The Three Little Pigs
We all know the story of “the three little pigs” and the houses that they build to try and stop the wolf eating them up!
As I was considering some business tenders recently, it got me to thinking how suppliers are really like the three little pigs and the purchasers are like the big bad wolf. It must have been the cheese I ate at bedtime
But let me be serious for a moment. As a supplier tendering for business, the initial proposal is written with the best of intentions. Quality, ability to deliver and confidence in the offering are ripe. The proposal is designed to make the business money while delivering the best that can be delivered to the client.
It’s the house made of bricks and mortar
Ah, but we are in a tendering process so….
Before the tender document even leaves the building, the cost to the purchaser has been reduced. Conversations in hurried meetings prior to submission produce cries of concern about “over-pricing” or not being “cost competitive”.
The house gives in and the price is reduced. We’ll manage is the general concensus. A tweak here, a tweak there – sure no-one will notice.
The house is now made of wood. It’s ok – just not as good as it could be.
Then the “wolf” gets his hands (or is that paws) on the proposal.
Assuming the wolf is licking his lips at the offering, the tenderer is told – we like what you have to offer, it’s just too expensive. Can you work on the numbers?
Which is what happens.
More corners cut in the cost base. Some may talk about “descoping” but are so afraid to lose the race that they cut the baseline to the quick. No contingency. No real understanding of the longer term implications of the decision.
The house is now made of straw. Nothing will be as good as the either the tenderer would have liked or the purchaser is expecting.
While the wolf can’t eat the pigs in this instance, the chances are he can make their lives pretty miserable.
What bemuses me is that business has operated like this for years. No-one seems to learn.
Suppliers don’t hold their ground. Purchasers expect too much.
At the end of the day, the supplier generally ends up having to look for more cash or absorbing a loss, the purchaser displeased with a poor result or having to spend more money than expected.
While I do think that suppliers have to give good value and purchasers should push on price, no-one wins in a race to the bottom.
Not sure what the solution is though. Thoughts anyone?