How tenders and bids have changed: observations from a veteran
With 17 years experience in the industry, Thought Bubble is now into its fifth generation tender and bid cycle. We look at how this growing discipline is evolving into a corporate necessity.
How tenders and bids have changed – where we have come from
Gone are the days when contracts and deals were sealed over the long corporate lunch and a golden handshake…and the price fixing, jobs for the boys, corruption and inside trading that went along with it.
Nowadays, tender and bid contracts generally run a 3 year cycle before they are retendered. They have moved beyond being simply compliance documents, to focusing firmly on corporate competitiveness and cultural alignment, governance and corporate citizenship, and the linkages between them.
Tender and bid activity heightened following the spate of corporate collapses in the 1990s (HIH, Lehman Bros, Aurthur Andersen etc) and Global Financial Crisis (GFC)-driven government stimulus packages. As a result, stakeholders demanded greater accountability, transparency and scrutiny of corporate practices and procurement methods.
It is still common practice for suppliers to be scrutinised by internal and external auditors, stakeholders and political opponents about tender practices. Even recently, a major government tender decision has been the subject of an inquiry.
The practice of competitive tendering has transformed over each cycle – from simple quotes to selling documents, to governance and compliance-driven responses; to focusing on triple bottom line reporting, corporate competitiveness and cultural alignment, to one of whole-of-life value and supporting strategic industry reform programs.
What a difference corporate governance and a GFC can make.
Where we are going
Tendering and bidding builds confidence by communicating consistently with different stakeholders about the company’s principles, policies and practices in a transparent manner, within the bounds of confidentiality.
As a growing management practice, competitive tendering will become more of a strategic issue for CEOs and boards in shaping their agendas for growth, innovation and organisational change.
Irrespective of their nationality, industry or ownership structure, companies that integrate their governance and leadership structures and which can provide the strongest business case in terms of stability, risk management, business and cultural alignment to their stakeholders can achieve competitive advantage.
Accordingly, bids and competitive tender management is increasingly shifting from the marketing and estimating department to the executive level and boardroom. Many companies are struggling to take advantage of these changes, including understanding the bid management process and associated risks, and the challenges or opportunities that can shape organisational performance, growth and culture.
The rise of the strategic bid program
The growing practice of competitive tendering among organisations worldwide has led to strategic bid management programs becoming a corporate requirement – where business development converges with business strategy, aligned with government and/or client policies.
Faced with the challenge of global competition, business leaders operating in competitive tender environments that are serious about running ethical and responsible businesses often have to be strategic and creative in the way they address tender responses – with a clear destination in mind for their organisation.
This is especially the case for companies that aspire to be competitive and well-regarded players in the global economy beyond their own borders. These companies have to understand and effectively manage not just business risk, but also need to demonstrate the willingness to advance industry innovation, aid in nation-building and deliver greater community capacity (examples include the National Broadband Network, social housing developments, military support Defence services, tri-government funded major infrastructure upgrades, coal export terminals, international aid, health reform and education programs).
Stakeholder engagement will be the new core competency
While the tender (or bid) manager traditionally represented the organization through words, the profession’s responsibilities have changed substantially.
Using skills in people management, leadership, communication and bid strategy, the strategic bid manager’s role is to keep the team focused, ensuring roles and responsibilities are clearly defined, that individuals are challenged and that the process of managing the many experts within the organisation’s overall function is highly efficient.
In the current economic climate securing or losing a major bid demands a period of communication, refocus, strategic realignment and quite often, transformational change. Therefore, in the fast-paced environment of competitive tendering getting stakeholder consultation and engagement right at the start is crucial for the success of the bid management program.
Leading under pressure, championing change and eliciting a ‘sense of concern’ for the future of the organization among stakeholders as well as achieving broad consensus, including CEO and board buy-in of a chosen strategy, impacts significantly on the bid outcome. Importantly, organisations must proactively plan for, and respond to, procurement opportunities rather than at the reactive bid response stage.
Companies must therefore transition from traditional ways of managing their tender function and strategic procurement by bringing it to the highest level of governance in the organisation. Those companies which do align their tender strategies against core business interests and growth strategy stand to benefit from a business model that delivers competitive advantage as the foundation for ongoing superior performance and the creation of long-term shareholder value.
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