Month: May 2019

Best value procurement, a competitive process that prioritizes best overall value rather than simply the lowest price, is on the rise in the public sector.

In fact, a study of over 6,600 RFP projects found that the lowest priced proposal won in only 10% of all projects. Conversely, the most expensive proposal won 2.9% of time. The majority of projects fell in the middle, finding a balance between price and technical or qualitative factors in order to determine the best overall value (rather than simply the lowest cost).

Healthcare decisions are particularly well-suited to the best value procurement model because they must always consider patient outcomes above the bottom line. Many RFPs include factors such as service quality, experience, or clinician preference in the evaluation.

Especially when it comes to procuring cutting-edge technology or innovative solutions, procurement teams are beginning to replace the traditional RFP (which provides a list of predetermined specifications) with a problem-focused approach, which presents the challenge to be solved and gives vendors flexibility to propose solutions. 

The challenges of evaluating best value through paper and Excel

Best value procurement and other innovative methods deliver better solutions at a better price, which is good news for healthcare organizations and the patients they serve.

However it only makes procurement’s job harder. They must involve more stakeholders and ensure well-balanced and clearly specified criteria, while controlling costs and maintaining compliance to rules and regulations — and for many teams, they are doing it all over email, Excel, and paper.

While digitization is well underway in frontline healthcare, it has lagged when it comes to the administrative functions of the organization, leaving much of the RFP process to be conducted offline. This results in high administrative demands on procurement teams, as well as a risk of errors or delays in the process. The sheer amount of time it takes to conduct manual data entry and manage evaluators by email means that many teams have limited capacity to take on strategic procurement projects.

Three ways eProcurement software helps teams conduct best value procurement

Bringing the bid and RFP evaluation process online eliminates mountains of paperwork from buyers’ desks, cutting the amount of time spent on manual projects by half.

Leading eProcurement platforms go beyond efficiency gains to provide workflows and tools that make it easier to manage best value evaluations of RFPs. Here’s how:

1. Easy stakeholder engagement.

RFP decisions often depend on the input of several individuals across the organization, including clinicians, facilities managers, administrators, and others.

eProcurement platforms provide one online location to engage evaluators and centralize communication.

For evaluators, it means that they can log into one platform to find, review, and score relevant proposal documents at their convenience.

For bid administrators, it means that their inboxes are free from lengthy email chains, and their to-do lists are free of manual tasks like scorecard creation, distribution, and tabulation. With clear visibility into evaluators’ scoring progress and automatic score tabulation, bid administrators can focus on facilitating best value decisions, rather than managing administrative tasks.

2. Evaluation tools for efficient review of vendor information.

Bid administrators’ time is best spent on the difficult task of understanding stakeholder needs and properly balancing scoring rubrics — not on manually copy-and-pasting scores or checking vendor submissions for completeness.

eProcurement software platforms allow procurement teams to set custom weighted criteria, collect structured vendor responses, and automatically collect and tabulate scores, saving administrative labour at each step.

Evaluation tools automatically format large amounts of information, attributes, and specifications side-by-side for ease of comparison and scoring, so decisions are made with all the necessary information at hand.

3. Robust support for compliance requirements.

In a 2016 survey across Council of Academic Hospitals of Ontario (CAHO) members, 76 percent of respondents reported policies, directives, and procurement regulations as “major hurdles” to adopting innovation within their companies.

eProcurement platforms can’t change the laws that procurement teams must adhere to, but they can support procurement teams’ efforts by providing customizable built-in controls throughout the process. For example, online Conflict of Interest form collection makes it easy to ensure evaluators’ impartiality before they are granted access to proposal documents. eProcurement platforms also provide centralized digital records of every step in the decision to protect the organization from legal challenge and make it easy to respond to vendor debriefs.

Procurement teams have an unprecedented opportunity to provide value to their organizations through leading practices such as best value procurement. Healthcare-focused eProcurement software makes it easier to manage the evaluation of healthcare bids and RFPs.  

Excel is used by approximately one in seven humans worldwide — including many utilities procurement teams, who rely on Excel for the evaluation of bids and RFPs.

It may be a familiar tool in the toolbox, but it was not built for the complexity and collaboration required of the bid and RFP evaluation process. In fact, trusting Excel with your utility’s high-impact, high-dollar sourcing decisions is an increasingly risky choice.  

Here are five ways that Excel puts your RFP evaluation process at risk:

1) Spreadsheets are error-prone

Studies show that 88% of audited spreadsheets contain errors, and when people are asked to review spreadsheets with known errors in them, they only catch those errors approximately 50% of the time.

Here’s what makes spreadsheets dangerously prone to errors:

• They’re deceptively simple. Many people have basic working knowledge of Excel, but when it comes to advanced formulas and pivot tables, it’s easy to become out of your depth without realizing it.
• They lack oversight. There’s no spellcheck to let you know when you’ve made a mistake, and no formal mechanisms for testing or validation.

When you’re managing huge amounts of supplier data in spreadsheets under tight timelines, it’s more a question of “when” rather than “if” a simple error occurs, with potentially serious consequences for your RFP decisions.

2) Spreadsheets are inefficient

Managing the RFP evaluation process through spreadsheets requires a significant amount of manual data entry. From inputting vendor information, to aggregating scores, these tedious tasks take up hours of staff time that could be put to more productive use.

3) Spreadsheets lack consistency and standardization

Every organization has its Excel whiz (you know who you are) — but for the rest of us, it can be difficult to make heads or tails of the unique spreadsheet configurations that have developed over time in procurement departments. With staff turnover and retirements,  it is difficult to ensure consistency and standardization in the process.

4) Spreadsheets limit collaboration and control

RFP decisions often include many stakeholders from Engineering to Finance.

However, spreadsheets weren’t built to be used by multiple people at once. As a result, it’s common to find yourself poring over multiple versions of the same spreadsheet, trying to determine which is the current one. The end result is yet more manual data entry to harmonize the various copies.

This is not just a hassle, but also a source of risk. Unlike a database, spreadsheets contain no version control or audit trails — leaving you with no record of who accessed a document and what information they changed.

5) Spreadsheets keep your data siloed

How many spreadsheets would you have to consult to determine the total spend and savings of your procurement department this year? When procurement data is siloed in spreadsheets and physical files, it takes a lot of manual effort to report on metrics. Many organizations just don’t have the bandwidth. This leaves them with incomplete visibility over their spend and missed opportunities for consolidation and cost savings.

Fortunately, procurement teams have another option: sourcing software is built to support the entire bid and RFP process online, allowing procurement teams to reduce manual work and evaluate bids and RFPs more efficiently.

Learn more about how sourcing software helps utilities’ procurement teams reduce risk and run faster bids and RFPs by signing up for a custom demo.