To optimize your company’s performance, you need to control your purchasing. Your bottom line is built from the moment you buy. But you need to be able to read between the lines of your bids to be able to buy the right product or service at the right price from the right supplier.
As we’ve seen, a company’s purchasing process requires rigor, with very precise stages. So, once you’ve issued your call for tenders, you need to shortlist the best bids received. How can you analyze the bids received by your suppliers to protect yourself from these risks? We’ll start by presenting an analysis method based on relevant selection criteria for sorting out the most competitive offers. We’ll then show you how to use a bid comparison table to guide you through the decision-making process, right up to the creation of a supplier short-list.
Define selection criteria
The relevance of a good multi-criteria analysis requires consistency between the formulation of the need and the product or service purchased. As a result, the criteria to be prioritized in your supplier offers are known as soon as the specifications are drawn up. Following the supplier consultation, the buyer is then in a position to make a pre-selection of offers based on eliminatory criteria : specific technical skills, pre-defined catchment area… Suppliers who have passed this initial selection are those who offer solutions that are a priori adapted to the expressed need. You can then proceed with a precise and formal analysis of the responses. Here is a list of the main selection criteria to use for your multi-criteria analysis:
Product or service quality has an impact on your purchase. For example, product returns slow down your production chain. Conversely, a quality purchase guarantees long-lasting use. Certifications such as ISO are often sought after, and even prioritized, as they demonstrate your suppliers’ ability to respond optimally to your requirements.
Total acquisition cost
Price and commercial terms remain a key criterion in the selection of an offer. In a context of ongoing cost control, you need to pay close attention to this criterion. Indeed, the cheapest does not always mean the most advantageous. Beware of offers that are too tempting, as the adage “it’s too good to be true” all too often proves to be true. General terms and conditions must also be carefully studied to avoid unpleasant surprises.
The deadline criterion
Deadlines are a key factor in purchasing decisions. Setting deadlines enables you to coordinate your production process with your purchasing process. At a time when service providers are increasingly in demand, delivery, commissioning and availability times are key criteria in your analysis of supplier offers.
There are as many criteria as there are company-specific characteristics. A public buyer will not buy on the same terms as a private buyer. These criteria must be in line with your market, take into account the positioning of your competitors, and provide a guarantee of the health and stability of your company. This is therefore anon-exhaustive list of all the criteria that can have an impact on your decision-making. The initial RFI (Request For Information) work enables you to make an initial selection of suppliers. To perfect your purchasing strategy and consolidate your analysis, build up a comparative table of the offers received.
The comparison table is a key element in your purchasing process. Drawn up by the staff in charge of the project, it represents best practice in the purchasing function. Its rows list the criteria previously defined, and its columns list the bids received from your suppliers. You’ll then have weighted evaluations that will make it easier to study the bids received. Would you like to know how to create a comparative table of quotations?
Here’s how to get the most out of it:
- Establish in advance the list of criteria and priorities essential to your purchasing needs.
- Define the weighting coefficients and the evaluation scale to be applied to the analysis of each offer. Values from 0 to 5 or 0 to 10 are most often used.
- Create a consultation file in which you can integrate the “Quality criteria” section, which will include your selection criteria. This document can be communicated to your suppliers so that they can respond directly, thus promoting transparency of information.
- Fill in the “Supplier criteria” without waiting for the first bids to be received. Some criteria do not depend on receipt of the offer to be evaluated.
- Compare each of the bids received.
- Add up the weighted evaluations and rank your suppliers accordingly.
Our advice: fill in the cost criteria last, so that they don’t influence the evaluation of the other criteria…
Needs differ according to the sector of activity, the budget or the purchasing policy… So there’s no such thing as a standard comparison table. If you can’t find the answers on your own, you can ask your colleagues to help you.
Transparent communication is essential in the purchasing process.
Draw up your short-list
Once you’ve finished comparing bids, draw up a short-list of the best-rated suppliers. But what is a short-list? It’s a decision-making tool, based on a short list of the suppliers closest to your needs. Using a structured method, you can be sure of making a choice based on indisputable, tangible criteria. Choose the two or three highest-ranked suppliers in your comparison table, and use this shortlist to prepare the ground for future negotiations. This next step is the key to controlling your costs, and requires a thorough knowledge of the supplier market. And a good analysis of the offers received leads to this result.
Take advantage of this initial work and refine your shortlist for targeted negotiation. In conclusion, a good analysis of supplier offers needs to be worked on and prepared. It’s one of the key stages in an optimal purchasing strategy that strikes the right balance between quality, costs and lead times. Faced with a growing number of suppliers, it’s important to focus your search on drawing up precise specifications. Tools such as an RFI, a comparison table or a short-list will enable you to make a selection tailored to your needs. The analysis of bids is now made easier by the digitization of the purchasing process. Invitations to tender, supplier consultations, easy comparisons, centralized bidding… Weproc is a SaaS purchasing software that puts you in control of your purchasing process and your suppliers. Analyzing bids has never been easier!
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Weproc is a SaaS software specialized in digitizing the procurement process of companies. From purchase requests to supplier invoicing, through the validation process, Weproc is designed to simplify the purchase management of SMEs and mid-sized companies by centralizing all purchase-related activities.