Ariba Knowledge Nuggets
Request for Proposal / Quotation setup
4Prepare RFP/Q4Bidding Parameters discussion4Lotting Discussion4Upload all documents online4Setup RFQ/P online ( or excel upload)4Send out Opportunity Overview letters4Publish RFQ/P online
Complete RFQ PackageLot StructureToolsCommodity specific RFX TemplatesCost Breakdown file
Project Manager and Category Expert
- 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 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 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
- A group of item is the bidding unit
- Useful when bidding on large number of items
- Award at Market Basket Level
- Suppliers bid at line item level but compete at Lot Level
- Bidding rules apply at Lot level
- Award at Lot Level
- 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
- 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
- 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
AMR Research: Reaching Sourcing Excellence, Part 1: How To Keep 30 Cents of Every Dollar Spent (attached)
According to a recent AMR research study, forty-percent of sourcing organizations are giving away 30 cents for every dollar of spend because their business strategies are misaligned. Misaligned sourcing organizations believe technology is the primary tool to reduce costs. Read this report to uncover the great sourcing opportunity and how to capitalize on this opportunity and ultimately, how to get your money back.
AMR_Research.pdf 165.7 K