MM Vendor Evaluation Guide

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Version

SAP-00008797

VersionPrepared for R/3 Release 2.2.

August 94

SAP-00008798

Copyrights

@1994 SAP AG. All rights reserved.

Neither this documentation nor any part of it may be copied or reproduced in any form or by anymeans or translated into another language, without the prior consent of SAP AG.

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Introduction

Overview

This section introduces you to the SAP component Vendor Evaluation. It describes the master dataand the organizational levels for vendor evaluation.

Price Delivery

Quality Service

~ Vendor evaluation system ~,~if

WILSON

@SMITH

@BROWN

@JONES

@I Objective

Corn parable !Integration of the Vendor Evaluation System

In R/3 Release 2.1, the Vendor Evaluation component has been competely integrated into MMPurchasing. Information, such as, delivery dates, prices, and quantities can be taken from purchaseorders. Vendor evaluation also uses data from Quality Management, for example, results fromgoods receipt inspections or quality audits. It also accesses basic data in materials management,goods receipt data from Inventory Management, and data from the Logistics Information System(LIS).

This section contains the following topics:

~.

Click on a topic for more information

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What is Vendor Evaluation?

The Vendor Evaluation module helps you select vendors for procuring materials. It makes in easierfor you to determine sources of supply and enables you to assess your relationship with vendors. Itprovides you with accurate information on prices, terms of payment, and delivery. By evaluatingvendors, you can improve your company’s competitiveness.

You can quickly determine and solve procurement problems on the basis of detailed information inthe vendor evaluation system.

There is a scoring system in the SAP Standard System from 1 to 100 points which is used tomeasure the performance of your vendors based on four main criteria.

You can determine and compare the performance of your vendors based on their overall scores.

The main criteria in the standard system are:

¯ Price

¯ Quality

¯ Delivery

¯ Service

You can define other or additional main criteria to meet your requirements. You can allocatedifferent weighting factors to the individual criteria. The scores a vendor receives for the maincriteria are calculated according to their weighting factors to form an overall score.

The vendor evaluation system ensures that evaluation of vendors is objective, since all vendors areassessed according to the same criteria. In this way, subjective evaluations can be avoided.

Subcriteria

To create a detailed evaluation, each main criterion is divided into several subcriteria. The standardsystem provides you with certain subcriteria which provide a basis for evaluation. You can alsodefine your own subcriteria.

The scores for the subcriteria are calculated using three different scoring methods:

¯ automatic

¯ semi-automatic

¯ manual

With the automatic scoring method, scores are calculated by the system on the basis of existingdata.

With the semi-automatic scoring method, you can enter individual scores for important materialsyourself. The system then calculates the overall score on the basis of these scores.

With the manual scoring method, you can enter the scores for subcriteria yourself. You candetermine which of these methods you want to use.

The results of vendor evaluation are displayed in the form of analyses. For example, you cangenerate ranking lists of the best vendors according to overall score or ranking lists for specificmaterials.

Changes to evaluations are recorded in logs and evaluation sheets can be printed.

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Master Data and Organizational Levels for Vendor Evaluation

This section describes the master data which is required for vendor evaluation and theorganizational level for evaluations.

The R/3 Company Structure

This section describes how the organization of a company is portrayed in the R/3 System. It alsoshows how this organization is reflected in MM Purchasing.

The organization of a company is broken down into the following organizational levels:

Client

Company code

Purchasingorganization

Plant

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II I

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, °°°’1 ,’1 °°°~ I’, - I°°°~1’/I ;o0, I I’o0 "I I

Client

a grouping of legal, organizational, business, and/or administrative units with a common purpose. Agroup within a corporation (for example, a consulting group) is an example of a client.

Company code

represents an independent accounting unit. Each company code has its own balance sheet andcreates its own profit-and-loss statement.

Plant

a branch office or plant location within a company code. As a rule, purchasing is responsible forprocuring supplies and services for a specific plant.

Purchasing organization

an organizational unit responsible for procuring materials and services for one or more plants andfor negotiating prices and delivery conditions with the vendor. A purchasing organization isassigned to a company code.

Purchasing group

a purchasing organization is further subdivided into purchasing groups which are responsible foroperational tasks.

Organizational Level for Vendor Evaluation

The organizational level for vendor evaluation is the purchasing organization:

Each purchasing organization evaluates its own vendors.

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The system does not support a comparison of vendor evaluations on the company code level.

Master Data

Vendor evaluation uses the following master data:

¯ vendor master record

¯ material master record

¯ purchasing info record

What is a Vendor Master?

A vendor master contains information on a company’s vendors. This information is stored inindividual vendor master records. As well as the name and address of the vendor, the recordcontains the following information:

¯ vendor’s currency

¯ terms of payment

¯ contact person

A vendor master record also contains accounting data (for example, a control account).

A vendor master record is maintained by accounting and purchasing.

What is a Material Master?

The material master contains descriptions of materials which a company procures, produces, andstores. The material master is a company’s central source for information on a specific material.The individual material master records contain data, such as unit of measure, purchasing group,and over/underdelivery tolerance.

What is a Purchasing Info Record?

A purchasing info record (also referred to as an info record) is used as a source of information forpurchasing. It is a repository of information for a specific material and a vendor supplying thematerial. For example, the vendor’s current pricing is stored in the info record.

The info record also enables buyers to quickly determine:

¯ which materials have been previously offered or delivered by a specific vendor

¯ which vendors have offered or supplied a specific material

Information in Info Record?

An info record contains, for example:

¯ current prices and pricing conditions

¯ number of the last purchase order

¯ tolerance limits for overdeliveries and underdeliveries

¯ planned delivery time (time the vendor requires to deliver the material)

An info record also contains quotation and ordering data.

More Information

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For detailed information on master data and organizational levels, please consult the followingmanuals:

¯ MM Purchasing Guide,

¯ MM Managing Material Master Data,

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Introduction to Vendor EvaluationThis section describes the functionality available for evaluating a vendor and provides an overviewof the scoring system.

Overview

This section contains the following topics:

V.e.rld.o.r.E v.aluat [o.n

O~ermJl~tg~r~Click on a topic for more information

For more information on how to calculate scores, see Calculatinq Scores. You will learn how toevaluate a vendor in Evaluatinq Vendors.

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Vendor Evaluation

This section describes the most important features of vendor evaluation:

¯ overall score

¯ main criteria

¯ subcriteria

¯ score card

¯ weighting factor

The following graphic displays the scores on various levels of vendor evaluation:

Price Quality Delivery

Overall scorefor vendor

Service Scores formain criteria

Price Price GR System Delivery Quantity Shipping Scores forlevel history check audit performance reliability instructions subcriteria

Overall Score

The overall score represents the complete evaluation of a vendor. It is a combination of the scoresthe vendor has received for all the main criteria.

You can compare different vendors on the basis of their overall scores without generating adetailed analysis of their evaluations.

Vendor Overall score out of 100

Smith 85Brown 83

Jones 69Thompson 57

Wilson 40

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Out of the five vendors Smith received the best overall score and Wilson the worst; Smith andBrown scored almost the same points. For a more detailed analysis, you can compare Smith andBrown on the main criteria level.

Main Criterion

The main criteria form the basis for assessing the performance of a vendor. The system calculatesthe overall score for a vendor from the main criteria scores.

You can evaluate vendors according to several main criteria which you consider important. Thescores for the main criteria represent the performance of a vendor. They are then combined to forman overall score.

By comparing scores on the main criteria level, you can determine that vendor Jones received alower overall score than vendor Smith, but vendor Jones scored better in the main criterion Price. Ifthe price of the material is the decisive factor when you decide on your next procurement, then youwould select vendor Jones.

Required Main Criteria

You can determine the type and number of main criteria yourself. The system supports a maximumof 99 main criteria. You can specify the number of main criteria for each purchasing organizationand decide which main criteria are to be calculated in the overall score.

The standard system proposes the following four main criteria:

¯ Price

¯ Quality

¯ Delivery

¯ Service

You can also define additional main criteria or you can calculate an overall score on the basis ofonly three main criteria.

Subcriterion

Subcriteria are the smallest units which can be allocated scores in vendor evaluation. The systemcalculates a score for the main criterion based on the scores a vendor receives for the varioussubcriteria.

There are three types of subcriteria:

¯ manual

¯ semi-automatic

¯ automatic

They are named after the different methods of scoring. The individual scoring methods aremaintained differently and can be used for different purposes (see ~.

Required Subcriteria

You can evaluate a vendor with the automatic subcriteria in the standard system. With this method,you are not required to maintain scores for manual or semi-automatic subcriteria.

The system allocates a maximum of twenty subcriteria to each main criterion. In the SAP StandardSystem there are two automatic subcriteria for the main criterion Price and three automaticsubcriteria for the main criteria Quality and Delivery. You can determine 17 to 18 additionalsubcriteria for these main criteria. There are no automatic subcriteria for the main criterion Service,

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however, two semi-automatic subcriteria are included in the SAP Standard System. Therefore, forthis main criterion, you can define an additional 18 subcriteria manually or semi-automatically.

Please note when calculating subcriteria scores manually, the fewer criteria you define the easier itis to maintain them.

Short Description of Automatic Subcriteria

This section describes the individual automatic subcriteria in more detail. The automatic subcriteriaare:

¯ Price Level

Price History

Goods Receipt

Quality Audit

On-Time Delivery Performance

Quantity Reliability

Shipping Instructions

Price LevelThe Price Level is a subcriterion for the main criterion Price. This subcriterion compares thevendor’s price to the market price. If the vendor’s price is lower than the market price, he/shereceives a good score, if it is higher than the market price he/she is allocated a poor score.

On the basis of the subcriterion Price Level you can compare a vendor’s price to the current marketprice at a certain point in time.

Price HistoryThe Price History is a subcriterion for the main criterion Price. This subcriterion compares thedevelopment of the vendor’s price with the market price.

On the basis of the subcriterion Price History, you can determine within a certain period if thevendor’s price has increased or decreased and compare it with the market price trend.

On-Time Delivery PerformanceOn-Time Delivery Performance is a subcriterion for the main criterion Delivery. This subcriteriondetermines if a vendor has adhered to the specified delivery dates.

Quantity ReliabilityQuantity Reliability is a subcriterion for the main criterion Delivery. This subcriterion determineswhether a vendor has delivered the quantity specified in the purchase order.

Shipping InstructionsCompliance with Shipping Instructions is a subcriterion for the main criterion Delivery. Thissubcriterion determines whether the vendor complies with the instructions for shipping or packagingof a material.

Goods ReceiptGoods Receipt is a subcriterion for the main criterion Quality. This subcriterion evaluates the qualityof the material that the vendor delivers. A quality inspection takes place at goods receipt.

Quality AuditThe Quality Audit is a subcriterion for the main criterion Quality. This subcriterion evaluates thequality assurance system used by a company when they manufacture products.

Score Card

A score card is used to compare the performance of one vendor with another. A score card ranges

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from the best to the worst possible score.

The examples in this manual are based on a score card from 1 to 100 points. The score cardenables you to grade the performance of individual vendors.

NoteThe score card is determined when the system is installed. For more details, see ~mizin.~q’

Weighting Scores

The scores a vendor receives for main criteria can be weighted differently.

Weighting Factor

By using weighting factors, you can increase or reduce the importance of certain criteria when thescore is calculated on the next highest level.

Example: Suppose a vendor receives 80 points for the criterion Price and 80 points for the criterionService. Since the price of the material is more important than the service the vendor provides, youallocate the criterion Price a weighting factor of 3 and the criterion Service a factor of 1. The 80points for Price are then worth three times more than the 80 points for Service when the overallscore is calculated.

Weighting Key

A weighting key is an indicator under which the weighting factors for a group of main criteria can becombined and saved.

If you want to repeat an evaluation with certain main criteria and certain weighting factors, you cansave this combination under a weighting key.

When you carry out the next vendor evaluation, just enter the relevant weighting key instead ofentering a weighting factor for each individual criterion. The system automatically sets all theweighting factors.

There are two possible types of weighting key in the standard system:

¯ Key 01

equal weighting for all criteria

¯ Key 02

For example, evaluation of small parts vendors. The weighting factors are distributed as follows:

Price 5

Quality 3

Delivery 2

Service 1

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KDetermining Scores

This section explains which data is used in vendor evaluation and how the system calculates anoverall score for a vendor on the basis of main and subcriteria scores.

Determining an Overall Score

The system calculates the overall score for a vendor from the scores for the individual main criteria,taking into account the weighting factors you allocated for each main criterion.

Determining Main Criteria Scores

The system calculates a vendor’s main criterion score from the subcriteria scores. If you do notdefine any subcriteria for the main criterion, the system cannot calculate a score. In this case, youmust manually enter a score for the main criterion.

You can weight subcriteria in the same way as main criteria, except that subcriteria do not have aweighting key.

Note

There are no automatic main criteria. For example, if you want to have a main criterion calledDelivery for which the score is calculated automatically, you must define the automatic subcriterionDelivery as the only subcriterion for the main criterion. The score calculated for this subcriterioncorresponds to the main criterion.

Determining Subcriteria Scores

The following methods can be used to calculate subcriteria scores.

¯ manual

¯ semi-automatic

¯ automatic

Note

There is no field in the info record for evaluations. The info records referred to in this manual areevaluation records on info record level.

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o/o%Manual Semi-auto. Automaticmethod method method

Overall score

SCOreS formain criteria

Scores fors ubcrite ri a

Info record level

Purchase ordersGoods reiceipts

Quality inspection lots

Manual Scoring

With this method you enter the vendor’s score for a subcriterion in the vendor evaluation systemyourself before carrying out an evaluation. The system includes this score when calculating themain criterion score.

Score formain criteria

Score forsubcriterion

manually[~ User enters score

for subcriterion

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The manual score for the vendors applies to all their materials.

This method is recommended for evaluations which are not based on specific materials. It does notrequire much maintenance since you are not required to enter individual scores over a period oftime.

Before each new evaluation, you should check and, if necessary, change the scores for manualsubcriteria.

Semi-Automatic Scoring

Instead of giving vendors an overall score for all their materials as you do with manual subcriteria,you can maintain a number of scores for each important material on info record level with thismethod.

Score formain criterion

~ Score forsubcriterion

I scores via info record I

Semi-automatic

[~User enters scoresfor subcriteria viainfo records

[~ System calculatesscore for subcriterion

This method enables you to calculate a score for a subcriterion based on purchasing data in theSAP system. The scores obtained using this method are more accurate and objective.

The system includes all the scores you have entered when it calculates the subcriteria scores.

Material-specific evaluations can be used to compare different vendors who provide the samematerial (see _M___o_nj_tprjng___V__e__nd_o_[__E__y_a_]uatjo_n.

Automatic Scoring

With this method, you are not required to enter any data or scores yourself.

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Score formain criterion

Score forsubcriterion

Scores viainfo record

Purchase ordersGoods receipts

Quality inspection lots

Automatic

Data enterd at procurement,goods movement and QM

~> System updates dataand calculates scorefor subcriterion

The system calculates the scores for automatic subcriteria based on data from other areas of thecompany (for example, goods receipt or quality assurance). This data is entered into the vendorevaluation system via an automatic update of the statistics files.

Each automatic subcriterion is based on one scoring method. For example, the system checks allthe purchase orders and goods receipts, then it calculates a vendor’s score for the subcriterionOn-Time Delivery Performance based on the average variance between actual and planneddelivery dates.

The following table displays the automatic subcriteria for the four main criteria in the standardsystem:

Main criterion

Price

Quality

Delivery

Service

Subcriterion

Price Level

Price HistoryGoods Receipt

Quality AuditIn-Production Rejection (not in 2.1)

On-Time Delivery PerformanceQuantity ReliabilityShipping Instructions

Reliability (semi-automatic)

Innovation "

Customer Service "

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Changing Scores Manually

In certain cases, you might want to change the automatic scores.

For example, suppose a vendor has missed delivery dates because of a strike. Therefore, he/shehas obtained a very poor score for the automatic subcriterion On-time delivery performance. If youdo not want this exceptional situation to make a significant difference to the vendor’s score, you canoverwrite the score with a better one.

Before you can overwrite the score for this subcriterion, you require an authorization to changescores.

Note

Authorizations and field attributes are maintained via system configuration. For more informationsee .C...u.s..t..o..m...Lzj..ng and/or contact your system administrator.

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Evaluating Vendors

This section explains how to evaluate vendors. You will learn how to evaluate a vendor based onthe following subcriteria:

¯ automatic

¯ automatic and semi-automatic

¯ automatic, semi-automatic, and manual

You also learn how to display, change, and delete evaluations.

This section also includes a section on the SAP hierarchy and presentation graphics which can beused to graphically display a vendor evaluation.

If you are not familiar with the functionality and scoring methods in the vendor evaluation system,please read !.rlt[.(~d.L4£.’cj.q.rl..to.Ve.!?.d.o.r..E~f.a.!u.at!on.

Requirements

Before you evaluate a vendor, you must consider the following questions:

¯ Have you maintained the system configurations?

¯ Do you have the required authorizations?

¯ Which vendor do you want to evaluate?

¯ Which purchasing organization is to evaluate the vendor?

¯ Is this the first time the vendor has been evaluated?

¯ If not, when was the last evaluation?

Overview of Procedure

The following graphic displays the steps you must carry out to evaluate a vendor:

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(~ Enter- vendor- purchasing organization

1~) Enter weighting key

1(~) Enter scores for manual

subcriteria

1@ Evaluate all main criteria

l~) Save evaluation

Overview

This section contains the following topics:

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KEvaluating with Automatic Subcriteria

This section explains how to evaluate a vendor based only on automatic subcriteria. For this type ofevaluation, you are only required to carry out the basic steps.

Determining a Scoring Method for Subcriteria

You can determine which scoring method has been allocated to a subcriterion on the subcriteriascreen.

The key for different scoring methods can be found in the last column of the area Evaluation ofsubcriteria. The following table displays how they are allocated.

Scoring method Key

Manually ’_’Semi-automatically 1Automatically 2 - 9

Scoring Method for Automatic Subcriteria

Automatic subcriteria can be calculated as follows:

Subcriterion

Price LevelPrice History

Goods ReceiptQuality Audit

In-Production Rejection

On-Time Delivery PerformanceQuantity Reliability

Shipping Instructions

Procedure

To evaluate a vendor, proceed as follows:

1.

.

Scoring method

45

7

98

3

26

From the system menu select Logistics -->Materials management -->Purchasing and thenMaster data--> Vendor evaluation -->Maintain. The initial screen appears.

Enter a purchasing organization and vendor and then press ENTER. An overview of the maincriteria for this purchasing organization is displayed.

If you have the SAP Classification System, you can enter a vendor class instead of a vendor. A listof the class is displayed from which you can select a vendor for evaluation. Use the entry help F4 orthe matchcode =k.

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For more information about the classification system, see MM Classification Guide,

3. Maintain the required field Weighting key.If you do not know the weighting key, press F4.

4. From the menu bar select Edit-~Auto.new evaluation

The system first calculates the scores for the automatic subcriteria, then the scores for the maincriteria, and finally the overall score for the vendor.

5. Save your evaluation with Fl1.

Other fields on the overview screen include:

¯ Deletion indicator

¯ Main criteria scores

Deletion indicator: please see I~.ai.rlt.a.i.n.i.n...y.e.rldor..l~.y.a!.uat.i.o.n to learn how this indicatorworks.

Log for Calculating Automatic Subcriteria

The log provides a breakdown of the the vendor’s score for a subcriterion. It displays the automaticsubcriteria scores for all the info records included in the current calculation.

After you have carried out an evaluation of the automatic subcriteria for several or all of the maincriteria, you can display the log. From the menu bar select Goto --~AII logs.

If you did not start a new evaluation, the system will not generate a log.

Calculating Score for Individual Main Criterion

If you want the system to calculate a score for an individual main criterion rather than an overallscore based on all the main criteria, proceed as follows:

.

.

3.

You can display the log for the automatic subcriteria for this main criterion--~Log per main criterion.

Press F16 on the overview screen for main criteria. A window appears in which you can selectthe main criterion.

Select the criterion you want and press ENTER. The main criterion screen appears.

Press F5, to calculate the score for this main criterion.

by selecting Goto

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Evaluating with Semi-Automatic Subcriteria

This section explains how to evaluate a vendor on the basis of semi-automatic subcriteria.

Requirements

If you want to calculate main criteria scores on the basis of automatic subcriteria andsemi-automatic subcriteria, you must maintain scores for the semi-automatic criteria over a periodof time.

Maintaining Scores for Semi-Automatic Subcriteria

You can maintain scores in two ways; in vendor evaluation and when maintaining a purchasing inforecord. To access vendor evaluation from an info record, select Details -->Vendor evaluation.

To enter scores for semi-automatic subcriteria via the vendor evaluation menu, proceed as follows:

1. From the overview screen for main criteria select Goto --~ Evaluation perinfo recordto accessthe info record level.

A window appears in which you enter the number of the material for evaluation. If the materialdoes not have a material master record, you can enter the info record number.

2. Enter the material number or info record and press ENTER. The screen for the first main criterionappears.

3. Enter scores for your subcriteria.

4. You can branch with F18 to the screen for the next main criterion. Maintain the scores for yoursubcriteria.

5. Repeat this procedure for the other main criteria. Save your evaluation with F11.

The next time you carry out a vendor evaluation, the system uses both the automatic andsemi-automatic subcriteria to calculate the scores.

Re-evaluating Semi-Automatic and Automatic Subcriteria

The scores for subcriteria are allocated to main criteria which are displayed on separate screenswhen you maintain a vendor evaluation.

The function Automatic new evaluation enables you to re-evaluate the scores for a vendor forsemi-automatic and automatic subcriteria only. You can determine how a vendor’s scores forsemi-automatic and automatic subcriteria have changed since the last evaluation. The manuallymaintained scores from the last evaluation remain unchanged so that you can compare the results.

If the manually maintained scores were not included in the calculation, the overall score would bevery different. It would not be possible to compare the new results with the old results.

The scores for semi-automatic and automatic subcriteria are displayed together in a list so they canbe compared easily.You can also compare the old and new scores and replace the old scores bythe new ones.

Procedure

.Perform the following steps to re-evaluate existing subcriteria. Select Master data -->Vendorevaluation ->Automatic new evaluation from the purchasing menu.

2. Enter a vendor and purchasing organization.

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3. Press F8 to compare the old and new scores.

4. If you want to replace the old scores by the new scores, save the new ones with F11.

Select Individual log or All logs to branch into the log display.

Generating List of Vendors to be EvaluatedYou can also use this function to generate a work list of vendors to be evaluated.

Enter a date and leave the field Vendor empty. When you press Execute, the system generates a listof all the vendors who have not been evaluated since this date. The list includes both vendors withoutdated evaluations and vendors who have never been evaluated.

From this list you can branch into the screens for maintaining evaluations and overwrite the oldscores with the new scores.

Evaluating Vendors in Batch

You can evaluate your vendors on a regular basis via batch processing. The function Evaluation inbatch can be found under the purchasing menu.

Requirements

If you want to start a batch request for vendor evaluation, you require a variant to limit the numberof vendors for evaluation.

Maintaining and displaying variantsYou can display existing variants by selecting Goto --~Variant overview. You can use one of thesevariants for your batch request.

If you want to create a new variant, select Goto --~Maintain variant. Enter the name of the variantand press Edit. You can determine your selection criteria and/or parameters on the maintenancescreen. Save your variant.

Procedure

To evaluate vendors in batch, proceed as follows:

1. Select Master data -~ Vendor evaluation --~Follow-on functions -~Evaluation in batch.

2. On the request screen, enter a job name and the name of the variant. Specify when the batchevaluation should take place and how often it should be repeated.

3. Save the batch request.

NoteTo carry out evalutions in batch and to define variants you require certain authorizations. If youhave any further questions, please consult your system administrator.

For more information about batch requests, please read Getting Started with the R/3 System.

Subsequent Evaluation of Batch Evaluations

In batch processing you usually evaluate vendors who belong to the same group, for example,vendors who have the same weighting key. It is possible, though, that you have selected an intervalthat contains different groups of vendors. Due to this reason, you do not enter a weighting key forevaluations in batch.

To ensure that the scores are calculated correctly, you must subsequently maintain the weightingkey for these evaluation records.

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The evaluation records in question can be determined through the evaluation of vendors withoutweighting keys.

This function can be found in the purchasing menu under Masterdata --~ Vendor evaluation--~Follow-on functions -~ Vendors without weighting key

From this report you can branch directly into the screens for maintaining evaluations. For moreinformation on analyses, please read Monitorin~LVendor Evaluation

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Evaluating with Manual Subcriteria

This section explains how to include scores for manual subcriteria in the evaluation.

Requirements

Before you can evaluate vendors based on manual subcriteria, you must maintain the scores forthese subcriteria.

Maintaining Scores for Manual Subcriteria

To enter scores manually, proceed as follows:

1. Press F17 to display the first main criterion screen.

2. Enter scores for the manual subcriteria.

3. Press F18 to reach the next main criterion screen and enter scores here.

4. Repeat this procedure for all your other main criteria.

If you then carry out the next vendor evaluation via Edit -~Automatic new evaluation, the systemcalculates the scores on the basis of the automatic, semi-automatic, and manual subcriteria.

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KMaintaining Vendor Evaluation

This section explains how to display, change, and delete a vendor evaluation and how to generatea vendor evaluation sheet.

Display Vendor Evaluation

Proceed as follows to display an evaluation:

1. From the system menu select Logistics -->Materials management ->Purchasing and then->Vendor evaluation ->Display. You reach the initial screen for displaying vendor evaluation.

2. Enter a purchasing organization and the vendor whose evaluation you want to display.

3. Press ENTER. The overview screen appears.

The following data is displayed on the overview screen:

Header

Purchasing

organization

Evaluation data

Name of person in charge

Vendor Date of last evaluationWeighting key

Overall score

Deletion indicator

The scores which the vendor received for the main criteria are then displayed. The weightingfactors for the individual main criteria are found in the column Weighting.

If you want to display the subcriteria scores for a particular main criterion, double click on the maincriterion.

To display the subcriteria scores for several main criteria in sequence, select the main criteria andpress First main criterion. The screen for the subcriteria for the first main criterion is displayed. Todisplay the subcriteria screens for the other selected main criteria, press Next main criterion.

Entering or Changing a Vendor Evaluation Manually

The scores for a vendor usually change when they are re-evaluated. There are also cases whenyou want to manually correct the scores calculated by the system.

In certain cases you might want to enter scores manually before carrying out an evaluation.

Requirements

You must obtain certain authorizations and the score fields must be ready for input before you canenter scores directly or overwrite scores calculated by the system. Authorizations and field input aredetermined in configuration.

For more information please see Customizinq or ask your system administrator.

Example

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Suppose that you have had delivery problems with a vendor in the last six months. Since you couldnot procure the material from another vendor on a short term basis, you said that the vendor coulddeliver the orders in seven weeks instead of the usual three weeks.

The vendor kept to these new delivery dates. He receives 93 out of 100 points for the automaticsubcriterion On-time Delivery Performance and a very good score for the main criterion Delivery.

However, you do not want the vendor to receive a good score since he was actually late with thedeliveries, even though he gave you a new delivery date. So you overwrite the score for the maincriterion Delivery with a lower score.

Storing Text for Main Criteria

In the vendor evaluation system there is a long text field for storing additional information on theindividual main criteria. Press F18 on the initial screen to obtain the long text field. If you want toenter more than one line of text, press F2.

Deleting a Vendor Evaluation

If you want to delete a vendor evaluation, proceed as follows:

1. From the system menu select Logistics ~Materials management and then Purchasing-~Vendor evaluation. The initial screen appears.

2. Enter a purchasing organization and the vendor whose evaluation you want to delete.

3. Press ENTER. The overview screen appears.

4. Set the indicator in the field Deletion indicator,

When you next run the reoganization program, the evaluation record for this vendor will bedeleted.

Displaying and Printing a Change Document

The system creates change documents for each evaluation. You can display these documents.

Select Goto -~Changes. A window appears in which you can enter the date from when you want todisplay the change documents. Press ENTER. A list with the following information appears:

¯ modifier

¯ purchasing organization

¯ date and time of change

¯ comparison of old and new value

You can print the list with F13.

Generating and Printing an Evaluation Sheet

You can generate and print a vendor’s evaluation in the form of an evaluation sheet.

An evaluation sheet header contains the name of the person who generated the sheet, the creationdate, and the name of the vendor.The total evaluation and scores for the individual main criteria are listed below.

Procedure

To generate and print an evaluation sheet, proceed as follows:

1. From the purchasing menu select Master data -~ Vendor evaluation ~List display-~Print

SAP-00008824

2. Enter a vendor, a purchasing organization, and the name of a printer.

3. Press F8 to display the evaluation sheet and F13 to print it.

SAP-00008825

Graphical Display of Vendor Evaluations

This section explains how to use the SAP graphics. If you require more detailed information, pleaseread Getting Started with the R/3 System.

You can display vendor evaluations with the SAP hierarchy and presentation graphics. Thegraphical display provides you with a clear overview of your main and subcriteria and allows you toeasily and quickly determine how a vendor has scored.

From the overview screen in vendor evaluation, select Goto -->Graphics. A graphical overview isdisplayed.

The graphic display is divided into two areas:

¯ display

¯ navigation

Display

The display section contains the evaluation. If you have many main criteria and many subcriteria,the whole graphic may not fit on the screen. In this case, you can use the navigation function tomove the graphic to the left or to the right.

Navigation

The whole graphic is reduced in size and displayed in the navigation section. This function is usefulfor large graphics with many details.

Navigation Function

You can move and change the size of the graphic in the display and navigation areas:

¯ you can move the graphic horizontally and vertically in the display. You can also change thesize of the graphic to make it larger or smaller.

¯ in the navigation area you can move part of the whole graphic or make it smaller or larger byclicking on the right corner of the selected area and dragging the right corner with the mouse.

If you want to enlarge the navigation area, select from the menu View ->Navigation. To return tothe standard setting, select View ->User.

Displaying Criteria with the SAP Presentation Graphics

After you have carried out a new evaluation, you can proceed directly from the evaluation to thegraphics.

Double click on the main or subcriterion and the system will convert the scores into a graphicaldisplay.

It is possible to display a graphic for the following automatic subcriteria:

¯ Goods Receipt

¯ Quality Audit

¯ On-Time Delivery Performance

¯ Quantity Reliability

¯ Shipping Instructions

SAP-00008826

SAP-00008827SAP-00008827

Calculating Scores

This section describes how the vendor evaluation system calculates the scores for main criteria anda vendor’s overall score. It also describes the individual scoring methods for each automaticsubcriterion.

The purpose of this section is to explain what happens when the system calculates the scores.

For basic information on determining scores, please see J.r~:t[:Q.d.u£tJ.{).n.t~..~!#.rl.d.Q.(’..l~ya.!u.atj~n.. If yourequire more detailed information on evaluations based on automatic and semi-automatic criteria,please see .E..v..a..!.u...a..t.j..n.g...V...e..n...d...o...r..s.

Overview

This section contains the following topics:

Click on a topic for more information

SAP-00008828

KCalculating Overall Score and Scores for Main Criteria

This section describes how the vendor evaluation system calculates a vendor’s overall score andthe scores for the main criteria.

Calculating the Overall Score

The system multiples the various main criteria together to form an overall score, taking theirweighting factors into account. You learn how to allocate weighting factors in Customizinq. Thefollowing example explains how the score is calculated by the system.

Example

The table below displays the scores for a vendor and their weighting factors:

Main criterion Score Weighting factor

Price 70 40Quality 85 20Delivery 50 10Service 50 1

Converting Weighting Factors into Percentages

To make the calculation easier, the system converts the weighting factors into percentages.

1. The system adds the factors together and equates the total with 100 %:

40 + 20 + 10 + 1 = 71 equals 100 %

2. To determine the individual weighting factors as percentages of 100%, the system first divides100% by the total of the weighting factors:

100/71 =1.4%

3. Then the system multiples the weighting factors you allocated to the main criteria with thispercentage rate:

40xl.4 = 56.0%20xl.4 = 28.0%10xl.4 = 14.0%

1 xl.4 = 1.4%

4. The following table displays the results as a percentage of the overall score:

Main criterion Score Percentage of overall score

Price 70 56.0 %Quality 85 28.0 %Delivery 50 14.0 %

Service 50 1.4 %

SAP-00008829

,

,

7.

When calculating the overall score, the system uses the weighting factors. The main criteriascores are multipled by your weighting factors.

70 x 40 = 2800 3oints

85 x 20 = 1700 3oints

50x10 = 500 3oints

50x 1 = 50 )oints

Total points = 5550.

This total is divided by the total of the weighting factors:

5550 / 71 = 78 points

The vendor receives an overall score of 78 points.

Calculating Score for Main Criterion

The scores for the individual main criteria are determined in the same way as the overall score:

The system calculates all the subcriteria for a main criterion according to their weighting factors..

SAP-00008830

Calculating Automatic Subcriteria

This section explains how the vendor evaluation system calculates the scores for automaticsubcriteria.

Each automatic subcriterion in the SAP Standard System has a specific pre-defined scoringmethod.

This section displays the methods for the following subcriteria:

Subcriterion Main criterion

Price Level PricePrice History

Goods ReceiptQuality Audit

In-Production Rejection (available in 3.0)

Quality

On-Time DeliveryQuantity Reliability

Shipping Instructions

Delivery

The following graphic displays the procedure the system carries out to calculate the scores forautomatic subcriteria.

SAP-00008831

Search for data

I- Statistics file-Info records

Data found No data found

!Determinemissing data

ICheck configuration ¯Allocate scores

- Calculate averages- Smoothing

- Score for subcriterion

Requirements

This section provides you with additional information on the calculation of scores by the system.

Parameters in Configuration

When the system calculates automatic subcriteria, it uses the control parameters set inconfiguration. Check that all the parameters are correctly maintained.

Validity Period of Data

When calculating scores, the system only includes data with a date that is within the validity perioddefined in configuration; for example, a period of 150 days to the current date. For more informationon individual parameters, please see Customizinq.

SAP-00008832

Updating and Calculating

Alter a vendor has been evaluated, the system continues to record scores for the automaticsubcriteria for the main criterion Quality (Goods Receipt and Quality Audit) and the main criterionDelivery (On-Time Delivery Performance, Quantity Reliability, and Shipping Instructions).

The score for the main criterion Quality is updated when inspection lot results are entered in theSAP module Quality Management. The quality is checked either at goods receipt (Subcriterion:Goods Receipt) or in a quality audit at the vendor’s plant (Subcriterion: Quality Audit).

The score for the main criterion Delivery is updated when goods are received for purchase orders.That is, alter each goods receipt a new individual score is calculated. This is then included in theprevious score using a smoothing factor.

Each time you start a new evaluation, the system cacluates the average score for all the vendor’smaterials. The result of the calculation is the vendoCs score for the relevant subcriterion.

Smoothing Individual Scores

A score for a new good receipt changes the previous score for a material.

The new individual score is not as important as the previous score, because the old score wascalculated from a number of individual scores. For this reason, the new individual score is allocateda low weighting factor, which is referred to as a smoothing factor on this level.

When the system calculates the new subcriterion score, it takes into account the smoothing factorsallocated to the individual scores in the subcriterion.

SAP-00008833

Good s re cei pts

Scores forgood s re ce ipts Previous score

INewGo ods rec eipt

Individual score

@Previous sco re

System co nfig u ratio n

Proportion:Score Individual score

O.9 I 0.1

80 x(1-0.1)+20 x0.1 -

N ew s co re

Example:

If you have a smoothing factor of 0.1, the individual score for a new goods receipt is calculated as atenth of the score for the subcriterion. The previous score is worth nine tenths of the new score forthe subcriterion:

Previous score x (1 - 0.1) + New score x 0.1

SAP-00008834

For example, the previous score was 80 points, the new individual score is 20:

80 x 0.9 + 20 x 0.1 = 74

The new score for the subcriterion based on this material is 74 points.

Note

In an info record there is no field to store evaluations. The info records referred to in this section areare evaluation records on info record level.

Note

To calculate the price level in the following section, you must maintain the market price. Proceed asfollows: Master data -->Conditions ->Prices ->Market price.

Price Level

This section describes how scores are calculated by the system for the automatic subcriterion PriceLevel.

SAP-00008835

18 market pric~for M~t~rial A fmaintained

I0o,ou eT-~otive prioe Ifrom all vendors Ifrom info re¢ord~ Ifor M~erial A

I

Market pric~

Material A = $ "10

Effeoti~e pric~ Wibon

Material A = $ 11

($ 11- $ 1@ x 100

$10= 10% Variance

Sys~_ m oonfig u ration

Vat ianoe = Score

+ IO% I ~SP.

To determine a vendor’s price level, the system compares the vendor’s effective price with themarket price for the material. It calculates a score based on the following procedure:

1. The system then checks if the buyer has maintained a market price for the material or materialgroup.

2. If not, the system calculates the market price which is equal to the average of the effectiveprices for all vendors who deliver this material. Prices for standard purchase orders and pricesfor subcontract orders are dealt with separately.

3. The system then includes the effective price in the pricing conditions for the vendor.

4. The vendor’s effective price is then compared with the market price and the percentage

SAP-00008836

variance is determined.

5. The system then allocates a score for the variance according to your system configuration.

.

.

This score is valid for the material, that is, on the info record level. Since the score the vendorreceives for a subcriterion is not based on an individual material, but the total score for all thematerials he/she delivers, the system carries out the steps below.

The system repeats the comparison between effective price and market price for each of thevendor’s materials.

The system calculates an average from the total score. This average represents the vendor’sscore for the subcriterion Price Level.

Special Case of Single Vendor

In the following two examples, you have only one vendor who provides you with a specific materialand, therefore, only one price:

¯ Single Sourcing

¯ Sole Sourcing

Single SourcingIn this case, you have decided that you only want to procure the material from one particular vendorwho has excellent quality, for example.

Sole SourcingIn this case, you are forced to obtain the material from a certain vendor, because he/she has amonopoly on the market.

To determine which of the two situations applies, maintain the indicator Single vendor inconfiguration.

If you set this indicator, the vendor’s effective price is regarded as the market price when thesystem calculates the score for Price Level. The market price and effective price are the same.Since there is no variance, the vendor receives a good score.

If you do not set this indicator, the single-sourcing situation is not taken into account. The systemdoes not determine a score for the subcriterion Price Level based on this material.

Price History

The following section explains how the system calculates the score for the automatic subcriterionPrice History.

SAP-00008837

MarketpdceM~eN~I A $10Prevous 3ear

Effective price SmffhPreviou¢ ye~ $ 10

=+20%

I+ ::20 % "~I

?Market p rioa

ri~ A $ 12Current year

Calo ul,=~ed Smithleffective pric~

$ "12 I,=:u rre ~ ,/ear ICalculatedeffective 8 m ithprice $ 12

Actual Smithefl~diveprice $13

I (~13-$1~ xlC0 I= 8.8% Varian,=~II

8",.,~’1~ m C onfigur,~on

V~ ~,n,=e = 8oore

+ 8.8% I ~3

elfecive p nc~

Maloedal AMaloe dal BMat~ dal C

,~c~ual elfedve pdoe

M~e d~l AM,~e dd BMal~ dal C

I

Shith

To determine how a vendor’s price for a material has changed over the last few years, thematerial’s price history is compared with the market price history.

1. The system first checks if the buyer has maintained a current market price and last year’smarket price for the material.

If not, the system uses the price for the material group that the material belongs to. If this priceis not maintained, the system uses the effective prices from last year and the current year.Prices for standard purchase orders and prices for subcontract orders are dealt with separately.

2. The system then calculates the percentage variance between the old and new market prices.

SAP-00008838

,

,

,

,

The vendor’s effective price is re-calculated with this percentage variance. The result representsthe effective price the vendor should have been asking if his/her price had followed the marketprice exactly.

This effective price is then compared with his/her actual effective price, and a percentagevariance is determined.

The system then gives the vendor the score maintained in configuration corresponding to thispercentage variance.

The system repeats this procedure for all the vendor’s materials. Each time you start anevaluation, the system calculates the average score for all the materials. This average scorerepresents the vendoCs score for the subcriterion Price History.

Goods Receipt

The following graphic shows how the score for the automatic subcriterion Goods Receipt iscalculated.

SAP-00008839

Goods receiptMaterial A

Smith

1Quality inspectionenters score inGR inspection lot

QMGR lots

~l ®R lots Wilson I~

I= Score for

GIR qualityinspectionWilson

Calculation

SAP-00008840

The score is calculated as follows:

,

,

,

4.

If a material is selected for quality inspection, at goods receipt for a purchase order part of thedelivered material is checked by quality assurance.

An inspection lot is created. After the inspection, the person responsible in quality managementthen enters a result and a decision concerning the material usage.

All the goods receipt inspection lots are stored in a file with their scores.

When you start an automatic new evaluation, the system selects all the goods receipt inspectionlots for the vendor that are in the validity period and calculates an average score.The result is the vendor’s score for goods receipt quality.

Quality Audit

The following graphic shows how the score for the second automatic subcriterion of the maincriterion Quality is calculated.

SAP-00008841

Quality auditat Smith’s

Quality inspectionenters score in

audit lot

QMAudit lots

System C onfig ural]o n

F~ Allaudit lots

Smibh

03.01. = 60P.08.15. = 7OP.11.24. = 50P.

FqJ

s m ith

03.01. = 60P.08.15. = 70P.11.24. = 50E

Currentaudit lot

1= 60P. = Score for

qualityauditS m ith

!24.11. 50P. = Score for

qualityauditS m ith

Calculation

SAP-00008842

The score is calculated as follows:

.

.

In one of your vendor’s plants a quality audit has taken place. This means that either your owncompany has carried out a check to determine how the vendor ensures that his/her products areof a high quality or the vendor has carried out the audit himself/herself.

An audit lot is created by quality management. When the investigations are completed, theperson responsible determines a score for this audit lot.

3. All the audit lots are stored in a file with their scores.

.

.

6.

When you start an automatic new evaluation, the system selects all the audit lots for the vendorwithin the validity period.

The parameter Quality audit is read from the system configuration.

If the indicator is set, the system calculates the average score for all the quality audits in thevalidity period. The result is the vendor’s score for the quality audit.If the indicator is not set, only the most current audit lot is included. This then represents thevendor’s score for the subcriterion.

On-Time Delivery Performance

This section describes how the system calculates the score for the automatic subcriterion On-TimeDelivery Performance.

Requirements

The system calculates delivery variances based on the statistical delivery date in the purchaseorder and the goods receipt date. The statistical delivery date is in the item details of the purchaseorder.

You use a statistical delivery date, for example, if you know that the vendor will not deliver thematerial as scheduled on 9/15 but on 9/30. Enter the delivery date as 9/30, but enter the statisticaldelivery date as 9/15.

When the vendor evaluation system calculates On-Time Delivery Performance, the system doesnot use the delivery date, but the statistical delivery date. This means that the vendor receives apoor score for goods receipt.

MRP works with the realistic delivery date 9/30.

Mimimum Delivery PercentageIf you do not want a vendor to receive a good score if he/she delivered the goods on time, but didnot deliver the required quantity, you can maintain a minimum delivery percentage in configuration.

If you set the parameter Min. deL perc. to 60% and vendor Brown delivers the goods on time butonly 55% of the quantity, the goods receipt is not included when calculating the On-Time DeliveryPerformance, although the delivery was on schedule.

Standardizing Delivery Variance

To determine delivery variance in days, maintain the parameter Std.deLvar. in MM Customizing.

If you allocate a lower standard value, this means that relatively low delivery variances producehigh percentage variances. If you set a higher standard value, this results in a relatively lowpercentage variances:

12 days /2 x 100 = 60% variance

12 days /6 x 100 = 20% variance

If you have not maintained this parameter, the system uses the firm zone for schedulingagreements, and the order date and statistical delivery date for purchase orders.

SAP-00008843

Calculation

The subcriterion is calculated as follows:

B ro.,’,.,n Bro,.~’,1’,.,I.=710e ri.=,l A

lcopo.

_.11

I

I6 day~ x 100

Minimum deliveryquanti~/t50% 8f.=7ndard value

= :20% vari~nc~

I

8y~e m Configuration

V~ ianc~ = Score

0% 10020% 05

~ S~oothing @

On-timede livery

i:~ r’l:ormanc~

M aterial AM aterial BM aterial C

~2~,= ,’~orE Erddi,,5’ppr Bnn~ncp:liro~

.At goods receipt for a purchase order the system checks if the delivery was on time or if it waslate:

GR date - delivery date = delivery variance

SAP-00008844

.

.

.

5.

.

If the delivery was on time, the system checks if a minimum delivery quantity is specified.

¯ If you have not set a minimum delivery quantity, goods receipts for partial deliveries will alsobe included in the calculation.

¯ If the mimimum delivery quantity is not reached, the system does not determine a score forthe goods receipt.

¯ If the mimimum delivery quantity is reached and the delivery is on time, the variance is zero.This means that the system allocates a maximum score for the goods receipt.

If the delivery is not on time, the system calculates the delivery variance in days and converts itinto a percentage variance.

The system then issues the score you set in configuration for this percentage variance.

The new score is then included in the vendor’s previous score for the subcriterion. To calculatethe subcriterion with this new score the system uses the smoothing factor set in MMCustomizing.

When you start a new evaluation, the system calculates the average from the individual scoresfor all the materials to obtain a score for the vendor for On-Time Delivery Performance.

Quantity Reliability

This section describes how the system calculates the automatic subcriterion Quantity Reliability.

Requirements

A vendor’s score is updated in the statistics file when a purchase order is completed. A purchaseorder is considered to be completed in the following examples:

¯ although the complete order quantity was not delivered, the buyer determines that the deliveryfor an order item is completed with the indicator Fin.del.

¯ only 90 pieces were delivered (order quantity was 100 pieces) so the buyer changes the orderquantity to 90

¯ the buyer deletes an order item by setting the deletion indicator

¯ the goods receipt quantity is equal to or larger than the order quantity

Calculation

The score is determined as follows:

SAP-00008845

OrderJonesMaterial A100pc.

G oods receiptJonesM at eri al A90pc.

I G R quantity - order q ua nt ity = ?

1I

(90 pc.- 1 00 pc.) x 100

100 pc.=- 10%Variance

18yste m Co rift g urat ion

Variance = 8core

- 1 0% I 92i

1

New s; o refor Material A

1

Quantity -reliability -

~M a te ria I ~ = Score for

. ~ I Material ~ quanlJty

-~ ~ Material Jones reliability:

SAP-00008846

1. The system determines the difference between the goods receipt quantity and the order quantityand converts the difference into a percentage variance with the following formula:

GR quantity - order quantity / order quantity x 100

2. The system issues a score for this percentage variance which is set in configuration.

3. The new score is then included in the vendor’s previous score for the subcriterion. To calculatethe subcriterion with this new score the system uses the smoothing factor set in configuration.

4. When you start a new evaluation, the system calculates the average score for all the materialsto obtain a score for the vendor for Quantity Reliability.

Shipping Instructions

In purchasing, you can specify shipping instructions for each order item. The vendor must complywith these instructions to obtain a good score for the subcriterion Shipping Instructions.

The system calculates the score for the automatic subcriterion Shipping Instructions, as follows:

SAP-00008847

O rder

BrownMaterial Ain pack of 6

Order

BrownMaterial Ain pack of 10

I Check instructions

System C!nfiguration

Instruction = Scorepack of 6 100packofl0 90

I

~ ~ Smoothmng

New scorefor Material A

Shipping -instructions

ii

Materi al AMateri al BMateri al C

qBrown

,= SLore br~hippinginsbu d~ons:BlOWn

SAP-00008848

.

.

.

.

When goods are received for a purchase order, the system checks if the purchasing departmentspecified any shipping instructions.

If there are instructions, the person responsible for the goods receipt must enter a score for thevendor’s compliance with the shipping instructions before he/she posts the goods receipt.

A key with corresponding scores is maintained for shipping instructions in MM Customizing.

Example:You want the vendor of material A to deliver in packs of six. This packaging unit corresponds tothe key 01 = 100 points in your configuration. If the vendor delivers the goods in packs of 10,which is less practical, only give the vendor 90 points. If the goods are delivered in individualpacks, this involves more work for your warehouse employees. In this case, the vendor isallocated key 09 = 30 points.

The new individual score is included in the vendor’s previous score for the subcriterion. Tocalculate the subcriterion with this new score the system uses the smoothing factor set inconfiguration.

When you start a new evaluation, the system calculates the average from the individual scoresfor all the materials to obtain a score for the vendor for Shipping Instructions.

Calculating Semi-Automatic Subcriteria

This section explains how to calculate the semi-automatic subcriteria provided by the SAPStandard System for the main criterion Service.

This applies to the following subcriteria:

Subcriterion for Main criterion

Innovation ServiceReliability ServiceCustomer Service Service

Compared with automatic subcriteria, the individual scores on info record level are notautomatically determined by the system. You enter scores yourself for important materialsdelivered by certain vendors on info record level.

When you start a new evaluation, the system calculates the average for these individual scores oninfo record level to obtain a score for the vendor for this subcriterion.

For more information on calculating semi-automatic subcriteria, please read Introduction to VendorEvaluation.

In Evaluating Vendors you will find detailed information on how to evaluate a vendor on the basis ofsemi-automatic criteria.

SAP-00008849

Monitoring Vendor Evaluation

This section explains how you can analyze vendor evaluation data in the SAP System.

You will learn how to start, display, and print reports for vendor evaluations.

Monitoring Vendor Evaluations

Analyzing vendor evaluation data enables you to compare the overall and individual scores for yourvendors from different views.

With these reports, you can also determine which vendors you have not evaluated and whichvendors should be re-evaluated.

For example, you can obtain the following information:

the vendors with the best overall score

which of the best vendors received a particularly good or bad score for the main criterion Price?

which vendors received a good overall score, but a below-average score for the main criterionQuality?

which vendors received a poor overall score but a very good score when you only considermaterial X?

How to Start a Report

To start a report, proceed as follows:

From the purchasing menu select Master data --~Vendor evaluation -~List display. Then select oneof the following reports:

¯ ranking list of vendors

¯ evaluation per material/material group

¯ vendors without an evaluation

¯ all your vendors who have not been evaluated from a certain date

Comparing Evaluations

When you select Master data --~Vendor evaluation -->Compare evaluations, you can compare avendor’s general evaluation with his/her evaluation for a certain material.

For more information on reports, see Getting Started with the R/3 System.

Overview

This section contains the following topics:

H.o.~..to...G.e n.e rate..a R.ep.Q~t.~.tandaJ’.d R.e.p.o.~ s. J n..V.en dQr..Ev.a [uatio.nClick on a topic for more information

SAP-00008850

How to Generate a Report

This section describes the procedure for generating a report.

Overview of Procedure

The following graphic displays the steps you must follow to generate a report.

O Enter- vendor- purchasing organization

(interval)

1O " Limit scope of list via

list parameters- Enter interval

IEnter- comparison levelor- date

10 Start analysis

Printing a Report

Al~er you have generated a report with F8, you can print it with F13, or you can simply combine thestart and print commands by pressing F13.

Note

You can access the vendor master record display from a report and can return with F3.

Requirements

When you limit the report, you must decide which information you require and limit the selectionwith corresponding intervals.

For example, you should not select all the vendors for material X from all purchasing organizationsfor one report. Instead, generate a report for each individual purchasing organization.

Scope of List

SAP-00008851

The display format of your report is based on the scope of list parameters which you entered on theinitial screen.

The SAP Standard System contains the following list parameters:

¯ standard

¯ version 1

Standard

These parameters produce the following printout:

¯ Ranking list of vendors in ascending order according to overall scores

¯ Main criteria in the following sequence:

- Price

- Quality

- Delivery

Servicem

Version 1

These parameters generate the following report:

¯ Ranking list of vendors in ascending order according to scores received for the main criterionDelivery

¯ Overall score at the end

You can set additional parameters to generate other formats. For detailed information on settingnew parameters, please see Customizinq

Selecting Intervals

As well as entering individual values on the initial screen, you can also select intervals for report.There is a second column to the right of the first entry column in which you can enter a secondvendor or a second purchasing organization, for example.

Selecting Several Intervals

If you want to select several intervals, position the cursor on the field and from the menu barselect Edit --~Further selections or press F7. A screen with several entry lines is displayed (from- to) with two columns for Options. You can display the possible input values with F4. When youpress F3, you return to the selection screen.

Options

There are two columns for Options on the right side of the initial screen. The value in the leftcolumn system specifies whether the system is searching for a individual value or an interval.

In the right column you can enter either I (Include) or E (Exclude) to control which data thesystem selects:

¯ all specified data (I)

¯ all data except the specified data (E)

SAP-00008852

Standard Reports in Vendor Evaluation

This section describes how to generate the standard reports in vendor evaluation.

The following analyses can be carried out:

¯ comparison of evaluations

¯ ranking list of vendors (for all materials)

¯ evaluation per material/group of materials

¯ vendors without an evaluation

¯ vendors not evaluated from a certain date

Comparing Evaluations

This report differs from other reports, since you are only comparing evaluations for one specificvendor.

In this report the overall score calculated from the scores for all the vendor’s materials is comparedto the overall score the vendor would receive if only one material formed the basis of theevaluation.

With this report, you can determine how a vendor performs when he/she delivers one of your mostimportant materials.

For example, this analysis will tell you that a vendor with a poor overall score actually has a muchbetter score when only a certain material is taken into account in the vendor’s evaluation. Thisinformation ensures that you do not overlook possible sources of supply when procuring materials.

Note

You cannot save this report, but you can regenerate it if required.

Procedure

To generate an evaluation comparison, proceed as follows:

1. From the purchasing menu select Master data -->Vendor evaluation ->Compare evaluations.The initial screen is displayed.

2. Enter a vendor and purchasing organization.

3. In the area Comparison level, enter data in one of the following fields:

¯material

¯info record

¯material group

4. Press F8 to start the report. The report compares a vendor’s general evaluation with anevaluation for a specific material.

When you press F6, you branch to the general evaluation display.

Logs

When you press All logs, the logs are displayed with calculations for semi-automatic and automaticsubcriteria for all the main criteria.

If you want to display a log for one specific main criterion, branch from the display with F2 into itsindividual log.

SAP-00008853

When you are analyzing a large number of evaluation records, this function enables you to displayan individual main criterion in detail.

Ranking List of Vendors

This report generates a list of vendors in ascending order according to overall score. You can seewhich vendors received the best scores in the group, which have average scores, and which havebelow-average scores.

As well as the overall score, the scores for the individual main criteria are displayed. The systemalso calculates the average values for individual scores. You can then determine by how manypoints a vendor varies from the average value.

Procedure

If you want to generate a ranking list of your vendors, proceed as follows:

1. From the purchasing menu select Master data --~ Vendor evaluation -~List display--~Rankinglists. The initial screen is displayed.

2. Enter a purchasing organization and vendor. By specifying a certain interval, you can limit thereport.

You can generate a ranking list for an interval of vendors or for a vendor class.

Vendors can be classified using the SAP Classification module. For more information onclassification, please see MM Classification Guide.

3. Enter your list parameters and press F8 to start the report. The system then generates a rankinglist.

You can format the list differently. For example, if you want the main criterion Delivery in the firstcolumn, position the cursor on its column description and press F5. When you press F7, you returnto the original column sequence.

You can return to vendor evaluation by positioning the cursor on a vendor and pressing F8.

When you select Display vendor, the vendor master record is displayed.

Evaluation per Material/Material Group

This report also generates a ranking list of vendors in ascending order according to overall scores.

Compared with a ranking list for vendors, this analysis is based on a certain material or certainmaterial group. You can determine which vendors received a good, average, or poor score for aparticular material.

Procedure

To generate a ranking list of vendors for a certain material, proceed as follows:

1. From the purchasing menu select Master data --~ Vendor evaluation -~List display-~Evaluations per material/material group, The initial screen is displayed.

2. Enter the purchasing organization and an interval for vendors. Select your list parameters.

3. Specify a material or material group.

4. Press F8 Execute to start the analysis. The system generates a ranking list of all the vendors whodeliver the material(s). The list also contains information on the average values. You candetermine how much an individual vendor differs from the average.

To create a ranking list that only refers to your selected material, press Reference material/material

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group and enter the material number. From the original list, the system generates a ranking listspecifically for this material.

You can branch from this report into a vendor master record by positioning the cursor on a vendorand pressing F7. To return to vendor evaluation, position the cursor on the vendor and press F8.

Vendors without Evaluation

This report lists all your vendors who have not been evaluated.

Procedure

To generate the report, proceed as follows:

1. From the purchasing menu select Master data --~ Vendor evaluation --~List display--~Vendorswithout evaluation. The initial screen is displayed.

2. Enter a purchasing organization and a vendor or vendor interval. Select your list parameters.

You can limit the report by only selecting the main criteria you want to evaluate.

For example, if you select the main criteria Price and Delivery, a report is generated for all yourvendors who do not have an evaluation for these two criteria. Using this report you can alsodetermine which of your vendors only have individual evaluations for certain main criteria and donot have a general evaluation.

3. If you select the field By main criteria, a screen with a list of all the main criteria is displayed.

4. Select the main criteria for analysis.

5. Press F8 to start the report. The system generates a list of vendors who do not have anevaluation for the selected main criteria.

You can branch from the report into a vendor master record, by positioning the cursor on a vendorand pressing F5.

You can then return to vendor evaluation to evaluate this vendor by positioning the cursor on thevendor and pressing F8.

Vendors not Evaluated Since

This report displays all the vendors who have not been evaluated since a particular date.

Procedure

To generate the report, proceed as follows:

1. From purchasing menu select Master data -~ Vendor evaluation --~List display-~Vendors notevaluated since. The initial screen is displayed.

2. Enter a purchasing organization and a vendor or vendor interval. Enter a date in the field Notevaluated since.

3. Press F8 to start the report. The system generates a list of all the vendors which have not beenevaluated since this date. Their last evaluation date is displayed.

You can branch from the report into a vendor master record by positioning the cursor on a vendorand pressing F5.

You can return to vendor evaluation by positioning the cursor on the vendor and pressing F8.

Vendors Without Weighting Key

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This report lists all the vendors whose weighting key has not been maintained, for example,because their evaluations for automatic and semi-automatic subcriteria were generated in batch.

Since the weighting key is required by the system to correctly calculate the scores, you mustmaintain it subsequently.

Generate a list of the vendors without a weighting key. From the list you can branch directly to thescreens for maintaining evaluations.

From the purchasing menu, select Master data -->Vendor evaluation ->Follow-on functions-> Vendors without weighting key

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Customizing

This section describes what you must do before you can work with the vendor evaluation system.You will learn:

¯ how to start the customizing menu

¯ which settings to maintain

¯ how to configure the system

Overview

This section contains the following topics:

?.

Click on a topic for more information

More Information

This section shows the basic steps for implementing and configuring the Vendor Evaluationmodule. You can obtain additional information by referring to the online documentation. The onlinedocumentation provides detailed information on how to maintain individual values. When youconfigure the vendor evaluation system, please read this information by pressing FI.

For detailed information on how individual scores are calculated by the system, please read,.C...a.J..c...u.!..a..tj..n.g....S...c..o..r..e..s..

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What is Customizing?

The SAP System stores and calculates vendor data and data you enter manually for evaluation.For the system to calculate, compare, and evaluate the data, you must set certain values forevaluation criteria, score intervals, and other parameters in the system.

For example, it is possible that one purchasing organization needs to define a main criterion forevaluation that another purchasing organization does not require. In a company structure therecould be several purchasing organizations each responsible for procuring different materials.

It is also possible that one purchasing organization must divide a certain main criterion into fourmanual subcriteria, whereas another purchasing organization must divide it into only twosubcriteria.

The following graphic displays an overview of the customizing procedure:

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~Call up ImplementationGuide

~ Display sub chapters

I~1~Read module

~ Back to own system

I~1~ Use online help

I~1~ Set parameters

I~1~ Save

I~1~Back to m odule

What is the Implementation Guide?

The R/3 Implementation Guide lists all the actions you must carry out to configure your SAPsystem. It contains descriptions of the settings and lets you to access the function directly from theImplementation Guide.

Procedure

You can use the Implementation Guide to help you configure your system. Proceed as follows:

1. From the system menu select Tools -->Customizing ->Implementation guide. A table of

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contents is displayed from which you select a subchapter.

2. Position the cursor on the subchapter Materials management and press F5 to display itssubchapters.

3. Position the cursor on the subchapter Purchasing and press F5.

4. Press F5 to display the subchapters for purchasing. One of the subchapters is Vendorevaluation.

5. Position the cursor on Vendor evaluation and press F2 to read the module and/or press F5 todisplay the subchapters for vendor evaluation.

6. Read the descriptions for the relevant subchapters and then maintain the settings by doublingclicking on Proceed. A screen is displayed with the default settings.

7. To maintain new settings, press F5. To call up the online help position your cursor on anindividual parameter and press FI.

8. Save your settings with Fll.

You can return to the Implementation Guide by pressing F3.

Maintain all the subchapters for vendor evaluation in this way.

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KMaintaining General Settings

In the SAP System there are general settings and settings for individual purchasing organizations.This section explains which general settings you should maintain in MM Customizing.

Individual settings are described in the section Maintaining Settings per Purchasing Organization.

You must determine the general settings which refer to all purchasing organizations. The followingtable displays four purchasing organizations and their main criteria:Criteria General Purchasing organization

1 2 3 4

Quality X X X X X

Service X X XDelivery X X X

Price X X X X XConsulting X X X

Innovation X XEcology X X

ExampleSeven different main criteria are determined in the general settings. Purchasing organization 1 usesfour of the main criteria, purchasing organization 2 also uses four, but not the same ones.Purchasing organization 3 only requires three, whereas purchasing organization 4 works with fivemain criteria.

Settings that are not maintained for individual purchasing organizations include, for example, thecontrol parameters. These can vary according to the different requirements of each purchasingorganization.

Requirements

Please note that vendors can be evaluated by several purchasing organizations. If you want tocompare their evaluations, they must have the same configuration. For example, they cannot havedifferent score cards.

Maintain the settings in the following order:

1. Weighting key

2. Criteria

3. Scope of list

4. Ranking list content

5. Purchasing organization data

¯ control parameters

¯ evaluation criteria

¯ weighting keys

¯ points for automatic subcriteria

Points one to four are general settings that will be dealt with in this section.

Point five includes settings which refer to an individual purchasing organization. These settings

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are described in detail in the section Maintaining Settings per Purchasing Organization.

Together with the persons responsible for the individual purchasing organizations, you must decidewhich criteria, weighting keys, and parameters are required. Then determine all the main criteriaetc. for your vendor evaluation system.

Under the subchapter Purchasing organization data, determine the values for your individualpurchasing organizations.

Setting Weighting Key

You set the weighting key by selecting Functions ->Vendor Evaluation from the purchasingconfiguration menu. The default settings in the system are the weighting keys 01 and 02. Theycombine the following weighting factors for the main criteria in the standard system.

Main criterion Weighting key 01 Weighting key 02

Price 1 5

Quality 1 3Delivery 1 2

Service 1 1

If you require additional weighting keys with other weighting factors, they can be maintained.

Setting Criteria

You define the criteria used in evaluations by selecting Functions -~Vendor Evaluation -->Criteriafrom the purchasing configuration menu. The standard system provides you with the following fourmain criteria:

¯ Price

¯ Quality

¯ Delivery

¯ Service

You can evaluate a vendor on the basis of these criteria. If necessary you can rename the criteriaor create additional criteria. The maximum number of main criteria is 99.

Note

Please note that the more main criteria you have, the more difficult it is to evaluate and comparevendors.

Determine the subcriteria for each main criterion and allocate weighting factors.

Determine Structure of Ranking Lists

To determine which criteria will be displayed in which sequence you must maintain the scope of listparameters. You do this in two steps:

¯ determine the scope of list

¯ determine the ranking list content

Setting Scope of List

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Select Functions --> Vendor Evaluation -->Scope of list to define additional scope of list parameters.Enter descriptions for the various list parameters.

Setting Ranking Lists

You can set the format for ranking lists by selecting Functions ->Vendor Evaluation ->Ranking listcontent from the purchasing configuration menu. You can determine how your reports should bestructured. For example, you can set which main criteria should be displayed and in which order.

The standard system provides you with the following scope of list parameters:

¯ Standard

¯ Version1

StandardThese parameters display the scores in the following sequence:

1. Overall score

2. Price

3. Quality

4. Delivery

5. Service

The overall score is displayed first. The vendors are displayed in ascending order according tooverall score. The scores for the main criteria are then displayed.

Version 1These parameters generate the following display:

1. Delivery

2. Price

3. Quality

4. Service

5. Overall score

The vendors are displayed in ascending order according to their score for Delivery. Their overallscore is found in the last column.

If you want to structure your ranking lists differently, you can set additional parameters. For moreinformation on reports in vendor evaluation, please read Monitorinq Vendor Evaluation.

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Maintaining Settings per Purchasing Organization

This section describes how to maintain individual settings for each purchasing organization.

Setting Control Parameters

In this subchapter you can maintain the following indicators and values which are then used tocalculate the automatic subcriteria. First maintain the following two parameters which apply to allsubcriteria:

¯ Best score¯ Validity period

The following table shows which parameters you must maintain for the individual subcriteria:

Subcriteria Parameters

Price Level Single vendor

Quality Audit Average of all GR lots

In-ProductionRejection

GR lot weightingIn-production rejection weighting

On-Time Delivery Smoothing factorStandard delivery variance

Minimum delivery percentageMinimum delivery quantity from materialmaster record

Quantity Reliability Smoothing factor

Shipping

Instructions

Smoothing factor

These parameters can be found in the Implementation Guide under Functions --~Vendor Evaluation--~Determine purchasing organization data for vendor evaluation.

Best Score

Determine the maximum points a vendor can receive on your score card. You should use a scorecard from 1 to 100 points. Score cards from 1 to 6 or 1 to 10 are also possible, but offer less scopewhen grading and comparing several vendors.

Validity Period

Enter a value in days to determine which data is valid for vendor evaluation. For example, if youenter 200, only the purchase orders, goods receipts, etc. which are a maximum of 200 days old are

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included in the evaluation.

Single Vendor

In the following two situations it is possible to have only one vendor for a certain material.Therefore, only one price is maintained in the system.

Single Sourcing

In this case, you have decided that you only want to procure the material from one particular vendorwho has excellent quality, for example.

Sole Sourcing

In this case, you must procure the material from a certain vendor, because he/she has a monopolyon the market.

With the Single vendor indicator, you can determine whether the single-sourcing situation is adisadvantage for you or whether the vendor deserves a good score for very good performance.

If you set this indicator, the vendor’s effective price is used as the market price when the systemcalculates the score for Price Level. The market price and effective price are the same. Becausethere is no variance, the vendor receives a good score.

If you do not set the indicator, the single-sourcing situation is not taken into account. The systemdoes not determine a score for Price Level based on this material.

Quality Audit

With this indicator you can determine how the score for the subcriterion Quality Audit should becalculated. If you set this indicator, the system calculates the average of all the audits carried out inall your plants within the Validity period you defined.

If you do not set the indicator, the system only uses the most current quality audit for theevaluation, irrespective of which plant it took place at. That means the score for the most currentquality audit is the same as the score for the subcriterion.

GR Lot/In-Production Lot Weighting

(Active in Release 3.0) With these parameters you can determine the weighting for a goods receiptlot in comparison to the weighting for an in-production rejection lot for the subcriterion In-ProductionRejection.

If you enter a value of 1 for the goods receipt lots and a value of 4 for the in-production rejectionlots, the system multiplies each goods receipt lot by 1 and each in-production rejection lot by 4when calculating the score.

Schedule Variance Smoothing Factor

You can enter a smoothing factor for new goods receipts for calculating a score for the subcriterionOn-Time Delivery Performance.

For example, suppose you want the individual score for a new goods receipt to be weighted lessthan the previous score for the vendor for the subcriterion On-Time Delivery Performance. Theprevious score represents the average for all the previous goods receipts.

Maintain the smoothing factor as 0.1. The score for the new goods receipt is one tenth of the totalcalculation, whereas the previous score counts as nine tenths of the score for the vendor for thesubcriterion On-Time Delivery Performance.

Note

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For more information on calculating scores with a smoothing factor, please read ~uJ.a..t).n._g.Sc.Qr~s.

Standard Delivery Variance

If you want to evaluate the absolute variance between the planned delivery date and the actualgoods receipt in the same way for all materials, enter a standard value for delivery variance. (Note:material-specific standardization of delivery variance will be possible in the next release).

If you do not maintain a minimum delivery quantity, each goods receipt - irrespective of the quantitydelivered - is included in the calculation.

If you do not maintain this parameter, the system calculates the delivery variance using the firmzone for scheduling agreements, and the order date and statistical delivery date for purchaseorders.

Minimum Delivery Percentage/Minimum Delivery Quantity From Material Master

Enter a percentage minimum delivery quantity if you do not want to include each goods receipt inthe vendor evaluation, especially if the vendor has only delivered part of the ordered quantity. If youwant all the goods receipts to be included in the calculation, irrespective of the quantity delivered,do not maintain this parameter.

This parameter applies to all materials.

With the parameters "Percentage Minimum Delivery Quantity" and "Minimum Delivery Quantityfrom Material Master" you can prevent a vendor from receiving a good score for delivering goodson schedule but with an insufficient quantity.

The indicator Minimum Defivery Quantity from Material Master is not supported in Release 2.1.However, you can maintain the parameter Minimum Delivery Percentage for automatic calculationof all materials.

The following section explains how the system calculates scores using both parameters.

When calculating the score for On-Time Delivery, the system first checks whether the "MinimumDelivery Quantity" indicator is set in the material master record. If it is set, the minimum deliveryquantity is included in the calculation. Therefore, you can determine per material whether youwant to set a minimum delivery percentage or not and how large the amount should be.

If you have not set a minimum delivery quantity in the material master record, the system usesthe minimum delivery percentage you maintained in customizing. This parameter applies to allmaterials. For example, if you set it at 40 %, any goods received on schedule but with less than40% of the ordered quantity are not included when the system calculates the score.

Quantity Variance Smoothing Factor

You can enter a smoothing factor for new goods receipts for calculating a score for the subcriterionQuantity Reliability. Please see the section Schedule Variance Smoothing Factor for an explanationof the procedure.

Shipping Instructions Smoothing Factor

You can maintain a smoothing factor for new goods receipts. It will be included when the systemcalculates the score for the subcriterion Shipping Instructions. Please see the section ScheduleVariance Smoothing Factor for an explanation of the procedure.

Setting Evaluation Criteria

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You can determine which main criteria belong to which purchasing organization and which maincriteria scores can be manually changed after the system has calculated them. If you do not set thisindicator, the score cannot be entered manually or it cannot be changed after it has beenautomatically calculated.

Setting Weighting Key

You can enter weighting factors for each main criterion for a purchasing organization. Theseweighting factors form a weighting key.

K subcriterion:in the standard systemK main criterion:calculating score for;new evaluation:automatic;score:calculating for

individual main criterion;scoring method:for automatic subcriteria;vendorevaluation:based on automatic subcriteria;vendor evaluation:carrying outK vendor evaluation:changing;vendor evaluation:deleting;vendor evaluation:entering

manually;vendor evaluation:evaluation sheet;vendor evaluation:maintainingK score:for main criterion:calculated by system;weighting factor:conversion into

percentageK setting: general;setting:score card;setting:sequence; subcriterion:custom izing;weighting

key:customizing

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