Industrial Marketing - Competitive Tendering

Competitive Tendering

Industrial marketing often involves competitive tendering (see tender, tendering). This is a process where a purchasing organization undertakes to procure goods and services from suitable suppliers. Due to the high value of some purchases (for example buying a new computer system, manufacturing machinery, or outsourcing a maintenance contract) and the complexity of such purchases, the purchasing organization will seek to obtain a number of bids from competing suppliers and choose the best offering. An entire profession (strategic procurement) that includes tertiary training and qualifications has been built around the process of making important purchases. The key requirement in any competitive tender is to ensure that...

• The business case for the purchase has been completed and approved.
• The purchasing organization's objectives for the purchase are clearly defined.
• The procurement process is agreed upon and it conforms with fiscal guidelines and organizational policies.
• The selection criteria have been established.
• A budget has been estimated and the financial resources are available.
• A buying team (or committee) has been assembled.
• A specification has been written.
• A preliminary scan of the market place has determined that enough potential suppliers are available to make the process viable (this can sometimes be achieved using an expression of interest process).
• It has been clearly established that a competitive tendering process is the best method for meeting the objectives of this purchasing project. If (for example) it was known that there was only one organisation capable of supplying; best to get on with talking to them and negotiating a contract.

Because of the significant value of many purchases, issues of probity arise. Organisations seek to ensure that awarding a contract is based on "best fit" to the agreed criteria, and not bribery, corruption, or incompetence.