VENDOR EVALUATION

The Vendor Evaluation component has been completely integrated into MM Purchasing.

Information such as delivery dates, prices, and quantities can be taken from purchase

orders. Vendor Evaluation also uses data from Quality Management, such as the results

of incoming inspections or quality audits. It also accesses basic data in Materials

Management, such as goods receipt data from Inventory Management, and data from

the Logistics Information System

What is Vendor Evaluation?

The Vendor Evaluation System supports you in the optimization of your procurement

processes in the case of both materials and services.

Procurement of Materials

The system helps you select sources of supply and facilitate the continual monitoring of

existing supply relationships. It provides you with accurate information on prices, and

terms of payment and delivery. By evaluating vendors, you can improve your

enterprise's competitiveness. You can quickly determine and resolve any procurement

problems that may arise on the basis of detailed information and in collaboration with the

relevant vendors.

Procurement of Services

You can check the reliability of the vendors from which you procure services on a plantby-

plant basis. You can determine whether the vendors perform the services within the

specified timeframes and appraise the quality of the work carried out.

Scores and Criteria

The SAP Standard System offers you a scoring range from 1 to 100 points, which is

used to measure the performance of your vendors on the basis of five main criteria. You

can determine and compare the performance of your vendors by reference to their

overall scores. The main criteria available in the standard system are:

·Price

·Quality

·Delivery

·General service/support

These four main criteria serve as a basis for the evaluation of vendors from whom you

procure materials.

You can also define other or further main criteria, as required. You can assign different

weights to the individual criteria. The vendor's overall score is computed taking into

account the weighted scores awarded for each of the main criteria. The Vendor

Evaluation System ensures that evaluation of vendors is objective, since all vendors are

assessed according to uniform criteria and the scores are computed automatically. In

this way, subjective impressions and judgments can be largely avoided. To create a

detailed evaluation, each main criterion can be divided into several sub criteria. The

standard system provides you with certain sub criteria, which suffice as a basis for

evaluation, but you can also define your own additional sub criteria.

The scores for the sub criteria are calculated in three different ways.

Automatic

Scores are calculated by the system on the basis of existing data.

Semi-automatic

You enter individual scores for important materials, or for the quality and

timeliness of a service performed yourself. The system then calculates the

higher-level score from these.

Manual

You enter a blanket score for a sub criterion per vendor.

Analyses

The results of vendor evaluation are displayed in the form of analyses. For example, you

can generate ranking lists of the best vendors according to overall score or ranking lists

for specific materials. Changes to evaluations are recorded in logs, and you have the

option of printing out evaluation sheets.

Organizational Level for Vendor Evaluation

The organizational level for Vendor Evaluation is the purchasing organization: Each

purchasing organization evaluates the vendors that have been assigned to it. The

system does not support a comparison of Vendor Evaluations at the higher company

code level.

Vendor Evaluation uses the following master data:

·

Vendor master record

·

Material master record

·

This section describes the most important elements of Vendor Evaluation:

Overall Score

Main Criteria

Sub criteria

Scoring Range

Weighting of Scores

Purchasing info record

Overall Score

The overall score represents the complete evaluation of a vendor. It is a combination of

the scores the vendor has achieved for all the main criteria. You can compare different

vendors on the basis of their overall scores without generating a detailed analysis of

their evaluations.

Main criteria

The main criteria form the basis for assessing the performance of a vendor. The system

calculates the overall score for a vendor from the main criteria scores. You can evaluate

vendors according to several main criteria, which you consider important. The scores for

the main criteria are a more accurate representation of the performance of a vendor than

the overall score.

Subcriteria

Subcriteria are the smallest units to which scores can be assigned in Vendor Evaluation.

The system calculates a score for the higher-level main criterion based on the scores a

vendor receives for the various subcriteria. There are three types of subcriteria:

·

Manual

·

Semi-automatic

·

They are named after the different methods of scoring. The individual scoring methods

fulfill different purposes and involve different kinds of maintenance.

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. The examples in this documentation are

based on a scoring range of 1 to 100 points. This scale provides you with a good

overview and also permits quite a finely differentiated rating of individual vendors.

The scoring range is defined when the system is configured.

Weighting of Scores

The scores a vendor is awarded for main criteria can be weighted differently to reflect

differences in the significance of the criteria.

Weighting Factor

By using weighting factors, you can increase or reduce the importance of certain criteria

when a score is calculated at the next highest level.

Suppose a vendor receives 80 points for the criterion Price and 80 points for the criterion

Service. Since the price of the material is more important to you than the service the

vendor provides, you assign the criterion Price a weighting factor of 3 and the criterion

Service a factor of 1. The 80 points for Price are then worth three times more than the 80

points for Service when the overall score is calculated.

Weighting Keys

A weighting key is an identifier under which the weighting factors for a number of main

criteria can be grouped together and saved. If you know that you will want to carry out an

evaluation repeatedly with certain main criteria and certain weighting factors, you can

save this combination under a weighting key. When you carry out the next vendor

evaluation, just enter the relevant weighting key instead of entering a weighting factor for

each individual criterion. The system then automatically sets all the weighting factors.

Evaluating Vendors

The evaluation of vendors is subject to certain preconditions. Before you begin, you

must consider the following:

·

Have you maintained the system settings?

·

Do you have the required authorizations?

·

Which vendor do you want to evaluate? (vendor key)

·

organization key)?

Which purchasing organization is to evaluate the vendor (purchasing

·

Is this the first time the vendor has been evaluated?

·

If not, when was the last evaluation?Automatic