If you want to buy in some training, for example, why not put it out for tender? And get the cheapest supplier?
Obviously you don’t want the cheapest training course (or the cheapest car or the cheapest builder etc) because that would be rubbish and end up being a waste of money – …“but surely if you define the specification clearly you could then just get the cheapest person who fits the spec.?” What can possibly go wrong??
Quite a bit actually – as follows:
- It’s very hard to define true quality. A time management course that covers all the main subjects can still be utterly boring. A car with 4 wheels and a 2 litre engine can still be terrible.
- So you’ll end up making the choice based on who has the glossiest presentation – which may well not be the best supplier, just the most marketing orientated, or the one who has the biggest marketing budget, either because they are a huge inhuman machine or because they have spent it all on marketing rather than making their product great. At the best it’s just going to be fairly random. If training is judged by who’s got the best equalities policy (I’ve experienced that!) then we’ve reached a sad state of affairs. Don’t get me wrong, equalities is important, but a) does a policy tell you what you’re really getting, and b) there’s more to training that equalities, let alone just an equalities policy.
- The best suppliers won’t want to spend the time on applying, especially if (see 2 above) the best person isn’t going to win. So you’ll be choosing between all the suppliers who are desperate for work because they’re not very good. Whoever you pick won’t be that good, even if you successfully identify the best of the bad bunch. When applying takes a day to fill in the forms and other day to go and present – at the very least – I’m one of many people who are too busy to do that.
- The cost that you get quoted by ALL of the tenderers (except the stupid ones) will have an amount added on to cover the cost of tendering. If it takes me a day to apply and I win one in five then I have to add FIVE DAYS (about 5k) to every tender, to cover the cost of the 5 attempts that it takes me to win one. So whoever you pick you are paying an extra 5k.
- Your own cost, Mr Purchaser, or running your tendering process, runs into thousands – organising the bids, reviewing them all, getting people in to present, it’s a time consuming process and it has a significant (though probably not measured) cost.
- If someone lies you can’t do anything about it. Legally you have to pick the best one, the one that tells the best story, and only later – when you find out – can you try to reverse things, and it’s probably too late then. I’ve known cases where a company they have used before, and who were terrible, put in the best-looking bid for the contract next time around, and they HAD to give it to them because if you don’t pick the best bid then the process is compromised. And past performance isn’t necessarily a predictor of future performance, legally. Although of course, it is really.
So you’re spending lots of money to get to choose between the worst providers who have all inflated their prices to cover their costs, and then your selection process is pretty random. Nice one!