The Vendor Rating Process on Oracle Purchasing should provide a comprehensive mechanism for rating Vendors and initiating appropriate actions to handle the vendors effectively. Vendors will be rated considering the following:
a)	Quantity Adherence Rating
b)	Delivery Adherence Rating
3.3.1.	Critical & Demerit Factor Maintenance
There will be 4 factors maintained in Item master. They are Quality Critical Factor (w1), Delivery Critical Factor (w2), and Demerit Factor when the material is accepted with Deviation (x), Demerit Factor when the material is accepted with Rectification (y).
3.3.1.	Vendor Rating
A Vendor Rating Report should be used to rate the vendors for further actions, with the following formula:
Vr  = (w1*Q1+ w2*D1)/100
Where 
Vr = Vendor Rating
Q1 = Quality Rating
D1 = Delivery Rating
w1 = Quality critical factor (from Item Master - ATTRIBUTRE5)
w2 = Delivery critical factor (from Item Master - ATTRIBUTRE6)

a)	Quality Rating
Quality Adherence Rating should be calculated as follows:
Q1= ((Q2+x * Q3 + y *Q4)/Q)*100 
Where 
Q1 = Quality Rating
Q2 = Quantity Accepted 
Q3 = Quantity accepted with deviation
Q4 = Quantity accepted with rectification (Always this should be defaulted to Zero)
Q5 = Quantity Rejected 
Q = Q2+Q3+Q4+Q5 
x = demerit factor (always less than one) when material is accepted with deviation (from Item Master - ATTRIBUTRE7) 
y = demerit factor (always less than one) when material is accepted with rectification (from Item Master - ATTRIBUTRE8)

b)	Delivery Rating
Delivery Adherence Rating should be calculated as follows:
D1 = (Dq1 /Dq)* (T/(T*p+1.5 *T1*q)) 
Where 
D1 = Delivery Rating
Dq = Quantity promised to be supplied within stipulated delivery time
Dq1 = Actual Quantity supplied within stipulated delivery time
T = Promised delivery time for the full consignment
T1 = Actual delivery time for the full consignment
P = Dq1/Dq
q= 1-p 

c)	Few important points:
•	This Vendor Rating Process should analyze the purchase history based on the PO status which are in  
•	One Full Consignment = One Delivery Schedule = One Shipment (status: ‘Closed for Receiving’, ‘Closed’) in Purchase Orders (SPO) / Purchase Release (BR/SR)
•	Delivery time for one Full Consignment is days between (including) Shipment Start Date and Shipment End Date
•	Shipment Start Date = Days Early + Promised Date/ Need-By-Date when Promised Date is Null in PO/Release Shipment Lines
•	Shipment End Date = Days Late + Promised Date/ Need-By-Date when Promised Date is Null in PO/Release Shipment Lines
•	Quantity promised to be supplied = (Shipment Line Quantity - (Receipt Closed Tolerance * Shipment Line Quantity)/100)
•	Actual Quantity supplied = (Cumulative Receipts - Cumulative Returns) for a given PO Shipment.
•	Quantity Accepted = Cumulative Accepted Quantity for a given PO Shipment
•	Quantity Accepted with deviation = Cumulative Accepted with Variance Quantity for a given PO Shipment

Vendors with the Rating above 75 will be tagged as A Grade vendors and Vendors with the rating between 50 and 75 will be tagged as B Grade and vendors with marks below 50 will be tagged as C category.
In a nut shell the Vendor rating report should identify the Grades of the Vendors after calculating the Rating for Quality adherence and Delivery adherence by analyzing the Purchase History. Also this report should allow the user to select the range of Items, Specific Supplier, Specific Item, Range of Dates (Mandatory), specific Grades, Group by (Item, Supplier Name, Grade) [for sorting and grouping the resultant] as parameters. 
Following are the main details which should get printed in Vendor Rating Report:
Item Number
Supplier Code
Supplier Name
Supplier Site
Delivery Rating
Quality Rating
Overall Vendor Rating
Grade