Last year I spoke at the PCIAW summit. I opened honest discussions between buyers and suppliers to find common ground and best practices when it comes to the tender process. We wanted a win-win outcome that worked for everybody and helped businesses find the right products and suppliers.
Helping to improve the tender process is a big passion of mine and still drives a lot of my thinking. But I find it is still often price driven. I don’t believe this encourages best practices. It doesn’t work to have manufacturers and suppliers climbing over each other to reduce the price an item costs.
By reducing product quality, you stifle the innovation that makes better products. Better products mean people buy less, use less, waste less, and often results in improved sustainability and an end-user that is more comfortable and safer. Not to mention the long-term cost saving!
Now that MAT (most advantageous tender) has replaced MEAT (most economically advantageous tenders) we will see a change in price weighting. This will see contracting authorities looking at a broader criteria spectrum, especially as they are now obligated to weight social value to at least 10%.
Although this primarily applies to public procurement contracts, most of the big private sectors that work in vital national sectors will try to stay close to public sector best practice. This will have a significant impact on the entire UK economy. It’s important this change delivers value to everybody.
I feel these recent changes and the push for sustainable thinking is making suppliers that prioritise long-term planning more desirable. The term “value” is changing from its previous definition as simply the balance between product quality and price, to a much broader concept that includes life-time value, contract costs, resource spend, and accessing services that improve efficiency.
We make sure that we approach tenders in the straightest and most honest way possible. If a tender gives us the opportunity to choose a cheaper product, but we don’t think it is the most suitable solution, or it’s what the tender was asking for, we don’t offer it. It would reflect badly to win business by offering cheaper products that are then suggested by Tower to be a less suitable choice.
Tenders that do not consider the nuances of safety workwear and uniform will always result in a race to the bottom for suppliers. If you ask for a ‘blue shirt’ for example, then some suppliers may simply offer the cheapest product that fits that description. This is often done to improve their chance of being scored well for price. This can be frustrating when we know that our cheapest option is not the one that will deliver real ‘value’ for both the employer that buys it and the employee that wears it.
Tenders don’t give full-service suppliers like Tower the chance to explain our proposition on money-saving. One alternative to tendering is HELM, a process where we comprehensively analyse product use, end-of-life processes, product range, and look at any ways to cut costs and improve efficiency. Choosing the HELM process as an alternative to tendering saves 20% of the total spend compared to tender awarded business.
Tower deliver value and cost-saving in more ways than just product price, such as on-time in-full delivery, customer support, and product development. I believe in the importance of thinking laterally about the entire support and service supplier package. This doesn’t always happen with formatted tenders.
My answer is yes, but only when they are used correctly. When they are not, they can restrict and discourage suppliers to provide sustainable, longer term innovative solutions and products, and stifle the ability to show the longer-term benefits of what they can deliver.
At the PCIAW event, I was not suggesting all tenders need to be changed. Instead, I was asking people to be careful about what is being tendered. If you don’t think it will give you the best long-term benefits, then take the time to sit down and talk to prospects about their partnerships instead. If you still want to use a tender, then I would suggest a pre-tender supplier engagement session.
Tenders have their place to find answers. Just make sure you are asking the right questions first.
