Offer Evaluation Process, Diffrent methos for Evaluation Supplier's Offer

Possibilities for evaluating
suppliers’ offers

Lowest price
Lowest total cost
of ownership

Weighted scoring ?

Value
judgement

ITC M6:U4:4.1-1

, 1. Lowest price
 Suppliers’ offers are tested for compliance
against minimum requirements, e.g.:
Does the offer meet your specifications?
Can the supplier deliver on schedule?
 If they meet or exceed these criteria, they are evaluated on the
basis of their offered price, e.g.:
Evaluating offers for supply of office PCs
Meets minimum:
Registered
Supplier Delivery Price Selected:
supplier? Specification
schedule
A Yes Yes No
B Yes Yes Yes $ 42,300 No
C Yes Yes Yes $ 47,500 No
D No
E Yes No
F Yes Yes Yes $ 38,900 Yes
G Yes No
ITC M6:U4:4.2-1

, Action Point 4.2-1

Evaluation based on lowest price
The following table shows a tabulation of offers from Suppliers X, Y, and
Z together with the minimum requirements of the buying company.
Assuming that only a single suppliers is sought, which supplier would be
selected using the lowest price basis?


Requirements for copy
Supplier X offer Supplier Y offer Supplier Z offer
machine
Minimum speed: 180 210 300
200 copies per minute
Minimum Warranty: 2 years 30 months 3 years
2 Years
Purchase Price $22,000 $28,000 $35,000
Selected supplier:



ITC M6:U4:4.2-2

, 2. Lowest total cost of ownership
(TCO)


Suppliers are, again, tested for compliance
against certain minimum requirements


If they meet or exceed these criteria, they
are evaluated on the basis of the total cost
of ownership resulting from their offer

ITC M6:U4:4.3-1