Note on Calculation Logic for Vendor Evaluation

1. Goods Receipt (Main Criterion "Quality")

The score is calculated as follows:
1. If a material is subject to incoming inspection, part of the delivered material
is checked by the quality assurance department
when goods are received
against a purchase order.
2. An inspection lot is created. After the inspection or testing, the person
responsible in Quality Management then enters a result and makes a decision
as to whether the material can be used.
3. All the incoming inspection lots are stored in a file with their scores.
4. When you run an automatic re-evaluation for a vendor, the system selects all
the incoming inspection lots for the vendor that lies within the validity period
and calculates the average of the scores. The result is the vendor's score for
the quality of goods received

Average Score for Quality = Mean Score of all Inspection Lot

Scores (401/5=80)

2. On-Time Delivery Perf. (Main Criterion "Delivery")

The system uses the statistics-relevant delivery date in the purchase order and the
goods receipt date to calculate date variances. Standard Variance of 50 days is kept
against which actual Variance is calculated.
If the delivery is not on time, the system calculates the date variance in days and
converts it into a percentage variance using Scores maintained in Score Matrix.

SCORE PERCENTAGE MATRIX.

Average Score for Delivery = Old Score X (1-.20)+ New Score x.20
Use of Smoothing Factor is Used for Score Calculation for Subsequent Delivery.
Old Score X (1-.020) (smoothing factor applied) + New Score i.e. 80 X 0.20 (smoothing factor) = New
Score.

Logic for Delivery Score Calculation

Delivery
Goods Receipt
Varian Standard
Date
Date
ce
Variance
14-0517-05-2011
3

Proportion to Standard
Variance
50

2011

For Variance of 6 days, New Score is score is 90

New Score = 75 * (1-.20)+ 90*.20
= 60 +18
= 78

Calculating Overall Score/Scores for Main Criteria

Use
This Section describes how the Vendor Evaluation system calculates a vendor's overall score and
the scores for the main criteria
Activities
Calculating the Overall Score
The system derives the overall score from the scores for the various main criteria, taking the
weighting factors assigned by Purchasing in the system settings for each main criterion into
account.
The following example explains this process:
Example
The table below shows the scores for a vendor and their weighting:

Main criterion
Quality
Delivery

Score
100
78

Weighting
70
30

Internally, the system uses the weighting factors to compute the overall
score.
1. The scores for the main criteria are multiplied by their weighting.
100 * 70 =
7000
78 * 30 =
2340
2. Overall score
(7000/100) +
(2340/100)
= 93
The vendor is awarded an overall score of 93 points .

Note: Scores may Not Get Calculated or may be incorrect if following Conditions not
met.
1. Quality Scores will only be calculated if Movement Type Involves Quality
Inspection
2. Percentage Score is assigned to Usage Decision Code at time of Quality
approval.
3. For Scores for Delivery Criteria, unless PO delivery indicator is set, system
may calculate incorrect scores.
4. If Minimum Quantity Delivery % is not met, system will Return Score as Zero.