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Choosing a supplier & outsourcing

1) When would you have multiple rounds of bidding? What evaluation criteria would be used to initially select a supplier? What criteria are used to evaluate supplier performance? What factors should be considered in supplier selection both domestically and globally?

2) Why would an organization decide to outsource? When would you consider using global outsourcing? Explain. Why would an organization decide to outsource globally? What benefits and risks should be considered in global sourcing?

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1) A firm will have multiple round of bidding when information provided to supplier changes due ongoing discussions during negotiation process. Usually the negotations with vendors and working sessions provides more information to the firm and many assumptions that hold good initially change over a period of time leading to scope / pricing change. As firm provides additional information (mainly around scope, pricing, timelines and assumptions) to vendors they tend to revise their bids leading to multiple round - with elimination or down selection in each round. At times vendors become ineligible after preliminary rounds and few chose to opt out as well due to changes.

The preliminary vendor selection is based on many criteria depending on type of business but common evaluation criteria include:

a) Vendor's reputation / brand and feedback from existing clients
b) Financial position
c) Vendor location (nearshore Vs Offshore)
d) Vendor size
e) Quality Certification
f) Past experience

Supplier performance is measure both in terms of cost of services / Products and service levels (usually defined ...

Solution Summary

The solution examines the experience of choosing a supplier and outsources jobs. The factors that should be considered in suppliers selection both domestically and globally are given.