Frequently Asked Questions

Glossary of ePurchasing Terms

Glossary of ePurchasing Terms

ePurchasing terms for beginners. Let us walk you through all the basics that you need know.

Aggregation

Aggregation is collaboration by buyers to combine their demand for supply by the same supplier. In telecoms, aggregation can help suppliers make new infrastructure investment and let them offer marginal cost pricing.

Algorithm

An algorithm commonly refers to software code written to automate a manual step by step process or calculation.

Award

Contract Award occurs at the conclusion of an telecom RFx or online auction where the winning supplier is awarded an offer to contract.

Bid

A bid is a supplier’s offer during an eAuction for a bundle of services.

Buyer

A buyer is a contracting entity.

Collusion

Supplier collusion is co-operation designed to reduce competition on price or service level commitments. Buyers are worse off when suppliers collude.

Combinatorial Auction

A combinatorial auction is where a supplier offers different pricing for different auction lot combinations i.e. fixed line, mobile, and data may be priced differently when purchased separately compared to when purchased in combination. A state based contract may be priced differently to a national contract.

Combinatorial Discounting

Combinatorial discounting is where suppliers offer different reference price discounts depending on different lot combinations.

Conditional Discounting

Conditional discounting is where suppliers offer different reference price discounts depending on certain conditions being met e.g. a supplier may offer a 10 percent discount if contracted for fixed line and mobile, but offer a 20 percent discount if contracted to provide fixed line, mobile, and data.

Post Auction Reports

Post auction reports are simple feedback sent to unsuccessful suppliers. Reports often include: contract term and structure, supplier pricing relative to the winning supplier. Suppliers desire these reports so that they can respond to market feedback on their offering, and engage in marketing to the customer close to new contract expiry.

Data

Telecom category data is baseline data required to manage the category including telecom service spend, usage, device count, and user count. Additional data can include locational, business unit, contracting entities, contract terms.

Disaggregation

Disaggregation refers to the scenario where customer demand is broken into smaller lots e.g. a state based, instead of a national, contracting strategy.

Discount

A discount is where a supplier offers a percentage reduction to a reference price.

Diseconomies of Scope

Diseconomies of scope occur where a supplier is not able to improve their pricing where additional services are contracted e.g. pricing for mobile and data may not improve if fixed line is added to the contract.
Diseconomies of scope are highlighted when a product combination can be purchased for less by contracting two suppliers, rather than either one supplier.

Diseconomies of Scale

Diseconomies of scale occur when cost rises as volume increases. This may be a reflection of product complexity or geography.

Duopoly

A situation where two suppliers dominate the market for a service. In telecom markets a supplier may be a monopoly or duopoly supplier for one service but not for a different one e.g. fixed line voice versus data.

Economies of Scale

Economies of scale occur when the average price of a service falls as the production increase. Economies of scale is a function of production costs being a combination of fixed and variable costs, and average fixed costs falling as production increases.

Economies of Scope

Average prices fall as the number of different products purchased increases. In telecom sourcing an economy of scope may be seen if the price of mobile minutes reduces when purchased with a data service.

eSourcing

eSourcing is internet based sourcing using online software. The generation of a contract. Sourcing includes product or service specification, supplier identification, supplier evaluation, preferred supplier(s) contracting.

eProcurement

eProcurement is internet based procurement using online software. Procurement is the use of a contract. The activity of having contracted suppliers deliver products or services and then making contracted payment. Procurement is viewed as tactical in nature (the process of physically buying a product or service).

Electronic Auction (eAuction)

An electronic auction is an online auction where suppliers and buyers transact over the internet.

eRFx

eRFx (or eRFx) is an acronym for Electronic Request For [x], where x can be Proposal (RFP), Quotation (RFQ), Information (RFI) or Tender (RFT)

Expressive Bid Process

An expressive bid process is one where a supplier makes offers across lots that are not mutually exclusive e.g. if the offer for mobile pricing is accepted then the data pricing is valid (otherwise invalid) i.e. offers are combinatorial.

Factors

Factors are criteria that a dollar value has been assigned to and that will impact a buyer’s purchasing decision.

Hard Stop Auction End

A hard stop auction end is the time when no further bids will be accepted.

Lot

An auction lot is a service or group of services that a customer intends to contract for.

Lot design

Lot design is the allocation of goods and services into lots that will lead to contracts that can be effectively managed.

Mobile

Mobile is short for mobile telecommunications i.e. a mobile phone service

Mobile Managed Services

Mobile is short for mobile telecommunications i.e. a mobile phone service

Pre-Qualification Questionnaire (PQQ)

A Pre-Qualification Questionnaire (PQQ) is used to assess candidate supplier competency to provide of a good or service. A PDQ will be part of a part of a multistage sourcing process,

Package Bid

A package bid is a single bid for a combination of lots. A package is a combination of lots.

Price Schedule

A price schedule is a contract schedule that lists goods and services and the agreed pricing.

Procurement

Procurement is the use of a contract. The activity of having contracted suppliers deliver products or services and then making contracted payment. Typically procurement is viewed as being tactical in nature (the process of physically buying a product or service).

Request for Proposal (RFP)

A Request for Proposal (RFP) is a market enquiry prepared by the buyer and issued to prospective suppliers for higher value and/or more complex solutions. Informally used interchangeably with RFT and Tender.

Request for Tender (RFT)

A Request for Tender (RFT) is a more formal approach towards asking a supplier to bid on specific goods and services. Informally used interchangeably with RFP and Tender.

Reverse Auction

A reverse auction is where suppliers compete to contract with buyers. Supplier bid with incrementally lower prices until the least cost supplier is found.

Service

A service is something that provides intangible benefit to the buyer but doesn’t exist in a physical form. Examples of telecom services are call minutes or data downloads.

Sourcing

Sourcing is the generation of a contract. Sourcing includes product or service specification, supplier identification, supplier evaluation, preferred supplier(s) contracting.

Supplier

A supplier is a contracting entity that will arrange, and invoice, for the provision goods and/or services.

Telecommunications

Telecommunications is a collective term to cover technologies that deliver mobile, data, and voice services

Telecom

Telecom is an informal term used for telecommunications or telco

Telecom Expense Management

Telecom Expense Management (TEM) is the activities to control telecommunications costs across fixed line, mobile, and data. Activities managed include reporting, accounts payable automation, and sourcing.

Tender

A formal offer from a supplier in response to a Request for Tender (RFT) for a product or service specification. Informally used interchangeably with RFT and RFP.

Tender Document

A tender document describes the specifics a buyer is requiring suppliers to provide and may include a description required of services or products, quantities, and service levels. This is sent to suppliers at the start of a sourcing process.

Telco

Telco means telecommunications supplier or informal of telecommunications. Variant of telecom.

Winner

A winner from a sourcing process is determined by analysing supplier offers to arrive at either the lowest factored cost supplier, or the supplier that represents the best ‘value for money’ for a buyer