SAP Vendor Evaluation

Overall Score
The overall score represents the general evaluation of a vendor. It is a combination of the scores the vendor has achieved for all the main criteria

Main Criterion
The main criteria form the basis for assessing the performance of a vendor. The system calculates the vendor's overall score from the scores achieved for the main criteria.
You can determine the type and number of main criteria yourself. The system supports a maximum of 99 main criteria. You can specify the number of main criteria for each purchasing organization and decide which main criteria are to be covered by the overall score.
The following five main criteria are available in the standard system:

• Price
• Quality
• Delivery
• Gen. Service/Support

Note:

1. There are no automatic main criteria.
2. If you do not define any subcriteria for a main criterion, the system cannot
   calculate a score. In this case, you must manually enter a score for the main
   criterion.

Subcriterion
Subcriteria are the smallest units for which scores are awarded in Vendor Evaluation.
The system calculates a score for the relevant higher-level main criterion based on the scores a vendor receives for the various subcriteria.

There are three types of subcriterion:

• Manual
• Semi-automatic
• Fully automatic

Note:

1. You can weight subcriteria in the same way as main criteria, except that subcriteria do not have a weighting key.
2. The system allows for a maximum of twenty (20) subcriteria for each main criterion.
3. There are no automatic subcriteria for the main criteria “General Service/Support” and “External Service Provision”. However

Brief Description of the Automatic Subcriteria

Price ------------------------------- 18
- Price Level
- Price History

Quality ------------------------------ 17
- Goods receipt
- Quality audit
- Complaints/rejection - level

Delivery ----------------------------- 16
- On-time delivery performance
- Quantity reliability
- Compliance with shipping instructions
- Confirmation date

General Service/Support
Three semi-automatic subcriteria
Two semi-automatic subcriteria

Subcriterion

Price

Price Level
This subcriterion compares relationship of a vendor's price to the market price. If the vendor's price is lower than the market price, he/she receives a good score; if it is higher than the market price he/she is assigned a poor score.

Price History
This subcriterion compares the development of the vendor's price with the market price.On the basis of the subcriterion "Price History", you can determine whether the vendor's price has increased or decreased over a certain period in comparison with changes in the market price over the same period.

Quality

Goods Receipt
This subcriterion is used to evaluate the quality of the material that the vendor delivers. Quality inspection takes place at the time of goods receipt.

Quality Audit
This subcriterion is used to evaluate the quality assurance system used by a company in manufacturing products.

Complaints/Rejection Level
This subcriterion is used to evaluate whether the materials delivered by the vendor are regularly found to be faulty subsequent to incoming inspection (for example, on the shop-floor) leading to additional expense and loss of time (due to loss of production, reworking etc.).

Delivery

On-Time Delivery Performance
This subcriterion is used to determine how precisely a vendor has adhered to the specified delivery dates.

Quantity Reliability
This subcriterion is used to determine whether a vendor has delivered the quantity specified in the purchase order.
“On-Time Delivery Performance” and “Quantity Reliability” always have to be seen in conjunction. You can specify for each material (in the material master record) or for all materials (in the system settings) the minimum quantity of the ordered materials that must be delivered.
If this minimum quantity is not delivered, the vendor is not awarded a score. However, in this case the vendor receives a bad score for "Quantity Reliability".

Compliance With Shipping Instructions
This subcriterion is used to determine how precisely a vendor complies with your instructions for the shipping or packing of a material.

Confirmation Date
This subcriterion is used to determine whether a vendor adheres to a previously confirmed delivery date (that is, whether the goods are actually received on the date previously confirmed by the vendor).
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The scores for subcriteria can be determined manually, semi-automatically, or fully automatically.

Manual Scoring
With this method, you enter the vendor's score for a subcriterion in the Vendor Evaluation system yourself before carrying out an evaluation.
If you enter a manual score for a vendor from whom you procure materials, the score is a blanket score for the vendor, applicable to all the materials supplied by the latter.


Semi-Automatic Scoring
Instead of awarding a vendor a single blanket score for all his materials or services, you maintain:
A number of scores (at info record level) for each material you consider to be particularly important.

Fully Automatic Scoring
In contrast to the manual and semi-automatic methods, with this method you do not enter any data or scores yourself.
The system calculates the scores for automatic subcriteria on the basis of data from other areas of the enterprise (for example, Goods Receiving or Quality Management). This data is entered in Vendor Evaluation when the statistics files are automatically updated.
Each automatic subcriterion is based on one calculation approach.
For example, the system checks all purchase orders and goods receipts, then it calculates a vendor's score for the subcriterion “On-Time Delivery Performance” on the basis of the average variance between actual and planned delivery dates.

Scoring Range
To compare the performance of one vendor with another, it is necessary to establish a range (or scale) of possible scores.
You can define your own scoring range from the worst- to the best-possible achievable score. For examples: Scoring range of 1 to 100 points.

Executing Vendor Evaluation

Steps
Prerequisites
You can start the vendor evaluation process if the following questions have been clarified:

• Have you maintained the system settings?
• Do you have the required authorizations?
• Which vendor do you want to evaluate? (vendor key)
• Which purchasing organization is to evaluate the vendor? (Purchasing organization key.)
• Is this the first time the vendor has been evaluated?
• If not, when was the last evaluation?

Determining the Scoring Method for Subcriteria
You can determine which scoring method has been assigned to a subcriterion on the screen showing the subcriteria for a main criterion.
The keys for the different scoring methods can be found in the M column of the Evaluation of subcriteria area. The following table shows how they are assigned.

Scoring Method Key
Manually '_'
Semi-automatically 1, C, and D
Fully automatically 2 - 9, A, and B

Fully - Automatic

1. From the system menu, choose Logistics -> Materials management -> Purchasing and then Master data -> Vendor evaluation Maintain. The initial screen appears.
2. Enter the keys for the purchasing organization and vendor and then press ENTER. An overview of the main criteria for this purchasing organization is displayed.
3. Maintain the mandatory-entry field Weighting key.
If you do not know the weighting key, use the Possible entries facility.
4. From the menu bar, choose Edit -> Auto. re-evaluation The system first calculates the scores for the automatic subcriteria, then the scores for the main criteria, and finally the overall score for the vendor.
5. Save the evaluation. The overview screen also contains the following:

Log of Computation of Scores for Automatic Subcriteria
The log provides a breakdown of the vendor's score for a subcriterion. It displays the automatic subcriteria scores for all the info records included in the current calculation.
After you have carried out an evaluation with regard to the automatic subcriteria for some or all of the main criteria, you can display the log.
To do so, choose Goto -> All logs from the menu bar. (Or Goto Detailed log if you want to see just one specific log.)
Calculating Score for Individual Main Criterion
If you want the system to compute a score for an individual main criterion rather than an overall score based on all the main criteria, use the Automatic New Evaluation/Main Criteria function.
Procedure
1. On the overview screen, double click on the main criterion for which the score is to be calculated or select the main criterion and choose Main criterion Details.
2. Choose Edit Auto.new eval./main crit., to calculate the score for this main criterion. You can display the log for the calculation of the scores with regard to the automatic subcriteria for this main criterion by choosing Goto Detailed log.

The score is calculated as follows:
1. On the shop-floor, material A supplied by vendor ACME is being processed in the course of production.
2. If the material is OK (that is to say, no quality notifications have been entered for material A during the entire validity period), the vendor is awarded the highest score for the material (100 points).
3. If the material is found to be defective, a quality notification (such as a rejection note or nonconformance complaint sent to the vendor) is entered.
4. During the vendor evaluation process, the system checks whether the costs associated with the faulty delivery exceed the maximum percentage of business volume defined in the Customizing system.
In the above example, your business volume with (value of purchases from) ACME amounts to one million dollars annually. The costs associated with defective deliveries may not exceed 0.1 percent of business volume, i.e. $100,000. The costs associated with a quality notification are estimated at $500.
5. If the costs that your company incurs as a result of the faulty materials are lower than the defined proportion of business volume, the system calculates a score between 1 and 99 points. 6. If the cost of defective or non-conforming deliveries exceeds the share of business volume defined in Customizing (in this case $100,000), the vendor is awarded the lowest score (1 point).

TRANSACTIONS AND SPRO PATHS

Maintain Vendor Evaluation

Create: Logistics -> Materials Management -> Purchasing -> Master Data -> Vendor Evaluation -> Maintain ( Transaction ME61 )
Change: Logistics -> Materials Management -> Purchasing -> Master Data -> Vendor Evaluation -> Changes ( Transaction ME6A )
Display: Logistics -> Materials Management -> Purchasing -> Master Data -> Vendor Evaluation -> Display ( Transaction ME62)
Materials Management -> Purchasing -> Master Data -> Vendor Evaluation -> Standard Analysis ( Transaction ME6H )
Materials Management -> Purchasing -> Master Data -> Vendor Evaluation -> Follow-On Functions -> Print Evaluation Sheet ( Transaction ME6F )

Market Price

Master Data -> Conditions -> Prices -> Market Price from the purchasing menu
( Transaction MEKH )
Second Way to maintain Market Price
In Quotation Comparision
click on vendor price
Menu -> Edit -> SAVE AS Market Price