What is incentive fee in SAP PSM-GPR - Procurement for Public Sector?

SAP Term: incentive fee

• Component: PSM-GPR

• Component Name: Procurement for Public Sector

• Description: A variable amount paid to the supplier as a profit for controlling costs of goods or services. The supplier may receive more or less than the stipulated incentive fee according to whether actual costs were below or above the target costs, respectively. The share of costs exceeding the target carried by the supplier is determined by the contractor share above and government share above percentages. The share of cost savings received by the supplier is determined by the contractor share below and government share below percentages.

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• Key Concepts: 
  Incentive fee is a type of payment made to a supplier for meeting certain performance criteria. It is a form of reward for achieving specific goals or objectives. In the context of SAP PSM-GPR Procurement for Public Sector, an incentive fee is a payment made to a supplier for meeting certain performance criteria related to the procurement process. This could include meeting delivery deadlines, providing quality products, or providing cost savings. 
  
  How to use it: 
  Incentive fees can be used to motivate suppliers to meet performance criteria and provide better services. In SAP PSM-GPR Procurement for Public Sector, incentive fees can be set up in the system and tracked. The system will calculate the incentive fee based on the performance criteria set by the buyer and the supplier’s performance. 
  
  Tips & Tricks: 
  When setting up an incentive fee in SAP PSM-GPR Procurement for Public Sector, it is important to ensure that the criteria are clear and measurable. This will help ensure that the incentive fee is paid out accurately and fairly. It is also important to ensure that the incentive fee is not too high or too low, as this could have an impact on supplier motivation. 
  
  Related Information: 
  Incentive fees are just one way of motivating suppliers in SAP PSM-GPR Procurement for Public Sector. Other methods include discounts, rebates, and other forms of rewards. It is important to consider all options when setting up an incentive fee program in order to ensure that it is effective and beneficial for both parties.