Making best use of an increasingly limited supplier market to deliver ambitious infrastructure programmes is a challenge for all government agencies today. When work is scarce, the choice between large and small contractors; and between local, regional and offshore suppliers is a luxury that plays into the hands of our buyers.
But what happens when work is plentiful, resources are stretched, and suppliers can afford to pick and choose the most attractive clients to do business with? How do the smartest clients achieve the most efficient and balanced combinations of suppliers? How do they optimise the available resources and channel everyone’s focus into best-for project and best-for-network outcomes?
Results from Clever Buying’s annual surveys bring together supplier and client views on procurement and contract models that work best in today’s demanding infrastructure climate. Below, we outline the key frustrations and successes experienced by suppliers in relation to current practices, and match it with the challenges and triumphs faced by clients in achieving value for money in a resource-constrained environment.
Based on our insight, we outline five key ways that clients can get best value from the range of suppliers who will deliver their projects – and tips from the suppliers themselves in how to make the process easier and more cost-effective. Making use of these factors will put clients in the driving seat to become ‘customers of choice’, who suppliers are keenest to do business with.
Our procurement practice surveys have generated hundreds of responses from both large and small councils, NZTA, private organisations, and suppliers.
When asked 'what are you doing to put in place a healthy competitive supplier market?', we were delighted to see client responses such as:
- Ensure tender documents are clear – simplify the process. Transparent scoring and pass/fail criteria
- More effort upfront to identify risks and reduce uncertainty
- Don’t bundle too much – provide opportunities for all
- Be prepared to assist smaller suppliers with developing their management systems
- Increase the response timeframes in line with government procurement
- Increased engagement with suppliers on pipeline and flexibility with implementation – constructive debriefs
- Move away from LPC and consider attributes more
- Preferred supplier panels for smaller packages
- Stagger the work through the year.
However, when we asked suppliers what the main issues with responding to tenders were, the overwhelming issue facing most suppliers was insufficient time to respond to tenders, followed closely by an over-emphasis on price. Food for thought ...
So, here are our top five tips for better procurement practice
1. Work closely and cooperatively with your suppliers
- Be easy to deal with
- Show them your pipeline
- Help them improve
- Be reasonable
- Provide opportunities for big and small companies.
2. Be clear what you want and how you will score it
- Keep the process simple, efficient and relevant
- Decide on fact-based scoring before you look at the responses.
3. Don’t waste everyone’s time on repetitive generic info
Use Prequalification or Supplier Panels – (but make it easy). Don’t blindly recycle RFTs – every project has different drivers for success.
4. Select your suppliers on a sensible and fair basis
- Don’t over-emphasise price. LPC makes it a race to the bottom, and seldom delivers best value
- Ask the right questions – on project-specific risks and opportunities (only).
5. Don’t rush the process
- Get your RFx documents accurate, well planned and complete before release
- Give sensible timeframes for responses (4+ weeks should be normal).
And a word from suppliers
- Give us reasonable time to respond – 3-4 weeks at least, even for LPC
- Clients need to understand what tenderers have to do to submit a tender
- Clear scope, info requirements and drawings
- Simplify the process – more transparent
- If using LPC, don’t make attributes extensive or generic/ Don’t use LPC – more emphasis on attributes
- Prequalification and shortlist. Narrow competition
- Be specific, ditch the templates
- Don’t transfer all risk to suppliers.
For more information, contact us at Clever Buying: firstname.lastname@example.org