Setting Up Vendor Evaluation Using Logistics Information System

Objective

After completing this lesson, you will be able to set up vendor evaluation

Supplier Evaluation in the Background

In the case of an evaluation in the background, you can update existing evaluation records and create new ones for suppliers that you have not yet evaluated. As a rule, you carry out background maintenance of the evaluations for suppliers belonging to the same supplier class or to which you have assigned the same weighting key. However, you can select a range covering different groups of suppliers. For this reason, you do not need to specify a weighting key for background evaluation. For the system to be able to calculate the scores correctly, you must subsequently maintain the weighting key for such evaluation records. The system finds the evaluation records involved using the Vendors Without Weighting Key report.

To set up supplier evaluation as a background job, on the SAP Easy Access screen, choose Logistics → Materials Management → Purchasing → Master Data → Vendor Evaluation → Follow-On Functions → Evaluation in Background (ME6G).

To post-process evaluation records without a weighting key, on the SAP Easy Access screen, choose Logistics → Materials Management → Purchasing → Master Data → Vendor Evaluation → Follow-On Functions → Vendors Without Weighting Key (ME6E).

Automatic Calculation of Subcriteria Scores

The system uses the following conditions to calculate the scores for automatic subcriteria:

  • Quantity reliability

  • On-time delivery

  • Price Level

Quantity Reliability

This figure illustrates how the system calculates the score the Quantity reliability automatic subcriterion (Delivery main criterion)

This example illustrates how the system calculates the score for the Quantity reliability automatic subcriterion (Delivery main criterion). The system updates the individual score for Quantity reliability for a material and a supplier in the relevant info structure when a Purchase Order (PO) item is closed. This happens when one of the following events occurs:

  • The supplier has not delivered the full PO quantity and the delivery quantity is not within the permitted underdelivery tolerance for the PO item. In spite of this, when posting the Goods Receipt (GR), you manually set the delivery completed indicator to indicate that the delivery has been completed for one PO item.

  • The supplier delivers only 90 pieces of a PO quantity of 100 pieces, and you reduce the PO quantity to 90 or set the delivery completed indicator for the PO item.

  • You delete a PO item by setting the deletion indicator.

  • The GR quantity is within the underdelivery tolerance, or it equals or exceeds the PO quantity.

The system takes into account only GRs against a PO and the release of GR-blocked stock into the warehouse or stores. The standard system represents such transactions with the movement types 101, 105, and 107.

Calculating the New Individual Score for the Subcriterion Quantity Reliability

If one of the events described previously occurs, the system calculates the new individual score (material dependent) for the Quantity reliability subcriterion as follows:

  1. In the case of a GR against a PO, the system calculates the percentage variance of the quantity delivered from the PO quantity using the following formula: ((GR quantity − PO quantity) x 100)/(PO quantity).

    In the process, the system differentiates between an overdelivery and an underdelivery through the appropriate sign (+ or −). However, when calculating the score, the system does not take into account the underdelivery and overdelivery tolerances stored in the material master record.

  2. The system then determines the score defined in the Customizing settings for the purchasing organization for the relevant percentage variance (taking the + or − sign into account).

  3. The new individual score is included in the previous individual score for the material and supplier for the Quantity reliability subcriterion. In doing so, the system applies the smoothing factor defined in the Customizing settings for the purchasing organization. The higher the smoothing factor, the lower the weight assigned to the previous individual score.

    The system uses the following formula:

    New individual score = old individual score x (1 − smoothing factor) + (score for new goods movement x smoothing factor)

    This new individual score is updated in the S013 info structure.

  4. When you run a new evaluation, the system calculates the new score for the Quantity reliability subcriterion for all materials on the basis of the S013 info structure.

    In doing so, all materials have the same weight. This means that the system calculates the score per material, then adds all scores, and finally divides it by the number of materials.

    Hint

    In the case of scheduling agreements, the Quantity reliability subcriterion is not updated following each GR, but only once, when the target quantity has been reached.

Reversals

Reversals have only a limited effect on the compilation of the score for the Quantity reliability subcriterion. The system takes into account only reversals of GRs against POs into the warehouse or stores and releases of GR blocked stock into the warehouse or stores. In the standard system, such transactions are represented by the movement types 102, 106, and 108. The purpose of this function is to correct faulty input that the goods receiving clerk notices immediately, because the system only considers the last GR that caused the score to be updated. The score awarded for the last GR is canceled when you reverse a GR. If you cancel the first and only GR for a supplier, the score is not canceled.

On-Time Delivery Performance

You use the statistics-relevant delivery date, for example, in a situation where the supplier is not able to deliver until September 30 a material that you ordered for September 15. In this case, you change the delivery date in the item overview to September 30 (the date that is relevant for MRP) but leave the delivery date that is relevant for the statistics as September 15. When calculating the On-time delivery subcriterion, the system uses the statistics-relevant delivery date, and not the actual delivery date. The score for the GR worsens as a result.

Hint

After you output or transfer a purchasing document, the statistics-relevant delivery date is no longer automatically adjusted with the delivery date in the document item.

As in the case of the Quantity reliability subcriterion, in the On-time delivery subcriterion, the system takes into account only GRs against POs and scheduling agreements into the warehouse or stores and releases of GR blocked stock into the warehouse or stores. If delivery is punctual, the system calculates the new individual score for the On-time delivery subcriterion only if the check regarding the minimum delivery quantity was successful. The check of the minimum delivery quantity prevents a vendor from being awarded a good score for a punctual GR with an inadequate delivery quantity. You specify the minimum delivery percentage at the purchasing organization level in the Customizing settings for supplier evaluation. The percentage specified can be overridden by a minimum delivery percentage defined in the purchasing value key of the material master record.

Hint

A punctual delivery means that the GR is precisely on the delivery date. If the supplier delivers too early or too late, the system calculates the score for the On-time delivery subcriterion without taking the minimum delivery percentage into account.

Standard Delivery Date Variance

To calculate date variances in percent, you must have defined the StdDelVar.(Standard Delivery Date Variance) parameter. The standard delivery date variance indicates how many days correspond to a percentage variance of 100%. If the standard delivery date variance is ten days, for example, a delay of one day in delivery would mean a percentage variance of 10%.

You specify the value for the standard delivery date variance at the purchasing organization level in the Customizing settings for vendor evaluation. As in the case of the minimum delivery percentage, the standard delivery date variance can be overridden by a value specified in the purchasing value key of the material master record.

Hint

The date variance is calculated in working days.

If you have stored a calendar in the control data for supplier evaluation, public holidays, Saturdays, and Sundays can be excluded from the date variance calculation. After the system calculates the percentage date variance (taking the + or − sign into account), the system runs through all further steps in exactly the same way as in the calculation of the score for the Quantity reliability subcriterion.

The following are some useful hints:

  • If a GR covers several delivery schedule lines, the system runs through the scoring process for each individual schedule line. Each of these scores is multiplied by the delivered quantity relating to the relevant schedule line (weighted by quantity). The sum of these weighted points scores is then divided by the GR quantity. The result is the score for the specific GR.

  • If you want to score the Notification reliab. (Shipping Notification Reliability) subcriterion, only the confirmation that is assigned to the 2 (Shipping Notification) internal category is taken into account. Furthermore, this confirmation category must be identified as GR-relevant in the confirmation control.

  • You can use the MCE2 transaction to check the scores that have been updated for a purchasing document. After entering the transaction, you choose the S013 info structure.

Price Level

Calculating the Score for the Price Level

When calculating the score for the price level, the system runs through the following steps for each material or material group:

  1. The system checks whether you have stored a market price for the material or material group.

    You can store the market price in the master data for purchasing. To define the market price, on the SAP Easy Access screen, choose Logistics → Materials Management → Purchasing → Master Data → Conditions → Prices → Market Price (MEKH).

    Hint

    You can save the market price directly from a quotation price comparison list. In doing so, you can select either the mean value or a random quotation. You can then save the corresponding value as the market price.

  2. If you do not store a market price, the system calculates the average of the effective prices for all info records for this material, except the info record of the supplier to be evaluated.

  3. The system compares the supplier’s effective price with the market price or average price.

    The percentage variance is determined from this comparison.

  4. Through the relevant table in Customizing, the system assigns the score defined there to the percentage of the variance.

  5. The system calculates the average from the scores determined for all materials or material groups of a supplier for which current info record conditions exist.

    The result is the supplier’s score for the Price Level subcriterion.

    Hint

    It is not possible to weight materials with higher-order volumes more heavily than materials with lower-order volumes. All materials are weighted equally.

In the Customizing settings for the Price Level subcriterion, you must specify the consequences for supplier evaluation if there is only one supplier for a certain material. You use the Single Source indicator for this purpose. If you set this indicator, the system calculates a deviance of 0% and assigns the score specified for this.

Analysis in Supplier Evaluation

Supplier Evaluation in Source Determination

Menu Paths to Perform Functions for Supplier Evaluation

Choose the following menu paths on the SAP Easy Access screen to perform the various functions for supplier evaluation:

  • Ranking lists:

    Choose Logistics → Materials Management → Purchasing → Master Data → Vendor Evaluation → List Displays → Ranking Lists (ME65)

  • Evaluation per material or material group:

    Choose Logistics → Materials Management → Purchasing → Master Data → Vendor Evaluation → List Displays → Evaluations per Material/Material Group (ME6B)

  • Evaluation comparison:

    Choose Logistics → Materials Management → Purchasing → Master Data → Vendor Evaluation → Compare Evaluations (ME64)

  • General analysis:

    Choose Logistics → Materials Management → Purchasing → Master Data → Vendor Evaluation → Standard Analysis (ME6H)

  • Changes to the vendor evaluation:

    Choose Logistics → Materials Management → Purchasing → Master Data → Vendor Evaluation → Changes (ME6A)

  • Vendors without weighting key:

    Choose Logistics → Materials Management → Purchasing → Master Data → Vendor Evaluation → Follow-On Functions → Vendors Without Weighting Key (ME6E)

  • Vendors without evaluation:

    Choose Logistics → Materials Management → Purchasing → Master Data → Vendor Evaluation → List Displays → Vendors Without Evaluation (ME6C)

Customizing for Supplier Evaluation

In Customizing for Materials Management, choose Purchasing → Supplier Evaluation → Define Purchasing Organization Data. You must define all the weighting keys and criteria that you want to use in supplier evaluation at client level. First, you define the main criteria and then you define the subcriteria that you require for each main criterion. For the subcriteria, you also specify how they are determined. You can also use a user exit to calculate scores for the subcriteria. You can define the scope of lists, each showing different main criteria or the same main criteria in a different order.

You can create the following settings for supplier evaluation at the purchasing organization level:

  • Main criteria:

    Define the main criteria required for each purchasing organization. You can also define if the point scores can be changed manually.

  • Subcriteria:

    Assign the subcriteria you require to each main criterion together with their weighting keys. Set the Manual Maint. indicator if you want the scores of the subcriteria to be changed manually.

  • Weighting:

    Define at least one weighting key with the relevant weightings for each purchasing organization.

  • Points for automatic criteria:

    For each purchasing organization, store in the table the scores for all subcriteria for which percentage variances must be converted into corresponding scores.

Control Data

You must create the following Customizing settings for supplier evaluation:

  • Customizing in Materials Management under Purchasing → Supplier Evaluation → Define Weighting Keys

  • Customizing in Materials Management under Purchasing → Supplier Evaluation → Define Criteria

  • Customizing in Materials Management under Purchasing → Supplier Evaluation → Define Scope of List

  • Customizing in Materials Management under Purchasing → Supplier Evaluation → Define Purchasing Organization Data

  • Customizing in Materials Management under Purchasing → Material Master → Define Purchasing Value Keys

Execute Additional Processes in Supplier Evaluation

ExerciseStart Exercise

Learning

SAP FacebookSAP YoutubeSAP LinkedIn