The Bad Actors of OEM Procurement

When sending out a request for quote (RFQ), original equipment manufacturers have the option of soliciting bids either on individual parts or parts packages as a whole. This latter practice is often referred to as bundling, and its purpose is to incentivize suppliers to quote in the most competitive manner since they can sense a significant amount of business is at stake. This practice, in itself, is not procurement malpractice. It becomes malpractice, however, when the OEM changes the quoting process after bids from all of the potential suppliers have already been received. What do I mean by this? Even in bundled quotes, suppliers are expected to give detail pricing on the individual parts included in the bundle. Unfortunately, OEMs often use this to their advantage by de-bundling the parts, effectively treating these line items as quotes for single parts. This is called “cherry picking,” and should be considered malpractice.