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Beverly Dunn
Subject: FW: Ariba Knowledge Nuggets -Esourcing - Sourcing Best Practices, Part V: RFP and RFQ Set-Up
Attachments: AMR_Research.pdf
Ariba Knowledge Nuggets
Request for Proposal / Quotation
setup
Key Activities / Steps
Prepare RFP/Q
Bidding Parameters discussion
Lotting Discussion
Upload all documents online
Setup RFQ/P online ( or excel upload)
Send out Opportunity Overview letters
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
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
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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:
1. This will make the implementation of the awarded supplier go more smoothly.
2. 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.
3. 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.
4. 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
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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
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Next E-Sourcing issue to feature - Part VI: Supplier Management
TIPS:
Current suppliers deserve special attention, as they have more at risk than other suppliers and as a result, are more cautious of
the project.
Contact current suppliers before contacting other suppliers and before publication of any RFX to incumbents do not hear of the
project from another source.
Read ARIBA’s “Incumbent White Paper”
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Food for Thought
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.
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