Category: Process

Processes like Procurement & Sourcing & Audit

5 Steps to Tendering Success

Love me Tender

Many people love Elvis but very few love Tendering!

However Tendering is a skill and process which should be developed in every organisation. Public and private tender opportunities emerge every week to win new business so investing time and resources developing this skill will pay dividends overtime. Whether you are creating or responding to Pre-Qualification Questionnaires (PQQs), Invitation To Tender/Bid (ITT/ITB), RFx etc.), the advice below will improve your Tender outcomes.

This overview initially sets the context by providing 5 High-Level Steps to Tendering Success, before elaborating further with a dozen Tendering Tips for each tender submission;

 

5 Steps to Tendering Success

 

There are 5 key steps to improving Tendering capabilities and success rates but unfortunately most companies primarily focus on Step 4, the Tender Submission;

1. Prepare Tender Library – An easy-to-use robust Tender Library will maximise the Return on Investment from your Tender Activity, while presenting an effective and consistent company message across all tenders

2. Target Opportunities – If you are waiting for the Tender to arrive in your Inbox, you are possibly too late. Effective market research will unearth potential customers, decisions makers, business needs and contract renewal dates, so schedule sales meetings prior to the Tender to convince them of your capability and value proposition. Consider Tender analytics from the likes of TenderScout.com

3. Qualify Opportunities – Create Go/No Go Bid Criteria for your company to use as a decision support tool to tender, or not. Rigorously quality each Tender opportunity to focus solely on winnable opportunities. Tendering is expensive to save time/money by learning to say ‘No’.

4. Tender Submission – Develop the core skills to produce best-in-class tender submissions, with a detailed Tender plan, win strategy, writing and reviewing task-list and submission check-list.

5. Post-Mortem – Tendering is a skill. Improve your strengths and learn from your mistakes overtime to continuously improve this skill and Return on Investment. Ensure to solicit, analyse and act upon all feedback (with further details below).

12 Tendering Tips for each Tender Submission

 

1. For each tender, define the bid strategy to position your bid ahead of the competition, exceeding the buyers’ stated and unstated needs. This bid strategy should summarise the proposal in a few keywords, prior to writing the narrative or incorrectly ‘copying & pasting’ from previous submissions.

2. The proposal needs to be about the Buyer so put their needs at the centre of the Tender document. Explain why your solution is ‘fit for purpose’, with a bespoke response in the buyer’s language. If you do not have a fundamental understanding of the buyer’s detailed requirements your chances of winning are low while avoid using generic/brochure material as the basis for your response.

3. Consider collaboration – be open to forming or joining a consortium to submit a collaborative Tender. Consider strategic partners for complex Tenders and undertake the necessary due diligence.

4. Utilise all available market research to determine the purpose of the tender, the decision-making process (especially award criteria), the incumbents strengths/weaknesses, the strategic ‘fit’ for your organisation etc.

5. A Tender is a project. Use all available company resources, expertise and tools to manage the project effectively with milestones, deliverables, tasks, owners etc.

6. A winning tender response should read like a good book, taking the evaluator on a compelling journey about your business, and how you are creating and delivering real value to your customers. This includes developing a consistent corporate style (grammar, font, colours etc) so as to construct clear and persuasive tenders and proposals.

7. KISS – Keep it short and simple. Use clear, jargon-free language, writing in easy to understand terms (with a list of abbreviations to assist the non-technical readers). Always, assume the tender evaluators know nothing about your company and your solution.

8. Capacity to deliver is the primary risk on the buyer’s mind when awarding new business. Therefore, provide references to practical examples of successfully delivered comparable projects. Do not hold back and ensure you sell your key skills, expertise and experience which delivered past projects, similar to the buyers needs (with any lessons learned?)

9. Define your unique selling propositions and highlight your key differentiators from the competition. Sell the buyer the uniqueness of your solution and the related benefits to the buyer (operational efficiencies with metrics, savings, payback periods etc.)

10. Consider presenting bids in bespoke tender-specific binders, with easily-navigable tabs and graphic design suited to both your branding and the requirements of the buyer. No matter how persuasive the written content, your document will lose impact without colour / design – every tender opportunity is also a sales opportunity! For example, Armand Hammer, former CEO of Occidental Petroleum,  presented his winning bid for oil concessions from Libya in the mid-1960’s, in Arabic, written on a sheepskin parchment, rolled up and tied with ribbons bearing the Libyan national colors of red, green and black. This winning bid generated $200 million for Occidental in the late 1960’s.

11. Proofreading of proposals from start-to-finish is always a worthwhile task, especially experts not involved in the project including professional writers or editors.

12. When undertaking your post-mortem, consider your ‘win strategy’, market research and the effectiveness of your Tendering process. Consider the cost and time budgets, in relation to the value of the Tender. Whatever the outcome, use all available feedback to improve your next Tender.

Any other Tendering tips from the trenches?

While whether you are new to Tendering or have the scars from previous sourcing events, consider Arvo’s unique supports from both sides of the coin, whereby we;

  1. support buyers through every stage of the Strategic Sourcing event.
  2. assist suppliers prepare, identify, qualify and respond professionally to appropriate bid opportunities.
  3. provide training to buyers and suppliers to maximise their success levels at either side of the Tender Document.

 

Contact us today to discuss how we can maximise the return from your next Tender.

Brexit and your Supply Chain

As you know by now, European President Jean-Claude Juncker had a meeting with British Prime Minister Theresa May last Friday morning to agree a historic deal defining the terms of Britain’s divorce from the EU. If all that was agreed on December 8th comes to pass, the UK has essentially committed to a soft Brexit.

Ireland has done well in Phase 1 of the Brexit negotiations, including preserving the Common Trade Area, protecting the Good Friday Agreement and, crucially, obtaining a guarantee that there will be no hard border. It is now for the European Council to decide today if sufficient progress has been made to allow the negotiations to proceed to Phase 2, which is a significant step forward in the process leading towards UK withdrawal from the EU in March 2019. It is expected that a transition period would last two years ensuring Britain will remain part of the customs union and single market (including being subject to EU law) until 2021.

Thereafter, the risks and unknowns for your business need to be carefully considered. Most proactive businesses have started to document Brexit assumptions within their Brexit action plans, supporting their planning and strategy work. Whether importing directly or indirectly from the UK, the impacts to your operating model, supplier base, cost base and working capital requirements needs to de analysed, to understand where the areas of greatest risk are (so as to develop suitable mitigating actions to reduce the impact of Brexit on your business).

 

Specifically focusing on your supply-base and imports, can you answer the following 5 questions to identify risks and resilience steps for your business?

 

  1. What suppliers will impact the business most if they cannot supply you tomorrow?

 

  1. Do you know what % of your goods and services are coming directly or indirectly from the UK?

 

  1. Have you researched alternative non-UK suppliers?

 

  1. Are there contracts, licenses or regulations restricting your global sourcing strategies?

 

  1. Are you aware of the potential additional costs to import from Europe in terms of hubbing, logistics partners, Minimum Order Quantities plus the impact on cash flow?

 

As Arvo have been participating in Enterprise Ireland’s Brexit Roadshows recently, let us know today how we can help build resilience into your supply chain for Brexit (& other Political, Economic & Technological events that may cause risks for your business in future).

Freight Market Changes

Have your Logistics costs reduced in 2017? Are fuel surcharges reappearing or are you expecting a price increase from your transport provider? It is a fact that diesel prices have increased severely in recent weeks but this 5% increase should not significantly impact your logistics costs as fuel constitutes only 17-32% of your supplier’s total annual vehicle operating costs*.

Does your business depend on the efficient and effective delivery of parcels, boxes, pallets or containers to your clients? If so, have you benchmarked the non-price aspects of the service e.g. quality, innovation and reporting capabilities?

If you are interested in reducing transport costs or increasing quality services, talk to us today, as there are daily changes in the transport sector which will benefit your business in 2018 e.g;

  1. Automation: Globally, automation is well-established in many distribution centres and is becoming more prevalent in Ireland now too, with a range of robotic solutions offering the ability to introduce automation into DC operations without the need for major structural alterations.
  2. Labor Costs: Have been increasing due to a severe shortage in drivers and rate pressures on ground-staff in most logistics operations. While OPEC play monopoly with global oil supply and prices, a real concern for the transport industry is the impending labor cost increases (while thankfully, Insurance cost increases borne by all over the past few years are not expected to continue).
  3. Consolidation: There have been a raft of mergers, acquisitions and alliances within the global freight industry over the past 5 years, which are turning traditional supply chains upside-down. The increased competition and coopetition is triggering supply efficiencies and price wars, which is flooring global freight rates (and we hope it is sustainable)
  4. Technology: There are very few industries immune to the technical breakthroughs of the last 5 years, while the transport industry is no different with ground-breaking advances expected to continue via drones, autonomous vehicles, Blockchain, IoT solutions, automation (as above) etc, with customers benefiting from increased efficiencies, reduced risk, improved governance, transparency and service etc.
  5. Customers: The aforementioned technical advances are fuelling customers expectations and demands, where same day deliveries are being explored by many retailers. Argos are leading this campaign, with their 2017 Christmas advertising highlighting online orders delivered in as little as four hours through its nationwide Fast Track same-day delivery service.

So will a single trend above or a combination of all impact your supplier and customer deliveries in 2018?

As Arvo have managed Logistics Reviews recently with clients benefiting from commercial savings in the region of 25% – are you interested in such reductions for your business? Contact us today to discuss further.

*FTA’s ‘fuel fractions’ table shows fuel costs as a proportion of total annual vehicle operating costs

https://www.fta.co.uk/policy_and_compliance/fuel_prices_and_economy/fuel_prices/fuel_fractions.html

 

Group Buying Challenges

 

10 Group Buying Challenges

Group Buying is not a new concept even though it has become very popular in internet shopping since the Global Recession of 2008. Groupon & Living Social etc. have popularised this age-old volume leverage technique, but traditional buying groups have existed for decades, helping cooperatives and buying clubs pool their buying requirements to leverage better deals. Purchasing consortia have established themselves as a vital link in today’s world-class supply chain strategies, used as a powerful tool to significantly reduce costs in the most effectively run procurement organisations (not just for SME’s which is a common misconception).

Cooperative commerce facilitating Group Purchasing Organisations (GPOs), has in-fact been around for a hundred years, with the first healthcare GPO established in America in 1910. While the modus operandi has not changed since, with buyers empowered to aggregate their purchasing power and obtain lower prices than they otherwise would be able to get individually.

So the business case for buyers is obvious, with the opportunity to reduce commodity costs directly by 10-20% plus the reduction in time spent sourcing, negotiating and administering individual product/service deals. Suppliers also benefit with the opportunity to reduce their Cost of Sale (& possibly Logistics Costs), while they increase turnover and market share. Manufacturers can often offload excess inventories, while certain suppliers use collective purchasing groups to launch new products on the market (again availing of low customer acquisition costs).

However, the diminishing success of Groupon has highlighted one of the age-old flaws with Group Buying – greed! The value for buyers and suppliers needs to be sustainable, while there should be limited hassle or “friction” for buyers and suppliers to engage in group buying activities.

 

10 Group Buying Challenges;

  1. Administration – as hinted above, joining a GPO can be difficult gathering all company, financial and spend data. However, without the data, the opportunity is impossible to define
  2. Consolidation – as varying product and service data is amalgamated, difficulties arise when negotiating with the buyers to consolidate their specifications and go to market with a limited product/service range
  3. Quality – as prices decrease, there is a perception that the quality of product/service may diminish also
  4. Autonomy – buyers like to make decisions and joining a buying group may limit their autonomy in the marketplace thereafter
  5. Commitment – closing the Intention-Action Gap is a constant task for most GPO’s
    , ensuring buyers and suppliers actions align with their initial intentions
  6. Credit Risk – suppliers can struggle with the creditworthiness of buying groups, with the one-to-many relationship leading to a price premium within certain purchasing alliances
  7. Margin – suppliers need to gain market share at an affordable margin reduction. Similar to greed below, the commercial terms of each GPO need to be sustainable for all parties
  8. Greed – is the business model viable for the buyer, supplier and GPO?
  9. Privacy – with multitudes of commercial data being shared within co-ops, between third-parties etc, data privacy is an utmost concern to all stakeholders
  10. Trust – Trust is the glue that holds all business relationships together, and new GPO’s or members to a group (including new suppliers), suffer with a lack of trust initially

 

So what other Group Buying Challenges have you met?

With years of experience managing group buying activities via email, spreadsheets & Aspirin!, Arvo have initiated research with Procurement Insights business iDDea and our academic partner UCC, to resolve the above challenges. We are targeting the trust, transparent, bureaucratic and greed flaws of existing buying groups and hope you can join us on this journey…

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