Competitive Tendering & the Internet of Things (IoT)

In a recent LinkedIn post we asked: Where do you sit on the scale of how the Internet of Things (IoT) is impacting your business today and tomorrow?

  • Don’t understand IoT impact and am over all this change stuff?
  • Investigating the impact sometime in the future?
  • Understand/aware but cannot identify impact at this time?
  • Understand/aware – See IoT value to our operations?
  • Understand/aware – Customer demands/insight driving us to embrace IoT?
  • Understand/aware – Managing dramatic impact for competitive advantage?

Important questions but the answers are even more important. If you cast your business model in stone, it may become your tombstone!

Answers from your major suppliers are also important for you to benefit from the digital insight they can, or cannot, provide. 

In a recent food tender project, Cost Management Specialists:

  • increased ROI through a supply agreement providing certainty on inputs, outputs and performance outcomes
  • improved quality and accountability by streamlining theorder to delivery process
  • achieved lower cost in two distinct areas of supply with incumbent suppliers.

In evaluating the food tenders, the following issues, which can all benefit from digitalisation, were significant:

Order Management – better commitment to planning and information sharing with suppliers to avoid unnecessary cost and the risk of error.

Supply List – too many items on the pick list. The tender outcome defined a pruned approved list at the agreed tender price. This did not preclude additions following a cost: benefit analysis.

Order Quantities –Partnership clarifies whether major suppliers prefer early over orders revised down to a late order. Major suppliers have ability to on sell overestimates in an advance Purchase Order.

Portion Control – essential to margin management and waste minimisation. Best done when time pressure is less, labour rates are lower, space is suitable and automation using lasers reduces variance and waste.

Better Utilising Suppliers’ Expertise – benefit from suppliers’ expertise in streamlining the process from order to delivery and acting on their insight into your unproductive purchasing patterns.

For those at levels 1 – 3 understanding of how the Internet of Things (IoT) is impacting their business today and tomorrow, there is much to learn from suppliers at levels 4 – 6.

When suppliers have digitally transformed their supply chain, learn from them. Expect to better leverage ROI on service, quality price and criteria such as information and integration.   They know their margins and how important each client, including you, is to their top and bottom line.  Partner to leverage a win-win outcome.

For those at levels 1 – 3, competitive tendering will expose a laggard supplier’s inability to embrace digital innovation and share the benefit with their customers.  Their competitors will relish an opportunity to demonstrate competitive advantage.

Digital provides transparency about such things as unproductive purchasing patterns, buying in the wrong market, lack of integration in invoicing/reporting or identifying innovative options available in the market. A competitive tender process gives the tenderer the benefit of that transparency. 

In a digital world customers expect ‘on time and in full’. Deliver ‘on time and in full’ with lower cost of goods, greater transparency and added value along the value stream.  Enjoy increased confidence in your ability to delight your customers through digital transformation and best value in the supply chain. 

Digital transformation is not an option but a reality in an ever increasingly competitive world. Appreciate the benefit of keeping the digital door open for future benefit.  

A competitive tender process exposes major suppliers who are laggards and can reward early adopters. 

Laggards who get their ‘periscope up’ have much to learn from early adopters. The supply market provides a terrific learning opportunity.

It also and identifies major suppliers who can deliver immediate benefits and share insight from their transformation as a solid foundation for a successful partnership!

If an incumbent falls short, the competitive tender process identifies alternative suppliers to:

  • increase ROI through clarity on inputs, outputs and performance criteria
  • improve quality and accountability in a streamlined order to delivery process

Benefit from specialist expertise in leveraging the supply market. For optimum benefit, tender preparation/evaluation/implementation requires expertise and experience. 

Contact John Cleary on +61 411 522 521 or by email at roi1@costms.com.au.                 

 

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