We could sense that the persons in the meeting room weren't the final decision-makers. We had been back and forth for long enough… with their team talking about discounted pricing, and my team justifying the value of what we do. Then, after a light tap on the door, in comes Mrs. Procurement Manager, to reinforce the company's unwavering directive to favour the lowest bid.
(Refer to title)... which brought the meeting to an amicable end.
Dear Professional Procurement Personnel,
Many of you are still being trained to think that the "cheapest quote" represents the best deal on corporate goods and services. It is no secret or surprise that institutions that have built this culture tend to be fraught with poor workmanship, consumer complaints, budget overruns, prolonged project delays, frustrated contracts and litigation matters. This adversity pervades the organization all the way to a predictably defective bottom-line. Then, the organization does it all over again, this time without the blacklisted previous contractor.
Now, let us move our eyes across to your personal spending. Have you bought yourself the least expensive mobile phone? Does your family use the cheapest means of commute? Are you excited about the experience of using a free public health facility? If not, then we can agree that for goods and services that matter, 'lowest price' has not been the absolute and overriding determinant. Quality, convenience and value have weighed far more heavily on your choices. It often makes more sense to qualitatively assess your best affordable options within a reasonably set budget. So why not try this approach with your organization's procurement?
Dear Sincere Solution Suppliers,
"I'm so happy that our service is worth the lowest price", said no CEO ever... and you probably shouldn't aim to be the first.
It really isn't sustainable to compete in a viscous race to the bottom of the quote'em pole (I just coined that), because frankly, no one wins. Having agreed to be paid the bare minimum, you can only deliver just that. Margins are marginal and budgets are constrained. Meanwhile, as time goes by, the client expects more but with no increase in price. After all, the set price was the premise on which you were awarded in the first place. It's entirely counter-intuitive and it ruins the business relationship.
On the flip side, as an honest and earnest supplier, it doesn't feel good to be 'overpaid', just because the client has a sufficiently deep pocket.
As an alternative, we have always tried to assess the client's needs fairly, and propose our price to deliver great work in meeting and exceeding those needs. We preserve our rate (with some flexibility) and we preserve our rep.
True nirvana can only be reached when a dollar is exchanged for its equivalent, mutual value in goods or services. So, maybe (just maybe) we should review our approach to tenders and contracts, attaching more merit to the qualitative elements that make or break our business.
Principal: "This is not what we asked for."
Contractor: "Probably not. But it is what you paid for."
Invariably, they were both disappointed.
Cheers to evolved procurement!
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