ECI Proprietary

Lili Globman

Head of Financial

Planning & Analysis

BID MANAGEMENT

PRICING AND RISK

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AGENDA

ECI General Overview

ECI Bid Management Procedure

How does Bid Profitability Analysis reduce

uncertainty in pricing strategy process ?

Open Discussion

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ABOUT

ECI ?

250+ Active

Customers

International sales

and service centers

R&D and

manufacturing

centers across

MEA and APAC

FAST

FACTS 1700 Employees

Operating in more

than 70 countries

across 5 continents

25+ Centers

Established in

1961

Years of Experience

50+

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HQ and

Regional HQ’s

Sales and

service offices

in all continents

R&D and

manufacturing

centers

Partners

GLOBAL PRESENCE

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Bid Management

Process

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BID MANAGEMENT PROCESS

How do we decide what is the win bid pricing in B2B

company ?

How do we improve management decision making

when submit a proposal to customer ?

What the business and commercial considerations

should be taken ?

What the economic approach behind bid process –

MOP?

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BID PROCESS – KEY STAGES

- Deal Introduction &

Bid No Bid

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- Delivery vs. C form

- Contract

Negotiation and

Approval

- Assign a bid

manager

- Launch the Kick Off

& Proposal

Optimization

- Proposal Review

and terms approval

A Form Approval

D Form Delivery

C Form Contract

B Form BID

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A Form

Approval

B Form

Bid

C Form

Contract

D FORM

Delivery

Proposal

optimization

& approval Intro &

Bid No Bid

Contract

verification

& submission

Execution of deal

proposal/contract

and improvement

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STAGE B - MANAGEMENT BID REVIEW (MBR) GATES

What elements can cause a MBR ?

Discount above the approved discount policy (per RBU & LOB)

Financing, Credit exposure, Extended Payment Terms, Title Transfer and

Bid Bonds

Non-Standard Production & Delivery Terms

Non-Standard Product Road map

Non-Standard commercial terms

Non-Standard risks

Non-Standard Intellectual Property

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- Any one of the above can trigger a MBR

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STAGE B - MBR (CONT.)

MBR’s outputs - Pricing, P&L, Cash Flow and other risks assessment which support management to make decision and evaluate risks

MBR Stakeholders - Bid manager, Sales manager, CBU/RBU manager, LOB manager. Legal, Finance rep.

Non standard terms approval - Escalation will be discussed with the relevant stakeholder manager

Approvers – Finance/RBU/Operations/LOB/Legal

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ESCALATION TABLE

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MOP= Marginal Operating Profit Incremental profit by one single deal .

Any company

should decide its

level of OPEX

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HOW DO WE CREATE A P&L ?

The BOM – Bill of Material is prepared by Sale

Engineer .

The price list discount level is targeted by Sales .

The direct cost are taken from the foreword costing

per the bid timing .

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= Sales and Direct Contribution

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HOW DO WE CREATE A P&L - #2

Freight – Bill of Material is calculated by Export

Dep,

Warranty – cost per year *number of Years.

Royalties per the OCS agreement ,

Identified Services expenses like - Installations ,

training

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= Sales and Direct Contribution

Other COGS

= Marginal Gross Profit

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HOW DO WE CREATE A P&L - #3

Agent & Sales commission.

NRE – specific R&D efforts to this proposal .

Additional local expenses – Project Management ,

Unexpected – 3% from sales ratio

Financial expenses- based on the payments terms * interest

rate.

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= Gross Profit

Total marginal OPEX

= Marginal Operating Profit

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MBR PRESENTATION

OPPORTUNITY ANALYSIS &STRATEGY

Strengths/Weaknesses

Customer Relationship ?

Political leverage ?

Existing customer ?

Technical /Products/service capabilities

Recent activities regarding this opportunities –

Customer Win Factors

Technical/System offering ?

Commercial /Financial /pricing ?

Delivery ?time to market ?

RFP compliance ?

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What is our strategy to address the customer win factors above ?

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SUMMARY

Bid process – well structured work flow of A,B,C,D

MBR – Management Bid Review

Bid Pricing - decision making

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Open Discussion

PRICING &COSTING MODEL ISSUES

Marginal costing ?

How do we ensure that we are on track with

company long term profitability targets?

Do we need to approve any positive bid ?

ABC approach – is it feasible?

The dilemma is responsiveness vs. professionalism

Any idea how to improve the capabilities in order to

decide what is the win price in B2B

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THANKS LILI GLOBMAN

LILI.GLOBMAN@ECITELE.C

OM

MOBILE - 0524007241