Quality Cost and Delivery - Oracle Purchasing


Hello Friends,

 This is another blog, sharing with you guys more informative and quite useful for you hopefully. :)

 Well this is one feature we have discovered while working in oracle purchasing. 
Just finish of one implementation and got chance to share this nice concept with you. 

 First of all, I would like to thank my friends Kedar Deshpande and Amit Agarwal - Oracle apps experts who are the thought worker of this concept. 

 To begin with 
This topic is about identifying best supplier based on 3 factors (Quality, cost and Delivery)

Concept

Supplier Quality Cost and Delivery (Acronym SQCD or QCD). Functionality is to identify best supplier based its transaction history on 3 factors

1)   How Cost effective material provided,
2)  How was Quality of a material on basis of material rejection ratio during GRN. If collection plan is attached to material then based on material specifications provided by supplier; Material is inspected during GRN and accepted by organization.
3)   And Material Delivered on specified need by date including date tolerance. 

Along with these, we can also include how much maximum Credit limit with no of days provided by Supplier.
This will help buyer to have deal with effective supplier(s) and based on that supplier ranking will be decided and accordingly sourcing rule/assignment will be created and/or updated.   
This would be useful for auto sourced orders where supplier will be referenced from sourcing rule. Currently sourcing rule is manually maintained by buyer. Even if certain supplier agreement is over then buyer needs to manually disable sourcing assignment.

Before placing PO/agreement with supplier buyer has to consider these factors which is very well possible with the help of SQCD.

Scope includes based on cost, quality and delivery transactions against supplier(s), to show best supplier for particular item and decide supplier rankings and material distribution (i.e. Allocation %) and give facility to buyer to create/update the sourcing rule/ assignment based on supplier suggestion matrix populated as SQCD result.

EBS Gap

In Standard Oracle Applications, the Sourcing rules/assignments more over deciding best supplier is managed manually by the buyer. 

Even if certain supplier agreement is over then buyer needs to manually disable sourcing assignment.

Before placing PO/agreement with supplier buyer has to consider QCD factors which is very well possible with the help of SQCD.

Impacts to Processes

With this customization in place, Buyer can able to decide good vendor amongst list.
When Buyer raises sourcing RFQ, requesting for particular item distributes to suppliers and suppliers then responds with quotation incl. cost. Here buyer only gets visibility of current RFQ and its quotation but does not aware of RFQs/PO/BPAs raised earlier for the same material and supplier.

SQCD will help buyer to have deal with effective supplier(s) and based on that supplier ranking will be decided and suggestion will be given to buyer that includes list of suppliers with current material distribution, suggested material distribution (calculated), Probable Ranking and accordingly buyer will have option to create/update sourcing rule.  

Business Rules

This function will capture existing material transactions; along with suppliers and its material delivery ratio for given need by date.
Based on inputs, SQCD function will give suggestion distribution matrix then buyer will decide to go with that suggestion or will update required material distribution manually in sourcing rule/assignment 

·   Input to SQCD function will be
§  Inventory Organization
§  Item
§  Date range - Date from:
                                               Date To:
§  Delivery weightage (%)
§  Quality weightage (%)
§  Cost weightage (%)
·     Total of QCD parameters should be equals to 100%

·      Function will look for received quantity, rejected quantity, return quantity, correction quantity, accepted quantity for each material shipment from PO/releases.

·      Calculate total and actual correction quantity, total and actual acceptance quantity, total and actual delivery quantity 

·      Calculate QCD values.

Delivery_Performance = (100 *(delivery_receive_qty/ord_qty) * Delivery_Weightage)/100

Quality_Acceptance = (100 - (100*(reject_qty/receive_qty))* Quality_Weightage)/100

Price_Effectiveness = (100 - (100*(avg_price/total_avg_price))* Price_Weightage)/100

Composite_Score = Delivery_Performance + Quality_Acceptance      + Price_Effectiveness

·         Supplier ranking will be decided based on composite score
·         Function outputs below material distribution matrix

§  Current Distribution       (Already existing distribution in Sourcing rule)
§  Suggested Distribution (Distribution suggested by the SQCD form)

§  Required Distribution     (The buyer can manually change the distribution)

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