Vendor Bid Specifications – Begin developing your Vendor Bid Specifications by reviewing vendor invoices and recording the products currently being purchased. Include the quantity, packaging, and frequency.
Once this data has been collected, you may consider splitting the list into more manageable sections. Categorize each item with a priority identification code to identify the mailing sequence of the bid letter for that particular product or service. We recommend this approach to avoid being inundated with bids on every item on your listing.
Obtain bids on the most frequently used (and ordered) items first. After a reasonable time has passed and you determine you could handle more bid activity, prepare and mail the second priority group (perhaps in a 45 – 60 day time frame). Following the second group, prepare and mail remaining required bid items in the same controlled manner until all priority groups have been completed.
We recommend sending the Bid Specification Sheets to a minimum of three vendors.
A “request for bid” letter should accompany the specification sheet. All information on the Bid Specification Sheet should be completed, including all special instructions.
Substitutions for brand names must be properly demonstrated or used on a trial basis prior to awarding the bid. New and improved products are being developed regularly and you must be aware of them. Purchasing power is in volume buying. Your analysis of prior invoices and the usage forecast are valuable when determining order quantities, frequency, volume, packaging requirements, and other product specifications.
The bid process is never-ending. After you have completed your first round of bid specification mailings, begin planning the timing of your next effort.
A common misconception is that completing the bid process and occasionally revisiting this area are sufficient to achieve the desired reductions in operating expenses. This is not the case-maximum benefit is derived only through a consistent utilization of the Vendor Pricing Guides.
- Development and Maintenance of Vendor Pricing Guides
Vendor Pricing Guides are designed to provide a detailed record of price agreements and a procedure to ensure that these agreements are maintained. We often agree to a price and, over the course of time, find that the current billing price has changed. The idea of bidding a product or service is to establish a price and then to protect it through the agreement period. Vigilance in this area is imperative as many items are delivered at regular intervals over a period of time.
A Vendor Specifications Sheet should be prepared for each bid to be awarded. These sheets will become your Vendor Pricing Guide. Share sheets for as many guides as needed throughout the dealership. Accounts payable and the parts department will each need a sheet. The accounts payable guide should be filed by vendor, and the parts department guide should be by filed by products.
Here are some helpful documents that you might find useful throughout this article series:
Written by David Dietrich