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How does ECC handle SAP Vendor Evaluation for services?

In SAP ECC, Vendor Evaluation gives you an easy way to evaluate vendor performance for services such as equipment maintenance or building maintenance. Here's a look.

SAP Vendor Evaluation for services is a standard functionality in SAP ERP Central Component that evaluates a vendor's...

performance based on timeliness and the quality of services delivered. Vendor Evaluation integrates with the procurement process.

While companies often evaluate vendors' performance on procurement and key performance indicators (KPIs), many companies overlook the importance of external vendors that provide services for ensuring smooth logistics and an efficient supply chain. For example, a service provider that takes longer than was planned to fix a broken machine critical to production can wreak havoc on the supply chain. 

As is the case with implementing or integrating any application in SAP ERP Central Component (ECC), integrating SAP Vendor Evaluation for services entails focusing on the following four areas.

Configuration

It's best to bring relevant stakeholders on board to mutually agree upon the percentages to allocate to the three main categories that Vendor Evaluation measures. These are procurement, quality and services. Each area is assigned a certain percentage, which together amount to 100%.

Under each of these main criteria are subcriteria. For example, under procurement, there are the subcriteria of competitive pricing, on-time delivery and adhering to shipping instructions. Subcriteria are also assigned percentages that together must equal 100%

Master data

In this step, the business user defines the standard time of delivery in the purchasing information record. A purchasing information record maintains a one-to-one relationship between a service and the services vendor; two vendors providing the same service to the company will each have a purchasing information record in SAP ECC.

When using SAP Vendor Evaluation for services, the system refers to the planned delivery time to compare it to the actual time it took a vendor to deliver services, as well as to evaluate deviations to calculate the timeliness score.

Services procurement process

The procurement process begins with creating a purchase order for services offered by a vendor. The system not only automatically picks up the price maintained in the purchasing information record created in the previous step (the master data), but also its planned delivery time.

When the vendor has delivered its service, the business user updates the service entry sheet in SAP ECC. A service entry sheet validates the services delivered by a vendor, and it needs to be approved in the system. On approval of the service entry sheet, and due to integration with the procurement process, the system not only enables a vendor to submit an invoice for payment for services delivered to the company, but also enables the system to update the vendor's score in Vendor Evaluation.

Reports

Finally, Vendor Evaluation reports available in SAP ECC automatically calculate the individual, as well as the overall scores based on the subcriteria, quality and timeliness. It also calculates the score of the main criterion, services. Use Transaction MC6H to access procurement KPIs such as on-time delivery, quality and timeliness, among others.

Companies can build better business relationships with their outsourced services vendors by using Vendor Evaluation to collaborate on improving service levels for their internal customers (production and maintenance teams).

Next Steps

How the procurement software Ariba integrates with SAP ERP

How to navigate the e-procurement landscape

The e-procurement software for your company

This was last published in May 2017

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