Procurement special: making tendering work for you

Fleet procurement can go wrong despite the best of intentions. Ian Hill and
Geoffrey Bray look at two examples and the lessons learned. John Charles reports.

Maintaining the status quo when tendering

A building company operating 300 cars and vans went out to tender after becoming dissatisfied with its incumbent solus leasing supplier, but it didn’t ask prospective suppliers to suggest improvements to fleet practices.

“The tender document compiled by procurement was based entirely on retaining the status quo,” recalls Ian Hill, managing director of Activa Contracts, who was included in the initial tender process.

“It contained numerous spreadsheets highlighting every vehicle on the fleet and related costs and even vehicles that were obsolete.

Due to the multiplicity of spreadsheets, the task of going through it was monstrous and the base data poor.

“The business was making a complicated process out of retaining the status quo and we questioned who was going to analyse such a tender document and respond.”

Activa Contracts suggested the tender should be rewritten and simplified. It urged the organisation to focus on current practices and to request proposals as to how improvements could be made.

Hill says: “The company listened and responded with a rewritten four-page document focused on asking leasing companies to bring targeted added value to the fleet in terms of service and cost.”

Activa Contracts won the business, but Hill says: “It was a gruelling process to go through, but the company has made major improvements to its fleet in terms of cost, desirability of product and service.

“That would not have happened if it had not been receptive to our challenging its original approach.

“The case illustrates that suppliers should not be afraid to challenge customers.

“Equally, fleets should ask potential suppliers to deliver new solutions that add value and improve current practices – that is a sign of strength not weakness.

“So often the person responsible for managing a fleet is not an expert.

“Retaining the status quo is invariably not the answer when going out to tender, but because those managing the process don’t have fleet knowledge and experience they seek to maintain the existing approach and analyse it to the eighth degree. But it is the wrong thing to analyse.”

Asking the wrong questions at tender

Asking generic questions in fleet tender documents is a frequent occurrence of procurement specialists who do not have a full grasp of the vehicle management sector, according to Geoffrey Bray, chairman of Fleet Industry Advisory Group.

“Organisations don’t have to choose the cheapest supplier to save money,” he says.

The founder and chairman of Fleet Support Group (FSG) until the company’s sale and subsequent rebranding as ARI Fleet UK, Bray recalls how one organisation operating around 400 vehicles tabled a series of questions in a tender document asking the replacement cost of individual items.

It asked, for example, in a document sent to FSG (which was retendering for the contract) and other fleet management companies, the price charged for a tyre, a door mirror, an exhaust, a windscreen and many other items on a vehicle-by-vehicle basis.

Bray says: “We challenged what exactly it meant as, for example, we could find more than 200 tyres that would fit a Ford Mondeo, which was one of the models on the fleet. We asked the organisation if it could be more specific, but were told that we should put our own interpretation on the questions asked.

“Did it want a tyre that was black and round or did it want a premium tyre that was of comparable quality to manufacturer-fitted tyres?”

 The organisation also questioned through its tender document if potential providers offered a 24/7 service to drivers.

“This is a popular question,” Bray says. “Most suppliers will answer ‘yes’. FSG offered its own service, but many other companies replying to the tender used a third-party provider to deliver an out-of-hours service in which case service levels, among other factors, would vary.”

Bray adds: “FSG was unsuccessful in the tender despite our best endeavours in challenging what was being asked for. It became clear that all the organisation was interested in was the cheapest price, but it was asking the wrong questions.

“Frequently tenders are written by in-house purchasing employees who do not have a grasp of what they require.

“When writing a tender document, businesses must be as specific as possible in their requirement. Too frequently questions are too generic and allow for an open interpretation by suppliers which in reality may be undeliverable.