The lowest quoted unit price does not always identify the best eligible supplier. A sourcing event needs a consistent comparison basis: the same specification, quantity, currency, delivery requirement and treatment of freight. Otherwise, the comparison may reward a cheap quote that cannot meet the actual requirement.
This SAP Ariba sourcing exercise uses a fictional purchase of 1,000 identical protective cases. It demonstrates evaluation logic rather than a universal screen sequence. Your SAP Ariba solution, event template, permissions and configured bid terms determine which fields and calculations are available.
Write the evaluation rules before reviewing bids
The buyer needs all 1,000 cases delivered to one location within 14 calendar days of the agreed order date. The specification is mandatory. All three suppliers quote in INR, for the same unit of measure, and provide a separate freight amount for the complete shipment. For this simplified exercise, taxes are excluded from every bid comparison on the same basis.
State whether the delivery deadline is mandatory or a scored preference. Here it is mandatory, so a late supplier is not eligible for the base award. If split awards or partial deliveries are allowed, describe those rules separately before analysing offers.
| Supplier | Unit price | Freight | Quoted lead time | Comparable total |
|---|---|---|---|---|
| A | ₹200 | ₹10,000 | 12 days | ₹210,000 |
| B | ₹195 | ₹20,000 | 10 days | ₹215,000 |
| C | ₹190 | ₹5,000 | 21 days | ₹195,000 |
Supplier A totals 1,000 × ₹200 + ₹10,000 = ₹210,000. Supplier B totals ₹215,000, and Supplier C totals ₹195,000. A costs ₹5,000 less than B on the agreed basis. C is cheapest overall but misses the 14-day requirement, so it is excluded from this example’s base comparison of eligible suppliers.
Validate the inputs behind each total
- Confirm the quoted quantity is 1,000 pieces rather than 1,000 packs, and inspect any minimum order quantity.
- Check that all suppliers accepted the same specification and delivery destination.
- Establish whether freight is per shipment, per unit or already included in the unit price.
- Confirm the delivery clock’s starting event and whether lead time means dispatch or arrival.
- Review validity dates, payment terms and qualifications that could change eligibility or comparable cost.
A blank freight response is missing information, not automatically zero freight. A supplier quoting “10 days” may mean ten working days from payment, while the requirement means fourteen calendar days from order acceptance. Resolve the meaning and retain the clarification in the event record.
A quantity break can change the conclusion
Suppose Supplier B’s ₹195 price applies only to orders of at least 2,000 cases. Its valid price for 1,000 cases is actually ₹205. The comparison total becomes 1,000 × ₹205 + ₹20,000 = ₹225,000. Using the attractive price break for the smaller requirement would understate the offer by ₹10,000.
Similarly, do not apply one shipment’s freight amount to a delivery plan that requires two shipments without confirming the supplier’s terms. Keep the requested quantity fixed while evaluating bids; buying additional units to qualify for a discount introduces inventory and cash consequences that require a separate business decision.
Record a recommendation without implying an automatic award
The evidence in this example supports recommending Supplier A among the eligible offers, subject to specification acceptance, supplier qualification and required approvals. It does not establish that SAP Ariba will automatically award the event to A. Templates may include scoring, alternative scenarios, supplier limits and award approvals.
If a business owner wants to accept C’s longer lead time, document the changed requirement, the approver and the resulting scenario. Apply the revised criteria consistently to all bids rather than silently exempting one supplier.
Build a sourcing evidence pack
Keep the requirement, event version, bid timestamp, supplier responses, clarifications, eligibility decision and calculation basis together. Preserve original bids and any permitted revisions. Your summary should explain why a supplier passed or failed a requirement and show the arithmetic another buyer would need to reproduce the comparison.
Connect the comparison to configured Ariba terms
SAP’s documentation distinguishes a price-breakdown RFP from a total-cost RFP. The former collects components of a unit price; the latter can include additional cost factors such as shipping. In a total-cost setup, a term may apply per unit or to the complete line. Inspect that configuration before interpreting a displayed total.
For Supplier A, freight is ₹10,000 for the shipment. Adding it once gives the correct illustrative total of ₹210,000. Treating ₹10,000 as a per-unit freight charge would instead calculate ₹10,200,000. The striking difference is a reason to inspect the term’s calculation basis, not immediately conclude that the supplier submitted an expensive offer.
SAP also documents bid-analysis views and filters, including numerical terms such as price and lead time. Use them to investigate comparable responses, while checking the event state, available terms and permissions in your own environment. A filter helps examine the evidence; your written eligibility rule explains the procurement decision.
Worked extension: evaluate a split award separately
Assume the buyer now permits a split and asks A to supply 600 cases and B to supply 400, both within the deadline. For this separate scenario, assume each supplier confirms its original unit price applies to its smaller allocation and charges its full quoted shipment freight. These confirmations matter because the original bids covered 1,000 cases each.
- Supplier A allocation: 600 × ₹200 + ₹10,000 = ₹130,000.
- Supplier B allocation: 400 × ₹195 + ₹20,000 = ₹98,000.
- Combined quantity: 1,000 cases. Combined cost: ₹228,000.
This split costs ₹18,000 more than awarding all 1,000 cases to A at ₹210,000. It may still be considered if a documented supply-continuity requirement justifies the additional cost, but the arithmetic alone does not establish that benefit. Confirm capacity, minimum quantities and delivery commitments for each allocation, then state the business reason for considering the alternative.
Resolve an incomplete response without guessing
Suppose B uploads a revised quotation showing ₹195 per case but leaves freight blank. Keep its comparison status as “clarification required” until the supplier confirms whether freight is included, waived or omitted. Record the question, response date and applicable bid version. Do not combine the newest price with an older freight quotation unless the supplier confirms both remain valid together.
A useful clarification is specific: “Please confirm the total freight charge for delivering 1,000 cases to the stated destination in one shipment, and confirm whether your ten-day lead time means arrival after order acceptance.” This gives the supplier a precise issue to resolve and gives the reviewer a clear basis for updating the comparison.
Frequently asked questions
Is the cheapest supplier always the preferred supplier?
No. In this exercise, C fails a mandatory delivery condition. Compare cost among eligible bids and document any approved alternative requirements. Avoid assigning an invented monetary penalty to late delivery unless the evaluation method defines one.
Can I compare quotations in different currencies?
First define an approved common currency, conversion date and rate source for the evaluation. Retain the original quoted values alongside converted amounts. A currency conversion makes prices comparable; it does not remove exchange-rate exposure or replace the organisation’s purchasing policy.
What should the final recommendation contain?
State the required quantity, eligibility outcome, comparable total, assumptions and outstanding approvals. For the base example: recommend A for 1,000 compliant cases at ₹210,000 excluding taxes, with arrival within 14 calendar days, subject to the stated confirmations. Attach the calculation and clarification record so the recommendation remains understandable after the event closes.
Official SAP references
- SAP Help: About Request for Proposal Events
- SAP Help: Bid Analysis
- SAP Help: Creating Filters for Bid Analysis
The SAP Ariba strategic sourcing guide provides broader event concepts. For learning about sourcing, supplier management, contracts and procurement, review SAP Ariba training in Vizag at Softenant and confirm the solution available for practical exercises.