What Is Three Way Matching In Procurement?
Attention all procurement professionals! Are you tired of dealing with duplicate invoices and incorrect payments? Do you need a solution to streamline your accounting processes? Look no further than three way matching. In this blog post, we will explore what three way matching is and how it can revolutionize your procurement practices. Get ready to learn the ins and outs of this essential technique that has saved companies time and money for decades. Let’s dive in!
What is Three Way Matching in Procurement?
Three way matching is a procurement process where multiple buyers are looking to purchase the same type or quantity of goods or services. The aim of three way matching is to find the best possible price for all parties involved.
When three way matching is used, the buyer who first submits an offer is considered the frontrunner. If no one else can match the offer, then the frontrunner becomes the buyer and the offer expires. After that, the next contender in line (the second-to-last buyer) enters their offer and so on until a buyer matches all of the others’ offers or until there are no more contenders.
The benefits of using three way matching include:
-Auction style bidding helps to create competition which drives down prices.
-It allows buyers to compare offers and choose which one they think is best for them.
-It allows suppliers to find new customers and sell more products.
How Three Way Matching Works in Procurement
Three way matching is a procurement process where three or more suppliers are considered for a purchasing contract, and the supplier with the best price is awarded the contract. Suppliers who are not selected for the contract may still be able to sell to the organization through other channels.
The three way matching process begins with creating a list of potential suppliers. The suppliers on the list are then evaluated based on several factors, including price, quality, and delivery time. The best supplier is then chosen and offered the contract. If the best supplier is not available, then the next best supplier is offered the contract, and so on until a supplier is found that meets all of the requirements.
Three way matching can be helpful in avoiding bidding wars and ensuring that the organization gets quality products at a fair price. It can also help to reduce order backlogs and save money overall.
Advantages of Three Way Matching
Three way matching is a procurement methodology that allows for the selection of the best available proposal from multiple suppliers. Benefits of three way matching include:
1. Reduced costs and time delays: Three way matching can save both time and money by bypassing the need to review proposals from multiple vendors.
2. Increased selection options: By allowing for more than one supplier to compete for a contract, businesses can increase their selection options and find the best possible solution at the best price.
3. Improved quality: By allowing suppliers to compete against each other, businesses can ensure that they are getting the best quality product at a fair price.
Disadvantages of Three Way Matching
When companies use three way matching in procurement, they are essentially saying that they want to receive bids from all of the vendors who have submitted quotes. This can be a great way to get a large number of bids and ensure that you get the best price possible for your goods or services. However, there are some disadvantages to using three way matching that should be considered before deciding to do so.
One potential disadvantage of using three way matching is that it can take longer to select a winner than if only two suppliers are being considered. This is because each vendor must compete against each other in order to win the contract, which can result in higher prices and delays. Additionally, if one or more of the suppliers fails to meet contract requirements, the entire process may have to be restarted from scratch.
Another potential disadvantage of three way matching is that it can lead to collusion between the vendors. If one vendor knows another will be bidding on the same contract, they may collude in order to win the bid without competition. This kind of behavior can severely affect competition and result in high prices for consumers. In extreme cases, it may even lead to corruption among officials involved in awarding contracts.
Overall, while three way matching has its benefits, it should only be used if careful consideration is given to any potential disadvantages.
Conclusion
When it comes to procurement, three way matching can be a valuable tool for ensuring that all your requirements are met. By including third parties in the purchase process, you can ensure that all bids are fair and equitable, as well as reducing the likelihood of any unforeseen issues or delays. Three way matching is an essential part of successful procurement and should not be omitted from your procurement strategy – read on to find out more about how it works and why you might want to consider using it in your next acquisition.