Jeremy Ferrer
Webinar :
Cross-border Purchases and VAT: Optimization Strategies
Tuesday Sept. 10, 2024 at 11 am (France)
When all suppliers bid on the same criteria, you getassurance of a fair comparison.
This mode of operation may be advantageous in some situations, but overly restrictive specifications may prevent you from capitalizing on The strengths of suppliers which can offer alternative options that are more profitable in terms of costs and quality (innovation).
TCO analysis is indeed a very useful practice. However, when different supplier offerings may offer different value to your organization such as higher future revenue opportunities, theTCO analysis cannot lead to the most profitable decision.
Total value management may be a more appropriate method.
It is sometimes customary to assign a long term contract after the examination of a proposal and its negotiation.
However, supplier analysis that seemed smart on paper can be disappointing in reality, requiring you to waste time and money to make the project work because you have made a long-term commitment.
Structure your procurement process in order to include a short trial period: if the most attractive bidder does not respond correctly to the specifications, you can then work on an alternative solution.
The use of a single source can generate higher savings due to the volume fully mobilized on a single provider.
However, such an approach can be very risky.
What happens if theprovider procurement is disturbed?
A double source of supply can guarantee a strong leverage effect on volumes while guaranteeing you a backup plan if one of the two suppliers is unable to perform the service.
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