Deciding whether or not to enter a procurement competition is not as clear cut as throwing all the variables into a scorecard, hitting a button and seeing what comes out when the wheel stops spinning. A well-established and process-oriented company may be more systematic about a bid / no bid decision than a younger upstart. But no matter where you are in your life cycle prequalifying an opportunity is complex. Here are a number of areas that you will need to discuss:
1. Strategy
Does the opportunity fit with your business strategy? A mature outsourcing company may have a goal of being the dominant player supplying call centre solutions in the telecommunications area. If the opportunity is outside this area and doesn’t feel like it’s a long-term option it’s best to avoid it.
2. Financial
Is it possible to make a profit that is acceptable to your board? Providing a good service is always a source of pride, but this can quickly turn to resentment if you’re not making the money that the service deserves. Organisations may price “at cost” or “below cost” in order to either get a leg in the door or to build a credible reference site. Don’t do this unless you have the cash flow to accommodate it.
3. Operational
Can your business design, build and deliver the product or service as specified? Are your current partners / subcontractors able to deliver what you’ll need from them? It’s a bad idea to negotiate with new partners during a procurement process as they’ll have far more leverage when you’re under pressure. Will you cannibalise your current contracts if you win? Any strain placed on other contracts due to the reallocation of resources often leads to a rapid deterioration in service, strained client relationships and the eventual loss of contracts.
4. Clarity
Is the request for proposal (RFP) well put together and clear? It’s difficult to design a solution and cost it properly if the RFP is shoddy and ambiguous. Be careful, because a client who issues an poor RFP may take a similar approach to account management.
5. Capability
Bid pursuits are stressful times as they take people away from their core duties. They wind up working late, eating pizza and chips, and find their work under a higher level of scrutiny than usual. It can take weeks for some to recover from the process. Sometimes it’s wise to pass up an opportunity if you don’t want your staff walking out the door afterwards.
6. Intelligence Gathering and Capability Building
Sometimes it makes sense to target opportunities in order to build intelligence and improve internal capability. A bid debrief with the buyer casts a light on where you are with respect to your competitors about price and capability. If you are too expensive you can look at your overall cost structure and design a way to become more competitive. A competition is an opportunity to focus. It’s a great time to think, design and make decisions about investment.
7. Reputation and Trust
The fear of being “out of sight, out of mind” is a common one among leaders. Many feel that it’s good public relations to be involved in a competition regardless of the outcome.
Finally, it may take a number of attempts before a client really gets to know you and is confident in your ability to deliver. So take your time and view it through a medium to long term lens. It’s a slow burn after all.
What happens how?
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