It’s not always about price, right? In many cases there are other factors that influence which suppliers to whom you award business. This is especially true for sourcing via Strategic Sourcing which, in most cases, is used for atypically-sourced items that your organization does not have contracts or a purchasing catalog established for. For these items you may be dealing with suppliers your organization has never dealt with prior. What are other factors your organization may want to consider? How about:
- Prior experience
- Lead Time
- On time delivery
- Return policy
- Repair policy
Just a few examples.
In PeopleSoft Strategic Sourcing, these bid factors are questions bidders must answer about products, services or their company as a whole. In addition, you are able to set weightings to each and every bid factor that allows the bidders to understand how important that portion of the bid is overall. (Price, by the way, is by default the first bid factor for any buy or sell event.)There are a few differences between using bid factors for RFx events and auctions — such as the inability to use a bid factor of “text” type for auctions simply because there is no automated method to evaluate the text.
Please note that with bid factors, you can display them to the bidders and require a direct response, or you can make them non-visible and something that is evaluated as part of their overall bid. These are all decisions that can be made for each specific event.
When it comes to bid factors, as with most elements of PeopleSoft supply chain, there are headers and lines. As you can tell by their description, a header factor applies to the overall event but the line applies only to a specific line on the bid. Header bid factors may be things you want to understand about the organization as a whole such as whether the bidder is defined as a small business or perhaps their overall on time delivery. Because you may be sourcing more than one item in an event, you may also setup different requirements for color, on time delivery, quality etc. for each line being requested. This allows for flexibility in the overall process.
As mentioned above, each bid factor can have a weighting associated with it related to its importance to the overall bid. These weightings are taking into account as part of the scoring for the bid. The score depends on how close the answer is to the “ideal” answer or within the range between the “best” and “worst”. The ideal or best/worst range are established for each bid factor. The final scoring is based upon the average of all of the weighting and scores of each bid factor. This is a key setup for each event so the appropriate time and planning must take into account what is important for each sourcing event.
Know that for each bid factor you can set up whether or not the response is required. The bid cannot be completed if a response is required but not entered. Additionally, if a bid factor is an “ideal” bid, then it can be setup so the response must match the “ideal” response in order to be considered for award. This is another level of control, weighting and scoring. We will discuss these options in actions when we discuss events in future blogs.
Now that we have described what bid factors are and their importance to the sourcing event, let’s show you how to create one. This short video will demonstrate how to create a bid factor. As always, if you have any questions or want to talk, email me.
(Full size video here.)