When the Lowest Quote Isn't the Best Offer: How to Evaluate Supplier Quotes

The cheapest price on a line is where the decision starts, not where it ends. To evaluate supplier quotes properly, check that each one actually delivers what your customer asked for, when they need it, on terms you can live with. First rule out the quotes that fail a must-have, then choose on landed cost among the ones that remain.

The must-haves: pass or fail

These aren't weighed against price. A quote that fails one is out, however cheap it is.

• Specification. Is it the exact item your customer asked for? If the supplier offers an equivalent (another brand, a non-OEM part), will your customer accept it? If you don't know, ask before you quote it.
• Quantity. Did the supplier quote the full quantity, or only part of it, or a different pack size? A price for 30 of the 40 pieces you need isn't the same offer.
• Delivery date. Can it arrive in time for your customer's deadline, with some margin for delays?
• Validity. Will the price still hold when your customer is likely to decide? A quote that expires tomorrow is worth less than it looks.

The trade-offs: worth paying for, up to a point

Among the quotes that pass, these can justify a higher price:

• Lead time. Faster can be worth more, especially if your customer pays for speed.
• Payment terms. A supplier who gives you 30 days to pay is easier on your cash flow than one who wants payment up front, particularly if your customer pays you in 30 or 60 days.
• Warranty and origin. Some customers need a warranty period or a country of origin stated; some care about them more than price.
• Reliability. A supplier who delivered late or wrong last time carries a risk that doesn't show in the price.
• Consolidation. One more supplier means one more order, delivery and invoice. Sometimes that's worth more than the saving on one line (see line-by-line quote comparison).
• Landed cost. Freight, duties and fees can reverse the order of two close prices (see landed cost).

An example

Illustrative figures: your customer needs 40 hydraulic filters within two weeks. Three suppliers quote:

• A is cheapest, but it's an equivalent. Unless your customer has accepted equivalents, it fails the specification check.
• C is the exact part, but six weeks misses the two-week deadline. It fails the delivery check.
• B is the most expensive, and the only quote that passes both. It's the best offer.

If your customer does accept equivalents, the decision changes: A then competes with B on price against prepayment, and you might quote both options and let the customer choose.

Doing this in RFQ Manager

• Screen when you accept. A supplier's offer moves through statuses (Draft, New, Follow-up, Answered, Reviewed, Accepted, Refused). Only accepted offers reach Proposal Studio, so an offer that fails a must-have can simply be refused.
• The supplier's terms can be recorded. Each offer can have a valid-until date, payment terms and delivery terms, and each of its lines a lead time, next to the brand, model, part numbers (including the OEM part number), country of origin and warranty period.
• Everything you need is on the comparison. In Proposal Studio, each offer shows its part number, item name, lead time, and its delivery and payment terms next to the price, so an equivalent, a long lead time or a prepayment is visible at the point of choosing.
• Expired offers are marked. An offer past its valid-until date shows as Expired, so you don't build a quote on a price that no longer holds.
• Quantity differences are flagged. An offer for a different quantity than your customer asked for is marked on the line.
• You choose, not the badge. The lowest converted cost on each line is marked, but you can pick any accepted offer per line.

Try RFQ Manager free.

Summary

1. Rule out quotes that fail a must-have: specification, quantity, delivery date, validity.
2. Weigh lead time, payment terms, warranty, reliability and consolidation against price.
3. Compare the remaining quotes on landed cost.