Offer Comparison

Overview

An offer comparison is used in procurement to evaluate two or more supplier offers in order to determine the best deal. The process involves both a quantitative (measurable, cost-based) and a qualitative (criteria-based) comparison.

Quantitative Comparison

The quantitative comparison focuses on measurable financial factors:

• Purchase price / Price per unit: The base cost of the product or service
• Shipping and handling costs: Additional costs for delivery and handling
• Discount: Applied to the list price, typically based on order volume or the business relationship
• Cash discount (Skonto): A second discount granted for early payment within a specified period
• Payment terms: Due dates and conditions that affect the total cost

Qualitative Comparison

The qualitative comparison evaluates non-financial criteria that are harder to quantify but equally important:

• Quality: Product or service quality, certifications, and standards compliance
• Reliability: Supplier dependability and on-time delivery history
• Support: After-sales service, warranty conditions, and responsiveness
• Sustainability: Environmental standards, regional sourcing, and ethical practices
• Business relationship: Existing partnerships, trust, and long-term potential

Scoring Method

When qualitative and quantitative factors must be combined into a single decision, a weighted scoring model can help:

1. Define all relevant criteria and assign a weight to each (weights must sum to 100%)
2. Score each supplier on every criterion (e.g., on a scale of 1-10, or a 3-point system where 3 = good, 2 = average, 1 = poor)
3. Multiply each score by its weight to get the weighted score
4. Sum the weighted scores per supplier
5. The supplier with the highest total score represents the best overall offer

This approach makes subjective criteria more transparent and comparable across suppliers.

Note: There is no single standardized method for the scoring model. Variations exist in both the rating scale and the calculation:

• Rating scale: Common scales include 1-10, 1-5, or a 3-point system (3 = good, 2 = average, 1 = poor)
• Calculation: Weights can be applied as whole numbers (e.g., 40 x 8 = 320) or as decimals (e.g., 0.40 x 8 = 3.20). Both approaches yield the same ranking, only the totals differ

Example

Let's assume that we want to purchase a batch of new laptops for some new employees. We are going to use a scale of 1–10 and apply the weights as whole numbers (e.g., 40 x 8 = 320) to find the best supplier.

• Supplier 1: Inexpensive, but mediocre quality
• Supplier 2: Expensive and slow delivery, but top quality
• Supplier 3: Balanced with fast delivery

Criteria	Weighting	Supplier 1	Supplier 2	Supplier 3
Price (Quantitative)	40%	8 => 320	6 => 240	7 => 280
Quality (Qualitative)	40%	6 => 240	9 => 360	7 => 280
Delivery time (Qualitative)	20%	7 => 140	5 => 100	9 => 180
Sum	100%	700	700	740

Result: In this example, Supplier 3 achieves the highest total score and would therefore be the recommended choice.