To understand the vitality of procurement planning, let’s list only a few potential consequences of poor planning.
– No bidders (zero bids) as a result of the tender
– Late delivery
– Higher prices
– Poor quality products, works or service
Each of these points is critical to your organization.
No bidders. If due to poor planning you left the shortest possible time for responders to submit bids, you will most likely have no bids. If your tender is international you can bet on receiving zero bids. This means losing even more time for re-tendering and facing the following consequences.
Late delivery. If your planning is bad, your delivery time in the contract will certainly reflect it. Working on bid submission many bidders do not realize that expected delivery time is unrealistic, i.e. too short. The bidders are so busy to submit bids, so they work mostly on confirming prices and negotiating discounts with their own suppliers, but not assessing the reasonableness of expected delivery time. Only when award notice is made or contract is signed suppliers knock your door and ask for time extension.
Higher prices. When your supplier delivers late, it pays penalties. Thus, your project pays less than it should pay initially. One may ask, so what? Isn’t it good?
Let’s look deeper. The penalties your supplier pays are peanuts in comparison to the losses your project is going to face. And those losses will include but will not limit to worse relationship with final recipients, emergency procurements of missing items (naturally paying higher prices), critique by donors, stakeholders, media coverage ruining your procurement reputation and your organization’s general image, etc..
Poor quality products, works or service. Major international organizations have to constantly report to regional offices, headquarters, donors, etc. They have to report on successful delivery, implemented projects, reached targets and these should be reported in due time. Very often this rush to report on success comes with sacrificed quality. But imagine if your organization planned some extra time to correct errors, complete additional works (construction rarely goes smoothly), exchange defective parts, improve emerged situations, etc. Proper planning would solve all these issues.
Procurement Network receives numerous messages about poor planning. Those messages tell about conflicts and bottlenecks resulted from planning chaos. Why manage the conflict, if you can avoid it?
The good news is Procurement Network is ready to help your organization with procurement planning too. Our massive database of planning cases, formats and formulas is an unprecedented knowledge pool, it will help you organize your procurement beautifully and smoothly. You can contact us anytime.
Simon Dewton
Procurement Trainer
Procurement Passion 