Our blog article this month takes a slightly different approach. We normally focus on suppliers, helping them to think about how to prepare bids that are more likely to win. We do, however, have a number of readers who are ‘on the other side’ as buyers. This month, we therefore think about what makes for a good procurement exercise and how to get the most out of the bidding process.
As a buyer, you are normally looking for a service that fits well with your organisation, that meets your priorities and helps you to solve a problem or an issue. Unless you really are looking for an ‘off the shelf’ service that requires you to fit your business around that of the supplier, use these top tips to help you get the most out of a procurement exercise.
Engage with your market early
Lots of early engagement brings so many different benefits:
- You can test your thoughts and ideas in advance
- Suppliers can give you new insight and feedback using their experience
- Suppliers who really understand your business are more likely to propose a service that meets your needs and solves issues
- Clear understanding reduces risk, allowing suppliers to reduce prices
- You are more likely to increase interest in your contract, which will driver greater levels of competition.
As a buyer, you like to read bids that are structured well, clear and easy to read. The same goes for suppliers. Many procurements are well run, but we still see bid documentation that is incomplete, copy and pasted from other competitions with irrelevant information, is ambiguously worded or simply ill-defined. Re-issuing lots of updates to documents can lead to confusion, and certainly frustration. It can also lead to a loss of confidence in you as the buyer.
Take time therefore to prepare well, pre-empting the sorts of information your suppliers are going to require. Make sure you have thought through what you are wanting to buy and how you are wanting to buy it. Make sure documentation is complete, unambiguous and helpful. Good preparation will even reduce you work-load as it avoids unnecessary clarification questions.
Timing is critical
Suppliers are made up of human beings. Human beings have needs just like you. Needs like holidays and sleep! Think therefore about when you time your procurements. For example, try and avoid school holiday periods when bidding teams may be depleted. There is nothing worse for the morale of a bid manager than to receive procurement documents in mid-July with a return date of end August!
Equally, find out when like-minded organisations are bidding so you do not overload your suppliers. Recognise the businesses have their own boards and governance they have to go through to get ‘sign off’ before submitting a bid. Then allow them plenty of time to prepare their bid.
The risk of doing otherwise is to end up with half the number of bids you were hoping for (companies will prioritise, and you just might not make the shortlist of ‘must bid’ competitions). Other bids may feel rushed and leave you open to risk later on.
Create a process and allocate sufficient resources
Work doesn’t stop after the bid documentation has been issued. There are clarification questions to answer, supplier events to organise, evaluation meetings to organise and business cases to prepare. Don’t forget that you will also receive clarification questions from your bidders that you need to reply to quickly. What may seem to be a minor matter to you, may be of critical importance to the supplier, without which they will struggle to meet your deadline. Make sure therefore you have the right experts on stand-by to receive questions and respond promptly to them. Also make sure responses are full and unambiguous.
Give suppliers space to be creative
We sometimes see requirement documents that are so detailed, it is not surprising that the buyer receives a set of bids that are incredibly similar in nature. There simply is no room for suppliers to move and so buyers are disappointed at what they perceive to be offers that lack substance. Think therefore whether you really need to be so prescriptive or whether you could give suppliers a set of minimum standards they have to meet with flexibility to innovate on how the service is delivered.
Don’t expect the market to carry all the risk
Outsourcing is a great way to pass risk to suppliers, particularly risk that they are used to carrying or are experts in doing so. However, if you try and pass over too much risk, you will either put perfectly capable companies off from bidding, or you will pay more for the service in the long run. Carrying more risk generally leads to a requirement for higher reward. Think carefully therefore whether your Key Performance Indicators really are key and whether they are the most important things to you. Use performance measures to incentivise, not to penalise.
Think about the relationship you want from your supplier
No one denies that the buyer is the one who sits in the driving seat of the contract. After all, you are the one who is paying for the service and you quite rightly should get what you want. However, relationships that are built purely on a ‘buy and supply’ model rarely work. Yes, set high standards and expect your suppliers to focus on you as the customer. However, at the same time, be fair. Recognise that contracts are delivered by people, and people are humans. Mistakes will therefore happen.
If you give your suppliers space to correct errors, and deal with inadequacies, you will find them to be more open, honest, and trustworthy for the long term. In turn, you will benefit from a far more responsive service and a willingness to go the extra mile for you.
We hope you have found this article to be helpful. If you are a buyer and want to know more about running successful procurement exercises, or for suppliers how to improve the quality of your bids, get in touch by calling Sam Nimmo on 01491 902021 or e-mailing us at email@example.com.