A recent article dealt with the value to buyers of long term supplier relationships. Another article asked whether big savings meant prior buyers were not performing well. Both articles focus on relationships created at a specific time of a buyer’s need. By omitting a simple step the best potential long term supplier may be overlooked.
Job shops’ available capacity rises and falls with the demands of their main customers. When a new buyer seeks candidates, some outstanding ones may be at capacity with other work, and not interested in the new work at that particular time. It is worth remembering that capacity may open up reasonably soon, and if the connection is not made, the relationship opportunity will be lost. We rarely see RFQ’s for new work that give the potential supplier any idea of what the future might hold for the winning candidate. Over the lifetime of a project, a different supplier may be the optimum supplier, but may never be found as a consequence.
If your organization seeks to establish long term, and especially single sources, you may miss the best supplier simply due to the timing of your search. Also, if some new relationship yields big savings, that does not necessarily mean a predecessor failed. Rather, it can mean the new supplier (and the savings) were not found earlier.
Loyalty to an existing and high performing supplier is appreciated, and this is another factor to consider. For reasons that escape us, the government does not seem to value supplier loyalty, as they re-bid each segment of a project regardless of performance on the first segment. The learning experience of the first segment should give the initial supplier an advantage, but even with outstanding performance subsequent work is re-bid in most cases. We know from experience this practice discourages some from even bidding on the work.
On the supplier side, RFQ’s are no-bid or even not answered if there is no capacity available. In the extreme case, the RFQ may not be fully examined. Yet, the work may be an excellent fit for that supplier, and in that case the possibility of a future relationship would be wise to protect.
We do not advocate either single or multiple sources, or long term relationships; that is up to the buying organization to decide. Perhaps your organization is interested in exploring alternative suppliers in future work, and believe long term, or even single suppliers might not be your best purchasing strategy.
If this fits your situation you might consider adding information in your RFQ’s that indicate future requirements so that a potentially excellent supplier can respond, even if it’s a no-bid. In this way you may find a great fit in the future that might otherwise not be apparent. For example, include a question whether or not the item being RFQ’d is a good fit, but not at this time. Knowing that, the buyer might engage in some communication to determine if there could be a future opportunity.
We hope you remember Proficient Sourcing can help in such situations. We can also help if your RFQ wishes to identify non-bidding suppliers that might be interested in the future. Our job is to help buyers find the best possible candidates for their needs today as well as tomorrow!