Beware of “Supply Base Conditioning”<\/h3><\/div><\/div><\/div>PurchTips edition #403<\/p>\n<\/div>
Are You Training Your Suppliers To Not Give You What You Want?<\/h4><\/div><\/div><\/div>When you request proposals from the supply base, you want two things:\u00a0 participation from all great suppliers and aggressively low bids from them.\u00a0 But, if you behave in certain ways over time, you may be unwittingly conditioning your supply base to provide inflated proposals or to not respond at all!<\/p>\n
Have you conditioned your supply base to:<\/strong><\/p>\n\n- Cut corners or withhold value?\u00a0<\/strong>If you always select the low bidder even when that means onboarding the worst supplier available, you imply that quality, delivery and service don\u2019t matter.\u00a0 As a result, some suppliers who compete on performance will decline to bid.\u00a0 That alone will relieve some of the price pressure you are trying to put on the supply base while taking some good options off of the table.\u00a0 In addition, suppliers who do bid will look to cut corners or withhold value in order to win your business.\u00a0 As such, a historical over-emphasis on price isn\u2019t always healthy.<\/li>\n
- Expect you to give your \u201cfavorite\u201d suppliers the chance to negotiate?<\/strong>\u00a0If you historically haven\u2019t disqualified some of the higher bidders, instead giving them the same chance to negotiate as lower bidders, you can expect that some suppliers will inflate their prices knowing that they will be able to reduce them later.\u00a0 Of course, they hope the negotiation enables them to win your business at a higher price than they would have had to offer if you accepted the low bid without negotiation or only gave the one or two suppliers with the lowest bids the chance to negotiate further.<\/li>\n
- Expect you to award business to the incumbent supplier regardless of how competitive other suppliers and their bids may be?<\/strong>\u00a0When the supply base sees you awarding business time after time to the same supplier regardless of how much more competitive other suppliers get, they assume that your sourcing process is a mere charade to pressure your incumbent to keep its prices in check.\u00a0 If the supply base sees no legitimate chance of you changing suppliers, they will stop responding to your RFP\u2019s, which will relieve the price pressure you hoped to apply.<\/li>\n
- Expect no regard for loyalty?<\/strong>\u00a0On the other hand, if the supply base sees you changing suppliers all of the time regardless of incumbent performance, they will think that you are an unloyal customer and they will not risk offering low initial pricing in the hopes of establishing a long-term relationship that will become mutually profitable in the future.<\/li>\n<\/ul>\n<\/div><\/div><\/div><\/div><\/div>
Want A More Rewarding Procurement Career?<\/h5><\/div>![](\"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2021\/04\/career.jpg\" "\\"career\\"")
<\/span><\/div>Are you tired of not getting enough opportunities, respect, and money out of your procurement career? Nothing will change unless you take action towards becoming a world-class procurement professional. Work your way up NLPA\u2019s CPO Suite Programs, an enhanced version of our SPSM certifications and bring the most modern procurement practices into your organization and achieve your career potential.<\/p>\n
Download our NLPA Course Catalog<\/strong> for a comprehensive list of the CPO Certification Programs and their corresponding modules per level.<\/p>\n<\/div>
PurchTips edition #403<\/p>\n<\/div>
Are You Training Your Suppliers To Not Give You What You Want?<\/h4><\/div><\/div><\/div>When you request proposals from the supply base, you want two things:\u00a0 participation from all great suppliers and aggressively low bids from them.\u00a0 But, if you behave in certain ways over time, you may be unwittingly conditioning your supply base to provide inflated proposals or to not respond at all!<\/p>\n
Have you conditioned your supply base to:<\/strong><\/p>\n\n- Cut corners or withhold value?\u00a0<\/strong>If you always select the low bidder even when that means onboarding the worst supplier available, you imply that quality, delivery and service don\u2019t matter.\u00a0 As a result, some suppliers who compete on performance will decline to bid.\u00a0 That alone will relieve some of the price pressure you are trying to put on the supply base while taking some good options off of the table.\u00a0 In addition, suppliers who do bid will look to cut corners or withhold value in order to win your business.\u00a0 As such, a historical over-emphasis on price isn\u2019t always healthy.<\/li>\n
- Expect you to give your \u201cfavorite\u201d suppliers the chance to negotiate?<\/strong>\u00a0If you historically haven\u2019t disqualified some of the higher bidders, instead giving them the same chance to negotiate as lower bidders, you can expect that some suppliers will inflate their prices knowing that they will be able to reduce them later.\u00a0 Of course, they hope the negotiation enables them to win your business at a higher price than they would have had to offer if you accepted the low bid without negotiation or only gave the one or two suppliers with the lowest bids the chance to negotiate further.<\/li>\n
- Expect you to award business to the incumbent supplier regardless of how competitive other suppliers and their bids may be?<\/strong>\u00a0When the supply base sees you awarding business time after time to the same supplier regardless of how much more competitive other suppliers get, they assume that your sourcing process is a mere charade to pressure your incumbent to keep its prices in check.\u00a0 If the supply base sees no legitimate chance of you changing suppliers, they will stop responding to your RFP\u2019s, which will relieve the price pressure you hoped to apply.<\/li>\n
- Expect no regard for loyalty?<\/strong>\u00a0On the other hand, if the supply base sees you changing suppliers all of the time regardless of incumbent performance, they will think that you are an unloyal customer and they will not risk offering low initial pricing in the hopes of establishing a long-term relationship that will become mutually profitable in the future.<\/li>\n<\/ul>\n<\/div><\/div><\/div><\/div><\/div>
Want A More Rewarding Procurement Career?<\/h5><\/div><\/span><\/div>Are you tired of not getting enough opportunities, respect, and money out of your procurement career? Nothing will change unless you take action towards becoming a world-class procurement professional. Work your way up NLPA\u2019s CPO Suite Programs, an enhanced version of our SPSM certifications and bring the most modern procurement practices into your organization and achieve your career potential.<\/p>\n
Download our NLPA Course Catalog<\/strong> for a comprehensive list of the CPO Certification Programs and their corresponding modules per level.<\/p>\n<\/div>
When you request proposals from the supply base, you want two things:\u00a0 participation from all great suppliers and aggressively low bids from them.\u00a0 But, if you behave in certain ways over time, you may be unwittingly conditioning your supply base to provide inflated proposals or to not respond at all!<\/p>\n
Have you conditioned your supply base to:<\/strong><\/p>\n Are you tired of not getting enough opportunities, respect, and money out of your procurement career? Nothing will change unless you take action towards becoming a world-class procurement professional. Work your way up NLPA\u2019s CPO Suite Programs, an enhanced version of our SPSM certifications and bring the most modern procurement practices into your organization and achieve your career potential.<\/p>\n Download our NLPA Course Catalog<\/strong> for a comprehensive list of the CPO Certification Programs and their corresponding modules per level.<\/p>\n<\/div>\n
Want A More Rewarding Procurement Career?<\/h5><\/div>
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