TENDERING: Love me tender
04 November 2008
Invitations to tender needn't be something used only by the public sector. Even small fleets can use the process of asking suppliers to sell themselves as a way of reigning in costs. Tom Webster reports
Picture this: instead of scrabbling around collecting details and offers from suppliers when replacing your fleet, you set out what you want and let the leasing firms come to you.
If that sounds appealing, than maybe tendering is for you.
Invitations to tender (ITT) are generally associated with the public sector, as European law says the sector has to offer an equal opportunity to all suppliers. Despite that legal compulsion, the benefits for the sector includes suppliers competing in a 'sealed bid' environment with each other, which leads to the best deal possible, as well as the aforementioned removal of hassle. And those are advantages you can enjoy too.
There are no hard and fast rules on tendering. More than one company can 'win' and there is no template for the perfect tendering document. It is best, however, to avoid the extremes of 150 questions or just a few 'yes' and 'no' tick boxes.
Tendering can be used for the renewal of any professional supply contract. So there's no reason why private companies, even small fleets, shouldn't use it for their next review.
While small companies have plenty of excuses for not using the ITT process - "We don't have time", "We don't have the resources", "We aren't a big enough company to issue an invitation to tender" - tendering is not as bureaucratic as might be thought, and can force a company to really focus on its requirements.
The process shares features with other procurement exercises. Once you've worked out what you need, establish a set of measurable criteria with a method of weighting for comparison purposes. If your fleet includes different driver nationalities, for example, licence checking may be higher up your list of priorities.
Phil Redman is the fleet manager at computer company IBM, and went through the tender process to replace his firm's entire fleet throughout Europe. He believes it's key to make sure you're clear in your requirements.
"We had to double-check that all the details sent back were for the correct vehicle," he says, referring to a problem that arose when they realised that trim levels varied in different countries.
Redman warns of the importance of looking at the bigger picture and asking yourself: "How am I going to ensure the offer remains competitive?" With interest rates and residual values constantly mobile affairs, the cheapest price may not be the final answer.
In more prosperous times a cheap price may have been the deal sealer. But Roddy Graham, ICFM chairman, urges caution in the current financial market.
"Be very wary," says Graham. "Look closely at the organisation, look at their finances and credit worthiness."
With businesses entering trouble on a regular basis, it's important to assess the company's stability and potential. "Get clarity on the long-term strategy of the company," says Graham. If a company goes bust a few months after you sign a deal, you'll end up going through the whole process again.
Both Graham and Redman advise taking a third party's opinion. Graham suggests talking to the BVRLA, who don't offer advice on an individual basis, but do offer a series of guides on fleet acquisition. Redman suggests finding someone to 'buddy' with.
"This could be a fellow fleet manager or someone from an organisation such as ACFO," he says. "While there'll be someone at the suppliers who can guide you through it, it's good to have someone who's been through the same process you're going through."
Graham feels the financial uncertainty means there's a mixed message currently about tendering.
"You could argue that when times get tough you should work closely with your [existing] partners, but the other side is that you could save money by inviting to tender."
Redman maintains that the process is "essential" and "the correct option" even for smaller fleets. He also pointed out that the whole procedure took about a year. With the markets changing on a daily basis, that should leave plenty of time to make sure you get everything just right.
What to ask when preparing a tender
1. What do we want to achieve?
. Cheapest product/service?
. Are you prepared to pay more for better quality or enhanced service?
. A competitive approach to vehicle acquisition?
. A partnership arrangement with a new supplier?
. Instalment of new innovative products or services?
2. When do we want it and for how long?
. Short, medium or long term?
3. What is important to us?
. How many service outlets does the company have?
. What are its opening hours?
. What customer service systems does it offer?
. What quality certificates or accreditation does it hold?
. What environmental stance does it have?
. What are its equal opportunity policies?
. Is it financially secure?
. Does it have backing from a larger or parent organisation?