A comprehensive guide to understanding, configuring, and using vendor evaluation functionality in SAP S/4HANA
SAP S/4HANA provides robust vendor evaluation functionality to help organizations assess supplier performance across multiple dimensions. This enables data-driven supplier management and continuous improvement in your procurement processes.
S/4HANA enables systematic, data-driven evaluation of vendor performance based on actual transactions and deliveries.
Assess vendors across multiple criteria including quantity accuracy, delivery timeliness, and price compliance.
Configure evaluation criteria and weights according to your organization's priorities and business requirements.
Generate comprehensive performance scores to identify top performers and areas for improvement.
The vendor evaluation process in S/4HANA follows a structured approach that combines configuration settings with transactional data to generate meaningful performance metrics.
Create and configure purchasing categories to organize vendors and material groups for evaluation purposes. This helps in managing your spend and tracking performance for specific supplier segments.
Define evaluation criteria and assign weights to each criterion based on your business priorities. Set up scoring rules that determine how performance is measured and scored.
Evaluate vendors across multiple dimensions:
Combine individual evaluation scores based on configured weights to calculate comprehensive performance ratings for each vendor.
Use evaluation results to identify top performers, address underperforming vendors, and drive continuous improvement in your supply chain.
App Name | Purpose | Key Functionality |
---|---|---|
Purchasing Categories | Set up and manage categories for organizing vendors and material groups | Create categories, assign suppliers and material groups, track spend |
Vendor Evaluation Weight and Scoring | Configure evaluation criteria and weights | Define criteria weights, set up scoring rules, customize by purchasing category |
Vendor Evaluation by Quantity | Assess quantity accuracy performance | Compare ordered vs. delivered quantities, calculate variances and scores |
Vendor Evaluation by Time | Assess delivery timeliness | Measure on-time delivery performance, calculate time variances and scores |
Vendor Evaluation by Price | Assess price compliance | Compare PO prices vs. invoice prices, calculate price variances and scores |
Vendor Evaluation Overall Performance | Generate comprehensive performance ratings | Combine individual scores using configured weights, track overall performance |
Purchasing categories in S/4HANA provide a framework for organizing and managing vendors and material groups. They help you track spend, monitor performance, and implement targeted strategies for different supplier segments.
Track and analyze spend for specific vendor-material group combinations to identify cost-saving opportunities.
Evaluate vendor performance within specific categories to identify strengths and weaknesses in your supply chain.
Assign team members to specific categories to facilitate focused supplier management and development.
Group related suppliers and materials to implement targeted sourcing strategies and negotiations.
Navigate to the Purchasing Categories app in your Fiori Launchpad to view existing categories or create new ones.
Click the "Create" button and enter a name for your category (e.g., "Demo3"). This will be the unique identifier for your purchasing category.
Select a purchaser who will be responsible for managing this category. This person will typically oversee supplier relationships and performance within this category.
Search for and select the suppliers you want to include in this category. These are the vendors whose performance you will track and evaluate.
Add team members who will collaborate on managing this category. This facilitates team-based supplier management and evaluation.
Enter planned spend figures to establish targets for this category. This allows you to compare actual spend against planned spend for budget tracking.
Include the relevant material groups in this category. This defines which materials will be considered when evaluating suppliers in this category.
Save your new purchasing category. It will now be available for use in vendor evaluation and reporting.
Pro Tip: Structure your purchasing categories to align with your organization's procurement strategy. You might create categories based on commodity types, business units, strategic importance, or supplier relationship models.
The weight and scoring configuration is a critical component of the vendor evaluation process. It determines how different performance criteria are weighted and scored to generate meaningful evaluation results.
S/4HANA uses three main criteria for vendor evaluation:
These weights are customizable and can be adjusted based on your organization's priorities. For example, if delivery timeliness is more critical for your business, you might increase the weight for Time Evaluation.
Variance Percentage | Score | Example |
---|---|---|
0% (Perfect Match) | 100 | Ordered: 100, Delivered: 100 |
-10% (Under-delivery) | 65 | Ordered: 10, Delivered: 9 |
-50% (Significant Under-delivery) | 70 | Ordered: 20, Delivered: 10 |
+5% (Over-delivery) | 95 | Ordered: 100, Delivered: 105 |
The system calculates quantity variance as: (Delivered Quantity - Ordered Quantity) / Ordered Quantity * 100
Delivery Status | Score | Example |
---|---|---|
On Time | 100 | Delivered exactly on the requested delivery date |
1-2 Days Late | 90 | Delivered 1-2 days after the requested delivery date |
3-5 Days Late | 70 | Delivered 3-5 days after the requested delivery date |
>5 Days Late | 50 | Delivered more than 5 days after the requested delivery date |
Early Delivery | 95 | Delivered before the requested delivery date |
The system calculates time variance based on the difference between the requested delivery date and the actual delivery date.
Price Variance Percentage | Score | Example |
---|---|---|
0% (Perfect Match) | 100 | PO Price: $100, Invoice Price: $100 |
+1% to +3% (Small Overcharge) | 90 | PO Price: $100, Invoice Price: $102 |
+3% to +5% (Moderate Overcharge) | 70 | PO Price: $100, Invoice Price: $104 |
>+5% (Significant Overcharge) | 50 | PO Price: $100, Invoice Price: $106 |
Negative Variance (Lower Invoice Price) | 100 | PO Price: $100, Invoice Price: $98 |
The system calculates price variance as: (Invoice Price - PO Price) / PO Price * 100
Navigate to the app in your Fiori Launchpad to view existing configurations or create new ones.
Choose the purchasing category for which you want to configure weights and scoring (e.g., "Demo3").
Click the plus sign to add evaluation criteria to the selected category. You can select from the predefined criteria (Quantity, Time, Price).
Assign weight percentages to each criterion based on your business priorities. Ensure that the total weight across all criteria equals 100%.
Example: Quantity (25%), Time (25%), Price (50%)
If needed, drill down into each criterion to adjust the scoring rules for variance calculations. This allows you to customize how specific performance levels are scored.
Save your weight and scoring configuration. It will now be used for vendor evaluations within the selected purchasing category.
Important: Weight and scoring configurations are set up at the purchasing category level. This allows you to apply different evaluation criteria and weights for different supplier segments based on their strategic importance and business requirements.
S/4HANA provides three main types of vendor evaluations: Quantity, Time, and Price. Each evaluation type focuses on a specific aspect of supplier performance and contributes to the overall performance score.
Quantity evaluation assesses how accurately suppliers deliver the ordered quantities of materials. It compares the ordered quantity with the goods receipt quantity for each purchase order item.
PO Number | Ordered Qty | Delivered Qty | Variance % | Score |
---|---|---|---|---|
4500100123 | 10 PC | 10 PC | 0% | 100 |
4500100124 | 10 PC | 9 PC | -10% | 65 |
4500100125 | 20 PC | 10 PC | -50% | 70 |
4500100126 | 100 PC | 100 PC | 0% | 100 |
Time evaluation assesses how punctually suppliers deliver materials. It compares the requested delivery date with the actual delivery date for each purchase order item.
PO Number | Requested Date | Actual Date | Variance (Days) | Score |
---|---|---|---|---|
4500200123 | 2023-06-15 | 2023-06-15 | 0 | 100 |
4500200124 | 2023-06-20 | 2023-06-22 | +2 | 90 |
4500200125 | 2023-06-25 | 2023-06-23 | -2 | 95 |
4500200126 | 2023-06-30 | 2023-07-06 | +6 | 50 |
Price evaluation assesses how well suppliers adhere to agreed prices. It compares the purchase order price with the invoice price for each purchase order item.
PO Number | PO Price | Invoice Price | Variance % | Score |
---|---|---|---|---|
4500300123 | $100.00 | $100.00 | 0% | 100 |
4500300124 | $100.00 | $102.00 | +2% | 90 |
4500300125 | $100.00 | $98.00 | -2% | 100 |
4500300126 | $100.00 | $106.00 | +6% | 50 |
Comparing performance across different evaluation types can provide valuable insights into supplier strengths and weaknesses:
Based on the sample data, this supplier shows:
This analysis helps identify specific areas where the supplier needs to improve, enabling targeted supplier development efforts.
The Overall Performance Evaluation combines the individual scores from Quantity, Time, and Price evaluations based on their configured weights to generate a comprehensive performance rating for each vendor.
The overall performance score is calculated using the following formula:
Overall Score = (Quantity Score × Quantity Weight) + (Time Score × Time Weight) + (Price Score × Price Weight)
Example calculation:
Navigate to the app in your Fiori Launchpad to view comprehensive supplier performance ratings.
Choose your preferred view (by Purchasing Category, Purchasing Group, or Supplier) to see the performance data organized accordingly.
Review the tabular view showing suppliers, their scores across different criteria, and the overall performance score.
Click on a specific supplier row to drill down to detailed performance data at the purchase order item level.
Compare performance across different suppliers, time periods, or purchasing categories to identify trends and patterns.
Supplier | Year | Quantity Score | Time Score | Price Score | Overall Score |
---|---|---|---|---|---|
Premium Components Ltd | 2023 | 95.58 | 88.75 | 97.35 | 94.77 |
Premium Components Ltd | 2022 | 93.25 | 90.40 | 96.50 | 94.16 |
Global Distributor ABC | 2023 | 98.10 | 88.75 | 93.20 | 93.31 |
Domestic Supplier XYZ | 2023 | 95.58 | 92.30 | 91.45 | 92.70 |
Visual representation of supplier performance helps quickly identify strengths and weaknesses:
Quantity Score (Weight: 25%)
Time Score (Weight: 25%)
Price Score (Weight: 50%)
Overall Score
Key Insight: The overall performance score gives you a balanced view of supplier performance across multiple dimensions. It helps identify top performers, track improvement over time, and make data-driven decisions about supplier relationships.
Implementing an effective vendor evaluation process in S/4HANA requires more than just technical configuration. Here are key best practices to maximize the value of your vendor evaluation efforts:
Align your evaluation criteria and weights with strategic procurement objectives and business requirements.
Use purchasing categories to segment suppliers based on strategic importance, spend, risk, and other relevant factors.
Establish a consistent cadence for refreshing evaluation scores and reviewing supplier performance.
Share evaluation results with suppliers to drive transparency and continuous improvement.
Optimize your purchasing category structure with these recommendations:
Tip: Start with a focused set of categories for your most critical suppliers and materials, then expand the approach as you gain experience.
Optimize your weight and scoring configuration with these recommendations:
Example Configuration by Category Type:
Category Type | Quantity Weight | Time Weight | Price Weight | Rationale |
---|---|---|---|---|
Production Materials | 30% | 50% | 20% | On-time delivery critical for production |
Commodity Items | 20% | 20% | 60% | Price compliance most important for cost control |
MRO Supplies | 40% | 40% | 20% | Balanced focus on quantity and timeliness |
Maximize the impact of your evaluation program with these recommendations:
Performance Tier Framework Example:
Performance Tier | Score Range | Action |
---|---|---|
Preferred | 95-100 | Consider for additional business, strategic partnership |
Approved | 85-94 | Maintain current business, identify specific improvement areas |
Probationary | 70-84 | Require formal improvement plan, quarterly reviews |
At Risk | <70 | Consider alternate sources, escalate to management |
Maximize the value of your vendor evaluation data by integrating it with other procurement processes:
Use evaluation scores as a factor in supplier selection and award decisions. Consider past performance alongside price and other criteria.
Incorporate performance metrics into supplier contracts with specific targets and incentives based on evaluation scores.
Use evaluation data to drive structured supplier development programs and relationship management activities.
Correlate evaluation scores with spend data to identify opportunities to shift volume toward higher-performing suppliers.
Remember: The ultimate goal of vendor evaluation is not just measurement, but improvement. Use the insights gained from S/4HANA's vendor evaluation functionality to drive meaningful improvements in supplier performance and value delivery.
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