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For today's lesson on English for purchasing, this lesson looks at language for evaluating proposals from vendors.
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Business is all about buying and selling, and just as your company sells products to individual consumers or other companies, you also have to purchase goods and services to make it all happen.
For ongoing purchasing relationships, this means evaluating different vendors to find the best match. So when you sit with your team to evaluate vendor proposals, what will you talk about?
These discussions often involve comparing pricing, timelines, quality and service.
You might also talk about warranties, reliability and risks.
And just like any group process, The quality of the decision will come down not just to the facts in front of you, but your ability to communicate clearly about them.
In conversations about vendor proposals, there are several aspects you might consider.
You might assess risk as well as vendor capacity.
You might also evaluate the total cost and compare value, as opposed to the basic contract price.
And finally you might prioritize the different criteria you use to assess the vendors.
In today's dialogue, we'll listen to a conversation between managers at a fitness equipment company called XFIT.
Hazel, Adam and Nick are evaluating proposals to choose a manufacturer of a specific part for their line of treadmills.
In previous lessons on purchasing, we heard Expit choose a company called VinMac to produce a part for a different exercise machine.
As you listen to the dialogue, try to answer the following questions.
1. What does Atom say about Steelworks' production capacity?
2. What does Nick say adds value to VinMac as a possible vendor?
3. Which criteria does Adam say are the most important consideration in this decision?
Okay, Adam. Can you walk us through these proposals?
So, three bids. Steelworks, Orion, and Vinmec.
Steelworks came in lowest on price, but their delivery timeline is the longest. Orion's more expensive, but with a shorter lead time, and Vinmech is somewhere in the middle.
And do they all meet our specs?
Well Orion and Vinmech meet all our tolerances.
Steelworks had a few minor deviations flagged by engineering so a bit of an x -factor noted and thoughts on capacity well steelworks is a pretty small outfit I'd be worried about them keeping pace especially a volumes ramp up yeah tricky for sure and you said Orion is the most expensive on the surface but shorter lead times mean savings and I get the sense that with their quality their total cost might actually be lower they sound great actually but we do already have a relationship here you mean Vin Mac yeah they've been pretty reliable and That kind of track record adds value, even if they're
not the cheapest. I tend to agree.
So, I think we can remove steelworks from the conversation, which means...
What's our top priority here?
I mean, what does it all come down to?
From my perspective, it's about reliability and consistent quality.
They matter far more than shaving a few dollars off the unit price.
And that's what we say we believe in.
So... Agreed. Downtime on the treadmill line would hit us harder than a few bucks per unit.
This is true. And I think it's worth double checking VIN MEC's first -past -yield, just to see how they've performed.
If that checks out, maybe we have a winner.
Now let's go through the dialogue again, and look at the language and techniques the group used to assess vendor proposals.
Hazel begins by asking Adam to walk through, or explain the three companies proposals or bids.
Okay, Adam, can you walk us through these proposals?
So, three bids. Steel Works, Orion and VinMEC.
Steel Works came in lowest on price, but their delivery timeline is the longest. Orion's more expensive, but with a shorter lead time, and VinMEC is somewhere in the middle.
Adam begins with a high level comparison of the proposals, including timing and price.
Nick has an important first question about specs, or the specific technical requirements for their part.
Let's listen. And do they all meet our specs?
Well, Orion and Vinmec meet all our tolerances.
Steelworks had a few minor deviations flagged by engineering, so a bit of an X factor.
According to Adam, two of the companies meet their tolerances, or the allowable variation in size or strength, but the other company has some deviations, or manufacturing results, outside the allowable range.
For Adam, this deviation is an important risk.
He calls it an x -factor, which is any factor that could impact a situation in a big way.
Evaluating risk is a critical part of assessing vendor proposals, so let's practice some more ways to talk about risk.
There's a real risk they won't meet our deadlines during busy periods.
I'm worried their lack of certification could create a lot of risk for us.
Working with just one vendor always carries some level of risk.
We need to consider the risks versus the advantages of using a new developer.
Besides risk, Hazel introduces another important consideration, as you can hear.
Noted. And thoughts on capacity?
Well, Steelworks is a pretty small outfit.
I'd be worried about them keeping pace, especially if volumes ramp up.
Hazel's question is about capacity, which is related to ability, and how much something can hold, produce or process.
Different vendors will be able to handle different volumes or amounts of production.
In this case, Adam is quite worried about Steelworks' capacity.
He is concerned that they might not be able to reduce the amount of parts that XFit needs, especially when they get busy or when production ramps up.
What are some other ways of assessing vendor capacity?
Let's run through some more examples.
Can they realistically deliver that volume in under eight weeks?
Their production facility seems too small for the scale of business we are talking about.
Do they have enough capacity to handle fast orders if needed?
Their timeline looks fine, but I'm not sure whether they can produce the amount we need.
Now that they've briefly discussed risk and capacity, Nick moves onto the issue of cost. Yeah, tricky for sure.
And you said Orion is the most expensive?
On the surface, but shorter lead times mean savings.
and I get the sense that with their quality, their total cost might actually be lower.
A vendor proposal will include details about pricing, of course, but the cost of working with different vendors doesn't just come down to price.
It also involves timelines, as Adam points out, as well as the cost of testing, defects, and shipping and taxes.
The company called Orion might be most expensive on the surface, or simply by price, but Adam is evaluating total cost, which includes all the different things I listed that impact how much you pay to do business with a vendor.
Let's try some more ways of evaluating total cost when you're assessing different proposals.
Their unit cost is low, but the maintenance expenses really add up.
When you include training and set up, their total cost is higher.
Their initial quote is good, but ongoing support will cost us a lot more.
The total cost includes more than just the unit price.
We need to look at all the costs together.
We can see that there are lots of intangible factors that impact our decisions about vendors.
Let's get back to the dialogue as Nick introduces some of these factors.
They sound great, actually.
But we do already have a relationship here.
You mean Vinmeck? Yeah, they've been pretty reliable and responsive.
That kind of track record adds value even if they're not the cheapest. Nick is keen to point out that one of their current suppliers, Vinmech, has a very good track record or history.
He believes they are good to work with, quick to respond to their needs and reliable or dependable.
These kinds of qualities can be combined with price to assess value.
Value isn't simply about price, it's about what you get for a particular price.
One thing might be more expensive, but if you get more for that higher price, then the value might be higher.
Comparing value is what all purchasing decisions are about.
Let's practice some more ways to compare value in these types of discussions.
Sure, they're cheaper, but the service package isn't nearly as strong.
They offer better value when you consider warranty and long term support.
That quote includes installation, which gives them a real advantage.
The higher price gets you better response times and guaranteed parts availability.
At this point, the group is able to separate the companies and eliminate one of them from consideration.
Let's listen. I tend to agree.
So, I think we can remove Steel Works from the conversation, which means what's our top priority here?
I mean, what does it all come down to?
From my perspective, it's about reliability and consistent quality.
They matter far more than shaving a few dollars off the unit price, and that's what we say we believe in, so...
The group has talked about several different criteria or specific considerations in their decision.
This includes quality, price, risk, timeline, and intangibles.
Now Hazel wants them to prioritize these criteria.
She asked about the top priority, or what's most important.
Adam seems very clear that it's about reliability or dependability and quality.
He believes these are more important than shaving off or saving a few dollars.
Prioritizing criteria in this way will help you figure out which vendor proposal is the best. Let's try some more ways of stating what you think is the most important criteria in the decision.
For us, reliability and lead time are more important than price right now.
I'd prioritize service availability over saving a few cents per unit.
At this stage, technical performance should come first. Price is secondary.
Meeting our timeline is the most critical factor in this decision.
So do Hazel and Nick agree that reliability and quality are the most important considerations?
Agreed. Downtime on the treadmill line would hit us harder than a few bucks per unit.
This is true, and I think it's worth double -checking Vinmec's first -pass yield, just to see how they've performed.
If that checks out, maybe we have a winner.
On the issue of reliability, Hazel points out that downtime, or time when production isn't happening would be costly.
And Nick agrees, but wants to check Vinmex First Pass Yield.
In manufacturing this refers to the percentage of units made correctly.
A higher first pass yield means higher quality and consistency.
So if they can confirm Vinmex quality in this way, then they have successfully assessed the proposals and chosen the vendor.
Now let's practice some of the language we learned in today's lesson.
Imagine you are a manager at a manufacturing company.
You are working with some colleagues to assess different vendors.
You'll hear a cue by one of your colleagues.
Then, I'll give you a suggestion for what you can say in response.
We'll guide you through each step in the practice and provide an example answer for each response.
Ready? Let's give it a go.
Brightway's proposal looks okay, but they're offering a brand new design.
Say that a new design could increase the risk of technical problems. Answer Yes, using a new design could raise the risk of technical problems. Delta, on the other hand, is technically sound and they say they can ship in six weeks.
Now ask whether they have the capacity to deliver the amount you need that fast. Answer, but do they have the capacity to deliver the amount we need that fast?
I'm not too sure, though I will say that Brightway has decent lead times and the lowest price.
Now say, their quote is low, but their limited warranty could increase total cost. Answer, true, but with their limited warranty, we might see higher total costs.
Good point. Delta may not be the cheapest but their tech team seems really strong.
Now agree and say that strong technical support adds value beyond just the price.
Answer. Exactly! Strong technical support adds real value here.
So what should we be focusing on most—cost, speed, or the technical side?
Finally, say that technical ability is top priority, since the part must work with existing systems. Answer.
I'd say technical ability is the top priority because it has to work with our current systems. Now let's practice some of the vocabulary we've covered in this lesson.
In a moment, But, you'll hear a series of sentences with a word replaced with a beep.
Repeat each sentence, including the missing word. For example, if you hear Jonah has delivery delays as an issue with their last contract.
You can say Jonah has flagged delivery delays as an issue with their last contract.
After each response, we'll provide the correct answer.
Let's begin. For this product launch, turnaround speed is our top.
Answer For this product launch, turnaround speed is our top priority.
If we double the order volume, can they keep – with production?
Answer If we double the order volume, can they keep pace with production?
Delta's proposal looks strong, but their quoted lead Lead ...
is a bit long. Answer ...
Delta's proposal looks strong, but their quoted lead time is a bit long.
We've reached the end of this lesson on evaluating vendor proposals.
We've looked at assessing vendors by talking about risk and capacity.
We've also covered how to assess total cost, compare value, and prioritize criteria.
For more practice, Premium members can access the online quizzes and PDF transcripts for this and other lessons on the BEP website.
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Thanks for listening and see you again soon!
