Vendor Evaluation - Customizing and Technical Information

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VENDOR EVALUATION

GENERAL OVERVIEWAND CUSTOMIZING



© SAP 2009 / Page 2

Table of Contents

1. Vendor Evaluation - Introdution

2. So!e of "untions

#. Sores and Criteria

$. Custo%i&ing

'. Transations

(. Te)nial *ata

+. Tables

,. Custo%i&ing Tables



© SAP 2009 / Page #

Vendor Evaluation - Introdution

Vendor Evaluation component supports you in optimizing your procurement processes in

the case of both materials and services.



© SAP 2009 / Page $

Vendor Evaluation - Introdution

This is done in TA ME61 and ME6 !



© SAP 2009 / Page '

So!e of "untions

Procurement of Materials

The Vendor Evaluation component helps you select sources of supply and facilitates the

continual monitoring of e"isting supply relationships. #t provides you $ith accurate

information on prices% and terms of payment and delivery. &y evaluating vendors% you can

improve your enterprise's competitiveness.

(n the basis of detailed information% and in collaboration $ith the relevant vendors% you

can )uic*ly identify and resolve any procurement problems that may crop up from time to

time.

Procurement of Services

+ou can chec* the reliability of the vendors from $hom you procure services on a plant by

plant basis. +ou can determine $hether the vendors perform the services $ithin the

specified timeframes and appraise the )uality of the $or* carried out.

.



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Scores and Criteria

The scores for Main ,riteria are calculated from the scores of the -ubcriteria.

The -ubcriteria scores can be!

Manual / scoring method '0'

+ou enter the score into the system yourself before carrying out an evaluation.

Semi-automatic / scoring method 1% , and

+ou enter scores for )uality and timeliness of delivery or performance at info record level

2for a material3 or in the service entry sheet 2for an e"ternally performed service3.

4or scoring method 1 a score can be entered for each info record. #nfo records are based

in the relation vendor 5 material.

The score for the -ubcriteria then corresponds to the average score for all info records.

Fully automatic / scoring method to 7% A and &

#n the case of the automatic the scores are calculated automatically.


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Customizin

Material management 89 :urchasing 89 Vendor evaluation


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Customizin ! De"ne Wei#tin $e%s C

&y using $eighting factors% you can increase or reduce the importance of certain criteria $hen a

score is calculated at the ne"t highest level.

-uppose a vendor receives ;< points for the criterion =:rice= and ;< points for the criterion

=-ervice=. -ince the price of the material is more important to you than the service the

vendor provides% you assign the criterion =:rice= a $eighting factor of and the criterion

=-ervice= a factor of 1. The ;< points for :rice are then $orth three times more than the ;<points for -ervice $hen the overall score is calculated.


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Customizin & O'era(( Criteria

The overall score represents the general evaluation of a vendor. #t is a combination of the

scores the vendor has achieved for all the main criteria.

+ou can compare different vendors on the basis of their overall scores $ithout generating a

detailed analysis of their evaluations 2TA ME6&3



Customizin ! De"ne Criteria I

The system calculates the overall score for a vendor from the main criteria scores.

The main criteria available in the standard system are!

> :rice

> ?uality

> elivery

> @eneral servicesupport

These main criteria serve as a basis for evaluating vendors from $hom you procure

materials.

> -ervice

This main criterion serves as a basis for evaluating those vendors you employ as e"ternal

service providers.

> #nvoice

This main criterion serves as a basis for evaluating vendors from $hom you procurematerials or services.



Customizin ! Su)criterion

:rice:rice level:rice history

?uality@oods receipt?uality audit,omplaintsreBection level

elivery(n8time delivery performance?uantity reliability,ompliance $ith shipping instructions,onfirmation date

#nvoice?uantity variance:rice variance




Price Level

This subcriterion compares relationship of a vendor's price to the mar*et price. #f the

vendor's price is lo$er than the mar*et price% heshe receives a good scoreC if it is higher

than the mar*et price heshe is assigned a poor score.

(n the basis of the subcriterion :rice Devel you can compare a vendor's price to the current

mar*et price at a certain point in time.

Price History

This subcriterion compares the development of the vendor's price $ith the mar*et price.(n the basis of the subcriterion :rice istory% you can determine $hether the vendor's price

has increased or decreased over a certain period in comparison $ith changes in the mar*et

price over the same period.

Goods Receipt

This subcriterion is used to evaluate the )uality of the material that the vendor delivers.

?uality inspection ta*es place at the time of goods receipt.

Quality Audit

This subcriterion is used to evaluate the )uality assurance system used by a company in

manufacturing products.


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Complaints/Reection Level

This subcriterion is used to evaluate $hether the materials delivered by the vendor are regularlyfound to be faulty subse)uent to incoming inspection 2for e"ample% on the shop8floor3 leading to

additional e"pense and loss of time 2due to loss of production% re$or*ing etc.3.

The score 2?M *ey )uality figure3 is calculated in ?M ?uality Management and the data passed

on to MM Vendor Evaluation. This *ey )uality figure is converted for use in the Vendor Evaluation

scoring system.

!n-"ime #elivery Performance

This subcriterion is used to determine ho$ precisely a vendor has adhered to the specified

delivery dates.

Quantity Relia$ility

This subcriterion is used to determine $hether a vendor has delivered the )uantity specified in

the purchase order.


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Compliance %it& S&ippin' (nstructions

This subcriterion is used to determine ho$ precisely a vendor complies $ith your instructions

for the shipping or pac*ing of a material.

Confirmation #ate

This subcriterion is used to determine $hether a vendor adheres to a previously confirmed

delivery date 2that is% $hether the goods are actually received on the date previously confirmed

by the vendor3.

Quantity )ariance

Fith this criterion% you evaluate ho$ e"actly the )uantity to be invoiced agrees $ith the

)uantity actually invoiced.

Price )ariance

Fith this criterion% you evaluate ho$ e"actly the price to be invoiced agrees $ith the priceactually invoiced.


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Customizin ! De"ne *urc#asinOranization

#n this step% you define individual Vendor Evaluation -ystem settings for each purchasing

organization* All parameters must $e maintained in order for the system to be able to

compute scores. #f% for e"ample% you do not maintain any smoothing factors for the criteria

=on8time delivery performance=% =)uantity reliability=% and =compliance $ith shipping

instructions=% the system $ill not be able to compute the scores% other$ise $hen you try to do

a ne$ evaluation system issues an error message.


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APPL(CA+(L(", PR(!#

:eriod in calendar days $ithin $hich data is to be ta*en into consideration for vendor

evaluation purposes.

E"ample! #f you enter the value 1G< here% the system $ill ta*e into account data from the

past 1G< days for vendor evaluation purposes. ata that is more than 1G< days old $ill not

be included in the evaluation process.

The applicability period is ta*en into consideration $hen the scores for the follo$ing criteriaare computed!

@H lots,omplaints level-emi8automatic criteria

The applicability period is not ta*en into consideration for the follo$ing criteria!:rice level:rice history


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+.S(SS )!L.M

uring the vendor evaluation process for )uality% the system chec*s $hether the costs

associated $ith the faulty delivery e"ceed the ma"imum percentage of business volume

defined in the ,ustomizing system.

Iotice that this value here is a percent value% i.e. if you $ant 1<J you should insert

1<%<<<< and not <%1.

S"A#AR# (0(G )AL. F!R #L()R, "(M )AR(AC

Value in days that specifies ho$ many days variance from the planned delivery date are to

count as a 1<<J variance.


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S(GL/S!L S!.RC

etermines ho$ the price of a single or sole source of a material influences the

scores for the subcriteria =:rice level= and =:rice history=. #t is only ta*en into

account if the vendor is the only source for this material and no mar1et price &as

$een maintained for t&e material*

There are t$o situations in $hich a vendor is the only source of a material!

Sin'le sourcin'2

This describes a situation in $hich your company has decided to procuree"clusively from a certain source 2e.g. for )uality reasons3% despite the fact that

other sources e"ist.

Sole sourcin'2

#n this situation% there are no other sources capable of supplying the relevant

material.

The sole source situation is disadvantageous to you.

#n order that the system does not calculate a score for the price level and price

history% you do not set t&e indicator*




M((M.M #L()R, Q.A"(",

#ndicates the percentage of the order )uantity that counts as the minimum

)uantity to be delivered.

#f the minimum delivery )uantity is not reached% the system does not

determine a score for the goods receipt.

M((M. #L()R, PRC"AG A# S"A#AR#(0(G )AL. F!

#L()R, "(M )AR(AC

Fhen this indicator is set this information $ill be ta*en from the relevant fields

in the material master record




P!("S SC!RS F!R "H A."!MA"(C CR("R(A

ere the scores are defined regarding the percentage calculated during an evaluation.The relation bet$een scores and percentage are al$ays Kup toL. This means that in the

e"ample belo$ vendor get a score of 1<< if the percentage is < and get a score of 7G if

the percentage is bet$een <%1 and %<.



Transactions

"RASAC"(!S2

!MGC! efine Feighting *eys for M,!MG(! Main ,rit. $ith associated -ubcrit. plus assignment of -coring

Meth. to be used.!MGL! :urchasing8organization8dependent settings!MG.! Maintain scope of list

!M3! Maintain scores for compliance $ith shipping instructionsM45 / Maintain Vendor Evaluation.M46 / ,alculate -cores for -emi8Automatic and Automatic ,riteria.M47 / ,ompare evaluations.!M!8 / pdating periods!M3 / -core for -hipping instruction 2:urchasing 89 Material

master3!L(6 / -tatistical setupM3H / Mar*et priceQM96 / ?uality notificationM56 / isplay inforecords




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Ta)(es

"A+LS2

L+3- eader ata.,ontains data as Feighting *ey% (verall score% etc.

L+P 8 Main ,riterion for Vendor Evaluation.

,ontain scores for main criteria and the individual scores for the associated

subcriteria.

4ields!NH#T / Main criteria

&EHT / score

NHT<1 to NHT< 8 -cores for subcriterion

L+M 8 Material8Helated #tem.


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Ta)(es

"A+LS:

S956 8 -tatistics for Vendor Evaluation.

Table that contains scores that are calculated during the on8line boo*ing of some documents

as for instance goods receipt.

,ontains information that related for the current period and the cumulative score.

#mportant! The cumulative points scores of -<1 are not entered in the VE evaluation record

until re8evaluation is carried out.

L+3 8 Vendor Evaluation! eader ata@EF-D / $eighting *ey

@E-&8 overall score

LP+ / Main ,riterion for Vendor Evaluation

NH#T / Main criteria

&EHT / -core for the main criteria.

NHT<1 8 score for the subcriteria 1.NHT< / score for the subcriteria .

Fhen a score for the main or sub criteria has a value <% this means that this criteria $as not

evaluated and not that the vendor has the $orst possible result.



Customizin Ta)(es

"57; / ,ontrol table for vendor evaluation"57;A / efinition for main criteria

"57;+ / Te"t for main criteria

"57;C / efinition for -ubcriteria

"57;# / Te"t for subcriteria

"57; / efinition of $eighting *eys

"57;F / escription of $eighting *eys

"57;G / Main criteria"57;H / #nterval for delivery time statistics

"57;( / efinition of subcriteria for the main criteria

"57;< / Feighting *eys

"57;3 / Assignment! :ercentage 5 -core

"57;L / #ntervals for )uantity reliability

"57;M / efinition of scope of list"57; / Te"t for scope of list

"57;! / -cope of Dist

"98;A 8 is the table for defining shipping instructions

"98;C 8 specifies the points scores for compliance.

Documents

Vendor Evaluation - Customizing and Technical Information