Does your procurement department also face the problem of multiple orders being placed with the same supplier, each incurring separate delivery charges? These delivery costs can quickly escalate if no arrangements can be made with the supplier to reduce them. Often, such individual orders could have been consolidated into a single purchase orders.
To address this inefficiency and reduce unnecessary costs, Ariba offers a powerful solution: Demand Aggregation.
How does demand aggregation work?
Rather than immediately converting approved requests into purchase orders, Ariba Buying allows requests to be held for aggregation. These approved requests are temporarily blocked from being processed and are instead grouped based on pre-defined criteria.
Standard variables include:
- Purchasing Unit
- Commodity Code
- Amount
- Contract (Yes/No)
- Line Type
- Currency
- Supplier
Organisations may also configure up to 10 additional custom fields to tailor the aggregation logic to their specific needs.
Assignment to buyers
Once a request is held for aggregation, it is assigned to a designated buyer. This assignment is similarly based on configurable variables:
- Purchasing Unit
- Commodity Code
- Contract (Yes/No)
- Line Type
- Supplier
Again, up to 10 custom fields can be defined to direct assignments to appropriate buyers.
Requests held for aggregation become visible in the Procurement Workbench, where buyers can manually review and consolidate them per supplier before submission. This is visible in the next screenshot.
The following screenshot shows the multiple individual requests are consolidated into a single aggregated request.
Additional requests may later be added to an existing aggregated request. This is showed in the screenshot below.
Automatic aggregation
Prefer a fully automated process? Ariba also supports automated demand aggregation using the following standard variables:
- Delivery Address
- Deliver-To (Recipient)
- Supplier
- Supplier Location
As with manual aggregation, you may define up to 10 additional custom fields to refine the logic.
Aggregation can be scheduled based on:
- A fixed day of the week
- A specific day of the month
- The last day of the month
Each schedule can be configured with an exact time of execution. Multiple aggregation windows per week or month are supported.
Key considerations
- Requests removed from the Procurement-Workbench are marked as cancelled and cannot be modified. A new request must be created.
- Aggregated requests follow a separate (optional) workflow.
- Only requests that meet the defined criteria are eligible for aggregation. Others are processed immediately after approval.
- Fields such as company code and ship to address in the aggregated request are inherited from the user who creates the aggregated request.
- This user who creates the aggregated request is also the formal requester, original requesters are not displayed.
- If the aggregated request consists solely of requests from one requester, it is possible to configure that person as the requester. Regardless of who submits the final aggregated request.
- The user who submits the aggregated request is responsible for the goods receipt or submitting the service entry sheet.
- No goods receipt or service entry sheet is required for the original requests.
Interested?
If you would like to explore how Ariba’s demand aggregation functionality can streamline your procurement process and reduce operational costs, please contact Compera, we would be pleased to assist you.