Characterizing Preferred Supplier Management

Objective

After completing this lesson, you will be able to summarize the characteristics of preferred supplier management in SAP Ariba Supplier Lifecycle and Performance.

About Preferred Supplier Management

Preferred supplier management involves segmenting suppliers into various preferred category statuses. These statuses represent the degree to which your organization prefers one supplier over another for specific categories, regions, and business units. This information is shared with other SAP Ariba solutions, encouraging users to engage with preferred suppliers during sourcing, buying, and risk management processes.

Suppliers must be qualified for a combination of commodities, regions, and (optionally) departments before they can be preferred, as shown in the following diagram of the SAP Ariba supplier lifecycle.

A diagram of the SAP Ariba supplier lifecycle, highlighting the Preferred step, which comes after qualification.

Your organization can set preferred category statuses for qualified suppliers using template-based projects, data import, or the Supplier Data API with Pagination.

Note

Project-based preferred supplier management is only available in sites that include SAP Ariba Supplier Lifecycle and Performance. Statuses set using data import or the API don't have associated preferred supplier management projects.

Key Components of Project-Based Preferred Supplier Management

Preferred Supplier Levels

Administrators associate preferred category statuses with preferred supplier levels to define your organization’s preference hierarchy. They can define up to five preferred supplier levels in your site. You assign the most preferred suppliers with the lowest number (1) and the least preferred suppliers with the highest number (5). For example, your organization may wish to segment preferred suppliers using the labels Gold, Silver, and Bronze. An administrator would define Gold as level 1, Silver as level 2, and Bronze as level 3.

Preferred supplier levels play a role in driving business toward your organization’s most desirable suppliers. For example, the system can prioritize suppliers with a minimum preferred level in guided buying search results and automatically invite level 1 preferred suppliers to relevant sourcing events. Additionally, the system can use preferred supplier data when calculating risk exposure and recommending suppliers during engagement risk assessments.

Preferred Supplier Management Projects

Users with appropriate permissions can utilize preferred supplier management projects to request a preferred category status for a new commodity, region, and department combination or a change to an existing status. As with qualifications, a supplier can have multiple preferred supplier management projects, each for a different combination of commodity, region, and department. You can't combine multiple qualified combinations in the same preferred status request. For example, if a supplier has separate qualifications for electronic reference material and printed media in the Canada region, you must create individual preferred category status requests for each category.

Note

If your site uses process qualifications, you can request preferred category status for any valid process qualification or a subset.

Summary

Segment suppliers into preferred category statuses based on commodities, regions, and departments to promote engagement with preferred suppliers.
Only qualified suppliers can achieve preferred status.
Organizations set preferred status using projects, data import, or an API.
Up to five preferred supplier levels define the preference hierarchy.

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