WHAT’S THE DEAL WITH VENDOR COMPETITIONS?
Let’s face it, vendor competitions, or Tenders are not exactly an everyday topic of discussion at the office water cooler. Until the day someone, perhaps you, realizes that a new vendor or supplier is needed. Such as when you are developing a new product, or need a business service.
What do you do? The typical scenario is that you check in with colleagues or friends for a recommendation about a vendor or supplier they know. Perhaps you call a go-to industry expert. Result! You now have the name of a vendor or supplier that you are 80% certain can be trusted to meet your needs. Thankfully, this means you don’t have to deal with the pesky business of drafting a Request for Proposal (RFP), issue a Tender or any of that procurement stuff. You give your lucky vendor a call, ask for some prices, maybe meet up. And you sign a contract. Let’s face it, you needed this arrangement in place yesterday, and what’s the point of obtaining multiple quotes when, well, your lucky vendor came highly recommended by Richard SME.
This is real life. It is how business deals have been done for centuries. Probably at the time of Noah’s ark, our man N went to his local tribe for timber suppliers that were known to his family. He may have spent some time bartering over price. It would probably not have occurred to anyone that it might have been a good idea to introduce a bit of competition between suppliers.
A vendor or supplier competition introduces an element of competitive tension. Competitions can take many forms and are generally referred to as a Tender. From a quick RFQ – request for quote to the more in-depth RFP- request for proposal. A vendor competition allows you to compare vendors based on selection criteria specific to your business need. Due to budget constraints you may want the lowest price vendor offer. Often there are other more or equally important criteria. Such as the vendor’s proposed methodology of delivery or quality control. Their ability to meet your business timelines, and the capacity to scale up in times of need.
By using a vendor competition instead of just settling for a single vendor offer, you increase the likelihood of a best value outcome – however you define best value. Relying on a single quote or recommendation limits your choice. Your bargaining power is almost non-existent. The end result is a vendor deal that likely not in your favor.
So give yourself the opportunity for the best vendor deal possible. Run more vendor competitions!
We know it can be challenging to find the time & resources to set up a vendor competition. That’s why one of our core services at Mptorem.com is to take the frustration out of the process for you, the buyer, and vendors. We offer Tenders as a Service. Flexible, set up and managed by us for you. We are cloud based, so we can handle any type of vendor competition, with vendor markets anywhere in the world. From quick, repeat requests for quotes from your established vendor panels, to a one-off public competition/Tender.
By Eve Elias