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Analyzing supplier offers: Best practices

Published By
Jeremy Ferrer
Tags
Purchasing profession

Dealer dashboard price comparison formula

Are you having trouble with the supplier dashboard formulas?

When there are multiple selection criteria, buyers often turn to supplier dashboards, using them as guides.

These supplier dashboards define a maximum of points per criterion in advance. The supplier scores, for each criterion, are based on a principle of allocating points that are already predefined.

For example, one of the criteria may be the location with a maximum of 50 points. The evaluator can then award 50 points to the supplier if he is within 20 kilometers of the buyer's factory, 25 points if he is located between 20 and 40 kilometers away, and 0 points if the supplier is located more than 40 kilometers away. It's pretty simple!

However, it turns out that most buyers have difficulty completing the chart properly. That is why, I suggest that you use a price comparison formula.

tableau de bord fournisseurs
outil achats

—Analysis of supplier offers

The classification tool: Sourcing Force!

The Formula is built on this principle. The penalty on a supplier's price must be proportionate to the degree to which the price of the lowest offer varies. So, if a supplier's price is 25% higher than the highest bidder, their price score should be 25% lower than the pricing score of the supplier who submitted the best offer. If the supplier price is 40% higher, the pricing score should be 40% lower. Here is the formula:

S = PM x (1 — ((OF-OMD) /OMD))

Definitions:

  • S = Pricing Score
  • PM = Maximum Points
  • OF = Offer from the supplier
  • OMD = Best-Bid

As a bonus, I suggest that you download this supplier dashboard, so that you can include Formula in your work.

Olivier Audino, CEO
Graduated from Grenoble School of Management.

Before founding Buy Made Easy, Olivier worked for 7 years in the Purchasing Department of General Electric, United Technologies and the SEB Group.

It is by sharing with operational staff and business leaders in France and Europe that the idea of offering a marketplace that is easy to use and exclusively dedicated to the expectations of professionals was born.

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