This Sale is Going to Make You Famous!

Make your bids! Don’t miss out on this opportunity folks!

In the world of buying and selling packaging you occasionally come across an opportunity to bid on a large annual contract which initially sounds like the golden egg if you win it. I've been involved in many bids for large “chunks” of business and I've definitely learned a few things along the way.

My First Bid Experience

It was a Friday morning and I was a young manager of a medium sized packaging company and I wore every hat from sales to receiving. As I opened my email I saw a RFQ (Request for Quote) from one of our customers and it was a huge list of items that we produced but weren't currently supplying them. I knew I had landed the golden goose that was going to lay the golden eggs. I would be on my way to retirement in no time when I won this business.

It was a pretty easy bid to get put together as all of the items were either in stock or we could run them cheaper as a custom in no time flat. I filled in the spreadsheet with killer numbers that I was sure would send the customer running to our door and submitted it before noon that same day. Up the feet went onto my desk and I waited for the first PO to arrive. OK, I didn't actually have my feet up but you get my meaning.

Within an hour I received an email back and I was like a kid at a B-day party opening a gift only to be floored when I saw that there was a link for an online bid. (AKA Auction). What is this!!!? How does this work now? I called the customer to ask how the entire online bid process worked and they explained to me that it was a little like an auction. All of the companies submitting a bid would be in a cyberspace room huddled around their blue screens of opportunity waiting to see who bid what on this business. It was nothing less than ugly. Numbers started flying around the screen and people were dropping out like flies due to the low-balling that was happening. I felt my stomach tighten and knew I was in over my head at that point so I respectfully and quietly bowed out before I ended up selling products below our cost.

Fast Forward to Today

Needless to say that I've been involved in a few more of this type of bid request and in most cases, the current vendor is in the spotlight and is rarely knocked out if they’re the lowest bidder. You stand a better chance bidding on new business that doesn't have a good or bad history. Bidding for work is all about volume business and the relationship that comes with that type of business. The business rarely stays at the same company for more than 1-2 years and it doesn't take long before every company knows about the business and walks away from the opportunity.

I’m not a huge fan of bid business as they normally take a lot of time and there are a lot of things that go into maintaining that business and trying to keep it. If you have a solid vendor who takes care of you in the best way possible and watches your money as if it was their own, then why would you need to go to bid for that business? The only real advantage to putting your business out for bid is price. Unfortunately the low price usually ends up costing your compay more than the one that is solid and reputable. Sure, there are a few other reasons that make bids attractive but for the most part they are price based and usually down and dirty.

Q: Enter into the bid war or not?

The packaging business is evolving at a record rate and technology leaps are bringing new and exciting things to market every day. Being locked into a contract (most winning companies will want an annual contract) can be a huge disadvantage to you and your company and you normally won’t find out until it comes time to put out the business for bid again next year.

Call around… look into solid sources and work with solid companies who can provide references versus locking the business down for the lowest price. There is truth in the old saying; "You get what you pay for" or "excessive small margin can cost you an excessive amount of money".

You’d be surprised how many companies actually lose money because they are locked into a contract won by bidding. Yes, someone will raise their paddle and buy that business but is that the best choice you have for a supplier?

Going Once… Going Twice…. Last Chance…. Sold!

Your feedback is always welcome.

Image Credit: https://www.williamkentinc.com/