Tips for Comparing Supplier Quotes Using RFQ Software
Securing the products companies need through procurement can be a long and arduous process involving several steps. Thankfully, RFQ software can perform many of the functions that purchasing agents would otherwise do manually. The question now is how to best utilize the software to compare supplier quotes and get the product in companies’ hands at the best prices. There are some key steps that procurement teams can take to optimize their RFQ software experience and stay on the high ground of supplier bidding.
Gather Market Information on the Products
Suppliers determine product prices and quotes based on various conditions in their market. Understanding the market can give purchasers leverage when requesting a quote or negotiating the prices of the product. RFQ software can play a role in helping companies identify market and supply chain management trends to understand what is going on behind a price quote.
By using the technology, managers can get an idea of market competition, projected growth rates of either product sales or companies, shifting trends, and profit margins based on a supplier’s interaction with other customers. This valuable insight into the overall market can help businesses determine which price quote they will choose, as well as which company they’ll want to establish a working business relationship with.
Develop Strategic Procurement Initiatives Within the RFQ Software
Utilizing RFQ software such as the one provided by ProcurePort allows buying teams to be more strategic in developing procurement initiatives. Before a bid is open, they can access the software features to help outline company objectives and goals for the next purchase. Companies can analyze previous transactions with all suppliers, discover new resources for products, and track all expenditures to formulate a plan of action. RFQ software can also aid in determining risks that could throw the plan off course during the bidding process.
Developing initiatives will govern buyers’ entire approach toward procuring and comparing quotes. For instance, it cannot be assumed that companies are always looking for the lowest bid. Therefore, they must establish a different set of criteria for awarding a bid to a supplier. What then will the criteria be based on? Analysis generated from RFQ software.
Create and Maintain Supplier Profiles
According to a recent Gartner survey, 56% of companies that purchase RFQ and procurement software neither update the technology nor take advantage of supplier profiles. Consequently, they approach every bidding situation as though they were using the software for the first time.
For retailers or other purchasing agents to establish a strong buying position when requesting vendor quotes, they need to know their suppliers better. Nowhere is this easier than reviewing and updating supplier profiles in the software. Profiles provide quick access to key information procurement managers use in comparing quotes. Information can include:
- Understanding a vendor’s cost structure
- Direct competitors of a supplier
- A supplier’s strength and weaknesses
- A supplier’s target market and customers
- Analysis on product availability, pricing, and location
Procurement teams can create custom templates to develop supplier profiles and update them regularly. Out-of-date information can cause companies to miss out on purchasing opportunities or weaken their position in a negotiation.
Customize the Procurement Process
Purchasing agents’ procurement processes may differ with each product or supplier. Therefore, they may want to seek different vendors every time they solicit a bid. Doing so can help find the quotes they are looking for and accelerate the process within the software. They can use the different types of bidding to their advantage. For instance:
- Open Bid: When looking for a bid for the first time, a buyer may want to open the bidding to all vendors. RFQs will be revealed to all suppliers in a wide open platform. The downside to this type of bidding is that it can lead to fixed prices or deals made between vendors.
- Sealed Bid: For a more controlled bidding situation, a sealed bid may be a better option. Vendors have limited or no access to other supplier information or bids. The benefit is that it allows vendors to be more transparent, thus, giving the buyer more information. It also allows a buyer to create a deadline for all bids to establish greater control over the supply chain.
- Invitation Only: RFQ software allows businesses to invite suppliers to bid on a product. This method eliminates all the steps that are normally involved when establishing new business relationships. Purchasing agents can choose the vendors and create an open or sealed bid by invitation only.
- Reverse Auction: A reverse auction gives procurement teams the choice to either accept the first round of bids or request lower prices through a second round. It puts all suppliers into a more competitive platform and can help save companies money.
For companies that understand the importance of refining the procurement process, RFQ software provides a wealth of resources and tools that can boost purchasing power while strengthening the company’s position when gathering price bids from suppliers. It opens up options for comparing quotes and finding the lowest prices as well as establishing solid business relationships.
You may also be interested in: RFP, RFI and RFQ; An Essential Toolkit For Efficient Procurement
