Prior to embarking on any new bid or negotiations effort, there are 5 main factors that should be considered in order to determine what is working in your favor and if it is prudent to proceed. For example, there may be a genuine need to do an in-depth analysis, issue a bid and negotiate a contract for a new ERP system, a FinTech solution or an alternative payroll service provider but caution should be applied so that the perceived urgency does not discount the importance of fully understanding the opportunity, its potential, its risks, available resources and timing. I am not suggesting you not proceed, due to some challenges that may encountered, but rather be aware of them so that you can navigate through these issues with minimal surprises and setbacks. Taking time to answer the following 5 questions will significantly improve your chances for success.
- Is this a good time to put the program out to bid? Has a favorable opportunity developed that you can take advantage of? For example, have market or supplier conditions changed which are now in your favor. Has your company recently won several large contracts which will significantly increase your future purchases? Is your current supplier a
risk and additional sourcing is immediately required?
- Do you have a strong position and is leverage in your favor? For example, has your overall volume increased significantly since the last contract? Is this larger volume better suited for a manufacturer or direct source vs. the current distributor? Has supplier competition increased within the market with numerous suppliers calling on you business? Have advances in
technology improved production efficiencies and increased open capacity within the market?
- Do you have adequate resources to gather all data, interpret all information, interview key stakeholders and develop an intelligent RFQ strategy etc. Will you require additional support, information and expertise outside your area of authority? If so, are they available? Also, if your company or industry are in their peak season, this may not be the best time for an complex analysis and bid effort and a slight delay of several months could be a wise choice. The resource component is often underestimated since newer staff may view their own objective as the only goal while not considering or investigating the requirements and interests of the supporting cast within the company.
- Do you have the critical knowledge and experience to leverage the information gathered in the most effective way? Are you prepared to analyze and interpret all the critical data in order to develop an effective strategy for the RFQ event? Is there a prior RFQ event summary you can reference? I strongly suggest, if that has not been done previously, to create a detailed summary of the various steps, logic and “good to knows” of the whole process which can then be referenced in the future to save valuable time and avoid prior mistakes. Lastly, are there more experienced staff you can tap into to discuss strategies, best practices and “what ifs” scenarios. They can be a great resource.
- Do you have a Clear and Comprehensive Objective? Even though this may seem obvious, I have routinely witnessed staff who assume they know what is best and that their goal is the same as the company’s goal. Unfortunately, this is a high risk assumption. I have learned over the years the importance of meeting with key stakeholders who have a direct or indirect connection with the program and supplier(s). By taking this extra investigative step, I have often been surprised to learn additional “good to knows” and other critical requirements that I was not even considering. Also, this collaborative effort sends a very important message to the senior
management and supporting staff - that their input and ideas matter and you are a team player.
Obviously, the examples I have provided with each question do not address all the possibilities but should help open your mind to the real possibilities and challenges you may face so that you can make a confident, smart, well informed decision. By answering these questions you have taken the preliminary steps to ensure as many factors as possible are working in your favor as well as to avoid or adjust to those that are not.
If this topic was of interest and you would like to learn more about the best practices associated with preparing a Request for Quote (RFQ) and formal negotiation event, please consider the Proformative course – Keys to a Successful Negotiation. https://www.proformative.com/courses/how-to-nogotiate-with-suppliers. This course provides a step by step explanation beginning with the preliminary considerations outlined above, pre-negotiation preparations, negotiation strategies and tactics concluding with choosing the best proposal.