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Purch-lympics Entry #2 - Round #2
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G.P Thushara Sampath Gunasekara
Procurement Professional, Colombo, Sri Lanka
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"Background
I work at Group Supply Chain Management division of a telecommunication plc. It was required to purchase Set Top Boxes for the subsidiary which provides Satellite TV service. There was an incumbent supplier and the challenge was to introduce a new supplier. A RFP was floated, but only the incumbent supplier submitted the bid by the closing time.
Problem Analysis
1. Strict RFP requirements.
Some vendors have deterred from submitting bids due to requirements;
To submit Bid bond for 2% of bid value.
To submit offers in hard copies.
2. Technological Barriers
The non compatibility to existing infrastructure had prevented some interested vendors. Many vendors were unable to provide a sample, which was a mandatory requirement of the technical evaluation.
3. Lower volumes
Compared to the market norms, the offered quantity was not that attractive for new vendors, as there were initial customization costs they have to bear. On the other hand, we were unable to promise bigger quantities, due to growth rate limitation of the market.
4. Rapid development of technology
The technology is currently evolving and there are few players in the market. Fixing the current price for longer period is not beneficial as the price has a downward trend.
5. Only two vendors were short listed from the technical evaluation, including the incumbent, resulting a lesser bargaining power. Larger volume to a new supplier was not recommended by technical team.
Actions taken to manage/resolve the problems
1. RFP terms were relaxed with chairman's approval and all vendors were requested to resubmit accordingly.
2. A new vendor was sourced who provides same technical configuration to a South African service provider, so that he can provide samples without an extra time/cost.
3. Only a small quantity to be offered to the new vendor initially.
4. BOD authorization was obtained to tender committee chairman to negotiate for further quantities with technically short listed vendors, so that any reduction in market price can be obtained.
Ultimate result achieved
A new vendor was introduced breaking the monopoly status existed. In long term this will be beneficial to the company. "
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