|
Bid Evaluation
A common task for purchasing professionals is to compare pricing among competing suppliers.
This is largely a manual and tedious process. For large bids, purchasing agents can
spend hours and days preparing a thorough bid analysis.
A well prepared and accurate bid analysis supports sound decision making. The
analysis also supports the buyer's negotiating strategy.
After entering description, quantity and price for each supplier, the bid
evaluation template does the rest of the work:
Bid Summary - total cost of each bid. Compare percent and total value versus
low bid.
Bid Detail - provides analysis for each line item in the bid.
- Line item total cost
- Percent of low bid
- Total cost versus low bid
- Unit cost versus low bid
How much of a time saver is this? For a proposal with 5 line items and 3 vendors
164 cells were automatically calculated.
Claim Cost Valuation
With claim cost valuation a procurement professional determines the cost of settling claims with suppliers. In cases where advance payments and / or inventory holding costs are incurred due to claims, you can calculate the cost impact to your organization. If multiple claims occur, a running total is automatically derived.
Early Shipment Valuation
Vendors that ship and invoice items prior to the required date impact
cash flow and inventory carrying cost. Early shipment valuation
calculates the cost based upon the number of days early and the
value of the shipment.
Escalation Hedge
Typically suppliers announce a price increase by providing advance notice to the buyer. In some cases it may be to the organizations advantage to purchase an incremental quantity prior to the price increase.
Escalation hedge will calculate the return on investment based upon the incremental inventory purchased, inventory carrying cost and the price before and after the increases.
Measurement - Unit of Measure
Unit of measure will perform conversion of area, length, volume and
weight. Price and total cost conversions are also calculated. For example
quickly convert the cost per pound to cost per kilogram.
Payment Terms / Progress Payments
World class organizations do a tremendous job of pro-actively managing cash
flow. To accomplish these goals procurement professionals need to negotiate the most
favorable payment terms.
Analyze alternative payment terms from competing suppliers. Determine if
taking the discount is worthwhile.
With progress payments compare and analyze terms from competing vendors. Review the cost of proposed progress payments. View the results in an automatically generated bar graph.
Quantity Break
Many times suppliers will offer a price reduction in exchange for ordering a higher quantity. With quantity break a purchasing professional can evaluate the lower price benefit versus the impact on cash flow and inventory holding cost.
Quantity break calculates the return on investment. Purchasing agents can use this information to negotiate a lower price based upon their organizations minimum required return on investment.
Savings
Purchasing professionals demonstrate value to the organization through implementation and reporting cost saving projects. Description, buyer name, cost reduction type, supplier name, year of savings and savings amount are entered by the buyer.
Several reports are automatically generated; savings are summarized by buyer name, type of savings and supplier. Graphs are generated with the ability to customize using pivot capability.
Specification Change ROI
Making a supplier change where qualification is required has a cost impact to the organization. Technical personnel are engaged to test materials based upon lab analysis and production trials. In some cases consumer testing may also be required.
Changing to a new vendor can be costly. Buyers trade off the savings to be achieved versus the cost and complexity of qualifying the new supplier. The return on investment is calculated based upon the price savings, quantity and the estimated cost of qualification.
|