Understanding your markets and the importance of a thorough review of pricing submissions.
Today’s post is is from our SafeSourcing Archives.
We’ve all heard this story of a supplier submitting pricing for select items in a commoditized category so far below other quotes that the strategy the team had used to find suppliers was thrown out the window. The supplier was awarded the contract but it soon became apparent that this particular supplier wasn’t at all the right supplier for the job.
As the contract came to fulfillment and the first orders were being received, major inconsistencies were being uncovered. The team discovered that everything was being subcontracted out, even the contract itself. The supplier changed key ingredients of several of the items it had quoted. The supplier had quoted items out of specification tolerance, even altered required pack sizes. It was an unacceptable situation.
The costs of the project skyrocketed which was exactly what was trying to be avoided. My advice is to have policies and procedures in place for price examination. If pricing seems too good to be true, it most likely is. Ask questions.
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