Is the tender process really the best way to identify a supplier?

It’s time to select a new supplier for a category within your business. Perhaps the category has grown so large your business requires finding a new supplier. Or perhaps you are looking to benchmark an existing category to understand if you are still getting a good deal from the market.

Common practice says you gather all the historical information and data to start the tendering process. You may even contract a tender specialist to construct and manage the whole project and you would not be the first (or last) to do so.

But why even tender in the first place? Is it what you have always done? Because that’s what everyone else appears to be doing? Or is it because tendering provides a nice auditable normative approach to selecting a supplier?

Smart businesses are now seeing past the bureaucratic box ticking selection process that typically focuses so much on direct cost reduction of historical goods and services. A different paradigm has emerged where businesses are looking to gain competitive advantage by future proofing their requirements.

How can this be achieved when the tender process is generally so backward-looking? Asking prospecting suppliers to provide a selection of prices for historical goods or services will hardly lead you to the right supplier or solutions that will take your business to the next level and get you ahead of the competition.

The solution and process is actually a far easier one than the laborious tendering solution. All you require to initiate the selection process is a profile of your business, its current activities, culture, an overview of the category requirements and spend, your customers, competitors, mission statement and your corporate strategy. If you can throw in a five-year plan as well then all the better, but how many five-year plans really come to fruition, especially in today’s fast moving environment?

By opening dialogue with solution providers you give your business access to a plethora of category solution experts. Each one has access and an understanding of the specialist category market, the latest (and future) solutions, what works and what does not work and innovation that your business would never otherwise be exposed to. Employing the mindset that dictates a supplier should be selected by the cheapest differentiator will be unlikely to deliver a forward-thinking solution.

Of course cost is important, but it is critical to consult with a selection of suppliers first and let them inform you of how they can take your business forward.

Ian Sullivan is CEO at Paperhat Group

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