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Your buyers are sharp and know the marketplace. They become comfortable with your vendors and start to get lazy if not challenged occasionally. You need to help them save money by occasionally taking them out of the equation unannounced. Shake things up a little. Change procedures one day. You need to impose some internal controls on the bidding process and ensure uncertainty on the behalf of your bidders; in other words, you want them to sharpen their pencils. Tell your purchasing agents ahead of time this procedure will happen at some point so they must be ready when it occurs without notice.
Introduce the ‘unknown bad’ guy to the bid process. One day in your purchasing department, tell your purchasing agent that as of today, starting on the next three bids for purchases over $1,000 (or you set the dollar amount), your buyer must tell all three or more bidders that they will be submitting their bids not to the buyer but to you or another designated party outside of the normal hierarchy.
Pick someone to accept incoming bids who is not involved with the process. Choose a person either in the same department, or better yet, someone completely outside of procurement. Pick some ‘bad guy’ in accounting to gather the bids. You want this decision to throw off the bidders, wake them up to competition and force them to consider submitting a better more competitive bid. You can tell your buyer to inform the outside bidders to get their best bid on their first submission because they cannot intercede when this process goes forward. This extra step adds a bit of drama, but more importantly it promises to save money and straighten out relationships that may have become complacent, non-competitive and detrimental to the firm.
Make bidders think twice before putting their price down on paper. Let the bidders know that a different person will evaluate the bids this time, a person they most likely do not know. This separation of tasks (internal control) helps alleviate pressure on your buyer, makes the bidders sharpen their pencils and adds a good audit trail to the bidding process. It may be an invitation to other firms in your community who gave up trying to get your business when they sensed futility in trying to bid.
Limit the bid to one time, sharpen pencils, no rebids will be accepted. Introduce a third guy in the bidding process. Regardless of what happens, have the person receiving the bids tell the bidders upon the receipt that these and first and final bids. If they wish to halt and refigure their bid, tell them they have 24 hours only to get it in. Otherwise, the decision will be a made one day ahead from then.
