Overview

When deciding whether to bid on an opportunity, suppliers consider several key factors to make an informed decision.

Understanding Project Requirements: Suppliers assess the project scope, objectives, deliverables, timeline, budget, and quality standards to determine if the project aligns with their capabilities and resources.

Assessing Qualifications: Suppliers evaluate their qualifications, experience, expertise, portfolio, references, certifications, and awards to ensure they are suitable for the project.

Market Research: Conducting market research helps suppliers understand fair pricing and competitive ranges for similar projects, enabling them to make informed decisions when bidding.

Verifying Credentials: Suppliers verify their credentials through audits or other means to establish credibility and reliability in delivering the project.

Negotiating Terms: After selecting a preferred supplier, negotiations on contract terms such as payment schedule, delivery method, warranty, support, revisions, penalties, discounts, and incentives take place to secure a favorable deal.

Reviewing Contracts: Before finalizing the deal, suppliers carefully review contracts to ensure they reflect agreements accurately and address any potential issues or ambiguities that could arise later on.

Monitoring Progress: Once the contract is signed and the project begins, suppliers monitor progress and performance closely using tools like reports, meetings, feedback, or audits to track milestones and ensure quality standards are met.

Evaluating the Profitability of the Relationship:  When determining if a customer relationship is profitable, suppliers consider various factors to ensure they are investing resources wisely and focusing on high-value customers.

Key factors include:

• Customer Profitability Analysis (CPA): This involves calculating the overall revenue generated by a customer and comparing it to the total costs associated with serving that customer per year
• Costs of Customer Acquisition: Evaluating the cost of acquiring customers, selling to them, and serving them helps assess the viability of a customer relationship and its profitability
• Revenue Generation: Analyzing the frequency and value of customer purchases, along with the cost of goods sold, marketing expenses, and customer service costs, influences customer profitability
• Length of Customer Relationship: The duration of the customer relationship impacts profitability, as long-term customers tend to generate more revenue over time
• Segmentation by Profitability: Segmenting customers based on their profitability allows suppliers to focus resources on high-value segments and optimize marketing strategies accordingly
• Customer Lifetime Value (CLV): Understanding the overall revenue generated by an average customer over time helps in assessing the profitability of different customer relationships

By analyzing these factors and conducting a thorough Customer Profitability Analysis (CPA), suppliers can prioritize efforts towards retaining profitable customers, optimizing marketing strategies, and enhancing overall profitability in the long term.

Not only do suppliers consider profits, but they seek opportunities to innovate.  The precursor to innovation is collaboration – which is easier to gauge with a customer.  Suppliers highly value collaboration with their customers as it leads to numerous benefits and positive outcomes for both parties involved.

Key points underscoring the significance of collaboration include:

• Mutuality: Collaboration ensures a relationship based on mutual benefit, trust, and respect, where both parties work together towards common goals
• Customer-Centricity: In today's customer-centric business landscape, collaboration helps suppliers and customers align their efforts to meet customer needs effectively and enhance customer satisfaction
• Bilateral Communication: Collaborative partnerships foster open communication, transparency, and visibility into customer demand, leading to better decision-making and problem-solving
• Enhanced Product Development: By involving customers in the design process through co-creation initiatives, suppliers can create products that better meet customer needs and preferences
• Redefined Cost Savings and Efficiency: Collaboration results in lower costs, shared best practices, better-negotiated deals, competitive advantage, increased revenue, and profit for both parties
• Customer Engagement: Engaging customers in the collaboration process through focus groups, elite customer groups, or co-design initiatives helps build stronger relationships and drive customer engagement
• Technology Integration: Leveraging digital tools like Customer Relationship Management (CRM) systems facilitates efficient collaboration with customers outside the organization
  

In conclusion, collaboration between suppliers and customers is essential for creating value, driving innovation, enhancing customer satisfaction, and ultimately achieving mutual success in today's competitive business environment - and it is a key in deciding whether to bid.

Why you should Attend

While many have argued, “The customer is always right”, many customers fail to realize they might not be the “right customer’ - or that an opportunity might not be right - for that supplier and deal. This session will explore the factors which suppliers consider in determining whether to bid on an opportunity. As big data and technology are becoming more integrated, these decisions are becoming increasingly objective, and data driven. During this session, we will address:

• Calculating three financial variables - revenue, profit, and investment
• Assessing five key risk factors - including transaction-related risks and market risks
• Considering six additional factors that drive the decision - from strategic alignment to customer reputation
• Applying similar approaches to the Procurement decision
• Developing communication governance models
  

While some of these issues are given some focus and analysis in the bidding process, the assumptions and risk factors have changed during the past few years. What was once sound reasoning is often no longer valid. As a result, firms are making flawed assumptions in arriving at their bidding decisions, and it is time to revisit these points - and for some, visit them for the first time.

The days of relying upon relationships for gaining key data, information, and insights are behind many firms.  No longer can they assume that a successful bid will lead to the same results and success. As a result, their decision trees are changing.

There are new elements in the equation, and to calculate the likelihood of success a new approach is required. This session will bring into light the factors that are now being weighed in a key decision - to bid or not to bid.  

Areas Covered in the Session

• Calculating three financial variables – revenue, profit, and investment
• Assessing five key risk factors - including transaction-related risks and market risks
• Considering six additional factors that drive the decision - from strategic alignment to customer reputation
• Applying similar approaches to the Procurement decision
• Developing communication governance models
  

Who Will Benefit

• Financial Management/Investment Management
• Legal/Regulatory Management
• Commercial Management (both buy- and sell-side)
• Project Management
• Operations/Engineering Management
• Logistics/Transportation Management
• Contract Management
• Risk Management
• Third-party Risk Management
• People Management
• Procurement/Category Management
• Supply Chain Management
• Change Management
• Communication Management
• Technology Management