10 Tips For Better Local Government Purchasing
November 4, 2019
Top 10 Public Sector Purchasing tips
Welcome to the top 10 tips for Local Government Purchasing. Bob Kittle from Munetrix explored 10 of the best tips for the public sector, and we believe in the power of sharing best practice. We are very happy to be sharing our insights into this topic as well, with over 10 years of experience as a business implementing digital transformation and smart solutions in over 45 countries, we are able to offer insights, and provide you with tips to improve your purchasing processes.
Below we have outlined the overview of each of the 10 tips.
One bidder does not make them the lowest qualified
Consider being product vague in your bid/ search.
Consider trying commodity prices to longer-term contracts.
Build strategic openers into long-term contracts.
Ask for cost breakdowns, then use the data to set targets.
Ask for other suggestions.
Consider a Best and Final Offer (BAFO) strategy.
Send anybody involved with procurement to negotiations and other training classes.
Consider “make vs. buy” comparisons.
Use a weighted Decision Analysis tool (PUGH)
1. One bidder does not make them the lowest qualified
It usually means there was something wrong with the Request For Proposal; tear it up and start over.
2. Consider being product vague in your bid/ search
In other words, don’t over-specify what you want to buy, instead explain the problem you are trying to solve; let the experts present their solution or alternatives. With technology changing so fast, there may be a Next Best Thing out there you’ve never considered.
3. Consider trying commodity prices to longer-term contracts
If your purchase involves a supply of resource – This creates partnerships, where swings in the price or fuel or other energy-related costs or resources can be adjusted at specified intervals.
4. Build strategic openers into long-term contracts
Strategic openers within long-term contracts can provide much-needed stability to your department, especially if you’re just starting out with a new provider. A long-term contract can help you take the financial guesswork out of your budget cash flow, and offer a great opportunity for you to grow a meaningful relationship with your supplier.
5. Ask for cost breakdowns, then use the data to set targets
It’s not uncommon to see aggregate prices for a road project (for instance) or development resource pricing be quite different across multiple bids, when the price of aggregate or development, for example, is not that elastic.
6. Ask for other suggestions
A great standard line in an RFP is, “In the case of a similar or tie bid, what differentiator could you add that would make your submission more attractive for our community to consider?”
7. Consider a Best and Final Offer (BAFO) strategy
There is an old adage in the world of sales and procurement; if you don’t ask, you’ll never get. Be bold! You (the customer) are in the driver’s seat and the bidders want your business. Use that to your advantage.
8. Send anybody involved with procurement to negotiations and other training classes
Especially during second and further stages where inhouse pitches and presentations are made, this is the time for well-trained negotiation.
9. Consider “make vs. buy” comparisons
You don’t have to own everything. Consider “make vs. buy” comparisons. If you can find a product or service on the open market which will allow you to deliver the service without jeopardizing quality, use this as a productivity gain to help offset the problem you will be facing in the future as you experience staff attrition.
10. Use a weighted Decision Analysis tool (PUGH)
Always build detailed bid comparisons to easily see key elements of a bid, and consider using a weighted Decision Analysis tool (PUGH) to quantify the value proposition.
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