Objective
Supplier evaluation supports you in the following:
Procuring materials and external services
Selecting sources of supply
Ongoing monitoring of existing supplier relationships
Supplier evaluation is based on data from Materials Management and Logistics Information System (LIS, info structure S013). Supplier evaluation also makes use of data from Quality Management. This can include, for example, the results of incoming inspections or quality audits.
You must use a scoring range to assess a particular supplier’s performance in comparison with that of others. SAP S/4HANA provides a scoring range of 1 to 999 points, enabling you to measure the performance of suppliers in relation to the main evaluation criteria. Most companies use a scoring range of 1 to 100 points. This scale is easy to read and, at the same time, permits fine graduation in the representation of the performance of individual suppliers. The scoring range is defined in Customizing on purchasing organization level.
The main criteria constitute the basis for assessing a supplier’s performance. The system computes a supplier’s overall score from the scores for the main criteria. On the basis of the overall score, you can compare various suppliers without taking details of the evaluation into account. However, the scores for a specific main criteria reflect a supplier’s performance more precisely than the overall score. By comparing scores at the main criteria level, for example, you may find that although supplier A achieved a lower overall score than supplier B, supplier A is better than supplier B with regard to the main Price criterion. If the price of a material is the deciding factor in terms of placing of your next purchase order, supplier A would be given preference over supplier B.
The SAP standard system provides the following main criteria:
Price
Quality
Delivery
Service
Invoice verification
Sustainability
You define main criteria and subcriteria at client level. The system supports a maximum of 99 main criteria. For each purchasing organization, you select the main criteria that you want to use there.
You can use weighting keys to define the share of the overall score that is made up by each main criterion. For example, a supplier has been awarded 80 points for the Price criterion and 90 points for the Delivery criterion. Since the price of the material is considerably more important to you than punctual delivery, you assign the 3 weighting key to the Price criterion and the 1 weighting key to the Delivery criterion. This means that when calculating the total points, the system considers the 80 points for the Price criterion three times, but only considers the 90 points for the Delivery criterion once.
In Customizing, define as weighting keys all weightings that you want to use enterprise-wide in supplier evaluation. You can then specify the weighting keys that may be used by each purchasing organization. When you carry out an evaluation for the first time, you must assign a weighting key to each supplier.
Caution
Each main criterion is subdivided into several subcriteria. The standard version of the system provides a certain number of subcriteria that serve as a basis for evaluation. You can also define additional subcriteria for each main criterion. The system supports a maximum of 20 subcriteria for each main criterion.
When computing the score for the relevant main criteria, you can define different weighting for individual subcriteria for each purchasing organization in Customizing. The settings apply to all suppliers within the relevant purchasing organization. The scores for the subcriteria represent the average of the individual scores for the relevant materials. It is not possible to weight materials; all materials count as equal.
Subcriteria are the smallest units in supplier evaluation for which scores are awarded. The system determines the score for the superordinate main criterion from the scores a supplier obtained for the various subcriteria.
The following list briefly describes the factors that the various automatic and semiautomatic subcriteria evaluate:
Price:
The following automatic subcriteria are available for the main Price criterion:
Price Level:
This subcriterion evaluates the relationship of a supplier’s price to the market price. If the supplier’s price is below the market price, the supplier is awarded a high score. If the supplier’s price is above it, the supplier is awarded a low score. If you have not stored any market price in the system, the average of all current info record prices is taken.
Price history:
This subcriterion evaluates how a supplier’s price has changed over time in comparison with the development of the market price (or the average of all info record prices).
Quality:
The following automatic subcriteria are available for the main Quality criterion:
GR Inspection lots (GR check):
This subcriterion evaluates the quality of the materials supplied by the supplier. The quality inspection (incoming inspection) takes place at the time of goods receipt.
Q2-Notification (complaints level – shop floor complaints or rejection):
This subcriterion assesses whether, after passing the quality check on goods receipt, materials delivered by a supplier proved unusable during the subsequent manufacturing process, thus resulting in extra effort and expenditure. This score is determined in Quality Management and then passed on to supplier evaluation in Purchasing.
This subcriterion assesses the effectiveness of the quality assurance system that an enterprise employs in the manufacture of its products.
Delivery:
The following automatic subcriteria are available for the main Delivery criterion:
On-time delivery:
This subcriterion assesses whether the vendor’s delivery date is the same as or close to the delivery date mentioned in the purchase order.
Quantity reliability:
This subcriterion assesses the extent to which a vendor delivers the quantities specified in purchase orders.
Shipping instructs. (compliance with shipping instructions):
This subcriterion assesses how closely a supplier complies with the instructions you give with regard to the shipping or packing of an ordered material.
Notification reliab. (shipping notification reliability):
This subcriterion assesses whether the supplier’s delivery date is the same as or close to the delivery date mentioned in the confirmation, for example, shipping notification. This criterion assesses whether the goods actually arrive on the confirmed date.
You evaluate suppliers at the purchasing organization level. A system-supported comparison of supplier evaluations ns at company code or plant level is not possible in the standard system. You can carry out the supplier evaluation process manually for each supplier or in the background for several suppliers.
The following transactions are available for manual execution per supplier:
Maintain supplier evaluation (ME61):
In this transaction, you can enter the scores for the manual main criteria and subcriteria.
Automatic re-evaluation (ME63):
Carrying out this evaluation provides you with a list comparing the scores from the last evaluation with the newly calculated scores.
You can display the log of the calculation of the scores for the automatic subcriteria. To do so, choose Go to → Individual log or Go to → All logs. Note that these logs are only available to you before saving the vendor evaluation. You can retrace the manual changes to the individual scores at any time by referring to the change documentation.
You can record the evaluation that the system has determined for a supplier in an evaluation sheet and print it out. The header of the evaluation sheet shows the name of the person who created the sheet, the date of its creation, and the name of the supplier. Below this, the overall evaluation and the scores for the individual main criteria are shown. The scores for the subcriteria of each main criterion are listed under Detailed Evaluation.
To print the evaluation sheet, on the SAP Easy Access screen, choose Logistics → Materials Management → Purchasing → Master Data → Vendor Evaluation → Follow-On Functions → Print Evaluation Sheet (ME6F).
To maintain vendor evaluation, on the SAP Easy Access screen, choose Logistics → Materials Management → Purchasing → Master Data → Vendor Evaluation → Maintain (ME61).
Hint
Hint
When you save the evaluation, the old scores are replaced by the new scores. You can reproduce calculation of automatic and semiautomatic criteria using a log.
To perform automatic re-evaluation of vendors, on the SAP Easy Access screen, choose Logistics → Materials Management → Purchasing → Master Data → Vendor Evaluation → Automatic New Evaluation (ME63).