I received quotations, how do I compare

them?
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Quotes are part of the purchasing process of all companies. As you probably know, first you
receive a demand from one of the company’s departments. Then, you must contact the
suppliers.

The quotations are used so that the contractor can understand under which conditions the
supplier will work, such as the price charged for the product or service, deadlines, technical
specifications of delivery, payment methods and more – learn here about supplier
compliance.

It is through quotations that the purchasing department chooses the supplier. Although it
seems like a very simple process, the quotes have some peculiarities that can make all the
difference in the final price of the product or service.

It is very important to learn how to compare quotations, know which information is relevant
and how you can put suppliers in competition. The stage of quotations is one of the first steps
in the purchasing process, and one of the most important to the success of the purchase in
the Industry 4.0!

Check it out:

Another supplier, another quotation

Each supplier presents its quotations in their own format. This means that your company’s
purchasing department will receive hundreds of different quotations for the same product or
service, which will not always contain the same information or be under the same conditions.

Some suppliers, for example, include the freight cost in the quotation; others will allow the
customer to search the products directly from the factory or the distributor. Some offer low
prices, but they determine minimum amounts to guarantee this value; others will always work
at the same price, but offer other advantageous conditions.

Because of these distinctions, it is crucial to know what to check to compare quotes. We have
outlined some points that you cannot fail to check in a quote, and which criteria you should
use to choose between suppliers. First read here how to get unified quotations of different
parts optimizing your process.

Technical specifications
Always check the technical specifications of the quote. This includes all information about
the product, such as weight, color, size, and other data. It is important that the quotation
specifies the conditions under which the product will arrive on delivery, if assembled or
dismantled, and whether the supplier provides equipment for assembly, for example.

Unit and packing

Speaking of conditions, it’s fundamental to check the unit and packing specifications. Some
products are purchased in large quantities, such as small spare parts, tools, screws, nails.
Others are bought only in case of need or in small quantities, like engines. The quotation
must specify in which unit the product will be purchased (for example, by pounds or kilos,
hundreds or thousands), as well as the packaging in which it will be delivered.

Packaging is really important because it has a direct influence on price! Some inputs are
transported in pallet boxes, others in plastic bags with bubble wrap or pieces of foam for
protection, and this makes all the difference in the final price.

The transport and Incoterm should also be evaluated. Air freight is faster, but more
expensive, while transportation by highways or railways may be cheaper (despite the greater
risks of accidents and longer lead time). Transport by ships involves port tariffs, in addition
to the time of loading and unloading, demanding a thorough analysis of the price and
estimated deadline.

This leads us to the next point.

Deadline
The delivery time is perhaps the most fundamental information of the quote – after the final
price, of course. The delivery time must be in line with what the company specifies in the
purchase order, and the supplier must undertake to meet this deadline, except in extreme
circumstances such as accidents or strikes, for example.
Payment conditions
Each supplier receives payment in the way that best suits them. Some offer the option of
installments with a deposit, while others do not request one payment, others offer discounts
for cash payment, and so on. The payment conditions must be very well discriminated in the
quotation, since it is a prime factor for the choice of supplier!

Validity of the proposal

All quotes have an expiration date. Watch out for this! Make sure that the quote that was sent
to you is valid for enough time to make the purchase under those conditions, since the pricing
and supplier selection process can be a little time-consuming.

Place and conditions of delivery

The quotes from the suppliers usually indicate the place of delivery or pick up of the product.
It can be in the company itself, in the factory, in the distributor’s warehouse, in the port, in
the airport, in the carrier, at the border. Identify the location and what is embedded in the
price by the acronym CIF (cost, insurance and freight) for insurance and freight costs
included, and FOB (free on board) for merchandise that will be withdrawn by the buyer.
Make sure these delivery terms meet the needs of your business before evaluating the final
price!

Different information
If two quotes for the same product or service present different information, the best thing to
do is to break the quotation down, point by point. Take each category that we mentioned
above and put together a table. Then, divide each quote into those points, fill in the individual
price of each item, and enter the specifics as they appear.

For example: if a supplier offers free shipping and a fee to assemble the equipment, and
another supplier considers freight and assembly a single fee, you must enter this information
separately in the table, but add the values from the first supplier, to make a correct
comparison with the second.

By doing so, you will be able to compare quotes that seem to be completely different!

So, do you feel ready to compare quotations without missing the relevant points? Don’t
forget to unravel every quotation, especially if there is different information to compare. It
takes more time than only looking and comparing final prices, but your analysis becomes
much more assertive, and so does your supplier choice. To learn more tips on how to choose
your suppliers read the articles below:

Strategic sourcing improving the purchasing process

The role of Strategic Force in Procurement 4.0
Advantages of sustainable purchasing and how to implement this concept
Soluparts, a global trading company
You can also leave the task of comparing quotations and choosing the best suppliers with a
company that is specialized in all types of industrial materials such as Soluparts.

Soluparts is able to offer quotations from the most relevant manufacturers in the world – read
an article that shows our differentials and learn how we can optimize the routine of your
purchasing department.

https://soluparts.com/received-quotations-compare/?
_x_tr_sl=en&_x_tr_tl=id&_x_tr_hl=id&_x_tr_pto=tc