I hope that you have enjoyed the article \u201cSingle Source Situations Shouldn\u2019t Stink.\u201d<\/p>\n
Don\u2019t miss updates on Procurement & Supply Chain, Subscribe here!<\/p>\n
Too often, we in procurement think that competitive bidding is the only way to get suppliers to keep their prices in check.\u00a0 This isn\u2019t the case.\u00a0 And, actually, competitive bidding in certain situations can actually increase your prices.<\/p>\n
How?<\/p>\n
Well, consider this situation.<\/p>\n
You do business with a certain supplier year after year.\u00a0 That supplier\u2019s work is clearly ingrained in your organization\u2019s operations for one reason or another:\u00a0 you have a product dependent on the design of the supplier\u2019s product, it is too costly to switch to another supplier, the time that it would take a new supplier to learn how to interact with your organization feels like it would be too long, whatever.<\/p>\n
You go out for bid every two or three years.\u00a0 At first, you were getting great price offers from competing suppliers, but still went with the incumbent, despite a higher price.\u00a0 The second and third times you went out to bid, you got fewer and fewer suppliers to participate.\u00a0 And, despite getting lower pricing from potentially new suppliers, you continued to stick by your old faithful supplier.<\/p>\n
You\u2019re faced with the expiration of the contract with the supplier yet again.\u00a0 You are considering doing another RFP because, well, that\u2019s all you know how to do.\u00a0 Are you seriously going to award business to another supplier given the history and the fact that management would support your internal customer\u2019s desire to keep the incumbent if it came down to a standoff with your relatively weak procurement department recommending a new supplier?<\/p>\n
You know how the story will end.\u00a0 Do you think that the supply base is going to put much effort into trying to win your business?\u00a0 Probably not.\u00a0 And do you think that the incumbent is really trying to be competitive with its pricing?\u00a0 Unlikely.<\/p>\n
Competitive bidding is essentially doing no favors for you.\u00a0 But it is costing you time, effort, and resources.<\/p>\n
In these situations, it\u2019s time to be more than a one-trick-three-bids-and-a-cloud-of-dust buyer.\u00a0 You need a new approach.\u00a0 One that actually contains costs, not creates the illusion of doing so.<\/p>\n
The article gives you three things you can do to keep control in a single source situation.\u00a0 They are certainly not the only tactics that could help you.\u00a0 What others can you think of?<\/p>\n","protected":false},"excerpt":{"rendered":"
I hope that you have enjoyed the article \u201cSingle Source […]<\/p>\n","protected":false},"author":12,"featured_media":4094,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3239","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-procurement"],"yoast_head":"\n