General Information and Considerations

Definitions

Bill of Material - Document which conveys product structure and component information for a given end item (assembly). It is used to determine how to build a product.

Budgetary Quote - An estimate based on information provided. This is an estimate intended to be used for feasibility decisions, planning, and budget development in the early stages of a project.

Budgetary (Price) Quote
Used to determine the price of a prospective purchase, but it usually has a longer lead time and more of a what if inquiry than the spot buyA budgetary quote may also be used to solicit lead times for parts. The budgetary quote is seen more in the government contracts and sub-contracting arenasIt will typically ask for the price breaks for 1,000 units, 10,0000 units, and 50,000 units for the same device, as an exampleThis information is usually used for determining a bid amount on a project.

Budgetary (Lead Time) Quote
Used if you are trying to receive information similar to what is obtained via a Purchase Agreement Quote, but you are also desiring lead times

AML - Approved Manufacturer List

Approved Manufacturer List - Specifies which manufacturers are approved/qualified for a part.

Approved Supplier List - Specifies who may supply the components produced by qualified manufacturers.

ASL - Approved Supplier List

BOM - Bill of Material

Contract Manufacturer (CM) - Also known as a sub-contractor. A business entity which provides manufacturing services for another business entity (also known as a prime contractor)

Delivery Quote - A purchase agreement has been established between the two trading partners when using a delivery quote.

Meet Competition Quote - Used to designate a meet competitor pricing ("meet comp") or delivery quote. This quote is the more complex of the quote typesA meet comp quote is used by the buyer to inquir e to a supplier if he/she is willing to lower his/her price, or make a delivery to make a sale. This is used primarily between a distributor and a supplier. The distributor is asking the supplier to lower its price in-line with another supplier of a comparable product to make the sale. This may be after the product has already been shipped to the distributor. This is more complex because of the transaction interaction that is described in Implementation Recommendations for Quote Processes. It may require information about who is the competition, what is their price, and how can their price be verified. .

OEM - Original Equipment Manufacturer

Original Equipment Manufacturer (OEM) - A business entity which manufacturers, markets, and sells their own product.

Purchase Agreement Quote - To specify the purchase agreement for prices or annual PA quote typeEDI is used more for this type of quote than the other typesIn the electronics industry, we normally try to establish a contract price for a product instead of negotiating the price with every sale. A contract is typically one year in the industry. The buyer will specify the quantity they wish to buy over the life of the agreement and the supplier will discount the list price based on the anticipated volume. Both consider the trend of the marketplace. A purchase agreement is common where a buyer and supplier are trying to establish a long term partnership, much the same as an EDI agreement. EDI is used more for this transaction because of the volume of data that can be involved.

Prime Contractor - A business entity that sub-contracts with a contract manufacturer to perform manufacturing services on their behalf.

Request for Quote - A business document that is used by potential buyers to solicit information pertaining product availability, pricing, lead time, and other information from potential sellers of goods and services.

RFQ - Request for Quote

RRFQ - Response to Request for Quote. A business document that is used by potential sellers to respond to a RFQ with information pertaining to product availability, pricing, lead time and other information.

Spot-Buy Quote - Most common in the industry. The RFQ asks the basic questions of when can I have it and how much will it cost? This is used more for generic devices that have multiple suppliers.

Sub-Contractor - Contract Manufacturer

Time and Materials Quote - Budgetary Quote

Before it's an Order
What happens before something becomes an order. There are some major categories:

• Sourcing: Determining who to buy from and establishing their technical and financial qualifications
• Pricing: Determining what the cost of the product or service will be
• Forecasting: Anticipating what will be ordered, based on a buyer's build plan or on historical usage

These are factors in the lead time for procuring a product.

Sourcing Means:

• Qualifying an existing approved supplier for a new product
• Qualifying an existing approved supplier for an old product they did not previously supply
• Finding and qualifying a new supplier for old and/or new products.
• If there is no supplier who provides what you want with the quality that you require, you can built it yourself or fund the startup of a new supply source

Identifying sources and settling on pricing are often done together. When the source is established, there may still be a need to re-address pricing, either order by order, or for long-term contracts. These are methods for sourcing and pricing: 

• Quote process: Buyer sends request for quotation and seller responds with a quote
  • Quote may include lead time commitment, pricing, product availability, etc. 
• Catalogs: Seller's public catalog or a customer-specific catalog of products and pricing.
• Contracts: Long term agreements for pricing and listing of which products to which the pricing applies
• Auctions, reverse auctions: defined later
• Account setup: Getting a new customer or supplier set up in partner systems
  • This is an example of a problem that is often perceived as a purchase order problem because purchase orders are typically the first transaction type a company moves to an eBusiness solution. There may be fewer problems with purchase order implementations if setup of partner identification data, including ship-to, bill-to and other location types, is handled during the account setup stage.
• Product setup: Exchanging part data, product categorization, etc. for new product or for new source
  • This is another example of a problem that is often perceived as a purchase order problem because purchase orders are typically the first transaction type a company moves to an eBusiness solution. There may be fewer problems with purchase order implementations if setup of product identification data, including cross-references between buyer and seller product identifiers, is handled during the account setup stage.

Types of Requests-for-Quote and Quotes

• Request for Quote (RFQ) with Approved Vendor List
• RFQ for Spot Buy (Reverse Auction - buyer gets bids from sellers)
• Purchase Agreement Quote
• Budgetary (Lead Time) Quote, a/k/a Time and Materials Quote
• Budgetary (Price Break) Quote
• Delivery Quote
• Meet-Competition Quote
  • May include Ship-from-Stock and Debit Authorization Request and Response
• Blanket Order/Contract Process
• Contract Manufacturing Process
• Distributor Process
• OEM/Sales Rep Process
• Direct vs. Indirect Material
• Design/Win (Pre-Order but not Quote)
• Auctions (Seller gets bids from buyer)
• Punch-Out/Round Trip

Types of Material Lists (Bills of Materials)

• Engineering BOM
• Production BOM (including production process) 
• Sourcing BOM
• Forecasting (Planning) BOM
• Product Costing BOM
• Sales BOM (flat, changes infrequently)
• Returns BOM (what should be inside the box when you get it back)
• Configurable/variable BOM
• Resource BOM
• Phantoms
• Primary and Alternate
• Kit BOM
• Postponement BOM

Types of Supplier Lists

• Approved manufacturers/sources
• Approved suppliers/vendors
• Preferred suppliers/vendors
• Denial List

Types of Catalogs

• Public
• Customer-specific
• Sales
• Technical Information
• Configurable Catalog (drill from one product to possible options/peripherals)

Related Components

• Inventory data (available to promise, etc.)
• Capacity availability
• Orders and forecasts
• Manufacturing Specifications
• Engineering Change Orders (ECO)
• Production Change Orders
• Part Change Notices (PCN) (discontinuances, etc.)
• Contract Award/Purchase Agreement
• Configurator