Expressive Bidding
In the traditional tendering process, suppliers are able to decide on only two variables: first, whether to submit an offer or not; second, what product price to offer. However, the world is not that black and white. Suppliers are often prepared to make price concessions if they know they will be given a bigger slice of the pie.
Cases such as this can be described as an “if-then” condition. An example: “If” a supplier is awarded Part B in addition to Part A, “then” he will reduce the price for Part A by a further 10 percent Provided only a small number of total offers contains “if-then” conditions, it is easy to consider them during the evaluation process.
As soon as offers contain a large number of “if-then” conditions evaluation becomes more difficult, especially if such offers are submitted by suppliers bidding for different segments of the total volume available. In the face of a large number of “if-then ”Offers and a large number of bidding suppliers, it is almost impossible to identify the maximum possible savings using conventional means.
Expressive bidding is a strategy that allows price bids with “if-then” conditions to be submitted. On completion of the bidding process, an algorithm integrated into the expressive-bidding tool calculates the maximum possible savings at the press of a button. By changing the framework conditions or by specifying individual suppliers, procurement can then calculate savings for various scenarios. For suppliers, expressive bidding offers a great deal of flexibility and myriad opportunities for differentiation. For the procurement company, it enables the cost-cutting potential to be fully exploited.