Understanding the underlying nature of competitive bidding when using e-negotiation tools.

July 21st, 2014

There are several important elements companies must understand in order to drive competitive bidding when using e-negotiation tools.

Todays post is from your team at SafeSourcing and is a question we get all of the time. Even from customer currently using e-negotiation platforms.

Competitive e-bidding is the process of a host company inviting and obtaining bids via the internet from competing incumbent and other suppliers in response to published specifications, by which an award is made to the best overall bid that meets or exceeds the specifications in areas such as price and quality.
The above process contemplates giving potential bidders a reasonable opportunity to bid, and requires that all bidders be placed on an equal playing field.

The purpose of competitive bidding is to stimulate competition, prevent favoritism, and secure the best goods and services at the lowest possible price, for the benefit of the host company.

Ideally each supplier must bid on the same documented specifications, terms, and conditions, but not necessarily for all the items. This can be a key to driving the savings you desire
When disassembling spends data companies should look at individual line items, product deciles groupings and potential market baskets that specialty suppliers may be able to provide bids for. This can reduce the opportunity for full service suppliers to manage the overall gross margin of their bids by certain high margin offerings and can resulting in  more competition and price compression.

Competitive bidding cannot occur where specifications, terms, or conditions prevent or unduly restrict competition, favor a particular supplier, or increase the cost of goods or services without providing a corresponding tangible benefit to the host company.

If you would like to look at ways to better analyze your spend data, contact a SafeSourcing customer services representative.

We look forward to and appreciate your comments.

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