Use case - evaluating 3rd Party supplier performance 

These case studies use real data and anonymised supplier names.

Price Shopper searches and then matches lead-in prices from multiple suppliers for the next 90 arrival dates. Matched lead-in prices are converted in to a KPI which we call ‘Meet Beat Ratio’ (or MBR). MBR is the ratio of prices that match or are lower than the competitor’s price. It approximates the market share that would be achieved with a customer. 


Our Lead in price Meet Beat Ratios show Istanbul averages 14% for the next 90 stay dates.

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Meet Beat Ratio vs. supplier A is very low, always below 10%.


Meet Beat vs. Supplier B frequently equals zero which usually means that no prices were returned for those dates. When requests return prices, Meet Beat Ratio is acceptable, between 60% and 70%. However, failure to provide responses is negatively impacting average Meet Beat Ratio.


Supplier C provides commissionable BAR rates. Meet Beat is at or near to 100% on all dates as would be expected.


Choosing a date where Supplier B is returning search responses (5th March), we get these example Meet Beat Ratios:

Supplier A competes for 123 (or 89%) of the total 138 matched properties and our price only beats Supplier A for 9 properties or 7% of matches.

Supplier B is only supplying 18 matched properties and their Meet Beat Ratio is low.

Of our 6 directly contracted hotels, 2 were beaten by Supplier A.


Conclusions:

  1. Supplier A has a dominant position. They supply most of our available properties.
  2. Our market share will be at risk if any of our customers contract directly with Supplier A.
  3. Supplier B's response performance is poor and is affecting our competitiveness.
  4. Our direct contract rates beaten by Supplier A need renegotiation.

Actions:

  1. Map more Supplier B inventory and seek price reductions to improve competitiveness.
  2. Map more Supplier C properties not available with Supplier A to reduce reliance on Supplier A.
  3. Seek additional / alternative suppliers who can directly compete with Supplier A inventory and pricing.
  4. Renegotiate net rates at the 2 directly contracted hotels.
  5. Work with our IT support to monitor Supplier B response performance
  6. Report Supplier B poor response performance to their technical support