**5.1 The bid preparation process**

In the machinery and equipment industry, the process of bid preparation is typically initiated by a single customer inquiry. Accordingly, the first task within this process is usually the inquiry entry, during which the customer inquiry is registered and usually administrated in an IT-based information system (Cuber & Schmidt, 2012).

The inquiry entry is typically followed by the inquiry clarification & assessment. In the course of the inquiry clarification, it is of primary interest to transfer the more or less detailed customer requirements into adequate product specifications. The inquiry assessment serves the purpose of determining at what risks and benefits and to which extend the requested product or service and the therewith related project is realizable (Schuh & Schmidt, 2006).

Especially regarding rather complex structures, during the determination of the delivery date it is hard to obtain precise planning data. Therefore in this task at first empirical data or knowledge, such as data from comparable proposals and projects or the experience and

has to be allocated via the procurement department, concretized during the project planning in terms of specification and availability and afterwards to be ordered by the procurement department and supervised in form of project monitoring. The process regarding an already known long-running product or service on the other hand starts within the project planning. When the long-running product or service has been requested and ordered by procurement,

Figure 11 illustrates which process steps are accordingly relevant for the order-management process to be analyzed – namely the bid preparation process, the project planning process, the procurement process and the monitoring and controlling process are illuminated as these process steps incorporate the main variables and leverages influencing delivery reliability in the focus of the determined product/service types of bottleneck- and long-

Fig. 11. Gross structure of planning and order-handling processes in the machinery and

In the machinery and equipment industry, the process of bid preparation is typically initiated by a single customer inquiry. Accordingly, the first task within this process is usually the inquiry entry, during which the customer inquiry is registered and usually

The inquiry entry is typically followed by the inquiry clarification & assessment. In the course of the inquiry clarification, it is of primary interest to transfer the more or less detailed customer requirements into adequate product specifications. The inquiry assessment serves the purpose of determining at what risks and benefits and to which extend the requested product or service and the therewith related project is realizable

Especially regarding rather complex structures, during the determination of the delivery date it is hard to obtain precise planning data. Therefore in this task at first empirical data or knowledge, such as data from comparable proposals and projects or the experience and

administrated in an IT-based information system (Cuber & Schmidt, 2012).

the progression of the purchased parts/services is also monitored.

running-products/services.

equipment industry

(Schuh & Schmidt, 2006).

**5.1 The bid preparation process** 

practical knowledge of the project team, has to be drawn in instead. The resulting project gross design already includes first make-or-buy decisions, which refer to main components and services. At that point, the feasibility of the components or services intended to be subcontracted, has to be discussed with potential main suppliers. This bilateral interaction and the corresponding bidirectional exchange of information between the producer and potential suppliers is the first producer-supplier-interface in the course of the inter-company order execution (cf. KL 1 in Fig. 12).

Proposals, which include all necessary schedule-, price- and specification-related information, have to be obtained by the producer at this point as aside from prevailing inhouse restrictions, the available resources of the potential main suppliers and their ability to deliver have to be taken into account when determining the date of delivery.

In the following, an outside-purchasing suggestion concerning the reservation of external production capacities and critical outsourced items is already forwarded to the procurement department.

The next task in the course of the bid preparation process deals with the determination of the tender price and other commercial conditions based on in-house calculations and information derived from the supplier proposals. Within the final task of proposal creation, the commercial and legal conditions for the making of the requested product or equipment as well as for its delivery are set and all relevant information (e.g. technical specifications, commercial and legal conditions as well as the basic project schedules) are eventually consolidated in a final proposal. The process of bid preparation is terminated as this final proposal is submitted to the customer.

Fig. 12. Detailed structure of the bid preparation process (Schmidt, 2008)

Configuration Logic of Standard Business

manufacturing- or procurement-department.

framework to the process of order creation.

inter-company order execution (cf. KL4 in Fig. 14).

**5.3 The procurement process** 

Processes for Inter-Company Order Management 663

The next task in the course of the project planning process is the in-advance planning of long-running parts & materials, which includes the identification of those parts and materials as well as the planning of their sourcing. "Long-runners" are those parts or materials, whose standard procurement times exceed the planned lead time of the corresponding order-execution process and which therefore have to be procured in advance. To assure a high quality of planning data, technical parameters as well as master- and standard-specifications have to be updated and the standard procurement times have to be checked (cf. KL3 in Fig. 13). Depending on whether the long-runners are produced internally or externally a production- respectively order-proposal is forwarded to the

The in-advance planning of long-runners is followed by the assessment of whether the project is feasible as planned or not. If the project is considered as feasible, its project structure and schedules are subsequently passed. In the course of the passing of the project structure and schedules, the written order confirmation is send to the customer in which the commercial conditions as well as the confirmed deadline is binding stated. The final task within the project planning process, the (sub-)project approval, eventually launches the respective subprojects according to the project schedules and initiates the corresponding detail engineering & design order. In this context, each detail engineering & design order successively concretizes the project structure in terms of a continuously growing part list. Furthermore the sub-project approval triggers the transmission of order data and time

The question of where the needed materials, components or services should be purchased – that is the assignment of suppliers – is the starting point for the procurement process (Cuber & Schmidt, 2012). While some suppliers might be known for instance due to already existing business relationships, others still need to be found and chosen. Thus, the search for suppliers is the next task within the procurement process, if an appropriate supplier of a certain material, component or service is in fact unknown. Hence, this task basically serves the purpose of identifying potential suppliers. To determine whether a supplier is generally capable of providing the required materials, parts or services, a corresponding exchange of specification information is necessary at this point. This interaction between the producer and potential suppliers is represented by a producer-supplier-interface in the course of the

The suppliers are asked – in form of bid requests - to submit a respective proposal. That means intent information as well as consent information are exchanged. After the suppliers´ bids have been received, those are assessed according to company-specific criteria such as lowest price or earliest date of delivery. If it turns out in the following, that the created order plans do not comply with the overall project requirements, the created plans will have to be adjusted and the described activities need to – at least partially – be executed again. If the requirement of the producer is satisfied by the request of the supplier, the bid is classified as realizable and the respective supplier is assigned. Within the following task of order-approval, the producer first of all dispatches the orders to the involved suppliers. The corresponding exchange of consent information leads to the
