Month: August 2020

Procurement teams were already expected to do more with less—and as public agencies navigate working within scaled-back budgets, procurement teams will be responsible for reducing costs even more. In this new environment, achieving the absolute best value for your bids and RFPs is more important than ever, and vendor competition is a key player in that effort. 

So how has COVID-19 impacted vendor competition on public bids, and how are government agencies responding? 

How has COVID-19 affected public sector vendor competition?

In our State of Public Sourcing: COVID 19 Edition report, we took a look at the average proposal submissions per project, comparing January/February and March/April 2020 data to 2019 data. Here’s what we found.

When comparing January/February 2020 to March/April 2020, we see that the average volume of proposals per project has increased slightly from 3.9 to 4.1 In other words, there has been a 5% increase in vendor competition on public bids. 

A case for continually engaging new vendors

In March and April 2020, as public organizations significantly reduced their open bids due to the uncertainty that came with COVID-19 and mandated lockdowns, suppliers may have had fewer options on solicitations to bid on. At the same time, the climate of economic uncertainty may have motivated suppliers to seek additional business, accounting for the increased vendor competition.

In times of economic instability, state and local governments play a critical role not only by providing businesses and individuals with the services and programs they need to weather the blow, but also by stimulating the economy by purchasing goods and services. In fact, government spending accounts for 17% of total GDP. 

Although vendor competition is on the rise right now, public procurement teams need to understand that engaging vendors and diversifying their supplier base in new and creative ways is critical to overcoming supply shortages, awarding contracts within project deadlines, and stimulating local and national economies. 

See it in action: How Louisville Metro Government is innovating their vendor outreach

To meet these needs and overcome these challenges, procurement teams are intentionally engaging new and existing vendors in creative and innovative ways.

In our State of Public Sourcing report, we covered this story from Joel Neaveill, Director of Procurement for the Louisville Metro Government:

“Our vendors were affected—the ones that we usually go to for supply were completely out. So you have to turn to others and be a little more creative. In terms of diversifying the supplier base, we found that through this emergency, we’ve been able to bring on new vendors that we haven’t dealt with before.

“Our local economy, like everyone’s local economy, is just hurting so much. The restaurant and hospitality businesses are hurting. Through this emergency, we’re turning to them to help supply part of the response to the emergency. We’re feeding local seniors who can’t get out of their homes by turning to local caterers to help with that. We’ve launched a program to help first responders who are healthy but can’t return back to their homes in fear of infecting them, so we’re tapping into the hospitality sector, the hotels, to implement those programs. We’re also providing face covers for all 5500 Louisville Metro employees, and we had those custom-made from a sewing shop in central Kentucky. We’re helping to stimulate the local economy through this emergency.”

“We also have a list of minority- and women-owned businesses that, as part of the incident management team, we look through an equity lens—how are we equitably responding to this so we don’t have disparate outcomes?” 

The good news is, as COVID-19 continues to impact the public sector, vendor competition is on the rise. That doesn’t mean it’s time to hit pause on intentionally engaging and diversifying your vendor pool; in fact, using competition to drive better value for your bids and RFPs will only become more and more important as public agencies prioritize cost savings and re-evaluating budgets. Agencies that can develop innovative solutions now will be the ones to weather the forecasted economic blows in the next months and years.

For more insights on how public procurement teams responded to COVID-19, and how these lessons learned can help prepare your organization for the future, download your copy of the State of Public Sourcing: COVID-19 Edition.

Digital procurement tools can empower your team to reduce costs and drive best value for your agency by streamlining operational tasks, increasing vendor competition, and fostering better stakeholder collaboration. And as many teams work in a remote environment, having the ability to conduct all procurement tasks online is more important than ever. But with COVID-19 leading to tightened budgets and a focus on cost savings in the public sector, is now the time to advocate for procurement software? 

In our latest State of Public Sourcing Report, we dug into first-party data on how COVID-19 and remote work were impacting public procurement teams. We came away with two findings: 1) Public agencies are recognizing the role procurement plays in a crisis, and 2) public agencies are open to investments in technology—particularly digital procurement.

Let’s take a closer look at how we came to those conclusions, and why they point to the fact that now is, in fact, the right time to advocate for procurement technology. 

Public agencies are recognizing the role procurement plays in a crisis

When COVID-19 first hit North America, we saw firsthand from our clients that public procurement teams pivoted their efforts to run more urgent bids with shorter timelines. Our data showed that the average organization was running 2.5 RFP project types and 4.3 non-RFP project types (such as price-driven bids or invitationals).

Procurement teams have been doing what they can to streamline these projects and get emergency supplies to the frontlines quickly and compliantly. RFP projects have gone from having an average of 4.46 evaluators to 3.8 evaluators—a 15% decrease. The average number of pages per vendor submission went from 207 to 156 (25% decrease), likely because procurement teams are reducing and re-prioritizing criteria so that proposals can be submitted by vendors and scored by evaluators more quickly. 

To meet their constituents’ new and unexpected needs at this time, while managing supply shortages, creativity is a critical skill for procurement teams. One of our favorite stories covered in The State of Public Sourcing Report is from the St. Joseph’s Health System. When long-term care facilities across the country moved from providing meals in a dining area to individual rooms, there was a nationwide shortage of overbed tables. St. Joseph’s Health System overcame these challenges by sourcing TV tables instead in order to meet this unique need.

In times of crisis, constituents look to their government, and procurement is the driving force in practically ensuring people get the goods and services they need. Public agencies are recognizing procurement’s role not just as an operational process, but as a strategic partner, especially in times of crisis. 

Public agencies are open to investments in technology—particularly digital procurement

Compared to last year, public organizations are conducting 37% more telecommunications bids and RFPs.

Educational institutions and municipalities in particular are investing in telecom software at an unprecedented rate. Many K-12 and higher education institutions brought learning online in March and April, resulting in a 219% increase in telecommunications bids and RFPs. Municipalities, similarly, saw a 118% increase in telecommunications bids as local governments adjusted to a new remote work reality.

Although public agencies may have previously viewed IT and software as a “nice to have” rather than a business-critical expense, as many organizations have had to make the jump to remote work, software services that enable remote productivity and communication have become critical to ensuring business continuity.

Additionally, our State of Public Sourcing Report found that 73% of procurement professionals said COVID-19’s effects caused their organization to realize how vital digital procurement is, and that their organization will continue to make it a priority. 

Not only are public agencies recognizing the power of software to meet their constituents’ needs during times of crisis, but there is a new understanding of the role digital procurement has in the public sector. This presents a unique opportunity for procurement teams like yours to advocate for the digital tools that will future-proof your processes for any future disruptions.

The role of procurement has never been more challenging; at the same time, the importance of procurement has never been more in the spotlight. Amidst this newfound appreciation for procurement’s role in a crisis, as well as public agencies’ changing mentality towards the business-critical nature of digital tools, now is the time to advocate for the procurement software that will help you streamline your bids and RFPs, drive connection between procurement and the rest of your organization, and access benchmarks and templates to make more data-driven decisions.

For more data and insights on how your North American public procurement peers have responded to COVID-19 and remote work, download your copy of The State of Public Sourcing: COVID-19 Edition report.

“You can’t improve what you don’t measure” – Peter Drucker 

In a time of constricted budgets, reduced resources, and prioritized emergency spending, it’s important that your procurement team is performing to the best of their abilities. However, it’s hard to know how your team can improve if you aren’t monitoring the data and trends of your department and individual contributors. 

To uncover the procurement KPI’s that will improve your team’s performance, ask yourself: Which of your departments has the longest average time-to-award? Which buyer has the lowest vendor engagement? Which projects saw the greatest savings compared to last year? If you don’t know the answers to these types of questions, don’t worry, you’re not alone. That’s why we’ve narrowed down the top procurement KPI’s that will empower your team to improve—and how Bonfire Strategic Sourcing Software can help.

Procurement KPI #1: Project Components

Project components—such as the requested information, criteria weighting, or the number of evaluators and vendors involved in each project—are vital components of RFx events. These project components will often vary depending on the project type (ITB, RFQ, RFP, etc.) and therefore are delineated as such. With Bonfire Insights, you can determine if your results are aligned with your goals—or if there are problem areas that need addressing. 

Beyond analyzing the trends of your internal projects, you can take your analysis a step further by comparing your typical project setup against our database of 40,000 procurement events through our latest Benchmarking feature. Benchmarking allows you to see how your peers in procurement have set up similar projects for the same category, including data on project timelines, criteria weighting, vendor engagement, and requested information, as well as view RFx documents of comparable opportunities.

When it comes to selecting your project components, decisions made early-on can have long-lasting impacts throughout the lifecycle of the project. For example, while criteria weighting plays a significant role in which vendor will be selected, we also know that it can be a deciding factor on whether vendors decide to submit or not. Therefore, it’s important to make these decisions (the “who, what, and why” of your project) with confidence and conviction.

Procurement KPI #2: Timelines

Project timelines can be a critical indicator of how efficient your team is performing.  When deadlines are tight, and end-users request goods and services to be delivered as soon as possible, time-to-value is imperative.  

 To optimize your timeline, it’s important to investigate the details. For example:

• Which stages of your projects are taking up the most time? 
• Are your price-only bids being awarded quickly? 
• Which buyers are most efficient with their timelines? 
• Are your projects open for the appropriate length? 

 Each of these questions provide an opportunity for your team to improve.

To ensure your timeline goals are consistently met, the planning phase becomes crucial.  Utilizing Bonfire Intake allows you to monitor projects from the initial request, and integrate strategic planning during the initial phases of each project — ensuring that bids and RFPs are set-up for success.

 Procurement KPI #3: Spend and Savings

Project Spend and Project Savings are potentially the two most important metrics you’ll be reporting on as a team. While procurement teams are often viewed as the ones who spend the money, public agencies are increasingly discovering procurement’s potential as a resource to save money as well.

With the Bonfire Cost Management feature, you’re able to track your current spend, target spend, projected budget, and percent savings. These metrics can be reported and visualized for each individual project, or by project type, buyer, and department. 

 A note on savings:

With primary goals of transparency, risk avoidance, and best value, public procurement teams often lack the single-minded focus on cost savings of their private sector peers. Nevertheless, public procurement teams have a significant role to play in optimizing spend for their organizations. Based on our State of the RFP Report (2019), we uncovered some key metrics that help determine how to save money when running an RFP:

•  Across 2019, there was an average of 34% difference between the highest and lowest priced vendors in a given RFP
•  One additional vendor increased the price spread by 3% on average
•  The difference between the winning vendor’s price and the average proposal price for each RFP was greater than 20%
•  BAFO (Best and Final Offer) opportunities have been shown to result in an average of 12% savings when incorporated into a regular RFx event.

Procurement KPI #4: Sustainability

Does your organization value environmental initiatives? Procurement workflows that rely on physical documents and scorecards can lead to a lot of paper waste. By digitizing your processes through an eSourcing solution like Bonfire, you can positively contribute to your organization’s sustainability mandate. Bonfire even tracks the number of printed pages your department has saved over time. For example, Ventura County has eliminated 170,000 pages of paper since implementing Bonfire, saving them significant storage, filing, and paper shredding costs.  

Ready to start tracking the procurement KPIs that will take your team’s performance to the next level? Try Bonfire for free to get started. 

Already a Bonfire client? Bonfire Insights is free and available to all Bonfire users.  To learn more about utilizing Insights to empower your team, reach out to your representative or [email protected] today!