Ariba Knowledge Nuggets

 

Online Auction.jpg

 

Request for Proposal / Quotation setup

 

Key Activities / Steps
4Prepare RFP/Q
4Bidding Parameters discussion
4Lotting Discussion
4Upload all documents online
4Setup RFQ/P online ( or excel upload)
4Send out Opportunity Overview letters
4
Publish RFQ/P online
Key Deliverables
Complete RFQ Package
Lot Structure
Tools
Commodity specific RFX Templates
Cost Breakdown file
Team
Project Manager and Category Expert

Lotting.png

LOTTING

  • Lotting is the process of grouping items or services together to optimize supplier competitiveness. 
  • Items are typically lotted according to manufacturing process, raw material or delivery location.
  • Lots are designed to increase the attractiveness of the business to suppliers and leverage spend across divisions or locations: lotting aligned with award strategy. 
  • Suppliers bid on each lot as a whole group and the entire lot is awarded to a single supplier. 
  • A lot may have one or many items depending on the size and complexity of goods or services
Lotting Graphic.png

Lotting of the items / services is important because:

  • This will make the implementation of the awarded supplier go more smoothly.
  • A well-lotted auction fosters competition within the supply base and often drives better pricing because it reduces bidding complexity for suppliers and focuses competition.
  • Grouping related items together reduces project complexity by consolidating suppliers, by preventing suppliers from “cherry-picking” attractive goods or services from less attractive business, and simplifies the post-auction selection process.
  • It can enable a buyer to leverage total spend across their companies (e.g., obtaining a common price for items purchased by several sites/divisions)

RFX Structure (Groups, Market Baskets, Lots)

Group

  • Group of items logically placed together
  • Suppliers can bid on individual items, all items, or select items
  • Buyer can award on item level or group level

Market Basket

  • A group of item is the bidding unit
  • Useful when bidding on large number of items
  • Award at Market Basket Level

Lot

  • Suppliers bid at line item level but compete at Lot Level
  • Bidding rules apply at Lot level
  • Award at Lot Level

Advanced Grouping

  • Matrix Bidding
  • Tier Pricing
  • Aggregate Lots

Best Practice on RFP/Q setup

Section 1: Project summary

  • Company Overview
  • Description of Project (spend, locations, description)
  • Contact details

Section 2: Timeline

  • RFP Walkthrough timeline
  • NDA deadline
  • Q&A deadline
  • RFP deadline

Section 3: project package

  • NDA
  • Conditions of Purchase
  • Cost Breakdown sheet
  • Company Brochure

Section 4: Awarding Rules

Section 5: Commercial & Service terms

Section 6: Quality requirements

Section 7: Request for Information (if RFP)

Section 8: Project Parameters

  • Confidentiality
  • Bid Acceptance period

Section 9: Bidder Agreement instructions

 

Steps To RFP / RFQ Development:

Step 1:  Create the RFP/RFQ Text Draft

Step 2:  If an RFP with weighting and scoring is being used, define the scoring

             methodology and assign question weights. 

Step 3:  Create a Cost Breakdown/Pricing sheet: provide unit prices for each item.

    • Use the Cost Breakdown template to start.
    • Determine cost components: Material price, Freight , Packaging price, Unit price
    • Determine what line item information (from the Data Collection Template) :
    • Part numbers, Descriptions, Delivery location, Unit of Measure, Quantities,etc.
    • Ensure that the cells that require supplier input are unlocked. 

Step 4:   Determine Lot name & format for supplier to bid (if bidding is not by Line item)

Step 5:   Consider providing a bidding schedule: opening & closing times for each lot

Step 6:   Ensure that documents (drawings/specifications/etc.) are grouped into zip files

Step 7:   Upload Lots & RFP into AS platform

Step 8:   Send “Invitation Letter” / “Opportunity Overview” prior to RFQ/P publication

Step 9:   Publish test RFQ/P (use test suppliers involving stakeholders & team members)

Step 10: Make modifications

Step 11: Have another colleague outside your project revise project setup

Step 12: Register new suppliers to AS platform

Step 13: Add all suppliers (new & incumbent) to project

Step 14: Publish RFQ/P

RFQ.png

Knowledge is Brain Food.jpg Food For Thought

 

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