Intermediate level · Module 3: Supplies, Vendors and Office Budgets · Lesson 2 of 3
Quotations and Vendor Management
Buy at the best overall value and manage suppliers' performance.
In this lesson you will
- Compare quotations on total cost and service
- Monitor vendor performance
Key concepts
quotationstotal costvalue for moneyvendor performance
The lesson
Request written quotations for the same specification from several suppliers, following the organisation's thresholds.
Compare total cost — unit price, delivery and other charges — and also delivery time, quality and reliability. The lowest price is not always best value.
Record vendor performance: on-time delivery, quality and problems, and use it when choosing suppliers next time. Declare any conflict of interest.
Step by step
- Write the specification.
- Collect three quotations.
- Compare total cost and service.
- Recommend and record the decision.
Comparing three quotations for printing paper
Total cost, not unit price, decides which of three suppliers gives best value for 50 reams.
| Supplier | Price per ream | Delivery charge | Total cost | Delivery (days) |
|---|---|---|---|---|
| Supplier A | 9,500 | 25,000 | 500,000 | 3 |
| Supplier B | 9,000 | 60,000 | 510,000 | 2 |
| Supplier C | 9,800 | 0 | 490,000 | 10 |
What the data shows
Supplier B has the lowest unit price but the highest total, 50 × 9,000 + 60,000 = 510,000 SSP, because of its delivery charge.
Supplier C is cheapest in total at 490,000 SSP but takes 10 days; Supplier A costs 10,000 SSP more and delivers in 3.
Recommendation
If current stock covers more than 10 days of use, choose Supplier C and record the reason; if stock is low, Supplier A's faster delivery is worth the extra 10,000 SSP.
Practice activity
Compare the three quotations from the practical activity.
Expected result: A comparison with a justified recommendation.
Check your understanding
-
Why compare total cost rather than unit price?
Show answer
Delivery and other charges change the real cost.
-
Is the lowest price always best value?
Show answer
No, delivery time, quality and reliability also matter.
Taught live by an instructor — online or in person. Free course lessons are for self-study and do not lead to a certificate — see registration options.