TenderSystem is where a single buyer invites a multitude of suppliers to quote through the process known as a Request for Quotation (RFQ). This is the exact opposite of an auction, where there is a single seller and many buyers.
Features:- Limiting the amount of suppliers. 3 to 4 suppliers works well with low value purchases, increasing with the contract or item values.
- Paying suppliers as promised and making the payment process as easy as possible. Deferring payments places financial strain on supplier that affects the service quality and may increases future prices.
- Grade suppliers firstly according to the service they offer. Uncompetitive suppliers are automatically eliminated from the panel when they do not receive business and will then stop quoting.
- Bring in a new supplier from time to time to prevent the possibility of the panel colluding by increase their prices together. TenderSystem also offers the added functionality of comparing non-panel prices on a continual basis.
- Eliminate suppliers that have a loss leader strategy in place by providing them with so much business that it becomes uneconomical for them. Their aim is to decrease competition by deteriorating the panel and if they have enough resources to sustain and extended loss remove them from the panel.
- Sufficiently training staff so that tender invitations are of good quality. The more information provided in the tender the better the quality of quotes and quicker the response.
- Suppliers must believe in the credibility of the electronic marketplace. TenderSystem has built in best business practises to ensure credibility and transparency, but management must take ownership of the process and manage the initial resistance that is present in a changing environment. Explain the benefits achievable by all parties to suppliers and staff.