Evaluation Frequency (Auction Only)
In an auction, the feedback is real-time and this setting lets you adjust how often Sourcing Optimizer evaluates new bids to generate feedback such as lot rankings. The default is every 15 seconds.
Bidding Extension (Auction Only)
The default of three minutes means that, if there is a new bid within the last three minutes, the auction will be extended for three minutes. This discourages bidders from sniping, where bids are placed at the last second to prevent any other bidders from reacting.
Global Rank-based allocation (Auction Only)
If this setting is enabled, then you’ll also see the ‘Number of Winners’ option.
The following explains what these settings accomplish:
- First, the platform generates a global bidder rank so that each bidder is ranked 1 to N.
- The ranking is based on the sum of each bidder organization’s bids across all lots.
- By default, the first-ranked bidder is shown as winning all lots.
If, instead, you change the number of winners to 2, then the top 2 bidders will see the 'winning' icon for all lots (right side of Figure 1 below). All other bidders won't see the winning icon for any lot (left side of Figure 1).
Since the ranks are based on a bidder having bids on all lots, you must seed your bids for all bidder-lot combinations.
The global ranks are displayed on the 'Bidder Activity' page (Figure 2).
Bundle Bidding (RFQ Only)
Bundle bidding allows bidders to provide discounts if they're awarded a package of lots. Each bidder can create multiple bundles consisting of various lots.
Two types of bundle bids are supported (Click 'On' for 'Bundle Bidding' and then click ‘Show advanced options’ to see them):
- Discounts for volume awards – bidders provide tiered discounts as shown in this example:
|Number of lots||1||20 lots||2.5%|
- Bundle lot bidding for all or nothing awards – bidders provide a discounted total value for each lot. They must win all the lots for the purchaser to qualify for the discounted pricing.
|Bundle Name||Lot ID||Bid Value (EUR)||Total (EUR)|
Bundle Bids Require Lot Bids: If enabled, bidders will not be allowed to create bundle bids unless evaluated bids exist for all lots in the bundle.
Bidders are asked to specify capacity limits (RFQ Only)
If this setting is enabled, bidders are asked to specify capacity limits (minimums and/or maximums) -- helping ensure that bidders can bid on as many lots or quantities as they’d like without exceeding their capacities. It also ensures that bidder minimum requirements are considered.
The purchaser must specify the number or currency attributes (e.g., shipments, lanes, units, etc.) on which the limits will be applied, and what type of limits to capture.
Clicking ‘Add Purchaser Capacity Criteria’ displays a window with three parts (Figure 4):
- Select the attribute to limit (e.g., shipments).
- From the ‘Bidder inputs’ drop-down box, select if bidders need to specify a minimum, maximum, or both a minimum and maximum, for the attribute selected in the first step.
- Enter the instructions that bidders will see when completing this information (e.g., “Enter the maximum number of shipments you can support.”).
|You can add mutiple capacity criteria. Click the ‘Edit’ button to make changes or delete a criterion.|
Figure 5 displays what the bidder would see for this example.
Bidder Capacity Limits (RFQ Only)
This setting, if enabled, allows bidders to specify a minimum, maximum, or both a minimum and maximum number of lots associated with one or more bundles.
For example, you may want to offer bidders the ability to specify a limit on the number of lots for a specific region, material or any other characteristic. Bidders first create bundles based on any criteria they choose. Then, they will be given the opportunity to enter the limit(s) for each bundle (Figure 6).
Click ‘Show advanced options’ to view the three limit types:
- Maximum Value
- Minimum Value
- Minimum and Maximum Value
Minimum Bid Decrement
In RFQ events, the minimum bid decrement is based on the attribute mapped to the 'Bid Decrement' field on the 'Bid Sheet Design' screen. It is the minimum amount by which a bidder has to reduce their current bid. For example, if you have set a minimum bid decrement of $5.00 and the current bid for a bidder is $100.00, then the next bid must be a maximum of $95.00.
This particular event setting pertains to bundle bids, and will only appear if you mapped an attribute to ‘Bid Decrement’ and have enabled bundle bidding.
Click ‘Show advanced options’ and then select one of the following options:
- 'Satisfy decrement on all lots’ in a bundle: this means that the bidder has to meet the minimum decrement set for each lot in a bundle
- ‘Satisfy decrement on at least one lot’ in a bundle: this is more lenient - the bidder only has to meet the decrement for one item in the bundle
- 'Satisfy decrement on sum over all lots' in a bundle: this means that the bidder has to adjust the bid value for one or more lots in the bundle so that the total adjustment is at least the sum of the minimum bid decrements for all lots in the bundle.
For example, assume the following:
- Lot A has a minimum bid decrement of $100
- Lot B has a minimum bid decrement of $200
- Lot A and Lot B are the only lots in an all-or-nothing bundle
If 'Satisfy decrement on sum over all lots' is selected, then a bidder can meet the bundle satisfaction criterion by adjusting the bid value for a lot in the bundle by $300 (the sum of the minimum bid decrements for all lots in the bundle).
The ‘Minimum Bid Decrement’ setting shown here will only appear if you have an attribute mapped to bid decrement on the ‘Bid Sheet Design' screen.
Next, click ‘Show advanced options’ and you’ll first have to specify whether a bidder has to satisfy the minimum bid decrement on at least one lot or all lots in the auction when updating bids.
The next option under Minimum Bid Decrement is the decrement formula. You can change the target value specified in the formula. By default, the target value is 'Current Lot Bid'.
The formula works as follows (please refer to Figure 7 below). Assume you have specified a bid decrement of 5 dollars for a lot. Next, assume you have a bidder with a bid of $100, Also, the next ranked bidder has a bid of $98, and the first ranked bidder has a bid of $90. Then, if you have the formula based on subtracting the first ranked bid from the current bid and then adding the $5 bid decrement, you can see by plugging in the values that the enforced bid decrement becomes $15; and therefore, the next bid can’t be higher than $85. Another option is to use Next Ranked Bid, and you can see that it results in an enforced bid decrement of $7. Of course, you can just have the bid decrement apply to the current bid (the default), so the enforced bid decrement is equal to the bid decrement of $5.
Note that you can also adjust the denominator and change it from 1 to any other number.
|Bid Decrement of $5.00||Bidder
|Next Ranked Bidder (6th)||First Ranked Bidder|
|Formula (Adjusting Target Value)||Plugged-In Values||Enforced Bid Decrement||Maximum
|(Current Bid - First Ranked Bid) / 1 + Specified Bid Decrement||(100 – 90)/1 + 5||$15.00||$85.00|
|(Current Bid - Next Ranked Bid) / 1 + Specified Bid Decrement||(100 – 98)/1 + 5||$7.00||$93.00|
|(Current Bid - Current Bid) / 1 + Specified Bid Decrement||(100 – 100)/1 + 5||$5.00||$95.00|
Use the feedback settings to turn of or off various feedback columns displayed to bidders. Please refer to Figures 9 and 10 below, which display the feedback columns for RFQ events and auction events respectively.
Available in both RFQ and Auction Events
- Winning Status: Tells a bidder whether or not they are winning a lot. It's based on real-time results for auction events and results from an earlier round for RFQ events. In Figures 8 and 9 below, it's represented by the green trophy icon.
- Evaluated Bid: If enabled, this tells the bidder what bid was used in the last evaluation. Recall that Sourcing Optimizer has an evaluation frequency setting for auctions, so the feedback could be based on the previously submitted bid instead of the bid just submitted.
- Traffic Light Feedback: Once enabled, click ‘Show advanced options’ (Figure 8) and decide whether you’ll provide green/amber/red feedback based on:
- A bidder’s rank (e.g., 2nd) by selecting ‘Calculate feedback based on rank’
- how close a bid is to the first-ranked bid (e.g., up to 5% of the first-ranked bid is green) by selecting ‘Calculate feedback based on proximity to first rank bid’
- how close a bid is to the feedback target (e.g., up to 5% of the target is green) by selecting 'Calculate feedback based on proximity to target'
- whether a bid has met the feedback target by selecting 'Calculate feedback on rank once target is met'. The system displays a red icon if the feedback target hasn't been met for a lot. Once met, it uses the feedback colors based on rank.
For example, you have 10 bidders and the following traffic light feedback conditions: Rank 4-10 is amber and Rank 1-3 is green. Then, all bids that are above the feedback target will show a red traffic light. As soon as the feedback target is met, the bid will either have an amber or green traffic light next to it, based on the bidder’s rank.
The last two options can only be selected if an attribute has been mapped to 'Feedback Target' on the Bid Sheet Design screen.
To change the rank ranges, first change the amber one (click the ‘3’ in ‘Rank 2 to 3….’) and then change the green one (click the ‘1’ in ‘Rank 1 to 1….’).
- Lot Rank: Tells a bidder their rank on a particular lot.
- Absolute Difference to Next Rank: Tells a bidder the exact difference to the next ranked bidder on a specific lot.
- Percentage Difference to Next Rank: Tells a bidder the percentage difference to the next ranked bidder on a specific lot.
- Absolute Difference to First Rank: Tells a bidder the exact difference to the first ranked bidder on a specific lot.
- Percentage Difference to First Rank: Tells a bidder the percentage difference to the first ranked bidder on a specific lot.
- Next Bid: This option can only be turned on if you’ve mapped an attribute to ‘Bid Decrement’. If enabled, it tells a bidder the amount by which they must improve upon their current bid. It's shown as 'Maximum Next Bid' in Figures 8 and 9.
- Current Bid: If enabled, this tells a bidder the value of their most recently submitted bid. It's shown as 'Bid Value' in Figures 8 and 9.
- Reserve Met: The ‘On/Off’ button will appear as grayed-out if you haven’t mapped an attribute to ‘Reserve’ in the ‘Bid Sheet Design’ screen. If enabled, it’ll inform the bidders when they’ve met the reserve on a lot. If the reserve is met for a lot, the 'Reserve met' indicator shows a blue light; otherwise, it's gray.
Available in RFQ Events Only
- Winning Bid Value: If enabled, this displays, for lots a bidder is winning, the current winning bid value. It does not display another bidder’s winning bid value.
- Winning Bundle: If enabled, this tells a bidder whether or not they are winning a lot as part of a bundle bid.
If enabled, Sourcing Optimizer displays a 'Split Configuration' step after ‘Event Settings’. From this screen, users can specify how they'd like to split a lot: Flexible Split (automatically split based on the optimal allocation plan), Single Award (lot will be awarded to one winner), and 'Split into N awards' where N is a number from 2 to 5. If a 'Split...' option is selected, the user can then specify the split (e.g., 50%, 30%, 20% when split into 3 awards). For RFQ events, the results are shown in ‘Scenario Results’ for a given scenario. For auction events, bidders winning business due to a split award for a lot will see the "winning" icon if the winning status is shown.
Clicking ‘Show advanced options’ displays the ‘Minimum Split Award’ setting. Use it to specify the minimum lot split that can be assigned to an awarded bidder. The minimum split should be greater than 0.00 and must not be above 0.5 (i.e. 50%).
Use this setting to determine how bidders enter their bids – either by entering them online via a browser window (‘Online’); by downloading an Excel bid sheet, entering the bids in Excel, and then uploading the saved file (‘Offline’); or ‘Both’ – where the bidders can use both options or the one that suits them best.
Reject Partial Bids
This setting is enabled by default, which means that bidders have to enter values for all mandatory columns when submitting bids. Otherwise, partial bids – bids missing values for one or more mandatory columns – will get rejected.
If 'Reject Partial Bids' is disabled, then bids that have values for all the columns used in the cost formula will be considered valid. Bids that don’t have values for all the cost formula columns will be accepted but will be considered incomplete and not valid.
Figure 11 shows a bid sheet with ‘Reject Partial Bids’ turned off. The bid on the second lot is valid despite the bidder not having entered a location (it’s valid because the pricing used in the cost formula HAS been entered). However, the bid on the third lot isn’t valid (denoted by the yellow ‘x’) because ‘Freight’, which is used in the cost formula, was left empty.
Zero and Negative bidding
Sourcing Optimizer automatically rejects bids that are either zero or negative in value. To allow zero and/or negative bids, turn this setting on.
If enabled, bidders can increase their bids from one round to the next for RFQ events, and within an auction. For example, a second round bid of €120 when the first round bid is €110 for a lot would be accepted with this setting on.
Bid Change Limit
This is the maximum change allowed between consecutive bids (e.g., a bidder organization's second-round bid compared to its first-round bid in an RFQ, or the next bid in an auction compared to the current bid). This setting helps prevent outlier bids by notifying bidders when the bid change is above the allowed limit.
To enable it, simply enter a percentage value in the box.
This setting also applies to lots in all-or-nothing bundle bids. For example, if the bid change limit is 25% then a revised lot bid of $70,000 in a bundle will not be accepted if the original bid is $100,000 (30% reduction exceeds the 25% limit).
Allow Early Finish
If this setting is enabled, bidders will see a 'I'm finished bidding' button that they can (optionally) click on to indicate they've finished bidding. The round will close early once all bidders have indicated that they've finished bidding.
Bid Upload Complete Notification
For events allowing bidders to upload completed bid sheets, turning this setting on will send the bidder an email notification when their bid sheet has been uploaded. It will also notify bidders of unsuccessful bid sheet upload attempts.