Define Settings for Supplier Evaluation and Statistics

This document explains how you define settings for supplier evaluation and statistics.

Outcome

The parameters that control supplier evaluation and statistics are defined.

The following files are updated:

The parameters are used to display purchase statistics, summarize supplier statistics, supplier evaluation statistics, delivery time statistics, quality inspection statistics, and ABC classification.

Before you start

Program ID/Panel Field The field indicates …

(PPS095/B)

Purchase order type

…an order type. The order type is a combined ID for the settings that determine how an order is processed in the processing flow during order entry.

(PPS095/K)

720 – Supplier performance effect

…if the purchase order should affect the supplier's performance evaluation.

(PPS095/K)

721 – Vendor statistics update

…if the vendor statistics need to be updated.

(CRS624/E)

ABC class supplier

...the supplier's ABC class.

The ABC class is used to classify suppliers and is based on the yearly purchase volume when it is calculated automatically. You can also enter the ABC class manually (method 0).

(CRS624/E)

ABC method supplier

…the ABC class. Select the check box to update the ABC class automatically. Clear the check box to update it manually.

(CRS624/F)

Supplier statistics

…a check box. If the statistics should be calculated for the supplier; select the check box.

(CRS624/F)

Number of years of statistics

…the number of years for which the accumulated supplier statistics should be saved.

(PPS430/B)

Division

…a division. This is an ID for a legal unit within a company group.

Division is a key value for the financial system in M3.

One division can consist of several facilities. Facilities are used in material and production management and for purchasing purposes.

(PPS430/E)

Period type MPM/MAI

…which period type (1-5) should be used in M3 MPM.

Five period types can be defined using (CRS910). For each application, enter the period type.

(PPS430/E)

Accumulation method - supplier performance

…which method must be used when the accumulated supplier performance values for each supplier are calculated in the supplier statistics.

The valid alternatives are:

1 = Moving average

2 = Exponential smoothing.

The accumulated performance value is calculated according to the moving average method as mentioned below:

Y (t) = (Y (t-1) +Y (t-2)...+Y(t=n))/n

Y = Accumulated value for the current period.

Y(t-1) = Accumulated value period t-1

n = Number of periods included in calculation, as specified in the supplier statistics.

The accumulated performance value is calculated according to the exponential smoothing method as mentioned below:

Y(t) = (1-A) * Y(t-1) + A * Y

Y = Actual valued for period t.

Y (t) = Accumulated value for the current period (t).

Y (t-1) = Accumulated value period (t-1).

A = Smoothing constant [0 to 1].

(PPS430/E)

Delivery discrepancy days range 1 – 5

…the start and the end values used to classify a purchase order with regards to its delivery time.

The delivery discrepancy range is a classification similar to early deliveries, late deliveries or deliveries on time.

Example:

Six order lines have discrepancy days equal to -34, -13, 1, 0, 5 and 16. This in combination with the following discrepancy range gives the following classification:

Discrepancy range 1 = (-999 to -15 days) = 1

Discrepancy range 2 = (-14 to -6 days) = 1

Discrepancy range 3 = (-5 to +5 days) = 3

Discrepancy range 4 = (+6 to +14 days) = 0

Discrepancy range 5 = (+15 to +999days) = 1

(PPS430/E)

Early delivery - cost of capital pct

…the interest rate that is included in the calculation of the cost that arises for early deliveries.

(PPS430/E)

Weighing factor K10

…the weighing factor for delivery time performance used for supplier evaluation.

You can enter a value between 0 and 1.

Weighing factor K10 affects the supplier's performance evaluation along with K11, K12, and K13 according to the following formula:

(K10 * delivery deviation) + (K11 * delivery quality) + (K12 * interest cost early delivery) + (K13 * invoice quality) where,

K10 + K11 + K12 + K13 = 1.

(PPS430/E)

Weighing factor K11

…the weighing factor for delivery quality used for supplier evaluation.

You can enter a value between 0 and 1.

Weighing factor K11 affects the supplier's performance evaluation along with K10, K12, and K13 according to the following formula:

(K10 * delivery deviation) + (K11 * delivery quality) + (K12 * interest cost early delivery) + (K13 * invoice quality) where,

K10 + K11 + K12 + K13 = 1.

(PPS430/E)

Weighing factor K12

…the weighing factor for the relative cost of early deliveries in connection to supplier evaluation.

You can enter a value between 0 and 1.

Weighing factor K12 affects the supplier's performance evaluation along with K10, K11, and K13 according to the following formula:

(K10 * delivery deviation) + (K11 * delivery quality) + (K12 * interest cost early delivery) + (K13 * invoice quality) where, K10 + K11 + K12 + K13 = 1.

(PPS430/E)

Weighing factor K13

…the weighing factor for invoice quality used for supplier evaluation.

You can enter a value between 0 and 1.

Weighing factor K13 affects the supplier's performance evaluation along with K10, K11, and K12 according to the following formula:

(K10 * delivery deviation) + (K11 * delivery quality) + (K12 * interest cost early delivery) + (K13 * invoice quality) where,

K10 + K11 + K12 + K13 = 1.

(PPS430/E)

Weighing factor K30

…the weighing factor used while calculating the delivery quality.

Factors K30, K31 and K32 collectively affect the delivery quality.

K30 affects the number of approved lots with remarks.

K31 affects the number of partly rejected lots.

K32 affects the number of rejected lots.

You can enter a value between 0 and 1. The sum of K30 + K31 + K32 = 1.

(PPS430/E)

Weighing factor K4

…the weighing factor used while calculating the interest costs for early deliveries.

K4 indicates the weight that must be placed on the early deliveries, in regards to the overall supplier performance evaluation. The lower the value for factor K4, the lesser the emphasis given to early deliveries.

You can enter a value between 0 and 1.

(PPS430/E)

Period factor K2

…a period factor, in days, used for delivery follow-up.

K2 is a weighing factor that determines the number of delivery delays that affect the supplier performance evaluation.

A higher number indicates a higher tolerance for delivery delays.

(PPS430/E)

Weighing factor K5

…the weighing factor used to calculate the invoice quality.

K5 indicates the weight that must be placed on the supplier's invoice quality with regards to the overall supplier performance evaluation. The lower the value for factor K5, the lesser the emphasis given to invoice quality.

You can enter a value between 0 and 1.

(PPS430/E)

Number of periods in moving average calc

…the number of periods used for the calculation of the accumulated supplier performance values according to the moving average calculation method.

(PPS430/E)

Smoothing constant

…the weight to be given between the previous period's value and the current period's value.

The smoothing constant is used when calculating the accumulated supplier performance values according to the exponential smoothing method.

You can enter a value between 0 and 1.

Follow These Steps

  1. Start 'PO Type. Open' (PPS095).

  2. On the K panel, select 'Supplier performance effect' and 'Vendor statistics update'.

  3. Start 'Supplier. Define Purchase & Financial' (CRS624) for a supplier.

  4. On the F panel, select 'Supplier Statistics' and input the 'No of years of statistics'.

  5. Start 'Settings – supplier Statistics' (PPS430).

  6. On the B panel, enter the division and select the Create option.

  7. On the E panel, enter the period type MPM/MAI, accumulation method - supplier performance, delivery discrepancy days range 1-5, early delivery - cost of capital percentage, weighing factor K10, weighing factor K11, weighing factor K12, weighing factor K13, weighing factor K30, weighing factor K4, period factor K2, weighing factor K5, number of periods in moving average calculation, and smoothing constant.

  8. Press Enter.

Related topics