Processing Supplier Complaints


After completing this lesson, you will be able to:

  • Process a supplier complaint

Supplier Complaint

Use Case Scenario

At goods receipt or in the warehouse, you discover the supplier delivered a damaged product. What can you do?

Process in SAP S/4HANA

You use a quality notification to document this event and to send a complaint to the supplier. In the simplified figure that follows, explore the process flow to execute a supplier complaint.

In a supplier complaint, you execute the following steps:

  1. Create a supplier complaint or process defect from a goods receipt inspection

    When you realize that the supplier delivered a damaged product (either when executing a goods receipt inspection or later in the warehouse), you create a quality notification. In the notifications details, you record all details at hand - for example:

    • Purchase order item
    • Material document for goods receipt
    • Vendor
    • Problem description in free-text and coded form
    • Pictures documenting the defect
    • Notification responsible
    You can also create a defect during goods receipt inspection. This defect is technically a quality notification that acts as a starting point for the supplier complaint.
  2. Execute and document immediate actions

    An immediate action is any action that ensures that the damaged product does not cause any further issues. For example, you want to ensure that follow-up processes cannot use the damaged product (follow-up processes such as consumption of a raw material in production). Then, you initiate a containment action. You transfer the damaged product quantities from unrestricted-use stock to blocked stock.

    If you need additional analysis, you can also transfer the product from unrestricted-use to quality inspection stock and create an additional inspection lot for further inspection. In an immediate action, you document the steps you've taken in free-text and coded form. You document them together with date and time information.

  3. Define and trigger corrective actions

    A corrective action is any action ensuring the defect is corrected. For example, you contact the supplier and ask for additional information that you need for your error analysis, such as information about the delivery and the product. The product can be beyond repair and, because of high transportation costs, returning it to the supplier is not feasible. In this case, you can scrap the defect quantity.

    Alternatively, you and the supplier can also decide that you want to return the defective product. Then, you create a return delivery. In parallel to logistical tasks, you can also trigger a root-cause analysis - for example, following the 8D or CAPA methodology. In a corrective action, you document the steps and all communication with the supplier. A person other than the notification responsible usually executes the corrective action. As a result, you assign an action processor and status. The action processor can be informed through e-mail. You use the status to track the progress of the action.

  4. Execute corrective actions

    After the action processor received a notification about the action, they execute the action as requested, give feedback, and document the outcome. To inform the notification responsible that they executed the action, they set a respective status. Optionally, the notification responsible can review the feedback given by the action processor and define, if required, additional corrective actions until the problem resolves. In the figure, you see two examples of corrective actions: book goods receipt for the replacement delivery when it arrives at your warehouse, and book goods issue for the return delivery.

  5. Close complaint

    When all corrective actions execute and your team identifies the root cause, you document defect resolution and root cause in the quality notification. To track if you or the supplier caused the defect, you can document the origin of complaint (internal versus external). This is important for various activities, for example, for vendor evaluation if you want to evaluate the number of damaged products a supplier delivers.

In this chapter, we do not discuss executing a supplier complaint in depth. In reality, this process is much more complex and also involves additional steps, for example, providing detailed feedback to corrective actions, root-cause analysis, detailed defect analysis and recording, and creating invoices and credit memos to debit complaint-related costs to suppliers.

How to Process a Supplier Complaint: System Demonstration

As explained earlier, when you observe a supplier-related quality problem, you can either start by creating a quality notification of type supplier complaint or record a defect during goods receipt inspection. In the following demonstration, we demonstrate the second approach and start the supplier complaint process with defects recorded during a goods receipt inspection. We do not demonstrate latter again because you already saw it in the chapter Inspections at Goods Receipt.

In this demonstration, you see the following steps:

  1. Analyze defects created in a quality inspection at goods receipt
  2. Execute and document immediate actions
  3. Define and trigger corrective actions
  4. Execute corrective actions
  5. Close quality notification and document origin of complaint
If you have access to the practice system, you can now do the exercise, Process a Supplier Complaint.

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