Winning tenders with procurementPosted on: May 9, 2011
Huthwaite International is acknowledged as some of the leading experts on selling (based on psychologist Neil Rackham’s work on SPIN selling) so it was with interest that I watched a video recently with highlights of their recent conference on “Winning tenders with procurement” where there is a high involvement from procurement professionals – an increasing trend in the professions. Interestingly, there is a short extract with Owen Williams of Clifford Chance where he explains that they use their own procurement people to review major pitch documents.
There was a short discussion about the level of maturity of procurement within client organisations and also their relative power and influence as a stakeholder group within the organisation – a potential segmentation idea. The video focuses on the closing remarks of Tony Hughes, CEO of Huthwaite who covered the following main issues in dealing with procurement led tenders:
- Restricted access – His research indicated that of the 2,000 people surveyed, only one had ever been disqualified for breaking the rule about all communications going through the procurement department although he was at pains to stress that in the public sector it was different. He reaffirmed that research in professional services which said if there had been no prior contact and no access to those beyond the procurement team tenderers were unlikely to succeed. He suggested that you decline to proceed if in a similar situation. His advice of “tactical audacity” to challenge the process led to 100% success in 93 major bids.
- Onerous up front contract terms – The suggested route was to tick the box that the contract were accepted but to submit (off-line) a note with comments on conditions should the tender be successful. He suggested the development of a “corporate play book” so that the organisation knew on what basis to threaten to withdraw from bidding.
- Denying your value – There was much earlier talk about how procurement people will attempt to commoditise offerings. The message, loud and clear, was to quantify your value in clearly understood terms. He indicated that some firms had a Value Quantification Toolkit and others offered guarantees of savings over a number of years to make it “bankable”. There were also suggestions of the creation of a separate value proposition addressing the economic and financial needs of the procurement and financial stakeholders.
- No influence over RFP – This was where the tender had been written or strongly influenced by a competitor. His statistics indicated that there was 41% success in securing a contract and 59% unsuccessful depending on whether they had influence over the RFP. He also made the point that if the criteria and weighting were not in your favour then your salespeople (urging the professions to ensure that early contact well in advance of tenders being issued) were not doing their job. The key message regarded early engagement with both the end users and the procurement people.
- Engage with procurement – Whilst recognising that often procurement professionals do not want to be friends with suppliers, they should not be ignored unless they are really unimportant in the business. He stressed the need to understand the internal power of procurement and how they have trouble promoting compliance with procurement policies. Again, some useful research was shared showing that 68% of the problems experienced by procurement were at an intra-company level compared to 8% technical issues, 6% globalisation, 6% supplier management and 6% contract/legal issues. His suggestion was to adopt a collaborative approach to support the procurement people and make them look good. The line “How can we help you make an impact in your business” was found to be 89% effective.
His summary points for winning tender with procurement involvement were:
- Be tactfully audacious
- Recognise that it is not a level playing field
- Engage as early as possible
- Quantify economic benefits
- Understand procurement (their role as stakeholders in the business)