Question 2
During the budgeting phase, they allocated $1.5 million to procure 50 sedans. In 2020, MostBuyer acquired 40 sedans at a cost of $28,000 per vehicle. The price included the cost of the vehicles and a standard service plan but did not encompass extended warranties or enhanced roadside assistance packages. Since the last purchase, the market has experienced a 3% annual increase in vehicle prices due to inflation and increased costs for safety and emissions technology. Additionally, the expectation for more comprehensive after-sales services has become standard in the industry.
Based on this information, the company has issued a Request for Proposal (RFP) to several car dealerships to ensure they secure the best terms in terms of cost, vehicle reliability, fuel efficiency, and maintenance services.
Question: Evaluate the RfP designed by MostBuyer in terms of:
- Does it communicate effectively the needs of the company for the service? What would you improve?
- Is the price realistic and in line with the market trends (Note: answer based on the information reported in the case! You do not have to do any car rental market research)?
- Are the criteria included in the RfP objectively measurable enough to communicate a fair evaluation to the suppliers?
MostBuyer has received offers from three suppliers.
Dealership A – Prestige Motors
Prestige Motors is renowned for supplying high-end vehicles and has built a reputation for quality and luxury. They have been in the market for over 20 years and are known for their exceptional customer service and after-sales support. Prestige Motors caters to corporate clients with tailored fleet management solutions and takes pride in offering vehicles that come with the latest technology and safety features. Their commitment to environmental standards is evident in their range of vehicles that exceed the required emissions regulations.
The offer received from Prestige Motors includes the following characteristics:
- Engine Type: 2.5L 4-cylinder engine
- Fuel Efficiency: 35 MPG city
- Passenger Capacity: Seats 5 adults
- Safety Features: Advanced airbags, ABS, ESC
- Emission Standards: EPA Tier 3, Bin 5
- Price: $34,000 per vehicle
- Delivery: 3 months from contract signing
- After-Sales Service:
- 5-year or 60,000-mile warranty
- Maintenance package for 3 years
- Roadside assistance included
- Fleet Management Services: Available at an additional cost
- Color Customization: Available
Dealership B – Value Auto Sales
Value Auto Sales has a solid track record of offering reliable mid-range vehicles at competitive prices. With a decade of experience, they have established themselves as a dependable supplier for various businesses, prioritizing value for money and efficiency. Although their after-sales services meet industry standards, they don’t typically provide comprehensive fleet management or extensive customization options. However, they have the best delivery times, demonstrating their efficiency and strong supply chain management.
The offer received from Value Auto Sales includes the following characteristics:
- Engine Type: 2.0L 4-cylinder engine
- Fuel Efficiency: 30 MPG city
- Passenger Capacity: Seats 5 adults
- Safety Features: Standard airbags, ABS, ESC
- Emission Standards: EPA Tier 2, Bin 5
- Price: $29,000 per vehicle
- Delivery: 2 months from contract signing
- After-Sales Service:
- 3-year or 36,000-mile warranty
- Maintenance package for 2 years
- Roadside assistance not mentioned
- Fleet Management Services: Not offered
- Color Customization: Limited options without additional cost
Dealership C – Economy Wheels
Economy Wheels is a newer entrant to the market, focusing on affordable transportation solutions. They offer the most economical options and appeal to buyers with tight budget constraints. While they strive to meet safety and comfort standards, their vehicles and services might not meet all the premium criteria that corporate clients like MostBuyer could expect. They are still building their reputation and are eager to establish long-term relationships with corporate clients, which could mean potential for negotiation and future improvements in service offerings.
The offer received from Economy Wheels includes the following characteristics:
- Engine Type: 1.8L 4-cylinder engine (does not meet minimum requirement)
- Fuel Efficiency: 32 MPG city
- Passenger Capacity: Seats 5 adults
- Safety Features: Standard airbags, ABS, ESC
- Emission Standards: EPA Tier 2, Bin 4 (does not meet minimum requirement)
- Price: $27,000 per vehicle
- Delivery: 4 months from contract signing (exceeds timeline)
- After-Sales Service:
- 3-year or 36,000-mile warranty
- Maintenance package for 1 year (does not meet minimum requirement)
- Roadside assistance included
- Fleet Management Services: Not offered
- Color Customization: Not offered
The offers are summarized as follows: (See attachments, screenshots provided)
MostBuyer’s Supplier Evaluation Method
MostBuyer has adopted a comprehensive weighting evaluation method that assigns weights to different dimensions of a supplier’s offer. Each dimension is assessed on a scale of 1 to 5, where 1 represents the least favorable outcome and 5 represents the most favorable outcome. The following dimensions are considered, with their respective weights:
- Price (30%): Cost is a significant consideration. The lowest price that meets the RFP requirements scores a 5, and the highest price scores a 1. The scores for the other prices are scaled proportionally between these two extremes.
- Vehicle Specifications (25%): This dimension evaluates how well the vehicle meets or exceeds the RFP’s technical specifications, such as engine power, fuel efficiency, and passenger capacity. The offer that exceeds the specifications the most receives a score of 5, the one that meets just the minimum scores a 3, and the one that meets the minimum requirements or slightly underperforms receives the lowest score.
- Emission Standards (15%): Given the importance of environmental standards, this criterion assesses compliance with or exceeding the EPA Tier and Bin standards mentioned in the RFP. Offers that exceed compliance scores a 5, those that meet the minimum required standards score a 3, and failure to meet the standard scores a 1.
- After-Sales Service (10%): This includes the warranty length, the comprehensiveness of the maintenance package, and roadside assistance. The most comprehensive service plan receives a score of 5, the offers with the minimum acceptable package score a 3, while the basic legal minimum scores a 1.
- Delivery Time (10%): Timeliness is key. The supplier that can deliver the fleet earliest scores a 5, and the one with the longest delivery time scores a 1; intermediate times are scaled proportionally.
- Fleet Management Services (5%): If a dealership offers comprehensive fleet management services, it scores a 5. If it offers some level of service or only upon additional costs, it will score between 2 and 4 depending on the extent of the services provided. No service results in a score of 1.
- Color Customization (5%): The ability to customize colors might not be critical but is still a desired feature. Full customization ability scores a 5, limited options score between 2 and 4, and no options score a 1.
Question: Comment on the evaluation method proposed by Most Buyer. This includes:
- How well does MostBuyer’s evaluation method consider the complexity and variety of factors involved in the supplier selection process? Consider whether the method incorporates various factors beyond price, such as technical specifications, environmental impact, and after-sales services.
- Does the evaluation method account for all necessary aspects of the supplier’s offer as per the RFP, ensuring a thorough comparison? Review the RFP and the criteria within the evaluation method. Identify any potential gaps where important requirements from the RFP might not be adequately covered or quantified in the evaluation method.
- Is the evaluation method presented by MostBuyer clear and easily understandable for all stakeholders involved in the decision-making process? Critique the clarity of the scale and the weightings used. Discuss whether these would be easily interpreted by different stakeholders, including those who may not have a technical background.