and 7 things you can do about it!
I have completed and managed a lot of print and print management tenders over the last 25 plus years and I can honestly say that I haven’t seen many good ones (including the ones I have won or managed). Most of them are a waste of time and money, both for the client and the suppliers.
Based on my experience the actual cost for a Brand to run a full print management tender is between £30,000 and £45,000.
That allows for the time taken by procurement, marketing or consultants to run the process, but excludes the time and effort of internal stakeholders and external suppliers.
The procurement / marketing dichotomy
The reality of most RFP processes is procurement will look at price and promised savings, whilst marketing will favour who they think they can work with.
Neither party are wrong, just differently motivated.
The benefit mirage
The benefit promised during a tender is rarely delivered over the life of a contract. The tender process encourages the lowest possible price to be offered in order to drive maximum savings. Once the contract starts there will be a ‘good’ reason why the price is different, more often than not the specification has changed or wasn’t accurate in the first place. The savings will then be reported by the supplier against a market average they have established themselves. True cost of service is often hidden behind supplier rebates and technology charges that are not declared in the tender process. The service is sold to marketing by the best presenters, but the senior client service, operations and sales team that sold the dream are rarely the ones that deliver it.
Seven things to do about it
1. Evaluate a full year’s print spend
Get a year’s worth of actual specifications and crunch the data. What specs or services are the same or similar? What did you pay? When did you produce them? Create a baseline for each unique specification or service so you can see what was produced and how much it actually cost you.
2. Pick a representative sample for pricing or even better don’t focus on price at all
The classic ‘basket of goods and/or services’ doesn’t usually work because the basket rarely represents the majority of the actual spend. Even a ‘representative basket’ changes during a contract and because suppliers know that they will price the basket extremely competitively, even at a loss, to win the work. They bank on the fact that something will change in the requirement and they will be able to charge more. If you are buying a print management service then the pricing should just be indicative to ensure the print manager knows how to buy and who from. If the price is direct from a manufacturer it is to establish that they are competitive against what you have been paying previously. In both cases how you contract with them and for what service is the key factor.
3. Establish the service you are actually buying
If you focus on the service you are buying (e.g. outsourced print buying, production and management) look at the method the supplier uses and use the baseline you created to measure performance on promises over time. If the tender is direct to manufacture an audit of their Management Information System can be used to ensure the correct costs and margin is being applied. For the independent print manager transparency of actual cost of service is key and how that cost is recovered (management fee, rebate, technology charge etc.)
4. Check in with the stakeholders
This is stating the obvious, but always make sure the stakeholders in the business are consulted first. What works currently, what doesn’t, what would an ideal world look like? If they could keep one thing what would it be? If they can change one thing what would it be? What support will they need in the future? The stakeholders’ input to any RFP is critical as at the end of the day it is their budget, their contract and supplier relationship to manage day-to-day.
5. Talk to the incumbent and shortlist new suppliers carefully
Based on the findings from the stakeholders always get the incumbent supplier’s view and understand what works and what doesn’t from their perspective. Are the expectations unreasonable? What service do they really provide in the background? What could we, as the client, do better or differently? Then when looking for new suppliers to include on the tender, shortlist carefully against actual need and capability. It’s not the Grand National, there is no point in inviting a long list of potential suppliers to participate if you know they will fall at the first fence.
6. Meet potential suppliers first not last
This is where most traditional print tenders fail. The presentation to the stakeholders happens last. Marketing stakeholders will often make a relationship-based decision, do I think I can work with this supplier or not? Do I believe them? Do I trust them to deliver? There is no point going through an RFP and RFQ process if ultimately the stakeholders don’t think they can work with the supplier. So shortlist for tender well and have the chemistry meeting at the beginning of the process - this will be first cut and save both client and supplier time and effort in the long run.
7. Cost, review and negotiate
This is where a good procurement team come into their own. Once the stakeholder’s needs and preferences are established, the proposals and prices are in, it is the time to challenge and negotiate. The art of sustainable contracting is to agree the contract on a win/win basis: the supplier needs to make a return and you need to make sure the service you have defined and any savings promised are delivered consistently over time.
Mike Newman, theSPC
Help is at hand
At theSPC we are here to make sure whoever you contract with does the right thing for you. We use best in class software and industry expertise to create baselines from available data. We create representative samples for pricing that suppliers can be held to. We help you define your needs and how to best fulfil them and we are very good at agreeing sustainable contracts.
We strongly believe that there is a right way to manage production and the production supply chain for each of our clients and we promise to find it.