The Advantages of Tendering – You Must Know

This article aims to explain the advantages of a tendering process. Organizations need to understand the advantages of tenders in order to benefit it for their business. For tender issuing organizations, the benefits are different from those who are pursuing tender opportunities. For organizations that issue tenders, the obvious advantages are increasing transparency, improving dialogue with potential suppliers, negotiating with various suppliers etc making the process of buying (procurement) very efficient.

 The advantage of tenders for companies who wish to pursue or fulfil the requirements is that they can gain a large volume of business, expect multiple contracts or repeat business and even help in developing products that match customer requirements. Tenders in general allow the release of a public announcement of a requirement for a product or a service. The advantage of tenders is that it allows a formal bidding process to begin where various suppliers can quote for the said product/service to be supplied so that it is advantageous for the buyer to choose from a number of alternatives.

 In simpler words, when organizations have a problem or a requirement for anything, they release a communication that literally says “Can you provide us with xxx or yyy and at what price”. Governments across the world may choose their preferred supplier based on the technical specifications, the strengths and weakness of the companies bidding in the process and price received for the products/services they wish to buy. Globally, all tenders follow a strict and transparent process due to which laws are enacted to ensure that the suppliers bid and compete fairly in the entire process.

Benefits of Tendering:

Tendering, also known as competitive bidding or procurement, is a procedure where organizations invite bids from suppliers or service providers to compete for the opportunity to provide goods or services. 

This process offers several benefits for both buyers and suppliers:

1. Competitive Pricing:

• Buyer Perspective:

  Tendering encourages competition among suppliers, leading to competitive pricing. This helps buyers secure goods or services at the best possible value.

• Supplier Perspective:

  Suppliers have the opportunity to win contracts based on their pricing strategies and cost efficiency.

2. Transparency:

Tendering processes are typically transparent and follow specific guidelines. This transparency ensures that the procurement process is fair, and all interested parties have equal opportunities to participate.

3. Quality and Innovation:

• Tendering allows buyers to specify their requirements, including quality standards and technical specifications. This ensures that suppliers must meet certain criteria, leading to the delivery of high-quality goods or services.
• Suppliers may also have the opportunity to propose innovative solutions or technologies during the tendering process, fostering creativity and efficiency.

 4. Fair and Open Competition:

• Tendering promotes fair and open competition, preventing favoritism

Although there are many advantages of tendering, the primary benefit of issuing a tender is to understand the supplier market and at what price can the desired products/services be acquired at. It also helps in assessing the feasibility of the product/service and its value for money in the entire project. For instance, assuming that an organization is willing to open a computer section which requires 100 seats. Therefore, it will require to buy itself 100 pieces of desktops, LAN cables and other IT accessories.

 The issued tender could thus be a framework agreement where the organization issues one single contractor to fulfil all the hardware needs. This single supplier can outsource the products at their risk but the responsibility of setting up lies with the single source supplier. In this way, the organization does not have to deal with too many people while getting the products acquired at a competitive rate. The other benefits of tendering is that organization can first issue a first-hand RFI (Request for Information) before initiating the project so that they can better assess its feasibility.

Other advantages of tender is increased transparency, established process, provision of audit trial and report and review process helping in understanding the market. The major motivation behind issuing a tender is to create competition in the marketplace between different suppliers so that the organization can benefit by getting the best products at the most affordable rates. For the suppliers, this is a great way to increase sales as they can get large volume contracts, repeat business and the prestigious advent of working with governments, sometimes helping in nation building. 

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