It has long been a frustration for many operating companies; as tenders have asked for more, so the level of investment per tender has risen to a level which has to become questionable especially in this moment of difficulty.
So many tender documents will carry between 10-15,000 words in narrative and cost anything £50-75,000 in production, time, expertise, and expense. At a time when so many companies are facing rising costs, increased pressure in margin as well as greater investment in sustainability, technology and talent, there surely needs to be a consideration of where a line is drawn and what is viewed as correct and responsible?
Most companies work off a 1:4 conversion ratio which invariably means that over £200-300,000 is invested before any real gain. This money could be far better invested. Imagine if each company invested the monies saved from high costs tenders into their own Centres of Excellence which were focused on innovation, development and research, then how much better could each company learn, improve and offer more to clients?
Outsourcing has long proven itself to be a master of adapting, being competitive and finding solutions but maybe the whole process could be improved by starting with how tenders are run? The levels of investment do naturally tie up valuable resource. There needs to be a stronger and better awareness of what is often asked from those companies who do tender.
It is right that the question is asked as to whether there is a new way all can look at tendering?
The argument has long been that a competitive tendering scenario promotes competition, is fair, transparent and gives all suppliers the opportunity to be able to pitch for business. This is true and in the food service sector, the independent players have long been able to compete almost equally with their larger, corporate competitors.
It has been one of the defining pieces of the sector which has made it special; how the small and large are able to compete with one another but there is a bigger picture to now be considered and every company has faced three of the toughest years from the pandemic through to today. Operators will invariably face each challenge head on with a positivity but again maybe we can find a better overall process which works for all. Do tenders really provide the answers being sought?
The counter argument is that some of the many issues which the industry face today have come from a competitive tenders as they will naturally:
- Create a barrier to a true partnership between the organisation and supplier. A tender does create a pitch scenario which only serves to emphasis the supplier role rather than partnership which is so need today. No one organisation possesses all the answers and it is more important today that all sides work towards aligned objectives which do move beyond the traditional approach.
- It also often stops both sides asking the right questions which are needed to maximise performance. Sometimes bidders will not ask questions as it may help others in the process, so often issues only arise post tender.
- It will promote cost cutting and lower margins which of course can work for a time but will lead, in time, to bad behaviours and pressure increased all the way down the line.
- It can create insufficient profit margin which can be invested further in innovation, development and technology.
Many will rightly argue that the process is the best that exists but still maybe we should not avoid a debate as to whether there are better ways to review how a process can be run?
There is a discussion to be had; most especially if we all truly do wish to promote stronger solutions and partnership for the future. It surely needs to start with how tenders are run?