Introduction
The conventional procurement and sourcing methods typically involve a lengthy and costly tender process. However, an alternative approach that prioritises relationship-building with incumbents can yield numerous benefits. By forging stronger partnerships and exploring innovative solutions together, organisations can reduce costs, improve service quality, and foster long-term mutual growth. In this article, we will delve into the advantages of skipping the tender process and embracing a more collaborative approach to procurement.
Rethinking the Tender Process
Traditionally, the procurement cycle consists of multiple stages, with a significant portion dedicated to the tender process. This formal procedure demands extensive preparation, research, and evaluation, consuming valuable time and resources. Additionally, the costs associated with tenders encompass more than just the contract price. Factors such as labour, rents, marketing, consultant fees, and travel expenses significantly contribute to the overall expenditure. Surprisingly, despite these substantial costs, tenders often end up favouring the incumbent supplier.The Value of Tenders
Tenders are widely regarded as a means to ensure transparency and benchmark prices. They can also lead to stronger contract clauses, more robust service level agreements (SLAs), and reduced risk exposure. However, it is worth exploring whether these benefits can be achieved through alternative methods, such as improving the relationship with the incumbent supplier.Enhancing Existing Relationships
When a supplier holds a contract spanning several years, the knowledge that they will have to undergo a tender process for contract renewal can create a sense of unease. This apprehension may hinder their willingness to provide additional value, such as innovative recommendations or streamlined processes aimed at enhancing efficiency and reducing costs. For instance, in the case of outsourcing a service desk, if the pricing model is based on the number of tickets, the service provider may lack incentive to introduce self-help or automated resolutions, as their focus would be on maximising short-term profits within the contract term. By fostering a collaborative environment, both parties can work together to find innovative solutions and mutually benefit from reduced ticket volumes. The supplier can reallocate their time to other activities and chargeable innovations, while the buyer gains cost savings.The Role of Impartiality
Numerous consultancies offer relationship reviews to advise on strategies for improvement. However, such services often carry biases, as they are typically invoked by one party involved. To establish a mature and innovative approach, it is crucial for both the supplier and the buyer to engage an impartial representative. This neutral party can act as a relationship advocate, ensuring complete transparency and openness during a relationship and contract review. By leveraging the expertise of an independent party, both parties can work towards an optimal, mutually beneficial outcome, negating the need for costly and adversarial tender proceedings.
Embracing a Future of Collaboration
By breaking free from the traditional tender process and fostering stronger relationships with incumbent suppliers, organisations can unlock a wealth of benefits. Embracing a collaborative approach allows for innovation, problem-solving, and continuous improvement. With the help of an impartial representative, both the supplier and the buyer can build trust, nurture long-term partnerships, and maximise gains for all involved. It's time to break the mould and revolutionise procurement practices for a more prosperous future.
