Suppliers: Case 4. Developing Pricing Strategy for Supplied Products Based on Analysis of Procurement History via the Unified Commodity, Work, and Service Classification (UCWSC) and Competitor Activity
Before we begin the actual task implementation, we need to formulate a list of questions that we aim to answer. Primary Question: How can the analytics module be used to formulate a pricing strategy?
Previously, we discussed supplier price determination methods via the Lot Table. Working with this tool involves selecting individual announcements and lots to understand the bid pricing for that lot.
When scaling up the analysis, this process involves additional labor. For instance, if you need to study positions for more than 100 procurements, you will need to review a corresponding number of announcements.
Within the scope of this case, we aim to streamline the pricing process using the analytics module.
Similar to the content in Case 3, we will start by selecting a specific UCWSC. We will open the “UCWSC Card” worksheet and choose a product that is potentially interesting for us.
For more utility from this case, let’s opt for a frequently traded product with numerous lots and a significant market volume. If we’re interested in pricing proposals, the product should be traded through competitive bidding procedures. As you see, we chose “staples” with about 20,000 lots, a planned sum of 215 million without VAT, and roughly 70% of trades occurring through request for proposals (RFPs).
Confirmation of this product’s relative popularity is the presence of around 17,000 announcements in the Lot Table.
The standard method for determining supplier pricing involves selecting each of these announcements, followed by the specific lot and analyzing the data on the bids submitted.
Let’s try utilizing the additional functionalities of the module. To facilitate the task, we will need the “Filters” worksheet. This worksheet features all possible dimensions for filtering selections with all available fields and values.
For our selection, only the UCWSC title is fixed. Let’s narrow down the potential volume for announcement analysis by using the filtering tool. In the “Lot Status” field, we select “Procurement Completed” to restrict the selection to lots where procurement has occurred.
Next, let’s further narrow it down to lots where there were bids. We open the “Lot Bid” entity, select the “Bid Status” field, and choose “Winner” to select lots where there was a winner. Thus, by using the filter tool, we refine the selection, thereby improving the quality of the analysis.
Returning to the Lot Table, our selection reduced the number of announcements from 17,000 to 2,600, which is significantly smaller but still requires substantial effort for detailed analysis.
The primary tool within the scope of this specific case will be the use of supplier pricing data.
We select the entity ‘Offer,’ and within it, we choose the field for ‘Unit Supplier Price.’
Values highlighted in white correspond to all the supplier prices that are presented in the bids within our selected dataset. Gray-colored values correspond to all the bids that are not relevant to our dataset.
We observe a certain range of prices. Using this tool, we can study both the extreme values and the conditionally more standard values. To narrow the price range, it is necessary to select the appropriate attribute and unit of measurement, as these factors can influence the final price.
Suppose you, as a potential supplier, know your minimum price and are looking for announcements and orders that fall within a price range acceptable to you.
In the ‘Offer Price’ field, you can set a range of values using the ‘greater than’ and ‘less than’ symbols. This way, you will receive data on the announcements where the award was given to suppliers with unit prices within the specified range.
Within the scope of this case, we have examined an example of using the filter sheet to narrow down the data for analysis when formulating pricing strategy.