VENDOR EVALUATION
GENERAL OVERVIEW
AND CUSTOMIZING
Table of Contents
1.
2.
3.
4.
5.
6.
7.
8.
Vendor Evaluation - Introduction
Scope of Functions
Scores and Criteria
Customizing
Transactions
Technical Data
Tables
Customizing Tables
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Vendor Evaluation - Introduction
Vendor Evaluation component supports you in optimizing your procurement processes in
the case of both materials and services.
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Vendor Evaluation - Introduction
This is done in TA ME61 and ME63 :
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Scope of Functions
Procurement of Materials
The Vendor Evaluation component helps you select sources of supply and facilitates 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.
On the basis of detailed information, and in collaboration with the relevant vendors, you
can quickly identify and resolve any procurement problems that may crop up from time to
time.
Procurement of Services
You can check the reliability of the vendors from whom you procure services on a plant by
plant basis. You can determine whether the vendors perform the services within the
specified timeframes and appraise the quality of the work carried out.
.
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Scores and Criteria
The scores for Main Criteria are calculated from the scores of the Subcriteria.
The Subcriteria scores can be:
• Manual – scoring method '_'
You enter the score into the system yourself before carrying out an evaluation.
• Semi-automatic – scoring method 1, C and D
You enter scores for quality and timeliness of delivery or performance at info record level
(for a material) or in the service entry sheet (for an externally performed service).
For scoring method 1 a score can be entered for each info record. Info records are based
in the relation vendor X material.
The score for the Subcriteria then corresponds to the average score for all info records.
• Fully automatic – scoring method 2 to 9, A and B
In the case of the automatic the scores are calculated automatically.
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Customizing
Material management -> Purchasing -> Vendor evaluation
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Customizing - Define Weighting keys (OMGC)
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.
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Customizing – Overall Criteria
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.
You can compare different vendors on the basis of their overall scores without generating a
detailed analysis of their evaluations (TA ME6B)
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Customizing - Define Criteria (OMGI)
The system calculates the overall score for a vendor from the main criteria scores.
The main criteria available in the standard system are:
·
Price
·
Quality
·
Delivery
·
General service/support
These main criteria serve as a basis for evaluating vendors from whom you procure
materials.
·
Service
This main criterion serves as a basis for evaluating those vendors you employ as external
service providers.
·
Invoice
This main criterion serves as a basis for evaluating vendors from whom you procure
materials or services.
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Customizing - Subcriterion
Price
•Price
•Price
level
history
Quality
•Goods receipt
•Quality audit
•Complaints/rejection level
Delivery
•On-time delivery performance
•Quantity reliability
•Compliance with shipping instructions
•Confirmation date
Invoice
•Quantity variance
•Price variance
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Customizing - Subcriterion
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.
On the basis of the subcriterion Price Level you can compare a vendor's price to the current
market price at a certain point in time.
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.
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.
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Customizing - Subcriterion
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.).
The score (QM key quality figure) is calculated in QM Quality Management and the data passed
on to MM Vendor Evaluation. This key quality figure is converted for use in the Vendor Evaluation
scoring system.
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.
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Customizing - Subcriterion
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).
Quantity Variance
With this criterion, you evaluate how exactly the quantity to be invoiced agrees with the
quantity actually invoiced.
Price Variance
With this criterion, you evaluate how exactly the price to be invoiced agrees with the price
actually invoiced.
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Customizing - Define Purchasing Organization (OMGL)
In this step, you define individual Vendor Evaluation System settings for each purchasing
organization. All parameters must be maintained in order for the system to be able to
compute scores. If, for example, you do not maintain any smoothing factors for the criteria
"on-time delivery performance", "quantity reliability", and "compliance with shipping
instructions", the system will not be able to compute the scores, otherwise when you try to do
a new evaluation system issues an error message.
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Customizing - Define Purchasing Organization (OMGL)
APPLICABILITY PERIOD
Period in calendar days within which data is to be taken into consideration for vendor
evaluation purposes.
Example: If you enter the value 150 here, the system will take into account data from the
past 150 days for vendor evaluation purposes. Data that is more than 150 days old will not
be included in the evaluation process.
The applicability period is taken into consideration when the scores for the following criteria
are computed:
•GR lots
•Complaints level
•Semi-automatic criteria
The applicability period is not taken into consideration for the following criteria:
•Price level
•Price history
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Customizing - Define Purchasing Organization (OMGL)
BUSINESS VOLUME
During the vendor evaluation process for quality, the system checks whether the costs
associated with the faulty delivery exceed the maximum percentage of business volume
defined in the Customizing system.
Notice that this value here is a percent value, i.e. if you want 10% you should insert
10,0000 and not 0,1.
STANDARD IZING VALUE FOR DELIVERY TIME VARIANCE
Value in days that specifies how many days variance from the planned delivery date are to
count as a 100% variance.
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Customizing - Define Purchasing Organization (OMGL)
SINGLE/SOLE SOURCE
Determines how the price of a single or sole source of a material influences the
scores for the subcriteria "Price level" and "Price history". It is only taken into
account if the vendor is the only source for this material and no market price
has been maintained for the material.
There are two situations in which a vendor is the only source of a material:
Single sourcing:
This describes a situation in which your company has decided to procure
exclusively from a certain source (e.g. for quality reasons), despite the fact that
other sources exist.
Sole sourcing:
In this situation, there are no other sources capable of supplying the relevant
material.
The sole source situation is disadvantageous to you.
In order that the system does not calculate a score for the price level and price
history, you do not set the indicator.
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Customizing - Define Purchasing Organization (OMGL)
MINIMUM DELIVERY QUANTITY
Indicates the percentage of the order quantity that counts as the minimum
quantity to be delivered.
If the minimum delivery quantity is not reached, the system does not
determine a score for the goods receipt.
MINIMUN DELIVERY PERCENTAGE AND STANDARDIZING VALUE FOE
DELIVERY TIME VARIANCE
When this indicator is set this information will be taken from the relevant
fields in the material master record
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Customizing - Define Purchasing Organization (OMGL)
POINTS SCORES FOR THE AUTOMATIC CRITERIA
Here the scores are defined regarding the percentage calculated during an evaluation.
The relation between scores and percentage are always “up to”. This means that in the
example below vendor get a score of 100 if the percentage is 0 and get a score of 95 if
the percentage is between 0,1 and 2,0.
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Transactions
TRANSACTIONS:
•OMGC: Define Weighting keys for MC
•OMGI: Main Crit. with associated Subcrit. plus assignment of Scoring
Meth. to be used.
•OMGL: Purchasing-organization-dependent settings
•OMGU: Maintain scope of list
•OMEK: Maintain scores for compliance with shipping instructions
•ME61 – Maintain Vendor Evaluation.
•ME63 – Calculate Scores for Semi-Automatic and Automatic Criteria.
•ME64 – Compare evaluations.
•OMO2 – Updating periods
•OMEK – Score for Shipping instruction (Purchasing -> Material
master)
•OLI3 – Statistical setup
•MEKH – Market price
•QM03 – Quality notification
•ME13 – Display inforecords
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Technical Data
FUNCTION GROUP:
MEL0.
IMPORTANT FUNCTIONS:
EVAL_SEMIAUTOMATIC_CRITERIA
EVAL_AUTOMATIC_CRITERIA_S013
EVAL_PRICELEVEL_CRITERIA
EVAL_PRICEHISTORY_CRITERIA
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Tables
TABLES:
ELBK- Header Data.
Contains data as Weighting key, Overall score, etc.
ELBP - Main Criterion for Vendor Evaluation.
Contain scores for main criteria and the individual scores for the associated
subcriteria.
Fields:
HKRIT – Main criteria
BEURT – score
KRT01 to KRT20 - Scores for subcriterion
ELBM - Material-Related Item.
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Tables
TABLES…
S013 - Statistics for Vendor Evaluation.
Table that contains scores that are calculated during the on-line booking of some documents
as for instance goods receipt.
Contains information that related for the current period and the cumulative score.
Important: The cumulative points scores of S013 are not entered in the VE evaluation record
until re-evaluation is carried out.
ELBK - Vendor Evaluation: Header Data
GEWSL – weighting key
GESBU- overall score
ELPB – Main Criterion for Vendor Evaluation
HKRIT – Main criteria
BEURT – Score for the main criteria.
KRT01 - score for the subcriteria 1.
KRT02 – score for the subcriteria 2.
When a score for the main or sub criteria has a value 0, this means that this criteria was not
evaluated and not that the vendor has the worst possible result.
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Customizing Tables
T147 – Control table for vendor evaluation
T147A – Definition for main criteria
T147B – Text for main criteria
T147C – Definition for Subcriteria
T147D – Text for subcriteria
T147E – Definition of weighting keys
T147F – Description of weighting keys
T147G – Main criteria
T147H – Interval for delivery time statistics
T147I – Definition of subcriteria for the main criteria
T147J – Weighting keys
T147K – Assignment: Percentage X Score
T147L – Intervals for quantity reliability
T147M – Definition of scope of list
T147N – Text for scope of list
T147O – Scope of List
T027A - is the table for defining shipping instructions
T027C - specifies the points scores for compliance.
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