How can you save money, and pain, in the way you procure? We’re often on the other end of a procurement process and see organisations destined to fail in their approach. Here’s a supplier's view of procurement, and what you can do to save money, and increase the likelihood of success.

Procurement is an expensive necessity for many organisations, especially in the public sector, with the UK government spending a staggering £220bn on procurement annually. The cost of getting procurement wrong is even more terrifying. You can avoid escalating procurement costs by preventing it from taking too long, and reducing the risk of a re-run.

We’ve seen many procurement processes get drawn out due to a lack of clear objectives, people being shy about discussing budget, and we’ve seen them stopped due to a failure to follow processes correctly.

Research your options

Don’t be afraid to speak with suppliers early in the procurement process – it’s free, and it’s in their own interest to help you with your research. Clearly, suppliers will focus on their own product, but you can counter-balance this by speaking to a variety of companies. Speak to vendors at trade shows, networking events, or approach them directly by email or LinkedIn.

Here’s a few questions you could ask:

  • Can you talk me through some similar projects you’ve delivered?

  • Can I speak to those customers and learn more?

  • This is our current thinking…what do you need from us to produce an accurate quote?

Clarifying your goals

This is probably the most important, obvious, and difficult principle to apply. The reason I labour the point is that we’ve seen several organisations go to public tender, only to abandon it as a result of an overwhelming volume of questions from suppliers. The questions could be characterised as “what do you actually want to do?” Publishing vague or conflicting requirements can result in such a range of responses as to make them incomparable.  

If your reason for procuring boils down to “we’re getting bad feedback about x, we need a new one that doesn’t make us look bad”, then you’re goal is to have “something not as bad as what we have today”. Unfortunately, this leads to suppliers showing you something shiny, and new-looking, but it may not always address the challenges you’re facing as an organisation.

While speaking with suppliers you might find that your requirements aren’t as clear as you first thought. In order to get a product that suits the needs of your business, it’s important that you’re clear about what you’re trying to achieve – and why. In general, if you can’t communicate an idea succinctly, you probably don’t understand it well enough. So, sit down and try to summarise your goals in around 200 words. This will require quite a lot of discipline, but it will force you to really hone in on what it is you’re trying to achieve.

"

'While speaking with suppliers you might find that your requirements aren't as clear as you first thought. In order to get a product that suits the needs of your business, it's important that you're clear about what you're trying to achieve – and why. '

"
 

This summary will help you narrow down your decision-making throughout the procurement process. It gives you something to measure every decision against – stopping you from going off on a tangent and preventing the kind of bloat that comes from falling for every fancy feature a salesperson promotes to you.

That said, by all means talk through your aims with your potential suppliers – if your aims are vague, admit as much. They are there to help you understand the ‘why’ – and sell you the ‘what’ you need to achieve it. If they can’t help you understand the why, they probably don’t understand your needs well enough, and might not be the right supplier for you.

When it comes to defining your needs, decide who your key stakeholders are rather than trying to please as many people in your organisation as possible. Don’t conduct research horizontally across every team. Do it vertically – speaking to key people about corporate objectives and end users about their needs. Aim to marry the needs of the organisation with those of your end users – if you don’t, you’ll find your project becomes a mish mash of diversions caused by asking too many people for their opinion. Don’t cast your net too wide.

Say how important requirements are to you

This requires discipline, and probably a certain skill at navigating internal politics. By informing suppliers that requirement A is a must-have, and B is a could-have, you’ll help them build a quote that fits your needs. Look into using the MoSCoW method.

The classic example is the technical requirement for ‘integration’. You could marry both systems to the point where every function or feature is shared seamlessly, which would take months of work. Or, you could just create a hyperlink - taking under a minute to complete.

By allocating priority, you don’t get quotes that are bigger than they need to be.  

Be open about your budget

Don’t be afraid to be upfront about how much you can spend. It helps suppliers design something that you can afford. By not providing at least an indicative budget you risk receiving quotes for all-singing, all-dancing solutions that are ten times your actual budget – wasting both your time and your supplier’s.

If you’re concerned about suppliers simply padding their quote to fit your budget, compare the value they offer with other proposals. The suppliers who simply quote to take all of your budget may have dramatically differing costs associated with well-defined areas of the tender than others. Drill into options that appear to be over-priced in comparison to others, where’s the added value? Have they delivered this for other clients?

The best way to define your budget is by understanding what you’re trying to achieve and deciding how much money it is worth to you. If you can’t conduct business analysis to establish this, then speak to others in your industry who have bought similar solutions and ask them to give you a ballpark figure. If they’re coy about the exact amount, give them price brackets and ask them which their project fits into. Did it cost between 10k and 20k, 50k and 100k, or 1m and 2m? This will help you narrow down whether you can realistically achieve what you want to do with the money you have available.

Having a clear idea of what you can afford, and what you want for your money, helps move the process forward considerably when talking to suppliers.  Have early conversations with vendors telling them what you're trying to achieve. Ask them if they can provide an indicative quote if you give them all the detail you have about the project.   

Procurement frameworks such as G-Cloud and DOS are a great resource for organisations in the public sector. They offer a relatively simple and streamlined method of procurement, removing the need for a full tender process, and they publish pricing. Even if you don’t end up using a framework for your project, they are still worth checking to get a reference for setting a budget.

Follow the rules

Finally, make sure your procurement process is watertight. This way no suppliers can challenge your procurement process if they lose. A challenge can set procurement of a project back several months – costing you a fortune in time and lost opportunity, and meaning you have to pay to go out to tender again.

Summary

  • Write down the purpose of this procurement in fewer than 200 words to test your ability to frame it clearly

  • Speak to suppliers early on in the process

  • Follow the rules to avoid costly re-runs

  • Research the typical cost - the data is out there

  • Be open about your budget

Subscribe to our stories

Jonathan Lewis

About the Author

Jon is Zengenti’s chief commercial officer. He looks after our marketing, sales and community teams, and helps keep our product team in touch with our clients. His background includes digital strategy, user experience, and front-end web design.

Follow Jonathan

More stories from Zengenti