What is the Plan-Buy-Pay process?
The Plan-Buy-Pay process, which is the key idea that governs Ariba’s business, is the possibility that the entire procurement process is interconnected, with the ability to anticipate the required merchandise in an organization, which will be acquired from an external manufacturer, or within another distribution centre, and that these prerequisites that have been decided will be correctly requested through a purchase procedure.
When the purchase requisition has been prepared and the goods have been shipped, the payment can be made, which enables the company to obtain what is necessary to run its business, through office supplies, contractors’ requests, or raw materials for production.
Learn in detail below how these notions work together and support the organization of Ariba’s activities.
What is the planning process in business
The planning procedure starts with the agreement of interests: the requirements of the organization, which are communicated in the form of requests. The internal representatives and the internal flows of the organization can express the demands of products or services needed to carry out their tasks.
Once they have dissected their needs and arranged their demands, it is important to find potential sources of procurement that can meet those demands. The source assurance procedure will identify new plausible suppliers and put them on the list of acknowledged suppliers, after what quality checks may be upheld as a Request for Quotation, also known as RfQ.
The source determination process
Each supplier is then contacted, invited to send a quotation, and arrangements can begin for the determination of the supplier. The one that has the best that can be expected is chosen, which can be not exclusively based on cost. Quality can also be taken into account, as can different elements, such as transfer time, distance or other predefined criteria.
Simple Purchase Order
The choice of the final supplier will result in the production of a contract, which could be a basic purchase order or an even more complex contract, with volume or any other form of reserve triggering the beginning of the purchase procedure.
What is the buying process in business
When a purchase request has been made and sent to a supplier with whom a progressively explicit contract might possibly exist, the purchase procedure begins.
Sending the purchase request to a supplier is a legally restrictive activity, as we guarantee that we will pay for the goods or the services we intended to obtain from a particular supplier from whom we will obtain them.
Purchase order creation in operational procurement course
The purchase procedure includes both the processing of the purchase requisition and the receipt of the product. The processing of purchase requests involves creating the purchase order and sending it to the supplier. The procedure is completed once the products or services have been shipped and checked, with regard to quality and amount.
Goods receipt in the purchase process cycle
The down payment procedure begins when the merchandise has left the vendor’s reserve, in accordance with the purchase requisition sent, a payment must be activated later, after verification and approval of the product.
How does payment processing works
The down payment process begins after the purchase request has been sent to the vendor and the merchandise has left its distribution centre.
The request can be verified and a payment should be made once the order has been submitted.
In any case, payment will probably not be equivalent to the purchase request. This totally depends on the confirmation of receipt, in the middle of which the purchase request will be compared to the receipt of the goods.
Invoice verification in SAP purchasing
Purchase order in SAP operational procurement
Goods receipt in SAP MM
Goods approved at the quality level and requested in the purchase requisition must be paid for, while products that have not passed the quality checks will require additional processing and discussions with the supplier, based on the agreement that was conceded in the middle of the planning part.
Credit notes can be issued, depending on the conditions of the transfer. Payments will be prepared once the receipt has been established.
Ariba and the Plan Buy Pay process
The Plan-Buy-Pay process should be considered as a whole, as no organizing and operational part should be possible on its own.
The organization must pay for the request to be purchased. Internally, it encourages some groups to cooperate and ensure that the entire operational procurement process is effectively supervised:
- The organization group of the generation characterizes a summary of the raw materials necessary for the creation,
- The group of obtaining discovers potential suppliers and selects the best for the treatment of the request for purchase,
- The legal group checks existing or recently concluded agreements,
- The storage group tracks the incoming goods and, when they arrive, checks their quality and stores them for later use by the generations group,
- The group of accounts pays the supplier for the transmission of the request and supervises the possible problems related to the understanding of the contract and the quality transmitted.
Goods receipt in inbound delivery process
The entire Plan – Purchase – Payment process is integrated into the SAP Ariba business network. It allows organizations to access a whole system of suppliers, with which these tasks can be supervised.
SAP Ariba business network
It’s not important to be an operational SAP customer to access the Ariba organization, as Ariba has its own way of overseeing article lists and the connection between demand and supply.
Introduction SAP Ariba course
Familiarize yourself with SAP Ariba procedures and understand how the Plan – Buy – Pay process is integrated by following our online course Introduction to SAP Ariba.
Our online course Introduction to SAP Ariba
The following topics are covered in the Introduction to SAP Ariba course:
- History and need for Ariba in the global computing environment,
- Plan – Buy – Clarify the payment process, process by process,
- The usefulness of Ariba Spend Visibility and the reporting opportunities,
- Ariba suppliers sourcing with its global business network,
- Ariba contract management and consequences for the legal team.
Introduction to SAP Ariba course
What are your requirements for using the SAP Ariba business network? Feel free to tell us what themes you might want to see wrapped up in our future courses.