The Bonus/Malus approach enhances the holistic supplier evaluation by converting all differences across suppliers into monetary values and creating a simple, common metric.
Setting the Stage for Stronger Negotiations: Fact-Based Decisions
Investment into thorough, holistic evaluation of suppliers before negotiations begin arms procurement teams with fact-based insights and compels them to objective decision-making.
- Bringing Everyone to the Table: Accounting for needs and requirements of all relevant stakeholders—from procurement to engineering to finance—and applying clear, data-driven reasoning foster the invaluable collaboration like nothing else.
- Empowering Suppliers with Data: Providing suppliers with a clear understanding of where they stand and what they can do to improve leads to value-driven negotiations.
Negotiating with Confidence: Agility of Decision-Making
With a holistic view of suppliers at hand and especially when applying the Bonus/Malus approach, procurement teams can make not only informed but also quick decisions.
- Benefiting from Fast Decisions: In negotiations, opportunities can come and go in a blink of an eye, making the ability to decide on the spot invaluable for success.
- Leveraging Competitive Pressure: Monetization of supplier characteristics enables negotiation approaches with open competition like auctions on strategic commodities and in the end leads to greater savings where it counts the most.
Seeing Success in Auction: Procurement of Production Vehicles
INVERTO has recently partnered with a global aluminum producer to streamline their procurement of customized production vehicles across three facilities in different regions. Their procurement process was bogged down by misaligned sourcing efforts and decision-making dominated by technical teams, leaving commercial considerations on a sideline.
Application of a holistic supplier evaluation, including Bonus/Malus, enabled us to:
- Align our client’s procurement strategy across all sites,
- Empower their cross-functional teams to make data-driven decisions,
- Achieve over 10% savings and enhance the technical solutions at the same time.
