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Use Multi-Round Bidding to Get Better Quotes  [Product Update]

March 30, 2016 by Andres Kuuse

gfx.pngDeltaBid has just released multi-round bidding. It makes it easy to run multiple rounds of RFPs, RFQs or even reverse auctions to make sure you get the best bids possible from the market.

Why Should You Use Multi-Round Bidding?

Better bids round after round

Multi-round bidding helps make sure you get the best bids from the market. Usually suppliers send first bids that guarantee their margins stay healthy. However, if the bidding goes into a second round, the remaining suppliers know they have a chance at winning and will be more willing to take a closer look at lowering their costs.

Lower prices on the lump sum

It’s smart to request a price breakdown by item in order to get a better understanding of the market. But when you want to buy a large number of items, you can expect a better deal if you buy all of the items together.

In the first round of bidding, ask the supplier to bid on every item individually. When the first round ends, select the top three suppliers and invite them to a reverse auction where bids are submitted in the form of a lump sum for the entire lot.

Improved position during negotiations

Before entering into negotiations, it’s smart to do your homework and make sure you’ve got all the aces up your sleeve. When running multiple rounds of bids, you can ask for both price breakdowns and lump sum offers. Then, when you ultimately enter negotiations, you can be sure you know the market barriers and use them to your advantage.

Convince management you’ve got the best deals

After running suppliers through multiple rounds of bidding, you can more easily present management the results from the first round and compare them to later rounds and see how the process has affected the total cost.

 

How to Run Multi-Round Requests with DeltaBid

In the past, DeltaBid users would select suppliers and go through the awarding process once the bidding due date arrived. Now users can also choose to invite suppliers to an additional round of bidding.

  1. After the tender ends, choose suppliers for the next round by checking the appropriate box and clicking “Invite to next round”:Select_suppliers_for_next_round.png
  2. Send a notification to suppliers who have not been selected to participate in the second round:Notify_suppliers_who_were_not_invited_to_the_next_round.png
  3. Edit the information for the new round. This is the same as putting together the original request, as you can see in familiar “Create tender” view. Click submit:Next_round.png
  4. Once you click submit, each additional round will be connected to the first. It’s easy to navigate between them:RFP_Dasboard_with_multi_round_bidding.png

 

What to Avoid when Using Multi-Round Bidding


Don’t forget to inform suppliers of your intentions.

Communication is central to good supplier relationships, and they should be aware of the process they’ll be getting into should they decide to submit a bid. Let them know you may open further bidding rounds if you do not reach your target quote after the first one. This way they can plan and bid appropriately. 

Don’t use multi-round bidding without first narrowing down your field of potential suppliers.

Additional rounds are only for select, qualified suppliers. After running the first round of bids, you have gathered some market intelligence in the form of bids from suppliers and a better understanding of available solutions and quality standards. Any additional rounds should be used to get bids from the two or three suppliers who meet your criteria or seem like the best potential partners.

Don’t let lower costs lure you into accepting lower quality or delivery standards.

When running multi-round bids, especially if you’ve included a reverse auction to lower costs, you need to make sure quality and delivery options remain identical for all suppliers. If lower costs mean you have to accept lower quality or inconvenient delivery dates, then you may need to look at total cost of ownership and reconsider your strategy.

 

Looking for a way to lower costs and improve the bids you recieve from suppliers?

Try DeltaBid for free for 30 days.

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Andres Kuuse

Written by Andres Kuuse

I am a co-founder and the Customer Support representative at DeltaBid. I’m passionate about creating an easy to use tool that helps procurement and e-sourcing people do their job better. Just as SalesForce revolutionized sales development, we will revolutionize procurement.

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