In the September blog, we hear about our customer’s experiences with indirect procurement tendering.
“The framework agreement for IT equipment used by our staff was coming to an end, so it was time to start exploring the options. The current supplier was seen as a good option, but as the industry develops rapidly, we wanted to search a benchmark also from other candidates.
The first connection with the companies was video meetings, as suitable for these times. In the meetings we covered our requirements and preliminary needs. All the companies confirmed their willingness to take part in the competition.”
Starting the negotiations
“The RFP was carried out with Noventia’s e-tool. Based on the supplier meetings, we made some adjustments in the RFP specifications and estimated volumes (based on the current agreement). We also wanted to share our company’s general procurement terms & conditions to the suppliers as a basis for contract negotiations.
The suppliers gave their proposals presenting the requested equipment and gave their first offers regarding pricing. Our aim was to get the prices already at this point in order to make sure that the equipment from different manufacturers was technically at the same level and comparable for us.
The suppliers had two weeks time to submit their responses and all of the participants met the deadline perfectly. The e-tool made it possible for us to follow the RFP progress and we were able to see that all of the suppliers had started working on the proposals in good time. After the deadline, the automatic summaries of the answers were available in the tool for further analysis.”
Specifications and a second pricing round
“After the first proposals, we wanted to get some clarifications in some of the responses. We gave feedback to each supplier individually and instructed them to make corrections directly to the e-tool. Some parts of the RFP, that were already ok based on the first round, were locked from suppliers. Only sections requiring more information or corrections, were left open. We had also received some questions from the suppliers and shared our answers to the questions (mainly technical details about the RFP scope) using the e-tool.
One of the participants was left out at this point, since the offered products did not meet the requirements. We had three genuinely potential suppliers left, and a fourth option that seemed to be quite far from the others regarding the pricing, but otherwise seemed interesting.
On the first round we had already confirmed the important fundaments (contract terms, product compliance with specs, etc.) for the RFP. Now we wanted to have another round for the suppliers to check their price levels. From the sourcing team’s point of view, this was a very simple operation – again all other RFP sections were locked from editing. The participants were able to update pricing for the products they had previously presented. This was a short round with only two days to respond.”
Price comparisons and supplier selection
“We had good results on the second round as the previously surprisingly large price difference was now significantly smaller. Now the suppliers’ proposals were rather close to each other. The new suppliers showed good potential in certain items in our comparison, but in the end we wanted to renew our contract with the current supplier. The current supplier had an advantage of knowing our company’s needs and way of working. Also the good feedback from inside our company was considered as an advantage for the supplier. Compared to the previous contract, we were now able to achieve great savings (however, the result is not fully comparable, as the new contract is negotiated with new generation equipment).
The e-tool made it easier to run the RFP and to manage the material during the project. After the RFP rounds the tool helped with automated comparisons and removed the risk of manual errors. A lot of time was saved as we were able to focus on the actual supplier comparison instead of copy/pasting the proposals side by side, one by one.”