Outlining Supplier Evaluation

Objectives

After completing this lesson, you will be able to:

  • Get an overview of supplier evaluation

Supplier Evaluation

Supplier Evaluation Process, Apps and KPIs

The above diagram shows the general supplier evaluation process in the SAP S/4HANA Cloud, public edition

In the following video you can see how to evaluate suppliers with SAP S/4HANA Cloud, public edition.

How to evaluate suppliers with SAP S/4HANA Cloud

Embedded Analytics in Supplier Object Page

The comprehensive view extends the supplier master data and transactional data with analytical data.

Capabilities

  • This supplier object page provides the master data, transactional data, and analytical data in one view.
  • It includes analytical capabilities to get an insight into purchasing spend, off-contract spend, purchase requisition item types, and supplier evaluation scores and trends.

Buyers can monitor the evaluation of their company's suppliers to obtain a basis for promoting their business relationship and for optimizing their supply base.

  • Buyers can analyze their suppliers' evaluation with respect to the amount of purchase orders and purchase order items.
  • Supplier evaluation can be done by quantity, by price, by time, and by operational supplier evaluation. Get insights into each single criteria (quantity, time, price, inspection lot and quality notification) for various dimensions (e.g. supplier, material group, plant, region, purchasing organization)
  • Instantly benchmark performance and perform the analyzes needed to identify relevant suppliers to manage them effectively.

Define Individual Supplier Evaluation Criteria, Weighting, and Scoring

  • Increased flexibility in supplier evaluation using defined evaluation criteria.

    Option to influence supplier performance by individual criteria that are customer-specific and not existing in SAP S/4HANA.

  • Define and activate up to five individual evaluation criteria.

    Provide customers the possibility to define and activate up to five individual criteria to measure supplier performance.

  • Define weighting and scoring of the individual criteria.

    After activation, customers define weighting and scoring of the individual criteria.

  • Maintain values by time-frame and by supplier.

    With the SAP Fiori app Manage User Defined Criteria for Supplier Evaluation, customers can maintain values for the individual criteria by supplier and time frame.

  • In two KPIs, customers can then analyze all individual criteria and the influence on the overall supplier evaluation score.

Parts Per Million

With this real-time KPI, you can analyze the return deliveries and quality notifications created for goods received. The number of items returned or quality-notified are measured against all items received.

Value Proposition 

  • Gain immediate insights into quality performance of the suppliers delivering goods.
  • Analyze in real time the parts per million score to discuss with the suppliers potential activities to improve quality.

Capabilities

  • Perform real-time calculation of parts per million score by various dimensions, such as supplier, material group, purchasing organizations, or plant.
  • Calculate the number of items received against the number of items returned.
  • Calculate the number of items received against the number of items for which quality notifications are created.
  • Navigate to the respective documents from KPIs.

Supplier Evaluation Score

Monitoring the performance of suppliers is an important task of a purchaser. In SAP S/4HANA Cloud, the performance of suppliers is measured across multiple criteria in different real-time KPIs. Buying companies want to share and expose the calculated scores to their suppliers. This can now be done using a flexible configure form, by print or email. Using the Supplier Evaluation Score Output app, you can send output messages (via email or print) containing the supplier evaluation scores to the respective suppliers.

Value Proposition

  • Share the calculated scores with the suppliers to make them aware of their performance.
  • Improve transparency between buying and supplying company.

Capabilities

  • Customers can configure their own form to communicate the scores to their suppliers Output channels by print or email.
  • Calculated scores can be based on on-the-fly calculation or based on historical scores, persisted by a batch job, that is planned on a regular basis (Supplier Evaluations Score History).

Supplier Evaluation Score History

With this app, you can view the history of supplier evaluation scores. You can persist the supplier evaluation scores by scheduling a job.

You can view the aggregated scores in a new tab, which includes the following scores for specific suppliers and material groups:

  • Overall Score

  • Operational Score

  • Time Variance Score

  • Price Variance Score

  • Quantity Variance Score

  • Inspection Lot Score

  • Quality Notification Score

  • Questionnaire Score

Supplier Evaluation Based on Quality Notification

With this app you can evaluate suppliers based on a score that is calculated on the basis of quality complaints received. You can identify the suppliers with fewer received complaint notifications and therefore with a higher quality evaluation score. This helps you to determine the suppliers with the best performance and reliability. This app can also help you to decide which supplier to select if the purchasing conditions, such as quality and price of material, quotation, and delivery time, are the same. In addition to analyzing the number of quality notifications created against a supplier, a new score is now calculated in relation to how many purchase order items are created.

Value Proposition

  • Gain immediate insights into the quality performance of the suppliers.
  • Analyze, in real time, the relation of quality notifications created in relation to purchase order items.

Capabilities

  • Real-time calculation of relative score of quality notifications and purchase order items.
  • Additional measures for the number of purchase orders, the number of purchase order items, and the relative score of quality notifications and purchase order items.

The supplier evaluation capabilities in SAP S/4HANA Cloud analyze the performance of the suppliers regarding accuracy of delivery, price and quality. Purchase orders with respective goods receipts were considered to calculate the variance. In addition to purchase orders, also scheduling agreements are heavily used in various industries. With this innovation, scheduling agreements are also considered to calculate the variances in supplier's performance.

Value Proposition

  • Complete transparency across purchase orders and scheduling agreements with regards to supplier performance
  • Holistic view across the supplier's performance

Capabilities 

  • Include scheduling agreement releases with corresponding goods receipts into the supplier evaluation score calculation in real-time, next to purchase orders
  • Configuration option to include purchase orders, scheduling agreements or both

Factory Calendar in Supplier Evaluation

The supplier evaluation capabilities in SAP S/4HANA Cloud analyze the performance of the suppliers regarding accuracy of delivery, price and quality. Purchase orders with respective goods receipts were considered to calculate the variance. For time variance, the statistical delivery date in the purchase order item is compared with the actual goods receipt date. To increase accuracy of the time variance calculation, it is possible to consider factory calendars which are maintained on a plant level to exclude non-working days in the calculation.

  • Maintain a factory calendar on the plant level to define working and nonworking days
  • Nonworking days should not be considered for supplier evaluation
  • Enable customers to configure consideration of a factory calendar for calculation of a supplier evaluation score •Eliminate nonworking days from the calculation for supplier evaluation time variance
  • Calculation based on working and non-working days also visible in the Document view of Supplier Evaluation by Time

Configuration Apps

In Sourcing and Procurement, several Self-Service Configuration UIs (SSCUIs), also referred to as configuration steps, are available in the Manage Your Solution app. The following SSCUIs affect the area of real-time reporting and monitoring for procurement:

Supplier Evaluation and Procurement-Related Activity
Define E-Mail Reminder LevelsMaintain E-Mail Subject for Supplier EvaluationMaintain Settings for E-Mail Templates in Evaluation

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