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Evaluation Planning and Evaluation Process Editing Services
In business procurement, the most important factor is the selection and evaluation of supplier so that competitive advantage can be gained. Selection of a supplier depends on different types of evaluation criteria, cost of ownership analysis as well as cost benefit analysis. Therefore, in this evaluation planning and evaluation process assignment, the learner focuses on making an evaluation plan as well as evaluation criteria for the largest multinational corporation of Australia, BHP Billiton. The learner also tries to focus on scoring system for choosing the most suitable Airline Company of Australia to provide service for the firm.
Part 1: Evaluation planning
Evaluation planning for supplier selection
The current company BHP Billiton is trying to tie up with a supplier for travelling on the several routes. Procurement experts always believe that there is no one best way to evaluate and select supplier. In such cases, the organisation or firm uses different approaches. Approach employed, which is an objective of the evaluation process might be to maximize the overall value and decrease the procurement risk to the buying organisation. Evaluation planning for supplier selection are described here (Sylvia &Sylvia, 2012).
- Process and design capabilities: Supplier might be capable and up-to date services as well as the advance technology. The buying organisation might be aware of the strength and the weakness of the supplier. However, the buying organisation expects that supplier has to perform component design and production (Wilkinson Sayce & Christensen, 2015). The buying organisation might also evaluate the design capability of the supplier.
- Quality and reliability: Quality levels of the procurement item might be a vital factor in supplier section. Quality of service might consistently reach at the specified requirement. The service quality has to be the best as well as it must fulfil the demand and expectation of the buying organisation. Further, the quality of the services can directly affect the image of the supplier (Raghunathan, 2013). This thing reveals the characteristic of the supplier as well as it helps to make the supplier more reliable to the buying organisation.
- Cost: Total cost of ownership is also very important in supplier selection. Further, total cost of ownership includes the unit price of the services, maintenance cost, logistic cost, carrying cost, ordering cost, cash discount, payment terms and other qualitative costs, which may not be very easy to assess.
- Service: Supplier might be able to provide their best services when required. The quality of the services makes the image of the supplier bright (Rist Martin & Fernandez, 2015). Therefore, the supplier must be able to respond to the queries of the buying firm. The supplier always tries to provide their best service to attract new buying organisation.
- Capacity:The supplier has to be capable to meet the requirement and fulfil the expectation of the buying organisation. The supplier might try to fill the order in time. Otherwise, the supplier may lose their goodwill. In case of current situation, where there is a requirement for BHP Billiton to choose the firm that has the capacity to provide space and tickets for its personnel whenever they want (Mills, 2014).
- Location: Geographical location is also a very important factor in supplier selection. It influences transportation, logistic cost and delivery lead-time. The supplier must provide their services across the world. Hence, it might be very easy to connect with the other countries.
- Management capability: Management capability of supplier is very complicated but also a very important step. Management capability also includes the commitment of the management to continuous process and service improvement, its ability to maintain the positive and closer working relationship with the buyers (Swearingen White, 2014). There are another aspect of management capability, which includes the overall professional experience and ability.
- Financial condition and cost structure: Financial teams evaluate the various financial ratios that decide whether the supplier continue in meeting its debt and financial obligation. Buying organisation must need the supplier might provide the great amount of discount on organisational travel while the employees of the buying organisation travelling on that route on their airline (Vauhkonen, Packalen, Malinen, et al. 2014). There will be no internet booking system, as well as all travel must be authorised by the traveller’s manager in the TMS in case of. Fares of the employees that belong to the buying organisation must be refundable. Travel up to six hours must be considered in economy class, otherwise it might be considered in business class (Esmaeilikia, Fahimnia, Sarkis et al. 2014).
There are many criteria in the process of selection of the suppliers. The evaluation criteria set for the current project are as follows-
- Price, quality and delivery: The suppliers always try to maintain the price, quality and the way of delivery. Hence, if the cost of the services is minimal and reasonable then the buying organisation might feel more attracted to this supplier. Whenever they provide their service in time to their buyers at a low cost, it can be more attractive to the buyers. Hence, the suppliers provide a great amount of discount on the tickets of organisational travel. Further, if the supplier is interested to refund the fare then it may affect the buying organisation. Furthermore, the suppliers must be able to give the best quality service and fulfil the expectation of the buying firm. The supplier must be able to meet the demand and the expectation of the buyers. They might provide best quality service to attract the buying organisation (Woodbury, Meier, Thomason et al. 2015). Best quality service makes the supplier reliable to their buyers. The supplier must try to deliver their services in time, when the buyers require.
- Management capability: Management capability is also another important criterion in selecting the supplier. Management quality is very complicated but necessary factor. It develops a positive closer working relation between the management and the consumers. It helps the buying organisation to understand the characteristics as well as its experience of the supplier (Elshazly, Azar, Hassanien et al. 2015).
- Employees’ capabilities: Employees capability is also very important criteria. However, the employees of BHP billiton must be capable to provide the best services. They must be soft spoken and polite. They must be aware of their duties as well as they must be eligible for those posts. Therefore, this thing may make the buying organisation attached with the supplier.
- Technological capability: The suppliers should have the technological capability. This is very important to provide services by using the advanced technology.
TCO and VFM analysis
The total cost of ownership is an analysis that places a single value on the complete lifecycle of a purchase. This value includes every phase of ownership such as acquisition, operation, and others softer costs of change management that flows down acquisition, this might be in different gestures such as documentation and training. There are three key components to the TCO analysis. Such as-
- Acquisition costs: The acquisition costs or Hardware costs include the cost of various things such as discounts, purchasing incentives, closing costs, equipment or property before taxes and commissions. Sometimes this will include onetime peripheral equipment or upgrades necessary to utilizations and installation of the asset.
- Operating costs: Operating costs, which include the subscriptions or services, needed to put them in to the use of business. This includes various things such as direct operator labour, initial training costs and utility costs.
- Personnel costs: Personnel overhead may include administrative staffing, facility housing the equipment, facility housing the equipment, facility housing the equipment and operators. This may include trouble shooting and training labour for maintenance purposes.
Value for money is defined as the optimum combination of whole of life costs and quality of the service to meet the user’s requirement. Value for money is not the choice of goods and services based on the lowest cost bid. To undertake a well managed procurement, it is necessary to consider upfront, and at the earliest stage of procurement, what the key drivers of VFM in the procurement process will be (McKevitt & Davis, 2016).
In order to get the value for money, these following factors can be followed. That factors are Risk transfer, Long term nature of contracts, competition, performance, measurement and the use of an output specification, performance measurement and incentives, private party’s management skills.
There are various nature of contracts, this nature of contract have a great impact on the deal. The value for money factor depends on various factors such as the performance; whenever any company is spending some amount in any deal, they want that deal to be proper value for the money. That is why the performance must be very good (Fantozzi, Bartoc, D'Alessandro et al. 2014). The competition is another important thing, the particular airline company need to be better than its competitors are. Then only the deal can be value for money.
Part 2: Conducting an evaluation
Scoring and justification
There are three companies. Those companies are Cobham Aviation service Australia, Alliance Airline and Free spirit Airlines.
- Cobham Aviation Australia: The Cobham Aviation Australia Airlines provides various kinds of services. They have come with different technology and knowhow to operate with deep insight into customer needs and agility. They even provide various kind of service such as Special mission, Commercial Aviation, Rotary Wing. This company provide commercial aviation services in Australia with a focus on premium passenger and freight services, and specialist support for the sector projects in regional and remote locations (Myers, 2013).
The score on this particular airline company is 6 out of 10. There are various reasons to give bit low score to the company because this company do not provide those required services as per the evolution criteria (Mertens, 2014). They are not providing any discounts and they are unable to provide the service whenever the company needs to travel.
- Alliance Airlines: The Alliance Airline company is a airline company which can also provide various services. As their services have grown, they have developed their services too. They provide an extraordinary journey to the clients. The service users will receive an air charter experience that is because of effective and tailored to meet individual needs, ensuring complete satisfaction throughout the journey. Another good service, which they provide that is this company is very, much ideal for the group travel. This group travel can be for various reasons such as travel & tourism, corporate, entertainment, media, educational or the government sectors. Alliance Airlines is able to provide tailored aviation solutions customised to your itinerary. From the logistics of corporate and government travel, to transport a sporting team and their support staff. This Airlines Company will provide some discounts on the journey of the company, if the company travel within every week then this Alliance Airlines will provide
The score on this particular airline company is 8 out of 10. There are various reasons to give bit high score to the company because this company 30% discount within the tickets or if the employees are unable to go there then this company will provide 50% discount (Straub, 2014).
- Free Spirit Airlines Company: this airlines company provides various kinds of services. Such as their airline, ticket price is consistently low, so the company do not need to spend more money on those people when they deal with Free Spirit Airlines services. They even provide quality care towards the customers, as they prefer to serve people before thinking about their profit. They are even providing various kind of free refreshment such as some snacks or entertainments like movie, music videos and so on (Raghunathan, 2013).
The score on this particular airline company is 7 out of 10. There are various reasons to give bit medium score to the company because this company is not providing any kind of discount services, so that the company might get good services but they have to spend a huge amount of money over there.
Thus, from the above analysis, it is clear that in the procurement process, it is important to create an evaluation plan as well as to make evaluation criteria. It help organisations like BHP Billiton to select suppliers or partners for their business. Further, it is also clear that an organisation requires to conduct both cost of ownership and value for money analysis. It helps in identifying which supplier might be able to fit with the requirements and needs of the buyer firm.
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