Learn how to evaluate vendor quality through quality, quantity, and delivery punctuality parameters.

Module Description

This functionality complements the quality module by allowing you to calculate an evaluation rating for vendors.

The evaluation can be activated on the following parameters:

• Respect for delivery dates
• Respect for the quantities ordered
• Non-compliance 

Using a specific setup, it is possible to assign a rating to each vendor in a specific field of the master data.

Setup

Inspection Setup

The main setup will be done on the “Inspection Setup” page.

The fields to be filled in will be:

• Assert delivery terms on release: Specifies the requirement to enter delivery terms at purchase order level on release
• Quality rating on Release: Specifies the mandatory inclusion of the quality assessment at inspection order level at the time of registration
• Use quality criteria in the calc.: allows you to include the quality criterion in the vendor evaluation calculation, considering the non-compliant quantities recorded on the inspection orders
• Use quantity criteria in calc.: Allows you to include the quantity criterion in the vendor valuation calculation, comparing the quantity received with the quantity ordered
• Use date criteria in calc.: Allows you to include the date criterion in the vendor valuation calculation, comparing the Expected receipt date with the load posting date
• Vendor rating Criteria Calc.: Allows you to choose the calculation method for evaluations
  • Mathematical average: indicates that all the criteria that will take part in the evaluation will have the same weight
  • Weighted %: it is possible to indicate a % for each criterion
• % weight for quality, quantity, and date criteria: if the previous field is = Weighted %, then you can indicate the weight of each criterion in these fields. Their sum must be 100%.

Rating Codes

It is necessary to identify the types of ratings that can be assigned to vendors based on the score received with the quality, date and quantity parameters.

These are managed in the rating codes:

• Code and Description: identify the evaluation
• Minimum score: this is the minimum score that the vendor must have in order to be awarded that rating.
• Default plan code. You can define specific sampling plans for the evaluation (e.g., a more restrictive one for the worst evaluations), which will override any previously entered in the inspection matrix.

Vendor

Within the vendor database, you must indicate which vendors are being evaluated using the appropriate flag in the Quality tab.

Additionally, you can indicate an initial Classification code.

If the Vendor rating Criteria Calc. field in the inspection setup is Weighted %, then it will be possible to specify custom vendor weights for each criterion. Quality, quantity, and date % weights will only be activated if the Custom % Weight field is set to true.

If Vendor rating Criteria Calc. = Weighted on % weights on inspection setup but Custom Weight % = false then the weights indicated in setup will remain in effect.

Quality rating code

In the “Quality Rating Code” table, you can indicate the ratings that can be assigned to each individual quality on the inspection order.

Each code is assigned a score that will contribute to the overall rating of the vendor.

The Default flag can only be set on one code and is required for all item codes that will not be subjected to quality control. When these items are received, the default Quality Assessment Code will automatically be added to the shipment line.

Vendor Rating Param Quantity

In the “Vendor Rating Param Quantity” setup, you can enter the score to assign to the vendor based on the deviation between quantity and quantity received.

It is possible to enter a specific setup for each individual item category.

If this is not specified then the rating will be active for all items.

Vendor Rating Param Date

Instead, use the “Vendor Rating Param Date” setup to set the score based on the deviation between the vendor’s promised dates and the load registration dates.

Functionality

Before starting document management, you must activate the flag on the vendor master data:

An initial evaluation code can also be managed within the master data in the field of the same name.

Order and Purchase Receipt

Vendor evaluation management starts with the entry of the purchase order.

Entering the order and recording the received receipt remains unchanged compared to the standard.

The inclusion in the calculation flag will automatically be set on the order lines if the vendor is subject to this evaluation.

The vendor evaluation will therefore be applied only to purchase lines (orders and receipts) created after the "Subject to evaluation" flag in the vendor master data has been activated.

Inspection order

If a purchase receipt includes the creation of an inspection order, the release process will require the completion of an additional field called “Quality Evaluation Code”.

The field must be populated before registration, otherwise the system will return the following error:

This error will be shown ONLY IF the load line from which it derives has the “Subject to evaluation” flag deriving from the vendor master data.

The quality score will be calculated using the Quality Evaluation Code that will be entered in the inspection order.

Lines without quality control

In case there are items or vendors in free pass or without active quality control, the Quality Evaluation Code will be automatically set with the default flag active.

Vendor Rating

To calculate the vendor rating, open the “vendor Rating” page which can be found in the menu:

On this page, you can view all the vendors in the system with their respective evaluation codes currently present in the master data, in case the vendor is undergoing evaluation.

The action bar at the top contains:

• Calculate vendor rating
• Vendor rating entry
• Print vendor rating
• Rating history
• Quality rating purchase

Calculate vendor rating

The “Calculate vendor rating” report opens a request page that allows you to choose the calculation type:

• The report is launched filtered for the selected vendor, but the filter can be removed or modified
• 100 points for failure to evaluate: allows you to assign full points if we were unable to trace the document line back to any evaluation.
• Calculation criteria: Using the flags, you can decide which criteria to include in the evaluation calculation (quality, quantity, and date). The criteria usage flags are set with the default established in the inspection setup.

The report will populate the table that can be opened from the Vendor rating entry function.

Vendor rating entry

To open the list of Vendor rating, use the function in the top bar on the vendor rating page:

In the vendor movements, all the load lines for which the order line is completely fulfilled are recorded and the following are indicated:

• Receipt No. and Receipt Line No.
• Item No.
• Vendor No.
• Delivery date score: indicates the score resulting from the difference between the line's registration date and its expected loading date compared to the date evaluation parameters entered in setup
• Quality Score: indicates the score resulting from the quality checks and the evaluation code set on the related inspection order
• Quantity Score: indicates the score resulting from the difference between the quantity received for the line and the quantity of the same line compared to the quantity evaluation parameters entered in setup
• Total Score: The calculation of the total score is linked to the choice made in the Vendor rating Criteria Calc. field:
  • Mathematical average: (Delivery date score + Quality score + Quantity score) / 3
  • Weighted by % weights: (Delivery date score * Date criterion % weight) / 100 + (Quality score * Quality criterion % weight) / 100 + (Quantity score * Quantity criterion % weight) / 100

Printing and updating the vendor score

Using the Print vendor rating action on the Vendor Rating page you can:

• Calculate the new valuation proposal based on the new entries
• Update the vendor master data with the new proposal
• Print a summary of the calculations

The request page that will open will be made up of:

• Create rating proposal: Calculate the proposal for the new vendor valuation based on the valuation entries just created
• Update vendor: allows updating the vendor master data based on the calculated proposal
• Planned Receipt Date From and Planned Receipt Date To: Date filters that allow only a specific evaluation entry number to be included in the proposal calculation. 
• Vendor filters: automatically populated with the vendor number selected at the time of launch, it can be modified using any of the fields in the master data

The printout presents a summary of the transactions selected with the date filter, creating a sheet for each filtered vendor.

The proposed vendor value is shown above; this will also be the value that will be set in the vendor master data if the Update vendor field is checked on the request page:

Rating history

From the vendor Ratings list, you can also view how a vendor's rating has changed over time by using the Rating History function with the related score.

Those marked as “Vendor rating proposal” mean that they have never been made final by updating the vendor.