The author, Alan Braithwaite, in his article, discusses the issues related to supply chain governance. The recent horse meat scandal gave food for thought to many procurement functions as to the legitimacy and honesty of suppliers in the supply chain.

The story behind the horse meat scandal was that many well-known and reputable firms were selling food items that contained traces of horse beef in it. This led to an uproar among people as they were being fed something very different to what was mentioned on the packaging. The root of the issue, according to many firms, were the members of the supply chain who substituted products fraudulently in order to make huge profits.

The rising inflation and costs have witnessed substitution and adulteration of genuine products with fraudulent, low cost and low quality products. High margin and high value goods are a temptation for many criminals that are a part of the supply chain. They usually substitute such goods with their low cost generic counterparts but sell it at the same high price. This allows them to make greater profits along the supply chain.

There are many other categories of products besides food items that are facing substitutions and adulteration. Categories like luxury goods, pharmaceuticals, car parts, aerospace components and other high margin sectors are facing the same issue. This means that the products that are dispatched from the firm do not reach the retailers in their original form. They are tampered with or changed. The same thing happens in case of raw materials. The items ordered are different from the ones that reach the manufacturing facility to be processed.

A recent research revealed that many firms were ignorant when it came to supply chain management and were not conducting any form of quality assurance or supervision over their supply chain. For firms, it is extremely important to monitor their suppliers as well as their distributors. This must be done in order to ensure that neither the raw materials nor the finished goods are of a different quality than what is mentioned on the product.

In case of own label products, retailers are responsible for monitoring the supply chain and in case of branded goods, brand leaders should ensure that the supply chain is not tampering with their products.

It is important for the procurement functions to be proactive. They should not compromise on quality or ignore the potential risk in order to purchase low cost goods. In most cases, it is evident that companies did not pay attention to what was happening in the supply chain and were oblivious to the non-conformance of suppliers.

Therefore, to avoid brand damage and maintain the reputation of their firm, companies should pay attention to their suppliers and retailers and ensure that appropriate supply chain governance is being practiced throughout the supply chain.

Losing is bad from almost every perspective. It results in a loss of several things including time and money. Plus, losing also often takes the motivation away leaving people demoralized. Winning is not easy because only a few can win and those few are usually the best at what they do.

This also applies in proposals. The winning proposal wins because it is able to convince customers. The idea that the customer wasn’t the right one does not apply when you fail. The loss is mainly due to your failure to write the right kind of proposal and the right option is not to sulk but to learn from your mistakes and prepare a better proposal in your second attempt.

The proposal should be superior not only in your eyes but also in the eyes of the customer. The main aim of a proposal is to convince your customer that you are the best option for a particular job. Many a times you might know how to do the job better than others but it is of no use unless you can write it down in your proposal in a convincing manner. At the end of the day your customers will decide based on what is mentioned in the proposals; in most cases other things are secondary.

A proposal should be responsive in a way that it answers every question that the reader might have in regards to the business. Only a team that is committed to its work can prepare such a convincing proposal.

A proposal should clearly highlight benefits. There is no point in keeping these under wraps as benefits are usually what a customer is mostly interested in. Emphasizing on wrong points such as the company’s background or cost may be wrong. Many experts believe that emphasizing too much on cost (unless it is a benefit such as discount or low cost) can have a negative impact and the reader may feel that the business is too much inclined towards profit.

Additionally, benefits should be mentioned from the reader’s point of view. They should highlight what the reader will get from the company. Some winning secrets are:

• Use a superior approach.
• Clearly mention the benefits.
• Use argumentation highlights to emphasize on special points.
• Clearly highlight strengths and also weaknesses preferably in the beginning of each chapter.
• Answer every question that the reader may have (both stated and implied)
• Be totally honest and avoid making false claims.
• Authenticate every claim you make.

A proposal should begin with the leaders (proposal leader and proposal specialist). It is important to select the right person as the proposal leader so that decisions are taken carefully and in the right manner. The proposal leader should be well aware of the industry including the changing trends, the competitors and the organization itself so that he can call the shots without putting anything on the line.

Some qualities of a good proposal leader are:

• Disciplined
• Good Communicator
• Flexible
• Punctual
• Controlling yet Delegating
• Foresight
• Knowledge

Persuasion is all about motivating a prospective customer into buying. It combines different elements including information and evaluation.

Understandably, information has to be provided for a buyer to be motivated into buying a product. Information can be about the product itself including its cost and benefits. The emphasis is generally on benefits as these are the main motivating factor in this case. Plus, the information may also be about the organization, especially if it is offering a service and not a product. The information should highlight the goodness of what is being offered and their advantages the user will have in case he or she accepts the proposal.

Information should always be provided in clear and simple to understand words. Plus, it should be true and based on facts. Misleading information can cause serious problems and should be avoided at all costs.

On the other hand information is not the only thing that is required. At times one has to present opinions and estimates that should be based on the present facts. Nonetheless, the main thing is that the words we write should leave a mark and influence the readers.

Persuasion basically consists of four main steps. These are:

The Customer’s Needs

The first thing is to understand what your customers want and then presenting information keeping their needs in mind. Every word should look tailor made to the reader so that he or she finds the offer relevant to their needs.

In most cases customers already know their needs. Still, you have to make this portion useable by posting information related to your offer.

Outcomes

Here the concentration is mainly on the desired outcomes. The emphasis here is on success and how it will be achieved. Since the main aim is to create a sense of urgency, this portion has to be written very wisely.

Yet, motivation does not necessarily come from needs. Every business has several needs and issues but it does not always look for solutions. In this the decision maker has to be convinced that the problem needs a solution.

Recommend a Solution

Once the decision maker has been convinced about needing a solution it is time to present an option in a way that it looks the best possible option. A proposal that only describes a product by mentioning facts without actually recommending a solution is often worthless.

A recommendation should be made in solid words so that the reader knows your firm belief in the recommendation you are making. Phrases like “we are sure…” or “we are very confident….” are considered good as they give the reader the idea that you know what you are talking about.

Prove Your Capability

Here you have to provide evidence that you have it in you to do what you’ve mentioned above. This can be done by mentioning successful projects or third party references. Guarantees, project plans and portfolios of team members may also be used for this purpose.

This information should also only contain honest words written in a way that they leave the reader impressed.

Most businesses that want to work with corporations or the public sector don’t know where to find those opportunities or they rely on only a few public, government portals.

In fact, private corporations rarely advertise their opportunities on websites and, in the public sector, only 20% of contracts are advertised on the main government portals.

Public sector procurement is a regulated market, so public sector organisations need to follow strict rules when advertising their opportunities. Usually, though, it’s only contracts over a certain value that have to follow this process.

Some institutions will have ‘accredited supplier lists’ or ‘preferred supplier lisst’ where they can top-in when they need a specific service. But what can you do to ensure to be part of these lists or make sure they will contact you when they will need your service?

So what happens with corporate procurement opportunities and the other 80% of public contracts? The answer lies in asking not ‘How do we find them?’ but ‘How do they find us?’

Visibility is crucial. If they don’t know you exist, they can’t contact you or invite you to bid for their opportunities.

Even more importantly, corporations and public institutions want to deal with professional organisations, those that have processes and systems in place and always provide excellent customer service.

To be considered for such opportunities, you might think about: belonging to professional bodies and institutions; having a strong website presence, etc…

If you want to work with the corporate or public sector, you will need to build a diverse tender sales pipeline. Today, you can’t rely solely on just one or two sources. Try to diversify, and be consistent. Some strategies will work better in your sector than others. But it’s always better to implement two or three strategies well than ten or more badly.

On the 14 June 2013, we will host a webinar, ‘How to find tender opportunities in the Public and Private Sectors’ in which we will explore others ways to find tenders in the public and private sector. Find out more

Christina Murias, from Green Growth Consulting

For a business to succeed, understanding the customer is the key. Without knowing what your customer wants, you will not be able to win their hearts, their trust or their loyalty with your products. Cicero, a Roman orator and statesman, highlights the issue of persuading the client in a few meaningful words. He said:

“If you wish to persuade me, you must think my thoughts, feel my feelings, and speak my words.”

This is excellent advice for all marketers as it teaches them a basic lesson regarding client persuasion. To sell a product or service to a client or to persuade them to buy something from you, you need to first understand what the client really needs. They will not buy your products and services if they do not need them.

The first basic step here is to understand what your client needs. When you determine that, your next step would be to persuade your clients to buy your products/services. These products/services should be a solution to their problem.

An intelligent marketer would try to motivate potential customers by influencing their thinking, their behavior or their attitude in order to influence their purchase decisions. Winning proposals can only be crafted if the marketer is well aware of his/her customers and understands them profoundly. Before writing a proposal, consider three main factors about your target audience:

Think My Thoughts – Personality Type

To influence your customer, you need to understand their personality type. This will help you level with your customer. If you know what your customer thinks, you will be able to approach them in a manner that will influence them.

Customers have different personality types. Your customers may be visionary, pragmatic, detail-oriented, consensus-oriented, etc. You will have to reach out to them in a way that inspires them and makes them understand how you can help them with your product or service.

Speak My Words – Level of Expertise

This is an important aspect of client persuasion. You should align yourself with your customer. If your customer is not comfortable with your language, they will not be easily persuaded. Try to see from their viewpoint and use language that they understand and feel comfortable with. If there is a slight discrepancy in the language you use and the one they understand, they might perceive your product or service in the wrong light. Depending on whether your customer is informed, uninformed, familiar or unfamiliar about your product or service, you will have to reach out to them in the same way so as to make them understand exactly what you are offering them.

Feel My Feelings – Role in Decision Making

An important part of client persuasion is the role of the client in the decision making process. If your client is a gatekeeper, their main job would be to reject proposals that do not comply with company requirements. If your client is a user, they will only see how the product will benefit them.

However, the ultimate decision will be made by the person who will pay for the products/services. You should be able to persuade them and make them see that your offering is worth the money you ask for and is going to benefit them.

An article by Pedro Paulo discusses the transformation of procurement function in the next 10 years. According to him, in the next 10 years, the world economy will remain stable but many established and successful economies will face hardcore competition from the four nations known as the BRIC (Brazil, Russia, India and China) nations. These nations are quickly developing economically and may become stronger in the next decade.

The author also states that certain resources, like rare minerals and metals, may become valued, scarce or controversial and access to them could be a source of opportunity as well as of conflict on a business and political level.

This will coax the governments to exercise their power over private companies, creating political and economic uncertainty for them. Also, in a matter of 10 years, a global shortage maybe observed in certain commodity areas, resulting in the balance between suppliers and buyers shifting towards the suppliers’ side. The opportunities in the private sector will increase and will result in more outsourcing of various services. However, the government may pressurize private firms to regulate themselves or behave more responsibly.

The author predicts that technology development will not slowdown in the next decade and procurement might disappear completely as automation of procurement activities takes place. However, he also notes that even with increased technology, the need for interpersonal contact and human judgment will not decrease.

For instance, even after supply chain activities have been completely automated, critical judgmental and commercial issues will still exist. Machines will not be able to solve issues like reputation management and outsourcing issues.

Even in various other sectors, like public procurement and services, managing internal stakeholder power and its relation to the external market will remain the main focus of procurement. This clearly depicts that procurement will not disappear within the next decade. However, there will be a dire need for it to undergo certain changes. In response to these changes, the procurement professionals will also need to develop novel skills in order to manage these changes.

Furthermore, the industry will have to reduce its focus of cutting down on unit costs. Instead, the primary task of procurement within the next decade would be to manage the value gained by an organization while dealing with the current and potential suppliers.

Mr. Paulo predicts that the future will witness rapid changes, fresh challenges and more global issues. In response to this, the procurement profession will have better technology and the procurement personnel will have the relevant knowledge, skills and behavior.

One of the biggest mistakes that bid writers make is to mainly focus the proposal on the features of the product or service that the company plans to deliver.

In fact, a proposal needs to talk to those who will make and assess your proposal. Not all buyers are the same, have the same needs or buy the same way.

When you write your proposal, you need to bear in mind who is going to read it. If you don’t customise the proposal for them, the chances are they will dismiss it.

Technical expertise or a logically constructed methodology is important in a proposal, like attaching résumés, qualifications and project planning documents, for example. However, at the end of the day, people decide as individuals before they decide as a committee. So every member should want to work with you if you wish to make it through the process.

In complex sales, when proposals are required, a group of people (or committee ) will be in charge of making a decision about whether to buy a service or product. Not everyone on the committee will perceive the situation (the problem) in the same way; not everyone will have the same opinion about the scope and the range of potential solutions. Businesses, though, do not realise that people might see things differently even if they are in the same situation, or that they will have different selection criteria and different bias. If you don’t take all buyers’ needs and requirements into account, you weaken your chances of winning a contract or project.

Sales professionals know that there are different types of buyers in complex sales (like tenders). Knowing how to analyse the members of a team, and their needs is crucial.

In his book, The New Strategic Selling, Robert Miller mentions that there are four types of buyers: the economic buyer, the user buyer, the technical buyer and the facilitator buyer. Richard Freed, in Writing Winning Business Proposals, argues that there are in fact five buyers.

It is a known fact that people buy from sellers they can trust. Trust is usually built overtime with the help of positive experiences and relationship. However, it can be damaged quickly. It may take a person years to build a relationship that may get destroyed by a small mistake. There have been several instances where organizations were brought down only due to the public losing trust in them. This is why the factor of trust must be paid attention to.

It is common for businesses to hit a rough spot with customers or collaborators even if the trust factor is there. In most cases one can recover from such circumstances if things are planned carefully. Effective communication is one of the main tools used in recovering lose prestige and trust.

Even in such situations proposal writing can be used as a strong tool. Denying or lying about something wrong you have committed is not the right solution. The situation should be directly confronted in a proper manner. Without denying the facts they should be put in a way that the damage is minimized. Such a move will not completely correct the situation but will definitely take away some of the heat.

An approach where you agree that something went wrong while maintaining that you are doing your best to correct it is the right one. However, giving all details may not be the right solution, even though there are some examples where companies gave every minor detail to clear up the situation. This generally differs from case to case and is very subjective.

The best choice is ‘acknowledge and explain’. Warren Buffet gives these tips when writing such a proposal:

• Admit that research is continuing and all facts are not presently known.
• State the information that is already available
• Communicate accurately to reestablish trust.
• Mention the steps you are taking to solve the problem and to prevent such accidents from occurring in the future.

Plus, blaming customers for something is not wrong. One may maintain the ‘black and white’ situation pattern without putting the whole blame blatantly on the customer. One should only stick to the core message in a proposal.

If you are sure that you can meet the client’s needs in a perfect manner then you should only concentrate on that point. You can win customers back with the right approach. The key is in convincing them that you have understood what went wrong and you are working on correcting the damage and ensuring that such a thing will not occur in the future. As long as you have the ability to satisfy your customers and you can communicate it effectively to them you will not be at a loss.

If there is bad news then you should try to reframe it in a way that the impact is minimized and it does not come across very negatively. For example, if a negative point is highlighted by someone you can reframe it in a way as to turn the attention towards something else by using sentences like, “yes, you are right, and we are doing this…”, “that is true but now the scenario is….”

However, there is a more upsetting situation where the bad news concerning your organization is actually false. In such scenarios you should mention evidence to prove your company’s consistent performance. Third party evidences are of great help in this regard.

When writing a proposal in such a situation you should know which part of the trust is actually broken so that you can work on mending it.

In recent years, the focus on cost reduction has increased substantially. Paul Snell discusses why buyers should break free from the vicious cycle of cost-reduction.

Most companies are advised to align their procurement goals with the key objectives of their business. Every business today is trying to align their procurement goals with their business objectives. This is very obvious and most businesses follow it. Why would any company want one of their departments to function and achieve goals that are different from corporate goals?

However, businesses nowadays, are hell bent on cutting back on their costs. A recent research showed that the top most priority for the procurement function or purchasing department in 2013 was to cut down on costs.

According to a survey by PWC, most of the CEOs in the UK are making an effort to expand their consumer base and reach out to a wider target audience as well as enhance their operational effectiveness. On the other hand, they are more than eager to reduce their costs. The survey states that in Britain, around 83% of the bosses are crafting cost-cutting initiatives. This is a much higher number than the global average.

The fact of the matter is that Chief Performance Officers in companies are focusing so much on cutting costs via the procurement department that this will become a continuous cycle which will be difficult to break later on.

In current times, firms are luring customers by offering them low cost products. They are depending on their procurement department to cut costs. So, it is actually the procurement department that is to be credited for luring in new customers. However, this is not the responsibility of the procurement function.

It is important to state that every department will help the CEO in achieving business goals. So, if a buyer or a purchase department tries to cut costs and deal with suppliers who can offer them attractive prices and a competitive advantage over others, they will be more than happy to go forward with the cost-cutting plans.

Rod Lewis,  sheds light on the changing business scenario and the need to reduce costs. Most managers set a target of around 5% when it comes to reduce costs; a target over it considered too much and anything below it isn’t considered enough by many.

There are many ways in which a business can improve its profits with cost reduction being the most workable solution. Businesses, especially ones which revolve around selling products, use different types of tactics including charging mark-up on products that feel like the buyer gets a product at a discount when actually it is the company that has the last laugh.

Companies also often set goals in terms of sales and communicate them to employees who work harder. in order to get commission that they usually attain when they surpass expectations that are generally showed in terms of numbers.

An organization that measures its procurement department on delivering finances has set certain rules and now it is left to buyers to play the game. The 5 percent per buyer formula works perfectly for most employees. If they are awarded for delivering this every day, they would not try to set a higher goal, say achieving 15%, in one year.

They would live in fear that they might have to accomplish gains in the second and third year against a low base. Plus, there is also the fear of the business wiping off any credit for the improvement in the first year just as the second year begins.

This requires an alternative and there are some. What if the team is asked to deliver over longer periods with stringent minimum requirements, with an over-arching aim, to provide against a present value over the period?

There are clear benefits of this scenario as 5% yearly for four years equals to a present value of  less than 20%. Based on an 8% discount rate, a 5% year-on-year cutback shows a total advantage over the four-year term of 11.4%.

Delivering 20% in the first year also has several benefits including a very positive impact on the company’s cash flow and profitability. It will allow the business to grow more by allowing it to invest more. This may also result in more jobs as more growth means that more people would be required to work.

It is obvious that every business wishes to grow and improve its overall performance. A 5% is a good minimum to set, as anything below that might not give strong results. In the suggested alternative, the value of bringing forward the money saved from future years would be recognized as well.

By having a collective target, a better performance may be attained. Instead of setting the target at 5% each year for a four-year cycle, one can set one to attain at least 5% of the first year’s opening cost base on a collective basis. This will support the project consideration with longer timescales.

However, in order to be effective this approach needs a regular dialogue within the organization. The procurement department must maintain the latest forecast of possible outcomes and the trade requirements to recognize over-achievement.

Buyers should keep on establishing underlying costs and driving a nonstop waste elimination program. A buyer should have the ability to show that prices are not just reducing but there is a proper process to reduce costs that support profitability. Enhancements in ownership cost should also be looked at as a better substitute to simple cost reductions.

According to Tom Sant, writer of Persuasive Business Proposals, a good written proposal is hard to find. Let’s add that, in fact, writing a proposal isn’t an easy task. According to Sant , common errors are:

• Firstly, proposals don’t really focus on the prospect’s or client’s needs, even though you might think they do.

• Secondly, proposals lack a clear and persuasive structure. They consist of junks of material that have been copied and pasted, they are difficult to read and they are full of spelling and grammatical mistakes.

• Thirdly, there isn’t usually a clear differentiation of your service compared to other providers. Proposals lack any compelling value proposition.

In addition, hiring an outside organisation can be perceived (consciously or unconsciously) by the buyers as a sign of weakness. This makes your job even harder.

A buyer organisation can easily think that they haven’t been able to find an internal solution to a problem, and that’s why they need an outsider to do a job they haven’t been able to deal well with internally. The buying organisation might feel worried about the implications of hiring you – an outsider. It might also mean that the buying organisation will feel threatened about losing some control to you. So the buying organisation is now impatient, because they’ve been trying to find an internal solution, and they now need to call in an external body quickly to solve their problem. The buying organisation is suspicious, because they’ve been let down before when promises have been made and the expected outcome hasn’t materialised.

Obviously, the best situation is to be able to build trust with the buying organisation before they need your services, by giving advice, offering ideas or providing a new perspective in how to do things better. In short, it’s about giving value even before you’ve been asked to. It’s about establishing a close relationship.

But we don’t always have time to do this preliminary work; more often, we’re simply required to prepare a proposal. Creating a good proposal is therefore crucial.

A proposal is a strategic exercise, and should be thought of accordingly. In fact, all proposals should comprise  at least the following components:

1. an appraisal of the current situation
2. the objectives of the work or service
3. the metrics/measures
4. the value your organisation is bringing
5. your implementation methodology and options
6. a timescale for the project
7. mutual accountabilities

On Monday 29April, we’re holding a workshop on 'how to write a winning proposal every time'. We’ll then explain in more detail how to develop content for your proposals. Find out more here…

Whoever coined the phrase “the customer is the king” deserves accolades as this is a very true explanation of the power customers enjoy in today’s world. The customer gets to make the final call. Even in sales the power is in the hand of the customer who gets to decide if he or she should or should not entertain your proposal.

A good proposal does not always guarantee success. Actually, the decision making process has to be understood first. The idea that people make decisions in a rational manner holds true in very few cases. Decision makers are often under a lot of pressure including the pressure to make the correct decision within a short span of time. Due to these factors they are not always able to make the right decision in the right manner.

In a perfect world one would carefully scrutinize all the options and balance pros/cons to reach a conclusion. However, as per a study, Simple Heuristics That Make Us Smart, published in 2000 by Oxford University Press and performed by the University of Chicago and Max Planck Institute for Human Development, people make decisions based on very little information.

This is because we are often used to making simple decisions quickly and this becomes a part of who we are. When we are in school we are used to randomly selecting answers in MCQs, especially when we do not know the correct answer. This habit builds into us as we grow and we often end up treating almost all decisions the same way including some major decisions.

However, this does not hold true for each and every individual. Some people, such as Benjamin Franklin, do proper research and comparison before taking a decision. In order to be successful it is important to know how your client makes a decision or on what grounds the judgment is passed.

For example: Low cost might not be the most important thing for your client when he or she is making a decision. In such a scenario you should try and find out the qualities the client is interested in so that they can be highlighted in your proposal.

When we know what the client is most interested in we can emphasize on the same point because we know that a specific point would trigger the desired reaction in the client and our proposal would get accepted.

Healthy competition is good for every industry. It gives more opportunities to the people and keeps the organization at the edge of their seats. Competition has a lot to do with positioning and featuring your strength in a way that the message gets communicated clearly.

The right approach to counter your competition includes analyzing your competition in a deep manner. A competitor’s claim may be unique, i.e.: only the competition specializes in that claim or it may be common to the both of you.

Common claims are easy to counter as both of you offer the same thing. Your competitor might present his service as the best service, but it is easy to counter because you can advertise the same service in a different manner and reach people effectively. The main problem arises in case of unique claims because you do not have an option to directly counter these.

An easy way to counter these claims is to make them look ‘untrue’. Conversely, in several cases even doing this is not easy, especially if the claim is actually true and proven by the competition. In such a scenario you will also have to look out for a USP that is exclusive to your product or business. This will help discriminate and counter your competitor’s claim.

Proving a competitor’s false claim ‘false’ is easy if you know the trick. Take an example of a business that says that it uses a new mechanism to complete a job in less than half hour. In your proposal, to counter this statement, you can mention how you used the same procedure but it did not complete the job in half an hour; hence, your current system is better. This way the reader will lose faith in your competitor and might be more interested in your proposal.

However, in order to counter effectively you will have to know the strengths your competitor plays on. This is possible only if you do thorough research and find about your competitor.

Still, you need to be sure that you do not cause trouble by countering true statements. Plus, on your part you should stay away from making any false commitments because your competitors may also use such claims against you to bring you down. You should highlight your strengths clearly while showing why you are better than your customer without going over the top.

A successful counter can help you win customers and make long-term clients. However, there is a lot of risk involved as well. You must remember that your competitor will not remain silent and there might be a counter attack. In order to be on a safe side the risk factor has to be considered and then a plan should be prepared so that the danger is minimized.

Plus, if you are proven wrong in your claim or in refuting your competitor’s claim then you might lose your client as well because such a thing may ruin your image in your client’s eyes.

To ensure growth, a business needs to look continually for new leads.

For some companies, tendering can be a new sales strategy for progression. However, because they are new to tendering, they don’t usually know where to find those opportunities.

Other companies, if they don’t have a consistent and reliable tender pipeline, come to realise that they’ve missed some opportunities. This is because they weren’t aware that a tender notice was issued some time ago. Something I’ve often noticed, since the expansion of the internet and growth of technology, is that businesses sign up to dozens of ‘tender portals’, which means they receive daily alerts of irrelevant tenders – and they miss those that are more relevant to their business.

In fact, not all tender opportunities are published.

Some tender opportunities must be published, especially those that are above a certain threshold and issued by governmental institutions. The public sector is a regulated market so it has to follow some processes and rules. Public procurement is concerned with transparency and fairness. A way to ensure transparency and fairness is to advertise tender notices in different platforms (such as websites, portals, newspapers and trade magazines).

Corporations (private companies) or public institutions with tenders below a certain threshold don’t have to advertise their opportunities, and consequently decide deliberately not to do so.

Why don’t they want do advertise their opportunities?

• Firstly, because they don’t want to receive hundreds of applications. Dealing with applications has a cost (more resources are needed). Having just a few to deal with will allow the procurement team to choose their supplier wisely.
• Secondly, they might not want to let everyone (i.e. the competition) know that they are tendering. This may be for internal and external strategic reasons. They want to make sure that only a handful of potential suppliers are aware of their needs, issues and vision. They feel more in control of the overall procurement process.

So, as you have now understood, if such opportunities are not widely advertised, how can your company be aware of these tender notices? The real question, in fact, is not ‘How can our company find these opportunities?’ but ‘How can we be found?’.

There are different ways that your company can be made aware of tenders in your sector. I’m sure that you’re already aware of some of them, like networking within professional bodies’ institutions, trade shows, newspapers and so on. In fact, at Green Growth Consulting we’ve identified 11 effective methods for you to implement in your company to make sure you receive timely tenders.

On Tuesday 9 April 2013, we’re giving a FREE presentation at the City of London Business Library about how to find opportunities in the public and private sectors. You can register here to attend.

John Tizard, one of the most experienced and respected commentators and strategic advisors on public services and public policies, shares his opinion on how the government and the public sector can serve the public in a better fashion.

He believes that the government and public sector should use their procurement teams if they genuinely want to help the public and deliver more services through newly formed charities, social enterprises, SMEs, and co-operatives in the public sector.

Small organizations also need a chance, which is only possible if there are well laid out and less complex procurement requirements and processes. Eligibility criterion that requires the applicant to have a certain level of experience or proven track record in order to qualify is a huge deterrent as it disqualifies the new organizations that have potential and wish to apply.

At times, frameworks require submission of several forms (often unnecessary) and having complex knowledge, which is often too complex. This has a very negative effect on small organizations that are not able to get their due share and find a way to make a mark for themselves.

Most major contracts are not suitable for SMEs or small organizations and only receive interest from big companies. This is why most contracts from Work Programme fail to attract junior supply chain providers, as they are hardly feasible for them.

The requirements, such as a huge turnover or heavy balance sheet, are often too much for small businesses. The government claims to have these contract offers for the targeted group; however, in most cases the targeted group is not even in a position to apply for the contract, leave aside winning the tender. Additionally, the requirement for consortia bidders to form legal relationship or have experience of working with the same party is enough to discourage bidders.

Talking especially about Payment by Results (PBR) contracts, John Tizard discussed the impact they have on bidders. In such contracts, bidders are required to fulfil overzealous requirements and considerable balance sheets to provide collateral or borrow capital from the market. Small businesses hardly have the ability to do so, which is why they are not able to fight for such contracts. Additionally, a charity has to take care of several things before putting trust property on the line in a public contract.

However, the government can change a few of its policies to make everything easier for the sectors mentioned above. Changing a few small things will make a major difference, and the government will be able to achieve its aim. Some actions suggested by Tizard are:

-          Bringing changes to the procurement processes so that they are friendly and welcoming towards SMEs and third sector.

-          Managing funds properly and developing the capacity of social enterprises, co-operatives and third sector.

-          Helping specified providers run services before they enter the open competitive market.  Additionally, it is important to ensure that these providers have the resources and opportunities to create the necessary commercial skills and capital to bid in the open market.

-          Following the Merling principles, which have been adopted for Work Programme, so that third sector suppliers and SMEs are treated fairly in the market.

The government can easily achieve its tasks by following the above given suggestions. The public sector can continue to do what it is doing while giving small enterprises and third sector suppliers a chance to grow.

Things have to be communicated properly to everyone involved so that the results can be seen. Failure to do so will lead to more problems and lack of opportunities.

Dr. Ilan Oshri, associate professor at Rotterdam School of Management and an associate fellow at Warwick Business School, has highlighted seven steps of outsourcing so that you can make sure that your business receives value from BPO and IT investments.

1.    Work Out Everything in Advance

Don’t do it just because everyone else is doing it. You must clearly understand why you wish to outsource. Think how essential the service is and what benefits it would give to the business. You must concentrate on the competitive advantage factor.

Check the internal sources you have so that you have a clear understanding of what you need to outsource. Outsourcing is a good option only if the company has the capability to fully monitor things and maintain a good working relationship.

2.    Devise a Strategy

It is very important to devise a strategy to calculate the benefits that the firm receives from outsourcing. Do not enter into contracts or outsourcing models that are beyond your firm’s capabilities. This step will only make things more complex and create problems for the organization.

Outsourcing all the general functions (such as HR) to one vendor is also a good strategy. It helps maintain everything in a better way.

3.    Set Standards

Most companies count on service level agreements (SLAs) that are very useful, but may often be misleading. They help monitor the service, but do not really show the transformation, which is also very important.

It does not matter how good the performance is if it does not have any effect on the business. The main aim of outsourcing is to get more benefits. If the outsourcing doesn’t offer the business any such advantage, then it might not be a very good idea to continue it.

This is why it is important for businesses to set standards and then match the performance to know how the company has grown or how outsourcing has helped it.

4.    Realize Value over Time

Value and expectations keep on changing with time. Changing expectations often result in disputes and problems that affect the outsourcing.

The best way to solve this issue is to communicate expectations clearly. Sharing learning is a great way to keep the relationship afloat and have a beneficial association. However, companies should not change their plans or expectations very quickly, as such a move may cause havoc on the other side.

5.    Make your CIO a Strategist

Most CIOs are not board executive members and are hence not aware of the ‘business language’. Due to a lack of exposure and knowledge, several CIOs are hardly capable of devising a working business strategy. Many argue that CIOs role is not very demanding and they do not need to be strategic. However, this notion is now starting to change with CIOs leading outsourcing plans.

Their role has now changed; hence, there is the need for them to change themselves too. They must be capable of taking tough decisions and making strategic plans. Their role should be central with a direct connection on board-level decisions.

6.    Build the Retained Organization

CIOs are very important for an organization, but they cannot run a business alone. It is important to have a strong retained organization. The retained organization must focus on transformation, innovation, and continuity.

The retained organization should also try to build relationships and create value for the customers. The IT function must be well-groomed with people knowing the difference between ‘techies’ and ‘users’ so that the communication process can run smoothly.

7.    Invest your Time in the Right Direction

Clients must be willing to grow and learn from every experience. Clients often only concentrate on meeting service provisions and leave the learning behind. This is a big mistake that stops the client from growing and taking the big leap.

If you want to win the battle, make sure you know the territory’

One of the critical considerations for buyers, after preparing their tender specifications, is how to select suppliers.

As the public sector is a regulated market, it’s concerned with matters such as transparency, fairness, discrimination, objective assessment, best value for money, quality and economic advantage, to name just a few.

The private sector isn’t regulated in the same way and, even though companies might be interested in the same issues as the public sector, their priorities are more targeted towards best value for money, quality and economic advantage. This means they might be more flexible in the way they select suppliers.

Nevertheless, selection can’t be left to chance. Relying on feelings and emotions (‘I like the team’, ‘They’re nice people’ and so on) isn’t a good basis for selection. So organisations (public and private) usually set up clear criteria for choosing their suppliers.

In my opinion, two main methods are used when evaluating tenders.

1. Using selection criteria, with a type of multiple evaluation list.

A typical list includes practical matters, such as quality, conformity and, of course, price. They’re weighted according to the quality of the response or a mathematical formula; these aspects are important and will be mentioned in the tender notice. Failing to pay close attention to these criteria will diminish your chances of winning.

2. Looking at different buyers’ requirements and expectations.

Even though the way in which buyers assess suppliers’ responses is usually mathematical, which I believe it should be, other factors often come into play too. These aren’t necessarily transparent and buyers might not even be aware they’re using them. I’m talking about the buyer’s profile. In fact, there are four types of buyers: user, technician, coach and economic buyer. Each of them is looking for different things in a tender application. If your proposal doesn’t reflect their explicit or implied needs, you’re lowering your chances of winning the contract.

At the webinar on Friday 22 February, we’ll look at the truth as well as the myths about evaluation criteria, the matters that are commonly assessed, and how to assess the requirements of different types of buyers. This will help you make sure your tender reflects a good understanding of a company’s needs. Register here 

Setting your pricing based on value takes confidence in knowing your value as a business and the results you feel you can deliver for clients. Many businesses going through the tendering process often become very nervous when it comes to price quotation for fear of undercharging or pricing themselves out of being shortlisted.  In this article, I want to address how value based pricing can be applicable to tendering as this can be a strategic approach to your tender submission.

There are numerous pricing models with the most common being cost based pricing and value based pricing.

Value-based pricing, is a pricing strategy that sets prices primarily, but not exclusively, on the value, perceived by the customer rather than on the cost of the product.  Goods  that are sold to customers in large markets (e.g. automotive industry) usually are sold based on cost-based pricing.

In tendering , you do not have the opportunity to meet with the client, build rapport and develop a personal relationship, but there are  a couple of things in your favour – a detailed statement of requirements, the opportunity to research the market and find out who  the existing incumbent is .  An example of this advantage  is that in the UK – specifically Greater London, you can look at the London Contracts register to see which kind of contracts have been offered by the local authorities.  This register provides information like “recently added contracts and soon to expire contracts, which is a minefield of helpful information:  http://www.londoncontractsregister.co.uk/public_crs/)

But, how can how can you set your pricing based on value and be successful in your tender application? When you are in a competitive sector, there is  a rigorous legislative approach to the tender process and the evaluation is based on the lowest price only, or the most economically advantageous tender (MEAT) approach?  Let me share with you a number of suggestions that can help you to do just that:

1. Decide that you will only dedicate time and resource to tender applications which are in alignment with your core business and you can demonstrate this value through clear measurable results in your testimonials and case studies.
2. Review the measurable results that you have delivered to clients?   What have you done recently that has made the biggest difference to their bottom line, culture or performance? A question to ask yourself would be - If there was one major outcome, that our clients want more than anything else what would that be – for example,  “ We help our clients with poor productivity and staff morale to increase performance and  reduce their production costs by 20%”.
3. If you were successful in your application, how would the client measure the value of your intervention?  With tenders, getting the answer to this question can be difficult because you do not have the privilege of asking this question as you would in a face to face meeting, but by studying the criteria and specification,  and drawing from your own experience you can imagine what they would need to see, hear and feel as a means of measurement.  
4. What is it worth to your client to solve this problem?  There may be an existing contract in place or this may be the first time that the requirement is going out to tender, in any event, the same question applies.  
5. What do you expect would happen if they did nothing about this problem?  As you draft your answer, think through the impact this would have on the business.
6. Why are they doing this now and in this manner ? Could it be that it is now urgent? Your research should bring up some answers.
7. How can you make your offer a good deal?  Not only for the client but also for your business.  Instead of submitting one price, how about a range of options with increasing value and price; which can show an element of creativity and innovation and could give you the edge when you most need it.

For you to be successful with value based pricing and tendering, there needs to be absolute focus  on the type of clients you want to work with.  A  commitment to their outcome and clear measurable results that you have provided for clients in the pas;  and offering a range of innovative options that although increasing in price and value can help them to improve performance, save money or increase profits.

Morton Patterson  runs  Morton Patterson Consulting, a specialist boutique  consultancy helping business owners who are struggling to grow their business and unclear about their value. He coaches and facilitates sessions on business growth, culture change and knowing your value. He will be running  a webinar on 'Value Based Pricing and Tendering'  on February 15th at 11am GMT. Register here

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A study, Open Access – delivering quality and value in our public services, published a little while ago shed light on how the government can save money by outsourcing public services. As per the numbers given in the report, the government can save around 11% by going out to market (around £22 billion based on £278 billion estimate).

The report that was conducted by Oxford Economics on behalf of CBI gives a detailed impact that such a move can have on the economy. It shows the importance of private sector in delivering services, such as prison management and bin collection. However, the report added that the government will have to strictly control everything so that work is perfectly streamlined.

The report calls such a move ‘essential’ due to the huge benefits it has. It also says that the private sector can play a very important role in improving overall services. It sheds light on the future expectations and how the market is expected to change with upcoming changes in the economic climate. Additionally, it emphasizes on everyone to concentrate more on outcomes and goals so that the aims can be achieved without any difficulty.

It was a wide research that was conducted all over the country to get concrete results that are applicable in the current scenario. The data gave some surprising results that highlight the need for the government to consider this move. The numbers state that 86% of prisons, 73% of school catering, and 98% of social housing was managed by the public sectors’ in-house teams. The report also said that involvement from private sector will help the public sector improve efficiency, as both the sectors will work together for the best possible outcome.

On the outcome of the report, the CBI director general, John Cridland, agreed that most public services are state owned (monopolized) and it might be the right time to turn them public and see the changes that such a move may bring. He seems to be agreeing that this is the way to save millions while maintaining the quality.

He added that it does not really mean that every public service under the control of the government should be made public. The government cannot afford to let the quality slip only to save money. It has to take every step carefully so that the results can be achieved while maintaining the set standard. Every step will have to be taken with utmost care that can start with going public with services such as school catering.

However, the Local Government Association (LGA) does not seem to completely agree with the proposed report calling the whole idea a ‘pie in the sky’. LGA innovative and improvement board’s chairman, Councillor Peter Fleming, said that a lot of things have to be considered when deciding which service to make public.

He added that the local government is doing its job well by keeping an eye on everything and making sure that things are working in the best possible manner. He emphasized that the government makes sure that the services are at the best and cheapest possible level. Nevertheless, he agreed that the private option is good in some scenarios; however, it may not be applicable to every service. The government will have to make estimates and see the comparative advantage it has. It cannot afford to make a service public and then regret as things may go wrong.

He says that the ‘public good – private bad’ statement is not acceptable as certain services must remain under the government’s control so that it can keep them under strict control.