Managing Contract Compliance in SAP Ariba Procurement

Procurement compliance is a crucial part of any company’s risk management and ensures that suppliers, buyers, and employees adhere to the contract terms.

March 24, 2022

Contract Compliance is a set of features and functions incorporated into SAP Ariba Procurement and SAP Ariba Strategic Sourcing solutions that allow companies to enforce compliance to contracts as part of the transactional activity that occurs in the system.

Contract Compliance offers the following benefits:

Procure to Pay process under control – contract definitions support internal compliance as well as supplier invoice compliance with respect to contracts.
Strict control over who can create, maintain and buy against contracts in the system.
A hierarchical contract structure that allows aggregation and accumulation of contract pricing terms (discounts) as well as a roll-up of spend against contracts.
Searching and reporting functionality that allows tracking of ordering activity and spend against contracts.

The solution supports the following four levels of purchasing contracts:

Level		Content

Supplier		all products from the supplier

Catalog		all products from a catalog

Commodity		all products identified by specific commodity codes from a supplier

Item		only specific items from a supplier

When users create contracts, they decide when the contract terms are applied. They can be applied when users create orders, invoices, or receipts as follows:

For a release order contract, they are applied during the order process when users add items associated with the contract to a purchase requisition, applicable contracts get automatically selected.
For a no-release order contract, contract terms are applied when users create invoices or receipts against the contract.

SAP Ariba Procurement approval processes contain predefined contract-related requisition approval rules, e. g. a requisition can be auto-approved if all the items are covered by a contract.

Milestones capability can be used to receive against contracts. Milestones are a set of key conditions that must be met by a supplier to achieve the terms of the contract and the supplier invoice could be processed.

Contract Compliance is a set of features integrated into SAP Ariba Procurement and SAP Ariba Strategic Sourcing, not a single product or a standalone SAP Ariba module.