Expressive Bidding

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Expressive Bidding

Post  Vadivelrajan on Wed Feb 08, 2012 1:47 pm

Expressive Bidding
By
S.B.Vadivelrajan
www.mavisb2b.com


Preface:



Expressive bidding is a way of obtaining offers from different parties for a particular requirement of a company. This arises in cases where the company sending the enquiry / requirement is not fully aware of the product availability or offering in the market . In such cases the parties are requested to quote for the products which they are offering and then comparing all the offers for the optimum offer which would suit the company’s requirement. Let us elaborate in detail in the following presentation.



What is Expressive bidding:



In expressive bidding parties quote to their specification, their design standards, their availability, their delivery lead times etc, Their will not be a one to one or apple to apple comparison but the buyer has to make a comparison of such bids considering weightages for different factors and arrive at an optimum solution for selecting the suitable bidder.



Situations of Expressive Bidding:



Statistics show that at least 10% of a companies spend calls in for a situation of expressive bidding. The following are the situations where expressive



1. The requirement is new. We do not have this product in the company and the user is not aware of any products in the market

2. The product available in the company has become obsolete and we have specifications of the existing product and we require spare parts for the obsolete pump / equipment.

3. We want to evaluate the different products available in the market and buy a product suitable to our requirement.



Why Expressive Bidding?



We send enquiry to different parties for a particular requirement. One party has innovated and has given a good product which is cost saving and more suitable to our requirement. In order to have multiple bids we cannot give the design of the first supplier to other parties and ask them to quote because it is not ethical to do so.



The options in dealing the situation are:



1. Inform the biddier who has given an innovative product that we are going to give this design / specification to other parties and ask for their offer. Most of the suppliers won’t agree for this. Also this not ethical on the buyer’s part to do so.



2. Or asking all the vendors again to quote for the best design they can provide.







Comparison of expressive bids:

The expressive bidding can be for single item or for a list of items. The offers of various parties varies in terms of



Price

Delivery lead time

Quality of material used / MOC

Dimensions and design specifications

Performance Guarantees

Availability of after sales service

Provision of AMCs after expiry of guarantee period



The problem now starts with making a comparison of the different bids having different parameters to arrive at a optimum solution.



What do you do for optimising?



This is a promising area for using mathematical models to find an optimum solution. We can design a linear programming model to arrive at a optimum solution by giving weightages to different parameters and arrive at optimum solution. Few technology companies worldwide have started offering products which helps a company to arrive at maximum benefit from expressive bidding.



Is it worthwhile ?



Statistics and feedbacks from worldwide says that unconstrained optimization yielded savings of 50 per cent, but would have involved individual manufacturing sites dealing with up to a dozen different suppliers. An aggressive but more realistic scenario resulted in savings of 25 per cent, whereas a conservative scenario produced savings of 15 per cent.



vadivelrajan is available also at www.mavisb2b.com

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