Evaluation Criteria - Price Alone

 

Surprising to see the article in Supply Management commenting on evaluation criteria not being on price alone ( http://www.supplymanagement.com/news/2014/dont-always-go-for-the-cheapest-price-buyers-warned ).

Awarding on price alone raises risk around quality, compatibility, subsequent additional costs, product life etc.  However, there are some services that can be competed on price alone and there is absolutely nothing wrong in competing on price alone when the other issues of service and quality do not play a factor.

What are these areas? Utilities are a prime example where the quality of the product is mandated by the regulator and there are no delivery issues that would differentiate competitors.

Without stating the obvious the following link provides a wide variety of reasons why other factors are important:

https://www.google.co.uk/#q=tender+evaluation+price+alone&start=0

Some of the links from Australia are excellent and all of the articles offer food for thought.

Perhaps most poignant learning to take away from this article is that companies that utilise their procurement organisations to only run price competitive selection see procurement as a tactical activity.

Additional comment:

A timely example of competing on price, low cost flight s to the US:

http://www.theguardian.com/business/2014/feb/04/norwegian-air-shuttle-low-cost-gatwick-bjorn-kos

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