Welcome to our blog.
Welcome to our blog.
Reading, or writing requirement for RFPs (Request for Proposals, or Tenders) is one of those necessary bug-bears disliked by pretty much everyone involved in putting together a vendor deal – for those on the buying side as much as those on the selling side. Traditional requirement development – SOR or SOW (there is an apt acronym!) is fine for when there are concrete, known needs that can be quantified and readily put on paper. Where requirements are a little hazy, and center around the vendor or supplier proposing their solution to some kind of problem, consider substituting or at enhancing your requirement document. Take a leaf from software engineering practices by incorporating the use of use cases and/or case scenarios in requirements, to help the vendor identify better with the problem. Working through these will also help you with comparing the proposals received. We love a good story. As little human beings our brains are cultivated by stories to help us learn and make sense of the world around us. So consider using a story telling approach to describe more clearly the paint points and your anticipated benefits, particularly from a user or “beneficiary” point of view. This will help respondents form a more multi-dimensional understanding of what your requirements are. And you are far more likely to receive vendor responses that are accurate and deliver the benefits you seek from your vendor deal.
A purchase price is a bit like an iceberg – what you see is not always what you get. This is particularly relevant to the B2B market. When negotiating price, take the time to identify the likely total cost of ownership (TCO). In some sectors, such as software, the purchase price may only equate to 10% of the true costs of your combined buying commitment. With the remainder 90% comprising a myriad of other cost commitments such as maintenance, onsite work, helpdesk support and mandatory upgrades. And this is without considering all the costs involved in getting to the contract stage, such as preparing your business case, negotiations and legal fees. If your vendor is not being upfront about actual fees and charges, perhaps take it as a red flag. Carry out your due diligence. Ask existing or previous customers of your vendor about hidden costs and lessons learned. Make sure you know the full amount you will actually be paying over the life of your purchase, besides the upfront purchase price. It may be a lot more than you bargained for!
Do you recall last Saturday night? Perhaps you spend it quietly at home with the family. Or maybe you went out for a night on the town. And spent all of 20 minutes figuring out whether to book a taxi or take the car. Possibly your consideration for the road safety of your fellow man made you pause. Perhaps it was the cringe-worthy memory of your stomach contents churning, when you and your high school buddies were stopped at a road safety checkpoint many eons ago, that made you book a taxi. Great, road safety campaigns had their desired effect – and you probably had a better night out as a result of not having to spend the night slurping virgin mojitos. The same could be said of a procurement process. Often seen as business roadblock, it ultimately functions as your last safety check point. It is the final opportunity to ensure that you don’t end up wasting a ton of money, end up with empty hands (or in the case if you’re the CEO of a public company or government organisation with a “go straight to jail”) card.
Of course this is putting things very simplistically. Procurement if managed well, is not just a safety check process. Some, sadly unenlightened, individuals will point to procurement being a “linear process”. Far from it. It concerns how your money is governed. Procurement addresses how to best support an organisation in achieving its corporate objectives. How you buy goods and services that are strategic goes to the heart of your business model. Frequently a new supplier agreement involves multiple organisational departments, and key business decisions that will have a major impact on a. your planned business strategy and b. the execution of your business operations. So what may at face value appear to be a linear process very quickly turns into a fairly unpredictable animal if you do not ensure that there is business alignment and consensus between the different business units impacted, on the strategic and tactical outcome of any procurement activity. However, for the purpose of this article, we are considering procurement as a process, as opposed to its wider function.
So what are some of the benefits of a procurement process as your safety checkpoint?
Just as a safety checkpoint that has been erected without any supporting laws or legislation is extra-judicial and would at minimum be an inconvenient roadblock, and possibly a breach of human rights, a procurement process for the sake of it is very similar. Take the time then to make sure that your procurement team is fully aware of your business plan. If you are in the midst of change, share your blueprint or road-map with your team, so they can plan your requirements with you, and are well placed to manage any time-critical procurement activity that crops up. Consider what procurement processes are necessary. And how you can improve on efficiency without undermining the benefit of any procurement process acting as it should – your final safety checkpoint.
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