SAP vendor performance measurement methodology
Why do i need a SAP Vendor evaluation methodology?
Vendor evaluation is the process of analyzing and assessing your SAP vendor performance (in this case).
The main objective of any Vendor evaluation is to ensure the following:
- time delivery
This can be achieved by aggressively pursuing vendor assessments based on pre-defined criteria. This has shown to provide over 20% improvement in supplier performance. But in order to achieve continuous improvements in vendor performance, continuous monitoring and analysis of vendors criterion’s is required. So the question arises:
How do I evaluate vendor performance?
SAP Vendor Evaluation component helps organizations measure traditional quantitative and qualitative factors. This drives better decision making and performance improvements. SAP Vendor evaluation is completely integrated into the purchasing component within Material Management and Quality Management module. It helps purchase departments select the source of supplies and facilitates continual monitoring of existing supply relationship. It provides the accurate information on price, terms of payment and delivery. This detailed information helps the procurement team quickly identify and resolve problems that may crop up time to time.The standard SAP offers a scoring range from 1 to 100 which is used to measure the performance of vendors.
The following are the main criteria available in the standard SAP system to measure the vendor performance:
- Quality Delivery
- General support/services
- Service (Vendors employ as external service providers)
Weights can be assigned to all the criteria based on the organization policies. The system will calculate vendor overall score automatically by a weighted average method for each of the main criteria. The SAP standard provides the following scoring method to calculate the vendor scores:
- Fully Automatic – Scores will be calculated by the system automatically on the basis of defined data
- Semi-Automatic – System will provide the option to enter individual scores for certain Material / Services and it calculates high-level scores automatically
- Manual – System will provide option to maintain blanket score for sub criterion per vendor
SAP System will provide vendor evaluation result in the form of analyses and also the result can be generated based on the vendor ranking list of the best vendors according to their overall scores or ranking lists for specific materials. The system provides an option to print vendor evaluation sheets.
In summary, Vendor performance evaluation is a critical part of an enterprise’s success. SAP being a premier Enterprise software solutions vendor has some pretty nifty tools which can help you on this front. If you are looking to understand more on Vendor performance evaluation, drop me a note through this contact form.