
hdelatorre@deloitte.com

18. About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member
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Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not
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Copyright © 2017 Deloitte Development LLC. All rights reserved.
Member of Deloitte Touche Tohmatsu Limited

19. Innovations in Direct ProcurementCopyright © 2017 Deloitte Development LLC. All rights reserved. 19
Contributors
Ted Brennan
Managing Director
edbrennan@deloitte.com
Hernan De la Torre
Senior Manager
hdelatorre@deloitte.com
Amanda Busch
Senior Marketing
ambusch@deloitte.com
Ashish Panakanti
Senior Consultant
ashpanakanti@deloitte.com
Frederic Girardeau-Montaut
Managing Director
fgirardeau@deloitte.com
Rahul Raj
Senior Manager
rahraj@deloitte.com
Soumen Ghosh
Specialist Master
soumghosh@deloitte.com
Leah Foushee
Consultant
lfoushee@deloitte.com