Opportunity/Problem Statement
Bidding on Tenders is an arduous process that is further complicated by having so few bids, in a blind auction, and a winner take all mentality that can cripple business operations in certain countries.
Additionally, this is complicated by tendering process inconsideration to value components that are given a range (written into the Tendering bid) of 0% to 40%. Thus, how do we bid more effectively,utilizing data sparse environments, control our discounting measures, and capitalize on our value whenever possible?
Furthermore, there was a critical need to effectively eliminate all out of scope/below minimum margin pricing allowing for more transparent pricing and eradication comparative‘like’ country price revisions.
This was extremely important, as countries publish prices and if a comparable country receives a lower price by X% (defined in the contract) then price matching must occur. This happened in the EU zone causing a loss of 13 million Euros on one contract alone (leading to the project need).
Action Taken
Interviewed key beta countries for value components, historical efforts/tools/documentation into the tendering process. Created Playbooks, process maps, authority matrices, and a global best practice guides for effectively managing and bidding on tenders.
- Developed a global protocol on capturing competitive information, auditing process, and data cleansing practices for feedback into the greater global data mart.
- This was then used by the strategy teams for the development of global, regional, and country specific minimum guidelines against certain competitors.
- Also, used by marketing to create documentation, studies, and comparative analysis against competitive offerings.
- Established a ‘High Volume Matrix’ by analyzing the top countries compromising approximately 50% of all global revenue to create pricing bands by: Product Family, Group, Line, and Individual by Size, Packaging, and Grade (Quality).
- The reasoning behind the distinction was lack of transactions, while high in volume (physical units) there were very few contracts to pull from even globally. Thus, we had to develop a methodology to create the necessary pricing bands up/down the product hierarchy, otherwise pricing bands were not feasible.
- Based on the ‘High Volume’ Data we coupled that with in country specific data, with a ramp rate based upon volume and contract expectations.
- Advanced the current ‘Value Attribute Analysis’ to standardize the process globally and created a pathway to move from qualitative to a quantitative analysis for competitive differentiation.
Finally,combined all elements into a tender management tool, to effectively contain the entire process into one program. Whereas before, some countries had between eight to ten tools, documents, processes, and forms to track the tender.
Benefits:
- Speed to response, completion, tracking, and management of the entire process, in beta countries, dropped from an average of 19 business days to 9 business days. Including new processes for the approval matrices, information capturing, and auditing process.
- Bidding or reviewing all Tenders for analysis, in 2014 approximately 7% of all tenders went unanswered due to lags in the bidding process.
- Bidding on projects that we want to win (for plant capacity) went from a win rate of 52% to 64%, not a significant jump however on those bids the average price also increased by 3.4%.
- Competitive information is finally being categorized and implemented, yielding new strategies, more effective bidding processes, and most importantly stabilization and prediction of revenues by country and regions of countries to more effectively deploy resources.
- Overall ROI over the first year (Beta clients) and second year (rest of the world) is projected to be 4X and 15X respectively.
