Marketing Your Requests for Bid

Associate Guest Post by Rusty Joerin of Woodsgift Enterprises

You have carefully prepared your RFP or Request for Tender document and consider it to be a great opportunity for a range of suppliers. You post it on a public bidding site such as BC Bid® or Civic Info® and wait for the responses to come rolling in.

If, as many do, you have a process that confirms receipt of the opportunity and you know that several good bidders have the documents – that is a good first step.

If you don’t have a process that confirms receipt of the request documents, you will not be able to gauge interest in your request. Even if you do confirm potential respondents, how do you know you have reached all qualified potential suppliers? There are plenty of excellent suppliers out there that do not log on to tendering sites looking for bidding opportunities.

You might be missing out on an opportunity as well. By doing some creative marketing of your request, you just might find the perfect supplier. Here’s an example: our facilities department was looking for someone to supply custom millwork. I prepared the request and then went looking for qualified responders. As a part of my search I called likely suppliers to millwork and cabinet shops. This led me to (among others) a small shop that did high quality work. He relied on word of mouth for business. I informed him and others of the posted bidding opportunity and how to get the documents. This shop became a valuable supplier to our facilities department providing excellent product for many years.

Creative marketing of your requests can include sending notice of your request to the likely suppliers of the type of supplier you are looking for. It is probable that they will know who the better suppliers are and pass along your information to them. Inform the local chamber of commerce and other pertinent associations that type of supplier may belong to as well.

Consider doing some supplier development in your community. A talk to the local Chamber of Commerce on how your organization sources its supply could provide you with an expanded range of competitive respondents to your next request.

More competitive responses to well constructed requests can mean greater value to organizations seeking the best available suppliers.

Rusty James Joerin, SCMP is a Supply Chain Management Professional and accredited by the Purchasing Management Association of Canada. He offers procurement services primarily to public sector organizations that do not have a professional supply manager on staff and provides additional capacity to assist with project related supply.

Information about his experience and qualifications may be found at:www.woodsgift.com

Issues That Bind

Associate Guest Post by Rusty Joerin of Woodsgift Enterprises

This is the third in our series entitled Find, Bind and Mind Your Suppliers.

The first thing to remember is that as you bind your supplier, so you bindyourself (or more properly your organization). As a result of some recent court decisions concerning the formation of contracts resulting from the solicitation of offers to supply, procurement professionals have explicitly stated in their requests that no contract will be formed until such time as an agreement to supply is reached with the best respondent. This statement will also apply to the respondents who also will be under no obligation to contract with you, although there is a presumption they will because they responded. I suggest that this clause be used with care and not be attached to every request. This issue is complex, still evolving and well beyond the scope of this message. Be aware of this issue, monitor the latest legal developments and seek expert advice.

There are situations where you definitely want to bind all respondents to a request to supply. Bid bonds have long been used as a tool to ensure that the preferred bidder will contract with you, even if they have second thoughts after bid closing.

I once experienced a situation where after a prequalification process one of the shortlisted firms backed out midway into the second phase of a high value, complex RFP which decreased competition by a third. For subsequent projects and with expert advice, we extended the bid bond process to ensure that all short-listed proponents to similar high value complex procurements were compelled to submit a viable proposal. In short the binding process was advanced a step.

Depending on the procurement, suppliers can be bound by the request document, contract terms presented in the request to be included in any subsequent contract or by reference to an industry standard document with supplementary conditions given in the request document.
The joy in all of this is that you, the buying organization, get to decide what the terms of engagement will be. My advice is to ensure that the terms are fair, which encourages competition and so that a resulting contract becomes a beneficial relationship for both parties.

Rusty James Joerin, SCMP is a Supply Chain Management Professional and accredited by the Purchasing Management Association of Canada. He offers procurement services primarily to public sector organizations that do not have a professional supply manager on staff and provides additional capacity to assist with project related supply.

Information about his experience and qualifications may be found at:www.woodsgift.com

Related articles

• Find, Bind and Mind Your Suppliers (psbdelegation.com)
• Find the Best Suppliers
  

Ignorance is Bliss (?)

Image via WikipediaThere is a model for learning called "conscious competence" - Go ahead and read the article, google the term and you'll see many dissertations of its application. Simple summary: there are four general areas: "I know what I know", "I know what I don't know", "I don't know what I know", and "I don't know what I don't know". This last one (first in the stages of learning) I find is the most dangerous in the corporate world. Many people who "don't know they don't know" operate under the assumption that they do, in fact, know. We see this all the time in procurement where end-users believe they know how to buy the goods & services they 'want', and believe procurement and legal advisors are over-reacting to 'potential risks & consequences'.

I was reminded of this on a recent exchange between individuals on a local freecycle.org page. The premise of freecycle is to keep items out of the landfills by offering it for free to anyone willing to come pick it up. Last week someone posted 2 child car seats, stating he just saw them at the side of the road with a free sign on them. After people raised concerns over the age & safety of the seats, his reply was "Despite concerns over the safety of older model car seats (that, IMO, deal with retail sales), the two seats had been picked up by someone this morning" That started a few more public emails flying about talking to insurance companies, Fire departments, or Emergency staff about what happens when old/expired car seats are used. Basically, it became a debate of "opinions".

What absolutely, no-one mentioned (publicly at least) was the fact, we here in Canada have a law that covers garage sales and giving away of certain items, including car seats:

http://www.hc-sc.gc.ca/hl-vs/iyh-vsv/prod/used-usages-eng.php

"Under Canadian law, certain products cannot be sold or even given away if they do not meet the safety requirements of the Hazardous Products Act. The Act outlines safety requirements for certain consumer products, many of which are intended for use by children. The Hazardous Products Act and Regulations do not distinguish between new and used products."

The whole group, in how this discussion played out, were expressing (heated) opinions, but didn't know what they didn't know: the law. (The moderator now has the above links to update the local site guidelines).

The risk? "If you sell an item that is hazardous, you could be liable in a civil court of law." or, having to live with someone being hurt due to lack of safety information, or at the very least, an extended debate of opinions and 'flame war'.

Does Anyone Care if I'm Certified?

I've been delinquent in renewing my Purchasing Management Association of Canada (PMAC) annual membership. If I don't renew, my SCMP certification (Supply Chain Management Professional) will expire. For our annual business forecast & budget, I decided to question all expenses (as we do for clients), so I've been debating the benefit to being a member and maintaining my certification. (Rationale: I have an MBA so is the certification necessary?)

Of all my past & current employers and clients - only one has REQUIRED that I be a member seeking/holding certification...and that was for my first purchasing job. My manager was a wonderful mentor (and if you ever goto a PMAC National event, seek her out - Donna Lee Reid - Dufferin/Peel Catholic School Board - she's incredibly smart). Donna introduced me to the concept of 'networking' - because of Donna, I see the purchasing/supplychain/logistics profession as a group of peers ready & willing to help each other out. Whenever I need to buy something 'new to me', I contact someone who may have done it before to seek advice (Most of whom I've never even met in person!) Everyone has been willing to share their experiences & expertise.

From there, I 'educated' my next employer(s) on the benefits of the PMAC training and membership - I negotiated a deal that I'd save them more than they paid in my tuition (in actuality, I always 'earned' my annual salary in 'savings').

In later years, a director told the staff the certification meant "nothing" to them, but a business degree (especially an MBA) made more sense. As I crept up the ladder, strategy was more important than tactical thinking, but, the PMAC education went through phases to build strategic thinking, so yet again, I needed to 'educate' my employers and clients.

I completed my certification in 1999, back then it was called CPP (Certified Professional Purchaser)...in the last year, it's been rebranded as SCMP (which personally I think better reflects the education/experiences I've had in the profession). So with a new certification brand, I have to 'yet again' educate my clients (no its not a new certification, it's a rebranding of what I've always had..). So for this year's forecasts/budget, I had to question the benefits of my "Membership Dues".

Being a member does not get me discounts on Errors & Omissions insurance (that I require for government clients); nor does it lobby/educate government & corporations on the certification requirements as well as other associations do for their members; nor am I finding courses I want to take this year at a member discount. So what does my membership get me? Networking opportunities that perhaps I wouldn't have if I weren't able to open with "I'm a fellow member of PMAC"; I have fond memories of the program, and still keep in touch with fellow 'live-in course survivors'; I receive lots of 'free' trade magazines as a result of being a member and even if the clients/corporations don't understand the certification, some actually do put it in their requirements; there's opportunity for me to be a course instructor; I receive emails/calls from students in the program when they see my certification...

Perhaps the certification isn't about the education, courses & discounts per se, but instead its about what you do with it. I love teaching, and one of my dreams was to be one of the instructors for the final "live-in course". Perhaps it's like a marriage - I stuck to this through the good and the bad...I'm committed to seeing this through (I think I'll go write a cheque now)

What do you 'require' of your professional associations/memberships?

Related articles

• The Importance and Relevance of PMP Certification Requirements (pro2sell.com)

Fairness in the Process - Now or Later?

In the aftermath of the Gomery report, many organizations have started using a "fairness" role with their large complex or politically sensitive procurements. The primary objective of involving fairness resources is to provide objective evidence that the process has been run in a fair, open and transparent manner. Having the role start with the process keeps the process ontrack and saves time later, versus the standard waiting for complaints and having someone audit the process 'after the fact'. I've done both roles a number of times, partly to deal with the perception of bias towards incumbents; alleviate union concerns of outsourcing, ongoing vendor relations issues, etc. Thanks to close contact with National Education Consulting Inc & the Legal Edge publication means keeping up-to-date with the latest/greatest court decisions.

Even in cases where RFPs are better developed (in terms of how evaluations would occur) with an incumbent in place, it might be useful to request a fairness advisor/monitor/auditor play a role. Generally, the procurement department itself doesn't hire the fairness role (as it is reporting on their conduct/process!) Personally, I believe a fairness role needs to be appointed by an assurance department or a higher authority. There are even 'little things' that should be considered in the course of 'fairness' such as having all the evaluators sign a disclosure agreement (much like how the vendors are to provide within their proposals). I sat in on an evaluation process where the chair did NOT request this, and the evaluators went through a dozen grant application proposals and it wasn't until they faced the last proposal, one evaluator disclosed his son worked for the firm and would recuse himself from that evaluation - which was good to do, HOWEVER, he was involved in the scoring/discussions on all the competitive proposals up until that point! That is still a conflict of interest, even if he wasn't going to play any role in the scoring of that last proposal, he influenced the other scores. The organization changed their practices for future evaluations, and dealt with the issue by awarding to 'all' grant applications received - eliminating the risk of breach of process. I've been in other processes where the evaluations had to be 'tossed' and a second evaluation had to occur.

Is this more bureaucracy? Red tape to an already onerous process? How do you think the fairness can be 'above reproach'?

Comments/discussion appreciated

Is there Profiteering in Fuel Surcharges?

While working on an ERP system upgrade for a client, I'm entering/matching a number of invoices of late. In doing so, I've seen fuel surcharges ranging from 6% to 17% on items from office supplies to furniture. So I started a bit of an investigation as to how companies are calculating these charges.

1) Couriers and freight companies in Canada are (with a few exceptions) using a standard rate set by the Freight Carriers Association/North American Transportation Council. http://www.ntscanada.com/CFS.asp http://www.fca-natc.org/INFO/FLCDN11.htm

2) Some companies spell out their calculation based on a third party fuel cost audit - http://www.purolator.com/dbwp/fuel_surcharge.html

3) Some companies could not tell me their calculation but instead said 'it wasn't that much to worry about'

When gas prices were doing crazy things a few years ago, I understood that businesses had not anticipated that huge increase in their overhead cost, so fuel surcharges were added/negotiated onto contract prices. Prices had been set based upon their standard operating costs plus profit. Years later, we still have fuel surcharges, AND increased costs - when reviewing bids for waste removal, not a single vendor provided their fuel surcharge within their quotes...yet, I know each of them charge surcharges.

Are fuel surcharges a new way to beat the price comparison? Win the business then add on a % cost to make up the profit? In 2006, Daniel Gross wrote an article on this topic, yet nothing seems to have changed?

As buyers, I hope you now request vendors provide their fuel surcharge calculation/table in their quotes for your business - or put it under some other scrutiny. When comparing the waste management company bids, I found the lowest bids had the highest fuel surcharges...

In addition, I found a local university purchasing department has set what it will ALLOW for freight surcharges http://web.uvic.ca/purc/fuel.php

Related articles

• Europe airfares soar with fuel surcharges (seattletimes.nwsource.com)
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Ten Steps to Better Procurements: Understanding

Image via Wikipedia

Another in the series from our guest blogger Rusty Joerin:

#8 – Understand Your Supply Chain

Understanding your supply chain will avoid costs and political gaffs.

Some of the goods we buy are essential to have available at critical times or if not available essential services are interrupted and costly rush orders result. Many of us are concerned about the providence of the goods and services we buy.

A spend analysis will identify the items most critical to the functioning of the business and those most susceptible to logistical, ethical, and environmental issues. These are the priority commodities to begin an examination of the chain of supply from resource extraction to delivery.

It is probable that some of the issues resulting from the things you buy are not immediately obvious. For example, social networking firm Facebook was criticised for buying electricity from coal fired generators (Oregonian Feb 23, 2010). There are many questions you can ask about the component parts of the supply chain; here are a few of them:

Where are the raw materials mined? Are the workers treated fairly? Is the country politically stable? Are there toxic by-products from the refinement and how are they handled? Are there alternate sources of supply for key raw materials? Natural disasters and extreme weather events happen; do you have a back-up plan for supply?

How are the raw materials and component parts shipped to manufacturers and distributors? Through how many assemblers and distributors do your products pass and are you able to bypass some? Is child labour and/or sub standard work environment evident in the factories that make your products or provide your services? Are the companies involved in your supply chain financially stable?

To better understand your supply chain consider visiting your supplier’s factories and distributor facilities, run a credit check, and research your supplier and their supplier’s operations. A supply chain management professional will provide you with good advice.

Other Posts in the series: How to Add Value to Your Procurements
• Be Proactive
• Analyze what is required – bring clarity to the specification
• Understand the supply chain
• Align procurement strategies with corporate strategies
• Apply the highest standard of ethics
• Use the right tool for the job
• Plan contract management before there is a contract
• Learn from what was done
• Mitigate procurement risks
• Utilize the skills of supply management professionals

Over the coming year, Rusty Joerin, guest blogger, will expand on the above. Your comments are welcomed.

Rusty James Joerin, C.P.P. is a Supply Chain Management Professional and accredited by the Purchasing Management Association of Canada as a Certified Professional Purchaser. He offers procurement services primarily to public sector organizations that do not have a professional supply manager on staff and provides additional capacity to assist with project related supply for those organizations with purchasing specialists on staff.
Information about his experience and qualifications may be found at: www.woodsgift.com

Unsolicited Proposals

Back in 2004, I helped research and develop a process for dealing with unsolicited proposals for a committee that was organizing a huge sporting event. The policy became something entirely different. In 2006, I did a briefing note for a government organization. The items that I had found were:
1) Most jurisdictions created policy based on Model Procurement Code and Regulations 1980 by American Bar Association – minimal procedural aspect to the requirements

2) Interest grew in obtaining innovative solutions, some jurisdictions had opened up scope of unsolicited proposals to Research and Development proposals (Nova Scotia), yet others deny all unsolicited proposals (City of Toronto).

3) A few studies had been conducted to determine what jurisdictions are doing (City of Toronto report published in 2003; Province of Ontario published in 2004)

4) Private sector receives benefit of innovation by partnering with vendors. The difference appears to be the non-disclosure aspect of the idea.

As a result of policies written solely for one industry (IT) or having no policy at all, public sector entities would find there was a mix of processes occurring: contract managers attempt to refuse the unsolicited proposal; vendors discuss ideas but don’t submit anything in writing; or the contract manager deems the item a ‘sole source’ and follows sole source procedures.

Sadly, vendors unfamiliar with the Freedom of Information Act attempt to protect their commercial interests with a non-disclosure statement to protect ideas from FOI or via a competitive process, but public sector agencies are bound by the Act and law trumps non-disclosure statements.

Some jurisdictions left the ‘approval’ process to higher levels (i.e. City Council) who were responsible to public more directly than civil servants.

• One jurisdiction went as far as to prequalify or ‘trial’ a product/service (no contract) before deeming it of merit

I'm looking around at public sector policies now, in 2010, and I'm not seeing anything of real difference. Is the public sector still missing out on innovation?

Sitting Across the Table

My father is a salesman. In my eyes, he was very successful and HONEST. He never played games, wasn't a schmoozer, and for a really shy guy, he did extremely well - winning awards, keeping family afloat during the aftermath of Black Monday (87), and eventually buying the company he worked for.

I chose a career in purchasing, basically sitting across the table from my father :) Strangely enough, I never felt we were at 'odds' with each others goals. My father, as a salesperson, sought to solve his customer's problems. I was most amazed at the fact some would want the latest, greatest machine; he'd look at their operations and tell them why they didn't need that, and how a different model (smaller, less expensive) would suit their needs including meeting their growth projections over the life of the machine.

So, never did I see sales and purchasing 'at odds', both were looking to solve a problem, build a relationship. However, in light of LinkedIn group conversations, I'm seeing a difference between sales and public sector buyers in the 'timing' of that relationship! Sales people want to build the relationship to 'win' the contract. Public Sector buyers need to run an open, fair, transparent competition, be completely objective, have no perceived conflicts, then build a relationship AFTER the contract is awarded. (there is a fear a relationship before/during a competitive process gives the perception the buyer has bias towards/against particular vendors).

That appears to be the issue regarding vendors hating the RFP process (no relationship building), and public sector buyers needing an arm's length approach to spending taxpayers' money. In light of Gomery enquiry and Ontario's E-Health scandals, public sector buyers are even more aware of keeping at arm's length from the vendor community when competing a contract.

So, how do we resolve the relationship timing, get the problem solved with the best solution, and avoid perception that public sector buyers are giving contracts to their 'friends' (Gomery, Ontario e-health scandals, etc)?

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