Who is responsible when a supplier wins the tender but then delivers poor service? You are!
The team that runs your tendering process is responsible for ensuring the selection of the supplier capable of delivering the business' goals most effectively.
In order to achieve this they must:
- Specify your business and technical requirements, clearly and accurately
- Manage the invitation to tender process to secure bids from a good selection of suitable suppliers
- Develop an effective evaluation scoring system that ensures the selection of the best possible bid, impartially and transparently.
So if you ended up with a supplier who hadn’t really understood your requirements, selected from a group of suppliers your internal team suggested and selected in an ad hoc fashion, you can’t blame anyone but yourselves.
We recently completed a tendering exercise for a client, who had embarked upon an IT outsourcing contract, which hadn’t worked out as planned - for the client. The service was not reliable and the service provider did not seem interested in fixing problems within the times defined in a rather loosely worded Service Level Agreement (SLA). The problem was that the CEO had been so keen to outsource his IT, he hadn’t bothered with a detailed specification of requirements – the outsourcing service provider did that for him. And he hadn’t sent the tender out to other suppliers – what was the need? The cost savings were already more than he had dreamed possible. So when the quote came in, he signed it.
When it came to renewing the arrangement, the client knew he needed to do things differently and looked for an external consultancy to help him, but either found freelancers who seemed to be making it up as they went along, or bigger consultancies who would have cost him a small fortune.
Fortunately a fellow-CEO recommended eXceeding, a independent company, set up to give impartial advice and support to our clients at an affordable cost.
- Undertook a thorough business and technical review of the company’s current and anticipated IT requirements.
- Carried out a market analysis to make sure we had a wide enough selection of providers to choose from – not the same ones each time.
- Carried out a ‘beauty parade’ of the top rated suppliers.
- Issued a PQQ that included several key questions about performance measurement and benchmarking, to ensure that the shortlisted suppliers would be happy to work within a more tightly written contract and SLA.
- Shortlisted four suppliers and asked them to respond to a formal Request for Proposal (RFP), which narrowed the selection down to two main candidates, both of which would have offered a good service.
The client awarded the contract to the service provider that demonstrated a better understanding of his future growth requirements. He achieved a better outcome in terms of improved performance, more favourable contract terms and significantly lower costs.
There are four main reasons our clients give us why they needed our help:
- Don’t have the bandwidth: “IT is our lifeblood and we can’t afford to screw this up, but everyone is too busy to allocate enough time, including me.”
- Don’t have the skills: “We’ve not gone out to tender before – we wouldn’t know how best and most effectively to manage the process.”
- Don’t know which suppliers to invite to tender: “We seem to use the same few suppliers the whole time. I suppose it’s easier, but it can’t be giving us best value.”
- Don’t have a well-designed, formal tender management process that would satisfy the key principles of fairness and transparency: “We had the very unpleasant experience of bidders accusing the IT manager of favouritism, because he had not published the award criteria and could not defend his decision to retain the incumbent supplier. We can’t afford that to happen again.”
For further information on Supply Chain Selection please visit our Supply Chain Selection page
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