COMPETITIVE BIDDING AS AN EFFECTIVE TOOL FOR VENDOR SELECTION
ABSTRACT
This work presents a competitive bidding as an effective tool for vendor selection in different corporate environment using a multiple exploratory case study approach and the 150 9000 standards. The corporate environment examined was Ministry of Works Imo State. This research indicates that the vendor performance measurement criteria most commonly used by these industries are quality, delivery and service. Also, depending on the corporate environment of these industries, the importance of these performance metrics can vary in general, quality is the most important criterion in the organizations studied. Delivery is a critical vendor’s performance measure in the Ministry of Works, since the reliability of the vendors is affected in case of delivery failure in this sensitive market. Finally, these organizations continuously review and implement effective quality systems following the rigorous 150 9000 series of standards and most companies have developed in house procedures and software for the vendor selection process.
CHAPTER ONE
1.0 INTRODUCTION
Traditionally organizations have been divided in operative function such as marketing, planning, production, purchasing, finance, etc supply chain, is a strategy that integrates these functions creating a general plan for the organization, which satisfies the service policy, maintaining the lowest possible cost level due to the incredible competition environment that they are exposed to. A supply chain is a network of departments, which is involved in the manufacturing of a product from the procurement of raw materials, to the distribution of the final product to the customer. Purchasing commands a significant position in most organizations since purchased parts, components and supplies typically represents 40 to 60 percent of the sales of its and products (Ballow, 1999). This means that relatively small cost reductions gained in the acquisition of materials can have a greater impact on profit than equal improvements in other cost-sales areas of the organization.
There has been an evolution in the role and structure of the purchasing function through the nineties. The purchasing function has gained great importance in the supply chain management due to factors such as globalization, increased value added in supply and accelerated technological change. Purchasing involves buying the raw materials, supplies, and components for the organization. The activities associated with it includes selecting and qualifying vendors, rating vendor’s performance, negotiation contracts, comparing price, quality and services, souring goods and services, timing purchases, selecting terms of sales, evaluating the value received, predicting price, service, and sometimes demands changes, specifying the form in which goods are to be received, etc.
