Nov
9
To obtain value for money many organizations utilize a collection of procurement methods to acquire materials and services. While the method used will depend on various rationale (spend or commodity for example), tendering is a key tool, typically used to foster competition and deliver business benefits.
Whilst tendering can be utilized for all sorts of commodities (direct and indirect) many businesses place criteria on where and how it is used. For example tendering can be well suited to the supply of certain products (its common in indirect spend). Tendering doesn’t guarantee success and the process is not without issues and businesses should consider these prior to launching a tendering initiative.
Tendering still requires robust business requirement.
Tendering doesn’t replace good business practice it complements it. Businesses still need robust clearly defined specifications/requirements. Without clarity on requirements (including detailed technical specification where applicable) it is difficult to ensure that the suppliers responding to the tenders can provide the right product or enable the buyer to carry out effective comparisons between suppliers. As ever with requirements definition it is worth investing as much time as available to develop requirements that are both robust and easily understood.
Don’t underestimate the supplier’s role in benefits realization – specifications must allow for innovation which may lead to further benefits.
Have a clear view of what the tendering process will achieve
Whether your organization is looking for the lowest price, shortest lead-time or in need of close affiliation with product experts it is imperative that you have a clear understanding of what you will achieve through tendering. Understanding what benefits are being targeted can help when designing your scoring process and in comparing suppliers.
With this in mind consider some initial research or dialogue with the market – find out if your tendering process will deliver benefits (or if another approach would be more suitable) – arm yourself with as much information as possible and select the most appropriate purchasing method.
Your tendering process is not just about unit cost.
Organizations must remember to focus on more than cost of the piece part, there are a variety of other factors to consider including methods of supply, quality, delivery schedules, sustainability issues, compliancy etc. Consider what’s important to you and develop a scoring/weighting system to compare suppliers.
Consider supplier approval requirements
A common issue is how to select which suppliers take part in your tendering process – consider your selection criteria for suppliers and consider how suppliers can pre-qualify before the tendering phase. Supplier approval can often be a complex process that requires various stakeholder input (Quality approval, technical review etc for example). This process can take time and there is a real likelihood that without a pre-qualifying process you may get suppliers responding to tenders who will not be accepted as an approved supplier thus wasting everyone’s time.
Consider also how many suppliers will be needed to achieve the benefits you are targeting, select a suitable number of suppliers to facilitate the competition required.
Consider stakeholder attachment to suppliers and buy-in to switching
Always communicate your plans to internal stakeholders and ensure that they understand that on completion of the tendering process suppliers may be switched. There are always those within an organization that can become emotionally attached to suppliers (often for very good reason). Get buy in that supplier switching will take place where benefits can be proven (be prepared to evidence these!). Try to understand intangible requirements which lead internal stakeholders to consider the incumbent supplier being the best option. Do this early as you can find yourself unstuck if on completion of the tendering process the business refuses to sign off a supplier change.
Risk Management
A thorough risk review is required – this should take into account QCD issues as well as information on the market and commodity. Consider mitigation requirements and how risk will be addressed in the supplier scoring phase and following contract.
Summary
Where tendering is appropriate and executed correctly it will typically yield benefits. Businesses should review all areas of spend and consider the benefits of competition. Tendering does have some common issues that need to be considered in order to make it a success, but these could be considered common purchasing issues that best practice should address anyway.
Nov
8
6 key steps when implementing a sustainable purchasing strategy.
Filed Under Blog | Comments Off on 6 key steps when implementing a sustainable purchasing strategy.
??As pressure comes from increasingly competitive markets (with knowledgeable consumers) coupled with compliancy and legislative requirements many organizations are viewing corporate responsibility as an increasingly important aspect of their business. With sustainability being a key part of this framework organizations are looking to how they can implement “green buying” practices. For many organizations developing a mission statement is the easy part but putting it into practice can be daunting.
However as with any business change project getting the right approach can pay dividends. This guide looks at 6 key steps to consider when developing your sustainable purchasing plan.
1/ Get senior sponsorship – getting senior stakeholder support is crucial. You are much more likely to succeed if your senior management is supportive. This support should clearly articulate the importance of the project, its goals and timescales. This support must be visible (with senior executives seen to be directly involved) and communicated clearly to the organization. Senior support can add legitimacy to your project and assist in communicating its objectives and successes.
2/ Team up – your sustainability projects will need resources – you’ll need project managers and most likely a cross functional team. Consider your training needs at this point – does your in-house team have the knowledge required – will you need consultants or will you need to send your team for training. Ensure that the size and number of projects is suitable for your resource pool – don’t try and commit to something you don’t have sufficient resources for or you’ll most likely fail.
3/ Choose your targets carefully. Your organization will most likely have a set of related objectives or goals. You may wish to start with smaller projects in order to gain momentum that can be communicated back to the organization to gain credibility. Consider commodities or products that represent quick wins and where the environmental impact can be easily demonstrated. Ensure that as with any projects you utilize lessons learnt in order that you can re-invest this knowledge in future projects.
4/ Know where your starting from – as with any improvement projects its imperative that you have a baseline – your company has set objectives to improve but do you actually know your current environmental footprint? If not find out! This could be statistics around energy consumption, CO2 emissions, recycling rates or related costs. By knowing where you are you can set yourself meaningful and more importantly measurable targets.
5 – Communicate and engage – ensure you have a plan on how you will communicate your successes. Establish a plan that communicates how your team will delivery against the business strategy. Ensure that you regularly and simply explain your progress for example explain how environmentally friendly alternative products can support your strategy and save costs – look for things that engage your stakeholders and encourage participation.
6 Measure your success – Develop a set of KPI’s that help track the changes you are implementing. Collect appropriate data that can support your initiatives and assess the impact (cost savings or improving your environmental footprint). Don’t rely on subjective commentary use hard facts.