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Points Award System
vs. Pure Bid
Evaluating your options for equipment procurement
We know you need to spend your limited resources wisely. In today’s market, procurement professionals are now responsible for implementing long-term strategies to reduce costs, mitigate risk and improve efficiency. So how can you be sure you’re getting the best overall value from your equipment? Let’s compare a typical bid evaluation process with the total cost consideration method using a Points Award System.
Traditional Bid Process
The traditional bidding process is very tactical and transactional in nature. It tends to focus on a specific equipment need for a specific project. Often, an agency will release a request for information (RFI) on suppliers’ qualifications, followed by a request for quote (RFQ) to get pricing on the specific piece of equipment. RFIs and RFQs are for transactional demands and likely don’t take other cost considerations into account, such as parts pricing and vendor support. Using this method of procurement could be costing your organization more money in the long run and wasting precious resources.
TOTAL COST CONSIDERATION
Total cost consideration, on the other hand, is a more strategic, holistic method of procurement. In addition to initial purchase price, suppliers are judged on their ability to meet municipality specifications, provide post-purchase services, offer technology training or any other solutions your operation finds valuable. Instead of RFIs and RFQs, total cost consideration requires a request for proposal (RFP). An RFP goes deeper than the one-time transaction and shows how a supplier can provide long-term value.
Total cost consideration procurement aims to build an efficient fleet that will serve the governmental agency for years to come. An easy way to look at the total cost of equipment or evaluate a potential partnership with a supplier is by using a Points Award System.
Points Award System
A Points Award System assigns numerical values to various categories to help you rank your supplier options. These categories can include purchase price, warranties, parts pricing and availability, service, lifecycle costs and other areas that are important to your operation. Each category has a maximum number of points, and you rate the proposal based on this scale.
Ultimately, a Points Award System puts a number on the actual cost of the equipment and the vendor capabilities, helping you better evaluate the long-term benefits beyond initial purchase price.
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