Transforming Procurement: Real Stories, Real Results

Many people who are not involved in corporate procurement have very vague and very mistaken ideas about how supplier-customer relationships work today. They say that all you have to do is put your requirements on the market and suppliers will flock to you like bees to honey, and the buyer will sit back and choose the best 🤦‍♂️.

But this is not the case. Since 2020, the market has changed and the market power has shifted from the buyer to the supplier. Now the supplier chooses which customers to work with and which not so much. Each supplier only needs to go to an electronic trading platform to see hundreds of tenders on his subject, choose the right ones for him and calmly apply to participate ❗️

So there should no longer be any illusions that the buyer is king of the world and suppliers are lining up outside the fence to offer their goods and services. No one is queuing up, and moreover, if the buyer is careless in issuing the request for proposal and fails to specify the essential parameters of the deal, many suppliers have no desire to even ask questions and clarify anything, they move on.

Top managers of companies should realize that the rules of the game have changed and now it is necessary to involve suppliers in their tenders to ensure competition. This means making a conscious effort to increase the attractiveness of the company as a customer and the attractiveness of its procurement processes. Otherwise, there will be no real competition, only a formal collection and 2-3 commercial proposals to ensure the necessary minimum. Even the most prominent brand companies - customers are already beginning to realize that the chain of events looks like this:

Making the customer more attractive ➡️ Attracting and training procurement managers ➡️ Making the procedures more attractive ➡️ Ensuring real competition ➡️ Competition between suppliers and improving the commercial terms of supply

🔥 Activities to increase the attractiveness of the customer:

1. Clear entry points to the company and requirements for suppliers. It is desirable to publish a public version of the procurement rules
2. A "Suppliers" section on the company's website with the basic rules of work in terms of procurement, as well as widgets of active procurement procedures
3. Fulfillment of the company's obligations to select a supplier in a tender, to conclude a contract, to select quantities, to settle mutual accounts
4. Clear and predictable company requirements, planned sampling volumes, acceptance procedures. Willingness to communicate effectively
5. Promotion of the company as a customer at industry exhibitions, conferences, publications

🔥 Activities to increase the attractiveness of the procedures:

1. Consolidated volumes attract much more attention from suppliers, including large companies
2. Clear requirements and hidden conditions, readiness to clarify details in the procedure chat room
3. Explicit indication of whether analogues are acceptable or not, definition of reasonable tolerances on characteristics
4. Adequate terms of tender procedures, usually from 5 to 10 working days, the terms of procedures do not end after hours, weekends and holidays
5. The customer invites not only new suppliers but also existing suppliers, this is fair and equitable to existing suppliers

The customer does not make any exceptions to the methods of accepting bids, announces that bids will only be accepted through zinit, observe this condition to ensure equal rights and opportunities for all bidders