What does the system use to determine a source of supply?

In the context of Sourcing and Procurement within SAP S/4HANA Cloud Private Edition, the system utilizes requests for quotation (RFQs) as a crucial mechanism to determine a source of supply. When a business identifies a need for materials or services, it can issue RFQs to multiple potential suppliers, enabling them to submit their pricing and terms. This process allows the organization to compare various offers and select the supplier that best meets their criteria—whether it's based on price, quality, delivery times, or other factors.

The use of RFQs is integral to ensuring competitiveness and transparency in supplier selection, as it formalizes the process of gathering offers from multiple vendors, thereby allowing procurement professionals to make informed decisions based on structured data.

Meanwhile, the other factors, such as vendor ratings, current inventory levels, and supplier lead times, may influence the overall assessment of suppliers and the procurement strategy but are not the primary means through which the selection of a source of supply is made in the initial stages. RFQs specifically address the immediate needs for pricing and terms that guide procurement decisions.