Optimizing The Balance Between A Technical Bid Vs. A Financial Bid Submission Process

Published 24 April 2023

By: Lamis Al Kaati, B.Eng., MBA Student (Operations Management Concentration).

Remember: Optimal Performance is defined as delivering customer value with minimal waste; waste is when taking ineffective steps to reach the ultimate goal, like what can happen in sales activities when trying to overfill the sales pipeline with opportunities with no short or long-term actual gains for the organization. Another example is the tender participation process. Optimizing the process would mean investigating appropriate steps to submit a well-balanced bid considering metrics such as cost, delays, and labor effort for a " right" decision.

Have you done that before? Trying to comply with technical specifications on a customer requirement to achieve 100% compliance without realizing that customization and diversion from your company’s standard product may be counterproductive in a tender environment.

Every additional option that is not a standard within a company's product technical specification but is considered a standard for the customer or the competition will eventually reflect on the financial bid value, evaluation, and final results. Customization and adding nonstandard options will reflect on the proposal submitted and could risk pushing the participant out of the game for proposing overly priced solutions. In this case, it is recommended to participate in the tender game aiming to achieve the minimum acceptable rating of 70% compliance, where the price is kept competitive and aligned with the company’s product positioning strategy. In this case, the proposal will be well-balanced, meeting most of the customer's mandatory standards sufficient for their operation and affordable where value is quantified on short and longer usage. If the product compliance rating is less than 70% of customer requirements, in this case, before participation, some questions need to be addressed to help make the best decision:

1. Does the company product conform to industry standards or require improvement and innovation?

2. Ask your customer why the additional options are necessary for their operations?

3. Find out how significantly those additional options will affect the bid’s overall price and decide whether to include them to help enhance the technical proposal while remaining competitive.

4. Asses the strength of the relationships built over time between different levels at your company and the different levels at the customer and find out if it is helping your company?understand the customer-specific requirement.

5. Asses the level of understanding of your customer about the product value and services the company brings and determine whether more clarification, persuasion, strategic relationships, support, or marketing is needed at the customer base.

6. Asses customer appreciation toward quality performance.

7. Assess customer budget.

8. Assess the customer's voice and feedback about the product and services versus the customer's voice about competition products.

8. Discuss internally with design engineers the tender specifications and assess whether it is written on a ‘general’ basis, or it may have been copied out of a competition brochure that arrived first to the customer grounds, or it may be tilted toward competition product during a pre-selection process due to stronger relationships they have with the customer. This step will help save company resources and time.

9. Lastly, find out whether there is any benefit for your company to participate in this tender. For more investigation on this factor, you can review the Sales Process Optimization article. https://www.dhirubhai.net/pulse/sales-process-optimization-lamis-al-kaati

Best Regards,

Lamis Al Kaati, B.Eng., MBA Student (Operations Management Concentration).

If you have any more questions, please connect via my LinkedIn page.

#gse #groundhandling #aviation #airlines #aviationindustry #equipment #process #optimization #salesoperations #salesoptimization #emea

References:

1.?????????????Roy D. Shapiro., 2013. ‘Process Analysis. Operations Management. Harvard Business Publishing.

2.?????????????Karen Martin and Mike Osterling. 2014. Value Stream Mapping.