Supplier Scorecard Price Comparison Formula<\/h3><\/div><\/div><\/div>PurchTips edition #98<\/p>\n<\/div>
Having Trouble With Supplier Scorecard Formulas?<\/h4><\/div><\/div><\/div>When there are multiple criteria for a supplier selection, purchasers often rely on supplier scorecards as a guide.<\/p>\n
Such supplier scorecards allow a maximum number of points per criterion. Suppliers’ scores for each criterion are based on predetermined point award schemes.<\/p>\n
For example, one criterion may be the location with a maximum of 50 points. The evaluator may award 50 points if the supplier is located within 20 miles of the buyer’s plant, 25 points if the supplier is located between 20 and 40 miles away, and 0 points if the supplier is located more than 40 miles away. That’s pretty simple.<\/p>\n
But most purchasers struggle to figure out a way to score prices for comparison. So, I took it upon myself to create a supplier scorecard price comparison formula. Let’s dub it the “Dominick Formula” for ease of recall.<\/p>\n
The Dominick Formula is built on this principle: the penalty to a supplier’s pricing score should be proportionate to the degree that its price varies from the Lowest Qualified Bid (LQB). So, if a supplier’s price is 25% higher than the LQB, its pricing score should be 25% lower than that of the supplier who submitted the LQB. If the supplier’s price is 40% higher, its pricing score should be 40% lower. Here is the Dominick Formula:<\/p>\n
PS = MP x (1 – ((SP-LQB)\/LQB))<\/p>\n
Where,<\/p>\n
PS = Pricing Score<\/p>\n
MP = Maximum Points<\/p>\n
SP = Supplier’s Price<\/p>\n
LQB = Lowest Qualified Bid<\/p>\n
Check out our Supplier RFP Scorecard<\/a> designed to help your procurement department rate supplier RFPs.<\/p>\nBecome a member of one of the world\u2019s largest procurement associations today.<\/a><\/p>\nRecommended Reading<\/strong><\/p>\n\n- Supplier Scorecarding<\/a><\/li>\n
- Supplier Scorecard<\/a><\/li>\n
- Supplier Scorecarding: Creating The Scorecard Is NOT The End Goal!<\/a><\/li>\n
- Reverse Supplier Scorecarding<\/a><\/li>\n
- Supplier Scorecard Formula<\/a><\/li>\n<\/ul>\n
<\/p>\n
Visit NLPA Learning<\/strong><\/a>, the new home to all of our certifications and online courses. NLPA Learning also includes learning resources, including live and on-demand webinars, publications and reports, articles, templates, white papers, and much more!<\/p>\n<\/div><\/div><\/div><\/div><\/div>Do You Want a More Rewarding Procurement Career?<\/h5><\/div>![](\"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2020\/12\/spsm_verify.jpg\" "\\"spsm_verify\\"")
<\/span><\/div>Are you tired of not getting enough opportunities, respect, and money out of your procurement career? Well, guess what? Nothing will change unless you take action towards becoming a world-class procurement professional.<\/p>\n
Earning your SPSM Certification is the action to take if you want to bring the most modern procurement practices into your organization and achieve your career potential. Download the SPSM Certification Guide today to learn how to get started on your journey to a more rewarding procurement career!<\/p>\n<\/div>
Download<\/span><\/a><\/div><\/div><\/div>Need Better Performance From Your Procurement Team?<\/h5><\/div>![](\"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2020\/12\/services.jpg\" "\\"services\\"")
<\/span><\/div>Are you a procurement leader whose team isn\u2019t achieving the results you know are possible? Maybe it\u2019s not enough cost savings. Or frustrating performance from the supply base. Or dissatisfied internal customers.<\/p>\n
You need a performance improvement plan that\u2019s easy to implement and quick to produce results. The NLPA can help.<\/p>\n
Download our whitepaper \u201cThe Procurement Leader\u2019s Guide To A More Successful Team.\u201d You\u2019ll learn the 7 steps for transforming your staff into a results-producing, world-class procurement team.<\/p>\n<\/div>
PurchTips edition #98<\/p>\n<\/div>
Having Trouble With Supplier Scorecard Formulas?<\/h4><\/div><\/div><\/div>When there are multiple criteria for a supplier selection, purchasers often rely on supplier scorecards as a guide.<\/p>\n
Such supplier scorecards allow a maximum number of points per criterion. Suppliers’ scores for each criterion are based on predetermined point award schemes.<\/p>\n
For example, one criterion may be the location with a maximum of 50 points. The evaluator may award 50 points if the supplier is located within 20 miles of the buyer’s plant, 25 points if the supplier is located between 20 and 40 miles away, and 0 points if the supplier is located more than 40 miles away. That’s pretty simple.<\/p>\n
But most purchasers struggle to figure out a way to score prices for comparison. So, I took it upon myself to create a supplier scorecard price comparison formula. Let’s dub it the “Dominick Formula” for ease of recall.<\/p>\n
The Dominick Formula is built on this principle: the penalty to a supplier’s pricing score should be proportionate to the degree that its price varies from the Lowest Qualified Bid (LQB). So, if a supplier’s price is 25% higher than the LQB, its pricing score should be 25% lower than that of the supplier who submitted the LQB. If the supplier’s price is 40% higher, its pricing score should be 40% lower. Here is the Dominick Formula:<\/p>\n
PS = MP x (1 – ((SP-LQB)\/LQB))<\/p>\n
Where,<\/p>\n
PS = Pricing Score<\/p>\n
MP = Maximum Points<\/p>\n
SP = Supplier’s Price<\/p>\n
LQB = Lowest Qualified Bid<\/p>\n
Check out our Supplier RFP Scorecard<\/a> designed to help your procurement department rate supplier RFPs.<\/p>\nBecome a member of one of the world\u2019s largest procurement associations today.<\/a><\/p>\nRecommended Reading<\/strong><\/p>\n\n- Supplier Scorecarding<\/a><\/li>\n
- Supplier Scorecard<\/a><\/li>\n
- Supplier Scorecarding: Creating The Scorecard Is NOT The End Goal!<\/a><\/li>\n
- Reverse Supplier Scorecarding<\/a><\/li>\n
- Supplier Scorecard Formula<\/a><\/li>\n<\/ul>\n
<\/p>\n
Visit NLPA Learning<\/strong><\/a>, the new home to all of our certifications and online courses. NLPA Learning also includes learning resources, including live and on-demand webinars, publications and reports, articles, templates, white papers, and much more!<\/p>\n<\/div><\/div><\/div><\/div><\/div>Do You Want a More Rewarding Procurement Career?<\/h5><\/div><\/span><\/div>Are you tired of not getting enough opportunities, respect, and money out of your procurement career? Well, guess what? Nothing will change unless you take action towards becoming a world-class procurement professional.<\/p>\n
Earning your SPSM Certification is the action to take if you want to bring the most modern procurement practices into your organization and achieve your career potential. Download the SPSM Certification Guide today to learn how to get started on your journey to a more rewarding procurement career!<\/p>\n<\/div>
Download<\/span><\/a><\/div><\/div><\/div>Need Better Performance From Your Procurement Team?<\/h5><\/div><\/span><\/div>Are you a procurement leader whose team isn\u2019t achieving the results you know are possible? Maybe it\u2019s not enough cost savings. Or frustrating performance from the supply base. Or dissatisfied internal customers.<\/p>\n
You need a performance improvement plan that\u2019s easy to implement and quick to produce results. The NLPA can help.<\/p>\n
Download our whitepaper \u201cThe Procurement Leader\u2019s Guide To A More Successful Team.\u201d You\u2019ll learn the 7 steps for transforming your staff into a results-producing, world-class procurement team.<\/p>\n<\/div>
When there are multiple criteria for a supplier selection, purchasers often rely on supplier scorecards as a guide.<\/p>\n
Such supplier scorecards allow a maximum number of points per criterion. Suppliers’ scores for each criterion are based on predetermined point award schemes.<\/p>\n
For example, one criterion may be the location with a maximum of 50 points. The evaluator may award 50 points if the supplier is located within 20 miles of the buyer’s plant, 25 points if the supplier is located between 20 and 40 miles away, and 0 points if the supplier is located more than 40 miles away. That’s pretty simple.<\/p>\n
But most purchasers struggle to figure out a way to score prices for comparison. So, I took it upon myself to create a supplier scorecard price comparison formula. Let’s dub it the “Dominick Formula” for ease of recall.<\/p>\n
The Dominick Formula is built on this principle: the penalty to a supplier’s pricing score should be proportionate to the degree that its price varies from the Lowest Qualified Bid (LQB). So, if a supplier’s price is 25% higher than the LQB, its pricing score should be 25% lower than that of the supplier who submitted the LQB. If the supplier’s price is 40% higher, its pricing score should be 40% lower. Here is the Dominick Formula:<\/p>\n
PS = MP x (1 – ((SP-LQB)\/LQB))<\/p>\n
Where,<\/p>\n
PS = Pricing Score<\/p>\n
MP = Maximum Points<\/p>\n
SP = Supplier’s Price<\/p>\n
LQB = Lowest Qualified Bid<\/p>\n
Check out our Supplier RFP Scorecard<\/a> designed to help your procurement department rate supplier RFPs.<\/p>\n Become a member of one of the world\u2019s largest procurement associations today.<\/a><\/p>\n Recommended Reading<\/strong><\/p>\n <\/p>\n Visit NLPA Learning<\/strong><\/a>, the new home to all of our certifications and online courses. NLPA Learning also includes learning resources, including live and on-demand webinars, publications and reports, articles, templates, white papers, and much more!<\/p>\n<\/div><\/div><\/div><\/div><\/div> Are you tired of not getting enough opportunities, respect, and money out of your procurement career? Well, guess what? Nothing will change unless you take action towards becoming a world-class procurement professional.<\/p>\n Earning your SPSM Certification is the action to take if you want to bring the most modern procurement practices into your organization and achieve your career potential. Download the SPSM Certification Guide today to learn how to get started on your journey to a more rewarding procurement career!<\/p>\n<\/div> Are you a procurement leader whose team isn\u2019t achieving the results you know are possible? Maybe it\u2019s not enough cost savings. Or frustrating performance from the supply base. Or dissatisfied internal customers.<\/p>\n You need a performance improvement plan that\u2019s easy to implement and quick to produce results. The NLPA can help.<\/p>\n Download our whitepaper \u201cThe Procurement Leader\u2019s Guide To A More Successful Team.\u201d You\u2019ll learn the 7 steps for transforming your staff into a results-producing, world-class procurement team.<\/p>\n<\/div>\n
Do You Want a More Rewarding Procurement Career?<\/h5><\/div>
<\/span><\/div>Need Better Performance From Your Procurement Team?<\/h5><\/div>
<\/span><\/div>
![](\"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2020\/12\/services-contracting.jpg\" "\\"services-contracting\\"")
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