Are you prepared for them?
The best part of a recent ChainLink Research piece on Contract Management: Negotiating, Creating, and Monitoring Compliance was actually the sidebar on supplier reverse auction tactics that presented some of the less-than-scrupulous strategies sophisticated suppliers will employ in an attempt to win, or deflect, your business. If you are not prepared for them, they could derail your event. They include:
- bidding to purposely come in second with less aggressive price, counting on advantages in non-price areas
- bidding low on the auction in an attempt to capitalize on lock-in to sell un-auctioned related services and materials at high margins
- “Sniping” in “hard-ending” auctions
- Deliberately no-bidding auctions when they calculate it is not in their interest to participate
So what can you do?
- if you are using a total weighting, be very careful in your weighting of non-price factors and indicate, up-front, that there will be significant (and serious) financial penalties (which must be enforced) for not adhering to any promises on lead-time/delivery time, defect rate, or quality (or other relevant factors)
- make sure you also bid out all related and associated services
- don’t do hard-ends — always do short extensions
- create a policy that suppliers who do not bid do not get business, period
While some suppliers might still attempt to ply their dirty tricks even if you take these steps, once they see what it costs them, they’ll stop. Or you’ll get better suppliers. Either way, you win.