How to avoid the risks associated with winning bids at low prices when purchasing equipment and spare parts

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Game theory in the procurement of industrial goods and services. In the procurement of industrial services and goods, there are usually two scenarios: 1. Single choice and the \"prisoner’s dilemma\" – Industrial clients choose only one service provider, and in order to win the contract, bidders tend to keep lowering prices during the bidding and negotiation process, sometimes even submitting bids at a price below their cost. 2. When two suppliers choose this option at the same time, it is usually the case with long-term suppliers of industrial products; as mentioned in the example, they tend to select a bid of $100 or around that amount. How to avoid the pitfalls associated with winning bids at the lowest price: 1. Last resort: The bidder with the lowest bid should prove its competence. The **Procedures for Bidding on the Purchase of Goods and Services** stipulate that if the bid evaluation committee believes a bidder’s bid is significantly lower than those of other bidders who have passed the compliance review, and that this might affect product quality or prevent honest performance of obligations, the bidder shall be required to provide a written explanation within a reasonable time during the bid evaluation process, and submit relevant supporting documents if necessary ； If the bidder cannot justify the reasonableness of its bid, the bid evaluation committee shall treat it as an invalid bid. Note: “A reasonable time at the bid evaluation site” is of great significance; it prevents favoritism from those outside the site, and it determines on the spot whether a bid is valid or not. 2. Intermediate approach: All tenderers should demonstrate their capability in terms of reliability and maintainability; that is, the tender requirements should ask them to provide evidence of their ability to ensure the reliability and maintainability of industrial products and services. It has been confirmed that the quality of the selected products and services meets the required standards, thereby avoiding the disadvantages associated with a single pricing option. Reference template: Reliability Evaluation Report for Equipment Modification and Introduction 3. Best approach: Obtain information on the quality characteristics of products and services prior to purchase. Extract key quality metrics from the maintenance records of previously purchased products (MTTR, which reflects the efficiency of maintenance services) ； MTBF reflects the quality of maintenance services or the manufacturing quality of the product itself; of course, digital equipment management (digital operation and maintenance) makes it easier to obtain such data. Of course, the data from a single factory is far from sufficient. By moving maintenance services to the cloud, it becomes possible to obtain more information from service providers and manufacturers. Through the classification and analysis of this maintenance data, it is possible to determine the quality characteristics of products, manufacturers, or service providers (exploratory features: product characteristics can be verified both before and after purchase). As a result, industrial enterprises can identify the best options among those available when purchasing products and services, which helps to enhance the stability and reliability of manufacturing systems and thus ensures the quality of the products.