Optimizing Procurement: A Guide to Buymanager's Automatic Valuation Settings

Buymanager's Automatic Valuation feature is designed to streamline your procurement process. It allows you to define a set of rules and criteria for automatically selecting the "best" supplier prices for your costing. 
Instead of manually comparing every detail, Automatic Valuation applies consistent logic to identify the most suitable offers.
 

Why Do You Need It?

• Efficiency: Automates the comparison process, saving significant time and effort.
• Consistency: Ensures that pricing decisions are always made according to predefined company standards, regardless of the individual buyer.
• Cost Optimization: Helps identify the most cost-effective options by evaluating not just price, but also factors like lead time, excess quantities, and stock availability.
• Policy Enforcement: Supports adherence to internal purchasing policies and strategies.
  
   

Prerequisites & Audience

This guide is relevant for:

• Users (Buyers): Who will utilize these configurations during the costing step to apply automatic valuation to their RFQs. You will need access to the "Costing" module.

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Understanding Automatic Valuation Strategies

Automatic Valuation in Buymanager considers several key strategies to determine the optimal price. These strategies define how the system evaluates different aspects of a supplier's offer.
 

1. Price Strategy

This strategy determines which prices are considered and how they are prioritized.

• Using All Available Prices: The system will evaluate every price provided in your quotation.
• Selecting with Priority: You can choose to prioritize certain types of prices.
  • When configuring this option, you'll see all available price types from your costings
  • You can assign a specific priority level to each price type.
  • A priority of zero (0) will make that price type unavailable for automatic valuation.
• Apply Setup to Key-in Prices: If selected, the automatic valuation (regardless of the chosen mode) will also apply to parts where prices have been manually entered by a user.
  
   

2. Purchasing Strategy

This strategy focuses on how the "best" offer is calculated, especially considering quantities and potential leftovers. Three calculation methods are available:

1. Minimum Price: The "Best of"  is simply the lowest price offered.
2. Minimum Excess: The "Best of" is the price for which the turnover (cost) of the remaining "excess" quantity will be the smallest. This helps minimize costs associated with over-ordering.

3. Price and Excess Optimized: The "Best of" is the price that represents the smallest total turnover, which includes the price of the required quantity plus any outstanding excess calculated according to a chosen excess calculation parameter.

   • Excess Calculation Parameters: The way "excess" is calculated depends on your chosen method:
     • Automatic: Buymanager automatically determines the excess.
     • Based on MOQ and MPQ: Excess is calculated based on the Minimum Order Quantity (MOQ) and the Minimum Pack Quantity (MPQ).
     • Based on Qty/PO and MPQ: Excess is calculated based on the Quantity per Purchase Order (Qty/PO) and the Minimum Pack Quantity (MPQ).
   • Understanding Key Terms for Excess Calculation:
     • Qty/PO (Quantity per Purchase Order): This is the quantity you specified in your Request for Quotation (RFQ), indicating how many items you want the supplier to quote.
     • MOQ (Minimum Order Quantity): This is the minimum quantity a supplier requires you to order.
     • MPQ (Minimum Pack Quantity): This is the quantity per lot or package that a supplier provides.

   

3. Lead Time Strategy

This strategy considers delivery times when evaluating offers.

• Not Taken Into Account: All prices are considered, regardless of their associated lead times.
• Standard Lead Time: The system filters out prices where the standard lead time is longer than your maximum accepted lead time entered. 
• Negotiated Lead Time: The system filters out prices where the negotiated lead time is longer than your maximum accepted lead time entered
  • Important Note: The negotiated lead time is automatically set to a configurable value if the supplier's stock is sufficient to meet your needs.

• Do Not Use Prices with Zero Lead Time: This option allows you to exclude price lines that do not have any lead time specified (i.e., a lead time of 0). This setting only takes effect if you've chosen either "Standard Lead Time" or "Negotiated Lead Time" as your primary lead time strategy.
   

  
   

4. Stock Strategy

This strategy determines whether offers are considered based on the supplier's available stock.

• Include/Exclude Prices with Sufficient Stock: You can choose to include or exclude prices where the supplier has enough stock to meet your specified quantity needs. This is based on whether the supplier has the required items readily available.
  The option will only be avialble if either Standard Leadtime, or Negociated leadtime were choosen: 
  
  
  
  
   

  For more information on the Quote feature, see our article: The "Quota" Feature

By properly configuring and managing your Automatic Valuation settings, your organization can achieve:

• Consistent Decision-Making: All buyers adhere to a unified strategy.
• Faster Setup: Quick application of complex valuation parameters.
• Adaptability: Create specialized configurations for diverse purchasing scenarios.
• Policy Adherence: Reinforce company purchasing policies.
• Reduced Training Time: Simplify the onboarding process for new buyers.

This comprehensive approach helps harmonize the costing process, leading to more efficient, consistent, and cost-effective procurement.