Supplier selection requires full transparency

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Telgen, Jan and Schotanus, Fredo (2010) Supplier selection requires full transparency. In: 19th Annual IPSERA Conference , 16 – 19 May, 2010, Lappeenranta, Finland.

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Abstract:In this paper, we highlight a number of problems arising with a commonly used supplier selection method: the weighted factor score method. We discuss the behavior of this method with respect to weighting, scaling issues, and relative scoring. Assuming that there is no convex dominance, we formally prove that with the same supplier selection method, we can make any supplier win by judiciously choosing the right parameters of the awarding mechanism. This means that any supplier can win if certain parameters are not published in a request for a proposal. This result applies to both absolute and relative scoring methods. Also, we show that the buyer should fully disclose all details of the awarding mechanism to suppliers in order to get better bids. The practical implications of our results are far reaching for (public) procurement: full transparency and disclosure of all details of weights and awarding schemes is not only required to avoid subjectivity in supplier selection, but it also leads to better bids from suppliers.
Item Type:Conference or Workshop Item
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Management and Governance (SMG)
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Link to this item:http://purl.utwente.nl/publications/74073
Conference URL:http://www.lut.fi/en/ipsera2010/Pages/Default.aspx
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