To realize the features and functionalities of contract management, the system needs to be configured based on business requirements. This post explores the first step: how to configure contracts in SAP S/4HANA Sourcing and Procurement.
With SAP S/4HANA, it’s possible to take advantage of the SAP Best Practices activation approach for customizing. However, if you use the traditional customizing approach, this post can help. This information also helps validate the SAP standard configuration.
Contracts are managed in the system as documents. Document types, which act as a key to group contracts, are defined in configuration. To define document types, navigate to IMG (SPRO) > Materials Management > Purchasing > Contract > Define Document Types. The table below provides the SAP-standard settings; it’s possible to define additional contract document types depending on business requirements. Number ranges are assigned to each document type defined in the system. New number ranges may also be defined and used as required. The menu path to set number ranges is IMG (SPRO) > Materials Management > Purchasing > Contract > Define Number Ranges (see the figure following the table).
After defining the document types, select the line for the Doc Type defined in the previous step and double-click Allowed Item Categories. On the admissible item categories for the document type, the item categories listed below can be configured depending on business requirements.
Then, select the line for each Item Category and double-click Link Purchase Requisition Document Type. On the Change View “Link Purchase Requisition-Document Type”: Overview screen, define the allowed follow-on documents.
A release procedure is used for the contract approval process. If the value of a contract exceeds $10,000, for example, it may have to be approved by a manger before the contract can be processed further. The approver in this process uses a predetermined release code to approve (release) the document. Release in this context refers to approving contracts in the system. The procedure is set up in a series of configuration steps:
Text types are used while creating contracts, and text maintained under each text type is generally used to provide additional information either at the header level or item level within the contract. For this functionality to work, text types must be defined. In this customizing step, it’s possible to check the SAP defined standard text types and create new text types if needed. In addition, you can define copying rules for adopting texts from other objects, such as RFQ, quotation, contract, and so on:
Then, you can check the available text types and define your own text types for header texts if needed.
This customizing activity is repeated for item text types.
In this step, you set the general ledger account authorization check to Active in contracts. Navigate to IMG (SPRO) > Materials Management > Purchasing > Contract > Set Up Authorization Check for G/L Accounts (see below). This indicator is set at the company code level. Whenever a contract is created with an item requiring account assignment, the system checks whether the creator of the contract has the necessary authorization for the general ledger account entered. This setting is used as a control mechanism based on the business requirements per company code.
With the information presented above, you’ll be able to configure contracts in SAP S/4HANA Sourcing and Procurement.
Editor’s note: This post has been adapted from a section of the book Sourcing and Procurement with SAP S/4HANA by Justin Ashlock.