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Solution · Supply chainThe rework, the scrap and the freight go back to the supplier who caused them
Money recovered from suppliers instead of written off
Every quality case with a supplier behind it becomes a costed, evidenced claim with a deadline, and the agreed credit is matched against the credit note that follows.
Executive summary
Rework, scrap and freight caused by a supplier part are absorbed internally because the claim costs too much to build.
The claim starts where the quality decision ends.
Claims stop being triaged by how long they take to build, so most cases come into scope instead of being absorbed.
SAP S/4HANA (rework and scrap postings, claim posting); the UiPath Data Fabric claim ledger; the SharePoint claim archive
Business problem
Cost recovery
When a supplier ships a defective batch, the cost lands on the buyer's books first. Parts are sorted, housings reworked, a line restarted with an express delivery, finished goods scrapped. The contract usually says the supplier carries that cost. Turning that right into money means building a document: what was delivered, when, against which order, what putting it right cost, and on what contractual basis the sum is claimed.
The pieces sit in four places. Delivery and batch history are in the ERP. Rework hours are on a production order, scrap on a material document, express freight on a carrier invoice that references neither. Photographs are wherever the inspector left them, and the warranty terms are a PDF annex to a framework agreement. An engineer assembles all of it by hand, and it costs roughly the same hour whether the claim is worth €200 or €12,000.
So people triage by feel. Large claims get built, small ones absorbed, and small ones are most of the volume. What is claimed then depends on follow-through nobody owns: notice windows pass unnoticed, a partial acceptance survives only in an email, and the credit note arriving months later carries a different reference and a different amount. Purchasing enters the annual negotiation without a figure for what this supplier's quality cost.
How it works today
Whatever the quality system on the label, a supplier claim usually travels this route.
- PersonA quality case closes with a supplier defect code, and somebody judges by feel whether the amount justifies the work
- PersonThe engineer rebuilds the delivery history screen by screen: goods receipt, delivery document, batch, order line
- SystemRework hours, the scrap posting and the freight invoice are exported from the ERP and added up in a spreadsheet
- WaitingThe claim waits on the contract: the warranty annex is a PDF on a shared drive, in a version nobody is sure of
- PersonA letter is written in Word from the last one somebody kept and emailed to the supplier's quality contact
- WaitingThe supplier answers in weeks, accepts part of it, and the thread continues in one buyer's mailbox with no due date
- Risk of errorThe credit note arrives under a different reference for a different amount, and nobody reconciles it to the claim
Why the current process costs more than it appears
Time that disappears before anyone measures it.
- Triage by effort is the largest hidden cost. A claim worth a few hundred euros is dropped because building it takes the best part of an hour, and the dropped ones are the bulk of the volume.
- Evidence decays faster than the dispute develops. Photographs stay on a phone, the sorting contractor's hours are agreed verbally, and by month three the strongest proof is gone.
- Notice periods are a quiet legal exposure. Law and supply contracts both set short windows for reporting a defect, and a late claim can be refused on procedure rather than substance.
- Partial settlements go unrecorded. What the supplier accepted lives in a mailbox, so a credit note short by a third looks like a normal posting to whoever books it.
- Purchasing negotiates without the one number that would change the conversation: what a supplier's defects cost beyond the price of the parts.
Cost of inaction
Only the first row is salaried work. The other two are money already spent on someone else's defect, and the arithmetic is on the page so it can be argued with: 2,280 cases a year at an assumed €430 of average internal cost; four in ten never raised, which is 912 cases; and of the 1,368 raised, one in six either sent too late to be admissible or agreed and never credited, which is 228. Every ratio there is an assumption.
Nothing in the pattern breaks, which is why it survives. Large claims keep being recovered and the write-off stays invisible, spread across rework orders, scrap postings and freight invoices that each look reasonable alone. What does not exist is the number: nobody can say what a supplier's defects cost last year, so the annual review runs on price and delivery.
A plausible organisation with realistic proportions. The figures are there to be recalculated on your data; they are not a client result.
An automotive tier-1 with three plants in Central Europe, around 2,100 employees, an IATF 16949 quality system, SAP S/4HANA and Microsoft 365 E3; supplier quality is six people.
190 supplier-attributable defect cases a month across the three plants, from incoming inspection, line rejects and warranty returns from the customer; roughly six in ten carry less than €500 of internal cost.
Cases that look large enough become a claim by hand: evidence collected from four systems, a letter written in Word, open items kept in a personal spreadsheet.
About 55 minutes per claim of assembly and follow-up: tracing the batch, pulling the cost postings, writing the letter, chasing the reply, hunting the credit note. Investigation stays with the engineers and is not counted.
A closed case with a supplier-attributable code triggers assembly. Robots gather the batch records, the cost postings, the photographs and the contractual terms, generate the claim pack, send it inside the notice window and match the credit note when it arrives.
Assembly and follow-up drop from 55 minutes to under 15, every case above an agreed threshold is presented instead of triaged out, and agreed credits are matched to the claim that earned them. That is arithmetic on the assumptions above, not anything counted at a client.
Proposed solution
The claim starts where the quality decision ends. A case closed in SAP S/4HANA QM with a supplier-attributable defect code, or reaching that state in your non-conformance register, raises a queue item in UiPath Orchestrator carrying the part, batch, plant and defect. Nobody has to remember to start a claim.
Robots then assemble what a claim needs. From SAP: the goods receipt and delivery document for that batch, the purchase order line and its conditions, confirmed hours on the rework order at their activity rates, the scrap posting and its valuation, and any sorting or freight booked to the case. Every position keeps the reference of the document it came from, because a position without a source is one the supplier will dispute. Photographs and the inspection protocol come from SharePoint with their version history. The notice window, the recoverable cost categories, the administration flat rate and the claim address are read once per agreement with UiPath Document Understanding, confirmed by a person and held as structured fields.
The output is a claim pack built from your own Microsoft Word template: covering letter in the supplier's language, cost breakdown line by line with its source reference, evidence appendix. Claims above a value threshold are approved in Microsoft Teams before they leave. The pack is sent from a controlled mailbox, the notice and response dates come from the contract, and the escalation calendar runs without anyone keeping it. An incoming credit note is matched to the claim reference and the agreed amount, and a shortfall becomes a task rather than a posting nobody questions.
UiPath Document Understanding with Validation Station; UiPath Orchestrator queues, triggers, retries and audit; UiPath Data Fabric entities for the claim ledger; UiPath Action Center actionable notifications in Microsoft Teams; Microsoft Teams Approvals app; SharePoint version history with Microsoft Purview retention labels; Power BI
The trigger and eligibility rules, the cost-collection logic across the SAP objects, the contract-terms model and deadline calendar, the claim pack and its language templates, approval thresholds, the credit-note matching rules and the reporting extract behind the Power BI pack
SAP S/4HANA reads and, where you post claims as receivables, the debit-memo request, through UiPath SAP activities (BAPI/OData); supplier claim portals where an upload replaces email
How the automated process works
- AutomationA case closed with a supplier-attributable defect code raises a queue item carrying the part, batch, plant and defect
- SystemRobots trace the batch back through goods receipt, delivery document and purchase order line in SAP, and read the terms held for that agreement
- AutomationThe cost side is assembled from rework confirmations, the scrap posting and its valuation, and any sorting or freight booked to the case, each position keeping its source
- AutomationPhotographs and the inspection protocol come from the SharePoint library, and the claim pack is generated from the Word template in the supplier's language
- PersonClaims above the value threshold are approved in Microsoft Teams by supplier quality or the buyer, with the breakdown and evidence on the card
- AutomationThe pack goes to the supplier's claim address; notice and response dates are set from the contract, and reminders and escalation run to that calendar
- AutomationReplies and credit notes are matched to the claim reference and the agreed amount, differences become tasks, and Power BI shows recovery rate and ageing
Human-in-the-loop model
Automation handles
- Eligibility, assembly of the delivery, batch and cost evidence, and the breakdown arithmetic
- Generation of the claim pack from your templates, in the supplier's language
- Sending, the deadline calendar, reminders, escalation and the record of what went out when
- Matching supplier responses and credit notes to the claim reference and the agreed amount
People decide
- Whether the case is genuinely attributable to the supplier, which stays a technical judgement
- Release of claims above the threshold, and any position the rules cannot price from a source document
- Acceptance of a partial settlement, a goodwill arrangement or a write-off, within delegated limits
- Whether a repeat defect stops being a claim and becomes a contract conversation
Before and after
Systems and integrations
Every entry can be checked in vendor documentation. The evidence class is stated next to each one.
Inputs
- closed quality cases with a supplier-attributable defect code
- the SharePoint evidence library
- warranty annexes as PDF
- supplier replies and credit notes in the claims mailbox
Automation layer
- UiPath Orchestrator
- UiPath Robots
- UiPath Document Understanding
- UiPath Action Center
- UiPath Integration Service (Microsoft Outlook 365 and Microsoft OneDrive & SharePoint connectors)
Target systems
- SAP S/4HANA (rework and scrap postings, claim posting)
- the UiPath Data Fabric claim ledger
- the SharePoint claim archive
- the Power BI reporting model
Human touchpoints: Teams Approvals above the value threshold; Action Center tasks in Teams for evidence gaps and credit-note differences; the weekly recovery digest
Technologies used
queue every eligible case, collect cost positions, run the deadline calendar and audit
Areads warranty annexes once per agreement and incoming credit notes, with Validation Station
Athe claim ledger: claim, cost positions, evidence, deadlines, responses and credits
Aevidence gaps, disputed replies and credit-note differences as tasks in Teams
Aclaims above the threshold released before sending, breakdown attached
Aclaim templates per language, the generated pack, the versioned evidence archive
Abatch history, rework and scrap postings, order conditions, claim posting
Arecovery rate, ageing, open value and cost of poor quality per supplier and part
AIllustrative economic model
The arithmetic is open, so it can be argued with.
Nothing in the table below is the recovered money itself, which depends on your contracts; it prices the work of building a claim and chasing it. The 55 minutes covers tracing the batch, pulling the cost postings, writing the letter, chasing the reply and finding the credit note. €33 is an illustrative fully loaded hourly cost for a supplier quality engineer in Central Europe, and every figure is a stated assumption, not a client measurement.
Run the numbers on your data
An illustrative estimate from your own inputs. It models released capacity; it is not a promise of savings.
Business benefits
- Claims stop being triaged by how long they take to build, so most cases come into scope instead of being absorbed
- Every claim leaves inside the notice window, which removes the cheapest reason a supplier has to refuse it
- The breakdown is traceable position by position to a document in your own ERP, which shortens the argument
- Agreed amounts are matched to the credit notes that follow, so a settlement short by a third is visible at once
- Supplier quality engineers get their hours back for prevention and supplier development
- Evidence is captured while it still exists, not reconstructed when a dispute is already three months old
The management view
- Recovery becomes measurable: claimed, agreed and credited, per supplier, part and plant
- The cost of poor quality caused by suppliers becomes a number purchasing can put on the table
- Deadlines and approval limits are enforced by the flow, not by one engineer's diary
- A fourth plant or a re-sourcing wave is absorbed without adding claim administrators
Board-level KPIs
Security and governance
Trust in automation is built on the audit trail, not on a promise.
- Robots run under their own SAP accounts, limited to the reads a claim needs and the one posting type it may create; secrets stay in the vault your security team already operates
- Nothing about a warranty claim crosses a border: the claim, its evidence photographs and the approvals stay in your Microsoft 365 tenant, and UiPath Automation Cloud runs the flow in its EU region
- Above the value threshold no claim leaves on the robot's authority; below it, the eligibility rules are versioned and owned by supplier quality
- Whoever raised the case cannot approve writing it off, and settlement acceptance follows your delegation of authority
- Evidence is versioned in SharePoint under Microsoft Purview retention labels, because claims are reopened years later
Why now
Deadlines here are structural, not administrative. Under § 377 of the German Commercial Code, in a sale between merchants the buyer must examine goods without delay and give notice of a defect without delay, or the goods count as approved; supply contracts add their own, usually shorter, windows
Re-sourcing keeps changing the supplier base, and a process living in one engineer's spreadsheet does not survive that turnover. It also costs the modelled €5,748 a month to run
The plumbing is ordinary now: SAP objects are readable through standard interfaces, pre-trained models handle incoming credit notes, and approvals arrive inside Microsoft Teams
Relevant executive roles
Supplier-caused rework and scrap stop being an unexplained line in plant costs and become a receivable
Plant budgets stop absorbing defects the plant did not cause
Every supplier review opens with what that supplier's quality cost, not an impression of it
Engineers stop being claim clerks, and repeat defects carry a figure the supplier must answer
Common questions and objections
The robot decides nothing; it assembles. What changes is that the claim arrives inside the notice window, with the delivery reference, a breakdown traceable to your own postings and the evidence attached. Late, vague and unevidenced are the grounds most refusals rest on, and those are what this removes.
That is the assumption worth testing. Today the threshold is set by the hour it takes to build a claim, not by the amount at stake. When assembly costs minutes, the threshold moves down and most of the volume comes into scope.
They do, which is why terms are read once per agreement and held as structured fields: notice window, recoverable categories, administration flat rate, claim address. A new agreement adds a row rather than a new workflow.
When this is not the right solution
- Fewer than about twenty supplier-attributable cases a month, where a template and a weekly review cost less
- Defects are not attributed to a supplier in the quality system at all; attribution has to exist before it can be claimed
- Rework hours land on a general cost centre and scrap is not valued per batch, so the claim has no cost side
A question for the next management meeting
Last year we paid for rework, scrap and freight caused by supplier defects: how much of it did we present to those suppliers, and how much of that came back as a credit note?
Implementation approach
Delivery runs in stages, so it can be stopped at any point.
We deliver
- A pass over six months of history: what was attributed to a supplier, claimed, and recovered
- The contract-terms model from your supplier quality agreements: notice windows and recoverable categories per agreement
- The cost-collection logic across rework orders, scrap documents, sorting and freight, with a source reference on every position
- The claim pack: templates per language, cost breakdown, evidence appendix and the approval thresholds
- The deadline calendar with reminders and escalation, and the credit-note matching rules
- The Power BI recovery pack and a runbook for supplier quality and purchasing
We need from you
- Last year's supplier-attributable cases with the postings behind them
- Two or three supplier quality agreements, including one you consider difficult
- A process owner in supplier quality and named contacts in purchasing and accounts payable
- Technical accounts for SAP test and production and for the claims mailbox
Stages
Discovery
Case sources, cost objects, contract terms and where claims are lost today
Design
Eligibility and pricing rules, claim pack, thresholds, deadline model, security model
Build
Robots, document models, claim ledger, SAP integration and the Teams touchpoints
Validation
Replay of historical cases against what was actually recovered, with packs signed off
Go-live
One plant and one supplier group first, under supervision, with hypercare
Optimisation
Threshold tuning, extension to the remaining plants, supplier-level reporting
Departmental. Effort is driven by how consistently costs are posted to the case, the variety in your supplier agreements, and how many plants are in scope.
The defect was the supplier's. The rework order was yours.
Send us last month's supplier-attributable cases with the rework and scrap postings behind them, plus two supplier quality agreements. You get back the positions we could evidence, the ones we could not, and where notice windows are already being missed.
Price one month of supplier defectsThe neighbouring process usually has the same problem
Containment, root cause, supplier 8D and effectiveness checks live in one spreadsheet and three mailboxes.
View solution ProcurementSupplier reviews that start from data, not from impressionsThe numbers in your supplier review were exported by hand last week, and nobody can show the lines behind them.
View solution Finance & accountingThree-way match exceptions resolved before the payment runStop chasing price and quantity differences by email while supplier payments wait for weeks.
View solutionIndustries we deliver this in most oftenManufacturing & industryServices & IT