SAP S/4HANA – Purchasing Analytics for Supplier Evaluation
As a part of the SAP S/4HANA Regional Implementation Group with a focus on procurement, I have been supporting customers on their journey to SAP S/4HANA. Procurement analytics and data visualization is in many projects a main topic and lead to higher efficiency and better decision making.
In this blog post, I would like to present to you further analytical applications that S/4HANA provides for supplier evaluation. These apps will help you to get insights by visualizing data. As an example, we will look at two of many analytical apps that are available in the system.
- Supplier Evaluation by Quantity
- Supplier Evaluation by Price
In his article Akash Prekar has given an insight on the new evaluation method of suppliers by questionnaire (soft facts) which is a part of ‘supplier and category management’ in SAP S/4HANA.
Of course, having access to the right data and information on the right time has a great impact on business success. In procurement, it is important to identify the suppliers that are suitable for a company and to establish a close cooperation.
Only selecting suppliers that offer the best price may easily lead to product quality limitations or supply chain issues, when delivery dates of quantities are not met.
To minimize these risks for your business and to make the actual performance of a supplier transparent, it is necessary to implement a vendor evaluation that considers as many aspects of your company as possible.
As you can find in the Simplification List of S/4HANA 1909, the current vendor evaluation based on Logistics Information System is still available with SAP S/4HANA, but is not considered the target architecture. It is recommended to use the SAP HANA reporting capabilities for vendor evaluation based on CDS views and smart business technology.
Though the Logistic Information System (LIS) can still be used, you need to take into consideration that if you use a material number longer than 18 characters, the extended material number may not be displayed completely – see restriction note “Extended Material Number in LIS: SAP Note 2232362”.
As an alternative you may want to consider using the SAP HANA reporting capabilities for vendor evaluation based on CDS views and smart business technology. The usage of SAP S/4HANA offers real-time supplier evaluation capabilities without building and referring to table and structure aggregates. Beside real-time capabilities, it also provides much more analytical visualization options as LIS. Also see note 2228247 – S/4HANA Simplification: Deprecation of Vendor evaluation based on LIS.
Here you can find the Purchasing Analytics for Supplier Evaluation on your Fiori Launchpad:
Let’s take a look at some apps and the benefit they bring:
Supplier Evaluation by Quantity
This app allows you to determine the quantity variance, which is based on the variance between the ordered quantity and the delivered quantity of items. On the X-axis the suppliers are listed, while the y-axis shows the Variance Score for each supplier. If needed, the arrangement of the diagram can be changed by clicking the settings icon in the right corner above the diagram.
Both the excess and the lower delivered quantities are considered as variances. The score is determined over the previous year to date. With this overview, you can easily determine whether a supplier keeps to the requested quantity and order fulfillment. As you can see on the picture, it is possible to select different views which will change the visualization of the data accordingly. This makes it clear whether there is a need for action in a particular material group.
If more convenient, it is also possible to select the table view instead of a visualization:
Further information on this app can also be found in the SAP help documentation.
Supplier Evaluation by Price
As a strategic buyer (SAP_BR_BUYER), you can determine the score of a given supplier in an organization based on the variance in the price of ordered items and delivered items. On the X-axis again the suppliers are listed, while the y-axis shows the Variance Score of prices for each supplier. If needed, also here the arrangement of the diagram can be changed by clicking the settings icon in the right corner above the diagram.
The Variance Score is calculated over the previous year to date and is based on the difference in the purchase order amount and invoice amount. Both the excess price and the lower price are considered as variances. Also a table view is available as seen before in the Supplier Evaluation by Quantity app.
More information to this app can also be found in the SAP help documentation:
If you need the data for further processing in a spreadsheet, it is possible to download the data by using the “export to spreadsheet” function.
In summary, as you have seen, the analytical views of your procurement data offers an easy way of accessing relevant information. Even though the LIS can still be used, the apps showed above offer a more flexible way of data visualization.
Brought to you by the S/4HANA RIG.