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Former Member

Consider"Interest earned during credit period" during "Weiging and Ranking"

Dear SRM Experts,

In "Weighting and Ranking", for the comparison of bids,

suppose if we have to consider the interest gained during the credit period given by the supplier, could there be any solution?

Example:

If the supplier1 has quoted 100600 INR with u201C15 days credit as payment terms", then effective price would be 100393.29

If the supplier2 has quoted 100700 INR with "30 days credit as payment terms", then effective price would be 100286.16

Calculation Details:

Assumed Bank Interest, which purchaser's company would gain by the deiayed payment due to credit period offered by the supplier is 5%

Supplier1

Quoted Price 100,600.00

Credit Period in Payment Terms 15.00

Interest earned per day 13.78

Interest earned in Credit Period 206.71

Effective Price Considering the Interest 100,393.29

Supplier2

Quoted Price 100,700.00

Credit Period in Payment Terms 30.00

Interest earned per day 13.79

Interest earned in Credit Period 413.84

Effective Price Considering the Interest 100,286.16

Conclusion: Supplier2 is better though he has quoted more!

With Thanks and Regards,

Ganapathi

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4 Answers

  • Best Answer
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    Former Member
    Jul 07, 2010 at 11:26 AM

    In "Weighting and Ranking", for the comparison of bids, suppose if we have to consider the interest gained during the credit period given by the supplier, could there be any solution?

    As far as I remember, Weighting and Ranking as per standard functionality, is a fairely fixed process by comparing total value only (i.e. quantity x price). And there is no BADI to involve custom comparison logics. I'm afraid the only chance you have is to modify the standard codes to fulfill your requirement.

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    Former Member
    Jul 07, 2010 at 12:19 PM

    But for a commercial point of view,

    1. Calculation of Interest gained during credit period

    - the credit period offered by the supplier and

    - the subsequent calculation of bank interest gained during credit period,

    - then to arrive at effective price, by deducting the gained interest...

    (If the supplier is asking Advance, we have to add the interest lost in the replenishment lead time)

    seems to be very important. Believe that is why most of the people negotiate for higher credit period with suppliers...

    2. Conversion to Local Currency

    3. Consideration of Import Freight Cost (or Local Freight, if local supplier)

    4. Calculation of Custom Clearing Charge

    5. Calculation of Local Freight charge (after custom Clearing)

    6. Calculation of Bank Charges for doing payment to suppliers

    7. Calculation of Non-Deductible portion of Duty/Taxes

    I am an MM consultant, new to SRM... The above were the calculations which we used to practice for arriving at FINAL EFFECTIVE PRICE (in Excel out side SAP), when I was in domain, while preparing Quote comparison Statement.

    Particularly, when

    (1) some suppliers are international, some are local,

    (2) The Credit period offered by various suppliers are different.

    Rest of the points seems affordable except for the first point... request comments on first point...

    Ganapathi

    Edited by: Ganapathi Hegde on Jul 7, 2010 6:27 PM

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    • Former Member

      Another option for your consideration is to use "Questions(or Dynamic Attributes)" for the elements you want to factor into weighting and scoring. The bid evaluation process takes into accounts the dynamic attributes and their weights defined.

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    Former Member
    Jul 07, 2010 at 12:27 PM
    • included in above *

    Edited by: Ganapathi Hegde on Jul 7, 2010 6:01 PM

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    Former Member
    Jul 23, 2010 at 02:28 PM

    Dear Jay Yang,

    Thanks for the helpful answer. However the ratio to be used in "factors (for auctions)" or/and attributes to be used Weighing and scoring in Bids" would need to be calculated outside SAP... Is this correct?

    Ganapathi

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    • Former Member

      Do not use "factor" in Auction because that is used for live auction ranking only. As far as I know, it is not used in weighting and scoring. But if you could "channel" your credit related numbers and percentages into dynamic attributes and assign them weights, there is real chance that your requirement would be achieved. If you get a chance, let me know how it works out for you.