Procurement is increasingly being conducted through panel-based arrangements, especially by governments.
To be included in these ‘closed shops’, it is important to understand how such arrangements work.
What is a panel arrangement?
According to the Australian Federal Department of Finance, ‘a panel arrangement is a tool for the procurement of goods or services regularly acquired by entities. In a panel arrangement, a number of suppliers are selected, each of which are able to supply identified goods or services to an entity’.
Tender panels comprise a selection of pre-qualified providers, who can be approached privately or by requests for quotation (RFQs) to provide goods and services for a defined period. After this period expires, the buyer will often ‘refresh’ the panel by renewing the tender process.
There are different types of panel arrangements. Some lock all selected panel members into set pricing and conditions, while others can consist of a shortlist of potential suppliers who will be required to bid against each order.
Why are they popular?
Panels simplify the procurement process, as purchasers only have to deal with selected panel members. Panels require less administration, reduce the number of times needed to go to tender and generally reduce procurement costs, because of the panel’s competitive pricing.
Panels are also useful for high-volume purchases, when a single provider may not be able to meet volume requirements.
Moreover, panels can also enable other staff members in an organisation to purchase directly from suppliers, allowing procurement professionals to focus on other tasks.
What are the implications for suppliers?
As with any tendering process, there are winners and losers. With panel arrangements, however, the losers can’t do much to get back into the game and won’t even see what business they’re missing out on.
They just have to wait until the panel is refreshed, or hope that the current panel suppliers fail to deliver.
For winners, though, there is still no guarantee they’ll get any business.
How can you make it onto panels?
Due to the constant pressure to streamline purchasing, we’re seeing more public invitations to appoint supplier panels.
The first step to being considered is to know about each appropriate opportunity when it arises and make a bid.
To be selected requires the same approach as any other tender submission. You need to prove your capability, provide a strong value proposition and display a willingness to work flexibly with your buyer to accommodate their needs.
You may even have to work with your competitors in some cases. And if you do make it onto a panel, you’ll need to respond to requests quickly, submitting tenders or quotes when required.
What’s the bottom line?
You have to be in to win. But once there, you’ll have to prove yourself worthy. Making it onto a panel doesn’t guarantee you’ll gain any business, but if you do, be sure to deliver.
Doing that will earn you a reputation as a preferred supplier, which will open up more opportunities in the future.