Project Materials

COMPETITIVE BIDDING AS AN EFFECTIVE TOOL FOR VENDOR SELECTION

ABSTRACT

Using a numerous exploratory case study technique and the 150 9000 standards, this paper introduces competitive bidding as a useful strategy for vendor selection in various corporate settings. The Ministry of Works in Imo State was the corporate environment under investigation. According to this research, the most prevalent vendor performance evaluation criteria utilised in these businesses are quality, delivery, and service. Furthermore, depending on the corporate environment of various businesses, the value of these performance indicators varies. In general, quality is the most significant criterion in the organisations evaluated. Delivery is an important vendor performance metric in the Ministry of Works since failing to deliver affects vendor reliability in this sensitive market. Finally, these organisations regularly assess and adopt effective quality systems that adhere to the stringent 150 9000 set of standards, and the majority of corporations have built in-house procedures and tools for the vendor selection process.

CHAPTER ONE

INTRODUCTION

Traditionally, organisations were separated into operational functions such as marketing, planning, production, purchasing, finance, etc. The supply chain is a strategy that integrates various tasks to create a general plan for the organisation that satisfies the service policy while keeping costs as low as feasible owing to the intense competition that they face.

A supply chain is a network of departments that are involved in the manufacturing of a product, from raw material acquisition to final product delivery to customers. Purchasing holds an important function in most organisations because acquired parts, components, and supplies often account for 40 to 60 percent of sales of its and products (Ballow, 1999).

This means that very small cost savings in material procurement might have a higher impact on profit than equivalent gains in other cost-sales areas of the organisation.

The purchasing function’s role and structure evolved throughout the 1990s. Globalisation, increasing value added in supply, and quicker technological change have all contributed to the growing importance of the purchasing role in supply chain management.

Purchasing entails procuring raw materials, suppliers, and components for the organisation. Its activities include selecting and qualifying vendors, rating vendor performance, negotiating contracts, comparing price, quality, and services, souring goods and services, timing purchases, selecting terms of sales, evaluating the value received, predicting price, service, and demand changes, specifying the form in which goods are to be received, and so on.

The efficient selection of vendors is a critical and arguably the most essential operation of the purchasing function because it results in significant cost savings for the organisation.

The goal of the vendor selection process is to reduce risk while increasing total value for buyers, which requires taking into account a number of strategic considerations.

Among these characteristics are the length of the connection with vendors, the decision between domestic and international suppliers, the number of vendors that choose single or multiple sourcing, and the type of product.

Several authors have highlighted various criteria for vendor selection, including net pricing, quality, delivery, previous vendor performance, capacity, communication systems, service, and geographical location (Dickson, 1966; Dempsey 1978; Weber, Current, and Benton 1991).

These criteria are important in the vendor assessment process since they measure the vendors’ performance. In general, this research aims to give empirical evidence of the criteria and procedures for the vendor selection process employed in various business environments.

It also intends to assess if these processes adhere to rigorous criteria like as the 1500 9000 standard. Finally, determine the applicability of the Analytical Hierarchical Process (AHP) to aid decision making in resolving the vendor selection issue.