How to measure vendor performance in D365
Which vendors deliver when they say they will, and how long do they really take? The answer drives purchasing decisions and, through lead times, master planning. D365 has the data; getting a clear answer out of it is the work.
Three things worth measuring
- On time: the product receipt is on or before the date the vendor confirmed.
- In full: the quantity received by that date covers the quantity ordered, within your tolerance. Backorders are the part that did not.
- Real lead time: the days from order (or confirmation) to receipt, compared with the lead time D365 plans with. This one is often the most valuable: a vendor that is always "on time" against a date it moved twice is not fast.
Where the data is in D365
| You need | Where it is |
|---|---|
| The promise | The purchase order line: ordered quantity, requested and confirmed receipt dates |
| Every version of the promise | The purchase order confirmations (confirmation journals): what was confirmed, each time it was confirmed |
| What arrived, and when | The posted product receipts: quantity and date per line, one record per receipt |
| The lead time D365 plans with | The purchase lead time in the trade agreement, or the item's default order settings and coverage |
What D365 offers as standard
Recent versions of D365 Supply Chain Management (from 10.0.31) include the Supply risk assessment workspace (Procurement and sourcing › Workspaces › Supply risk assessment). Its embedded Power BI reports show on time, in full and OTIF rates for vendors and products, rankings, and the risk that past performance means for planned purchases. Check that it is available and turned on in your environment, and that the data it needs is current.
D365 also has vendor evaluation: criteria you score by hand, such as quality or service. Useful for the things that are not in the data, but it does not measure delivery by itself.
Calculate it by hand
- Export the purchase order lines for the period, with vendor, item, ordered quantity, order date and confirmed receipt date.
- Export the posted product receipt lines for the same orders, with quantity and receipt date.
- Per line: on time, in full, and the real lead time (receipt date minus order date).
- Per vendor: the share on time, the share in full, and the average and spread of the real lead time. Compare that with the lead time in D365.
Traps that change the number
- The moving promise. Measured against the latest confirmed date, every vendor that sends a new confirmation looks on time. Measure against the first confirmation, or count how often the date moved.
- Late registration. Goods that arrived on Monday and were received in D365 on Thursday make the vendor three days late. If receipts are registered late, fix that first, or the report measures your warehouse instead of the vendor.
- Averages hide spread. An average lead time of 10 days can be 10 every time, or 3 and 17. For planning, the spread matters as much as the average.
- Small lines weigh as much as big ones. Counting lines treats a box of screws like a production-critical part. Look at the important items separately, or weigh by value.
The quick way: Supply Chain X-ray
The Workspace in Supply Chain X-ray has a vendor performance report: delivery performance per vendor over the period you choose, on time, backorders and real lead times against what was promised. It needs no Power BI setup and no export: open it next to D365 and choose the period.
It reads D365 as you (read-only, with your own permissions) and calculates in your browser, so the purchase data never leaves it. And for a single late purchase order, the X-ray side panel shows its approval, the vendor's responses and the receipts, which is where the conversation with the vendor starts.
Using the result
Two actions pay off quickly. Talk to the vendors at the bottom with their own lines in hand, not with a percentage. And update the lead times in D365 where the real lead time is clearly different, because master planning orders too late (or too early) with every wrong lead time. For the other side of the chain: How to measure customer OTIF in D365.
Menu names and behaviour can differ between D365 versions and your own setup. Check in your environment before you act.