To bid or not to bid, that is the question

Very provocative indeed…

Like in many things, there is not 1 single answer to the question to bid or not to bid… It all depends.

Yes, often dollar value is the trigger for launching a competitive RFP/Q… It is often estimated that dollar = stakes; an assumption that can be wrong in many cases.

Price should not be the single thing Procurement looks at!

“An overriding focus on purely or financial short-term performance will definitely not lead you to your procurement mojo.” Sigi Osagie in Procurement Mojo

Things like TCO or TVO should be the standard; these go beyond price paid to suppliers. They are a must IF Procurement wants to really bring value and be recognized as such. Plus, this is being more and more a must in an ever changing world, see the series of post I am publishing right now.

Like you said, there are many other factors at play and just deciding on price may lead to costs later…

The solution is the answer.

This all starts with a good understanding of the internal customer. Call it stakeholder management… This is what is key in identifying and defining “value”. Is it price? Delivery time? Flexibility in terms? Based on that discussion, then you can build your “value model” and decide what is the best strategy and how to capture if from the market.

This also gives you a chance to challenge requirements and avoid “dream-lists” or “over-specification”.

Conclusion… Assumptions sucks; use your brain!

I would still consider competitive bidding as the default option. But the assumption that all you buy requires competitive bidding should be challenged. Either on a case-by-case analysis or as part of the category management process. Exceptions to the ”rule” exist but they should be decided and reviewed; factually.