It Takes Two to Tango, and Sometimes Three

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By Tony O’Connor

Some buyers take the view that only suppliers that have previously shown them the attention of a sales call should be included in a tender. Conversely, some suppliers take the view that unless they already have a “relationship” with a buyer, there is no point in participating in their tender. I think this is wrong, in both directions.

Firstly, sales attention is not a good indicator of good service to come. The sales people are not the service delivers, and not even the writers of the tender response in many cases. Sales talk tends to be made up of loose promises and hyperbole rather than concrete commitments, disclosure and provable fact.

Even consultative sales talk is usually following a taught method or script. And I think there is a general trade-off in most markets. Suppliers that put a lot of time and money into sales activity tend to be less good and less interested on the job. They concentrate on getting clients rather than keeping them. And their high costs of sale are built into their real fees and prices. I believe that heavy sales activity is actually a contrary indicator to good value and fair trading. I know of one hyperactive supplier whose sales commission is an incredible one third of their fees, which raises several uncomfortable questions.

On the supply side, please be assured, dear supplier, that a good tender process begins with a clean slate. Every candidate should start equal, irrespective of incumbency or previous contact. Of course, this may not always be the case. But it should be and usually is. The thoroughness and quality of the RFT, especially of the assessment process if described, should be an indicator of good process. I would always see an RFT before declining to participate. Otherwise, you could be sacrificing real opportunities for new business. If you have some other concern about the tender I would say what it is rather than just opting out. You might be wrong, and procurement managers are usually appreciative of genuine feedback. The spread of procurement as a managerial discipline is a good thing for able suppliers, since it spreads good tendering practice across the supply categories.

Should buyers consult with the market in the development of an RFT? If the supply area is complex, as in my home ground of corporate travel, then the buyer needs quite a lot of subject matter expertise to do a good job. Only very large buyers have the scale to justify full-time experts in different supply categories. This means that you must in-source the knowledge somehow. There are three ways. You can piece together bits of know-how and tendering content and formats from peers and industry associations.
That might work. But you can still be hit with a wave of technical and pricing issues that require category expertise to assess the offers. Or, you can gather information from helpful suppliers, as mentioned. But there are Trojan horse issues here. Or, you could pay and engage an independent consultant. But you need to be careful of their real independence and knowledge.

Third parties that offer assistance with tenders essentially offer three types of thing; (1) good process, such as helping with probity and thoroughness, (2) efficient process, such as using an automated web-based tendering system, and (3) category subject matter expertise. My feeling is that these can get a bit mixed and confused, and that sometimes buyers understandably in-source the wrong thing. Most buyers can do a pretty good job with process. Automated tendering systems can be excellent but are less suited to complicated supply areas. It’s category expertise that is often most needed to strike a good deal with the Trojans (actually, I think the people inside the horse were Greeks).

Buyers and suppliers of business travel will come together to network and learn at BTTB Australia 2015 on 6th & 7th May in Sydney. If you’re involved in buying, managing, arranging or supplying business travel, this is a must-attend event for you. Click here for more details.

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