Partnering, or partner search is an activity that is usually viewed positive. We search, we find, we complement each other, we are going on adventures and we resolve any conflicts together. This is the reason that marriage proposals (the ultimate Request for Proposal) usually end much better than the example on the picture: rejection.
In procurement however, and transport procurement in our case, we notice that the word Request for Proposal and especially the word “tender” has a negative connotation for many professionals. The word partnering has a positive connotation. Yet both tendering and partnering are the same if you do it well.
Many misconceptions exist about tendering. To explain what does define a good tender, I will draw a parallel with dating and will describe the 3 aspects what tendering should NOT be.
“It’s all about looks”.
Is dating only about looks? Of course, it isn’t. Ultimately you are looking for true chemistry and a common base. There is a good match in what you think, say, and do. You share a common vision on things that are important to both and you complement each other. No matter how pretty someone looks at first sight, if there is no match in character, it won’t work in a long-term relationship. However, the reverse is also true! There needs to be a certain level of attractiveness to make it work to. That is the difference between friendship and a (life) partner. So, finding a partner is ALSO about looks.
When the word ‘transport tender’ is mentioned, many professionals think, “it’s all about price”. But of course, it isn’t if you do it well. In a transport tender you are also looking for ‘chemistry’ and a common base ensuring a service provider can provide the service you need. If the cheapest tender participant cannot provide what you need, he will not be selected. But if the (operational) chemistry is there, then price DOES become a factor, for both parties in fact. Any longer-term partnership will only work if both parties are financially comfortable and both parties face healthy profit margins. So, the point is to take ‘price’ into the equation properly and to compare it to the quality and service you get in return. This should also account for the impact of transport on cost elsewhere in your organization.
“Blind dates? No thank you, I know what I want”
Most people are not big fans of blind dates, anticipating a huge risk on uncomfortable silence or rejection at first sight. This is exactly why TV shows like “First dates” are so entertaining for the viewers but frequently uncomfortable for the participants. Of course, there are always adventurous types who fancy a gamble, and admittedly the results can be surprisingly good. But in general people tend to make a ‘pre-selection’ themselves or look for external help to do this for them: the dating agencies and apps. Why? Dating costs time, money and energy and there is an infinite number of options. You don’t want to make dating a 24/7 activity and try everyone. So, if you go on a date, you would like to know upfront that your date fits the main criteria and there is a good chance on success.
In procuring transport, this shouldn’t be much different. It doesn’t make sense to invite a huge number of service providers to bid on your tender, when there is a small chance on success for most of them. This is just a big waste of time, money, and energy. Step 1 is knowing what you need. Step 2 is having a good first idea on who has the potential to match your needs and making a smart pre-selection. In our view you should only invite a reasonable number of bidders, who all have a fair shot at the title. And also, here, you can seek advice from a ‘dating agency’ that performs many transport tenders and helps you with Steps 1 and 2. We see sometimes that what shippers ask, is not the same as what they really need. Pitfalls are ‘under asking’ which may lead to nasty surprises after selection, or the opposite, ‘over-asking’, which may eliminate service providers that could be a good fit. Next, a ‘dating agency’ can help pre-select a reasonable number of suitable partners for your tender.
“I already have a partner and we are happy together”
If you already have a good partner, you may be reluctant to switch or find a new one. That’s great! But does that also mean that you will NEVER evaluate if this partnership is actually as good as it was initially? A good conversation over a glass of wine with your partner, during a dinner or holiday. These are good moments to evaluate. Perhaps one of the partners has changed or grown during the relationship. Other criteria or needs may have arisen, or the circumstances have changed and you both deal with it in a completely different way. This process can be slow and largely unnoticed without any of the partners notice that the relationship is not that optimal as it used to. And then? For the generation of my grandmother, divorce was not done. Even if the relationship had become sour, people stayed together because society expected you to. Is staying together a good idea? The least that should be done in any relationship is communicating, to identify and solve problems when possible, or seize opportunities. But despite all good intentions, ultimately the chemistry may have ended.
When we talk to shippers, sometimes we hear the initial response “we don’t want to tender. We work with the same carrier for decades and that’s fine”. But no one says that a tender MUST always results in switching service providers. Switching often does also lead to suboptimal results because you can’t grow and improve together and there may be less incentive to support each other in good and bad times. If we explain this, perceptions about tenders change. Tenders should be seen as a chance to periodically evaluate the relationship in a structured way. To verify if the needs and services still match well. This ensures both parties remain sharp for solving problems and capitalizing on opportunities instead of becoming complacent in daily operations. The conclusion of a tender can be to extend the partnership with some potential adjustments. On the other hand, a tender can also clarify that you’ve grown apart and that switching is better. A tender can help evaluating your relationship.
1. Tendering is not just about price, but price plays a role. You just need to ensure which qualitative aspects are essential, very important or less important to value this against the price you pay for them. You can always find cheaper, at the expense of losing service but on the other hand, who wants to pay more than reasonable with respect to market conditions?
2. Don’t start a tender until you know what you really need, and which potential bidders match with your requirements, so they have a good chance on winning (part of) your business. This saves time, money and effort and a lot of frustration. Be sure to inform the bidders that are not selected on the reasons why. No one wants to be dumped with a short text message, right?
3. Tendering does not automatically imply switching from your current service provider(s). The fact that you are aiming for a long-term partnership should mean you will never evaluate the partnership. A tender is an excellent and structured way to check the relevance and quality of the partnership. If you choose to stay together, it should be for good reasons and not ‘for convenience’.