Bread & butter in procurement: Regular enquiries and tenders as compulsory exercises – but please correct!
The following examples of enquiries and tenders are real cases from our customer projects of the past 12 months. Among our customers are medium-sized companies as well as industrial groups, automotive suppliers, small series manufacturers, hidden champions and global players.
In one case, one of our customers commissioned us to carry out an independent review of its price level for some C product groups as part of a comprehensive program of measures.
Black Label request based on the real needs of the customer to check the price level.
At the customer’s request, the verification should be based on an anonymous request based on the realistic customer requirements of the last 12-month. Such a request refers purely to material information (quantity, quality, etc.) and service level – without naming the end customer. The corresponding material data was made available to us directly by the procurement department and had been used a few weeks earlier for the customer’s own market enquiry. The procurement department then again took over the evaluation of the offers received by us.
We approached those suppliers that we had classified as particularly competitive on the basis of our knowledge of the regional market and product groups and that the customer did not yet know. The customer promised himself an objective price benchmark and ideally access to further efficient suppliers (who are not located „around the church tower“).
Tenders – New efficient and competitive supplier contacts through ADCONIA
To make a long story short, the objective has been achieved: Not in all, but in most product groups, we were able to establish resilient contact with very competitive suppliers. On the price and/or performance side, there were considerable advantages for our customers. Our commitment to the customer had already paid off at this point.
In addition to supplier contacts, deficits in the purchasing methodology were also identified.
However, a much more important finding for the decision maker resulted from the enquiry process: the enquiries of his purchasers showed major methodological and data weaknesses. Already in the course of preparing the data, a number of queries arose on our part, which were not even torn down until the evaluation of the offer.
And with this experience, our decision-maker is in good company. Here are a few more examples from various customer projects:
- Coverage of all demand points/works
Despite a cross-plant program of measures, inquiries sent by procurement contained only the requirements of the main plant.
It was not until the enquiry and the impulse from our project were received that the requirements of the other plants were included. Each of the other plant requirements is considerably smaller than that of the main plant in terms of sales, but in total they account for around 35% of our customer’s total requirements. And especially in the course of an inquiry this is of course a not negligible order of magnitude in terms of buyer power.
- Portfolio coverage of individual inquiries
It is not uncommon for us to be unaware of the criteria according to which the articles intended for the enquiry were selected when our customers submit their enquiries. The requested assortment sometimes did not even cover 30% of the total requirements and was partly more manufacturer-oriented than turnover-oriented.
For Adconia enquiries, the central goal is to cover as much of the demand portfolio as possible (recurring materials with the highest turnover) and thus to achieve a high level of informative value from the offers. Accordingly, we decided together with the customer to revise the query portfolio in just a few steps.
- Communication of the essential service levels
Unfortunately, it is also not self-evident that bidders are or can be given uniform specifications with regard to the essential service levels in enquiries or tenders. Important requirements such as required payment terms, reaction or delivery times have often simply not yet been defined internally or communicated systematically. The bidders therefore calculate on correspondingly different bases, which ultimately leads to incomparable bids.
Quasi „on the fly“ we help such customers in our projects with the preparation of standardized inquiry and tender documents for the definition of central service levels in the individual product groups. And thus to actually comparable offers.
- Deficits in evaluation
O Z. B. Portfolio coverage of offers
The average price level advantage as a result of the comparison between the old price and the new offer price is of course the decisive factor in the 1:1 comparison of material. But this key figure is worth little, as long as one does not know for which portion of the inquired materials it applies.
Does a certain offer contain only a few articles with attractive prices or is it fully offered and therefore also resilient?
This information was not apparent from the evaluations of various customers submitted to us in the course of award reviews and was not used as a decision criterion.
From our project, these and other key figures are included as standard in the evaluation documents.
o Non-consideration/non-adjustment of unclear quantity units
Master data maintenance is also a sensitive issue that still poses challenges for customers. Almost regularly, there is no sufficiently detailed information on order quantities, delivery quantities and price units on the master data side for C-items. Accordingly, they cannot be attached to the article in the inquiry and taken into account accordingly in the evaluation or deviations can be corrected. The price differences ultimately lead to a lack of comparability and distortions in the results of the evaluations.
This deficit cannot be remedied in the short term. In our projects, however, it leads to a revision of the requirements for the future procurement process for C materials. The focus is being shifted even further in the direction of digitization and automation.
Optimization of inquiry process and training program strengthen procurement in the long term
In addition to a reduction in the material price level, our customers also benefit in terms of quality and methodology. The result of the price level review outlined in the first example was not only new supplier contacts and improved prices. We also offer a training program including practice-oriented checklists for each product group. In these, the purchasing methodology and minimum requirements tailored to the customer were specifically refreshed and updated for all purchasers.
How high do you rate the methodical quality in your team?
As ADCONIA GmbH we advise our customers with the experience from more than 200 projects from more than 15 years – in questions around procurement, supply chain and the digitalization of processes. Our goal is always to increase the earnings contribution of purchasing through cost reduction, process automation or the qualification of the procurement team.
With a correspondingly broad wealth of experience, precise knowledge of day-to-day procurement and a high level of professionalism, our consultants carry out training measures at eye level. We do this – depending on requirements – both as sparring partners for specialists and managers with many years of experience and as trainers for seasoned procurement professionals and young professionals.
Partner, ADCONIA GmbH