This paper describes a study on how to purchase replacement tires for the Virginia department of highways and its consequences as they affected the purchasing program. The purposes were (a) to determine the objectives of the tire buying program and to evaluate the effectiveness of the program in achieving these objectives, and (b) if upon completion of evaluation there was believed to be need for improvements, to state where these needs existed and how they might be fulfilled. The department's tire buying objectives are to satisfy its needs at the least cost consistent with desired safety, and the method used in pursuit of this aim was to buy "first line" tires at the lowest bid price on the assumption that these tires were comparable to original equipment tires. A study of available records indicated that although there was no evidence that application of these procedures was not providing the desired safety there was substantial evidence that the use of the lowest bid price technique was not the least cost method of procuring tires for a more desirable end result. It was further suggested that the definition of lowest cost be changed from lowest bid price to least cost per tire mile of service. Two methods viewed as possible devices to achieve least cost per mile of service were the use of laboratory testing to insure more uniform quality of tires, and the use of performance data to express the quality of tires in terms of miles of service. Necessary requirements for effective incorporation of performance data into a competitive bidding system (specifically, least cost per mile bidding) were developed. As a result of the study, a three-year performance purchasing contract was made with the successful bidder. Anticipated benefits are direct savings of 52 percent of former cost ($441,000) and indirect savings from reduced downtime and tire shipments directly to the areas of use. Including cuts, blowouts, and normal road hazards, guaranteed average mileage is 35,000 for automobile tires and 60,000 for truck tires. The ultimate success of performance purchasing of tires in Virginia will be determined by prospective suppliers' bids on a new contract beginning January 1, 1969. /author/.
Abstract