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The Difficult but Worthwhile Procurement Process

February 14, 2012

The federal government and companies’ acquisition of products and services that goes through bidding best explains procurement process. On the other hand, bidding is where businesses, small or not, compete with each other to win procurement contracts. This involves a series of stages which sellers find difficult, but very fulfilling to work up.

Organizations, which include the federal government, implement the process of procurement to cost-cut their acquisitions and operations. They hire people to work as company buyers. For those businesses that operate worldwide, though, they appoint companies to provide global procurement services for them. This makes things a lot easier, quicker and comfortable for them.

In general, the procurement process begins with the sending of Request for Proposal (RFP) to the potential suppliers. Business owners, soon as they receive this letter, prepare and submit applications. However, any supplier is also given the chance to participate, due to this so-called Request for Tender (RFT). Some companies also accept quotes and the likes even without sending invitation.

Buyers make a thorough review after submitting applications. They first validate the appropriateness of the supplies being offered. Afterwards, they check on the quality, terms and conditions, logistics, schedule of delivery and others. They need to make sure that everything will turn out smoothly; hence, will not affect the business workflow. Of course, selection and awarding of bids come next.

Most entrepreneurs believe that pricing matters in the procurement process. This is somewhat true. If they offer prices for supplies that are a lot lower than the others, they will surely get the attention of buyers. But, this is not a guarantee of being awarded with contract. They also have to make sure that the costs they are presenting are not too low as to raise doubts.

Always remember that those people that work on the procurement department are well versed with their jobs. They can smell tricks such that they can easily detect “low cost, low quality” bids. Sellers must therefore realize that buyers aim for cost-reduction opportunities and cost efficiency instead of dubious or impractical price drops. Why, one may ask? It is primarily because their reputation is at stake.

The key toward becoming successful in the process of procurement is submitting proposals that reflect cost effectiveness. Businesses, particularly the small ones, must be keen on to offer high quality goods and services for reasonable prices. But of course, the most important part of the “negotiation” is that they must be able to formulate cost that is lower than the competitions to be able to readily capture the interest of the procurement officers. Yes, cost reduction is still an important factor after the assessment on cost efficiency.

Some businesses are afraid to go through this procurement process. Even before they try a shot at it, they already find it difficult to do. Well, nobody can blame them, since a few even consider this as a grueling method. However, they have no idea that with this challenge comes profitable government or corporation contracts. With organizations spending billions of money just for acquisition of supplies, entrepreneurs must grab this opportunity to maximize their profitability.


From → Procurement

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