Objective 2.2

Question 1

When a procurement professional has conducted due diligence to evaluate and choose suppliers, what does the next stage in the procurement cycle include?

Answer 1

To issue the request for quotation (RFQ) or invitation to tender (ITT)

Question 2

What is the aim of a RFQ and ITT?

Answer 2

Although different in approach, both RFQ and ITT have the same aim: to establish which supplier can offer the goods and services for the best value for money.

Question 3

What is the difference between RFQ and ITT?

Answer 3

ITT
- More formal
- Generally used for complex requirements
- More detailed than RFQ
- Medium to high value contracts

RFQ
- Less formal
- Generally used for less complex requirements
- Less detailed than an ITT
- Low to medium value contracts

Question 4

Why should an organisation advertise the opportunity to work with the buying organisation?

Answer 4

Likely to increase the number of suppliers increasing interest. This will help to ensure that the best value is obtained. By limiting the supplier base, the opportunities for comparison are lower.

Question 5

What is a downfall of advertising opportunities?

Answer 5

Leads to increase in expressions of interest which in turn generates more work in terms of selection so more resources are required

Question 6

Ways organisations advertise their requirements depends on what factors?

Answer 6

• value of contract (e.g. higher value contract could justify a higher marketing budget).
• Strategic importance of contract
• Urgency if contract
• Resources available

Question 7

Where are advertisements typically placed?

Answer 7

• professional magazines
• business journals
• newspapers
• supplier websites
• specialist tender portals

Question 8

How do public sector organisations advertise their requirements?

Answer 8

The public sector has tools and systems available. For example, a centralised, government-sponsored procurement portal or official databases. This allows organisations in the public sector to easily reach the marker and promote the fact that they have contracts available on which to receive bids.

Public sector organisations advertise their requirements on their own dedicated public sector procurement websites as well as regional, national and continenta portais. In England and Wales, for example, Contracts Finder gives suppliers the opportunity to search for information about contracts with the government and its agencies worth over £10,000.

Question 9

How do private sector organisations advertise their requirements?

Answer 9

Private sector organisations
advertise their requirements less frequently. The private sector is not accountable in the same way as the public sector. Public sector organisations, which are funded by taxation, need to be seen to consider every option for supply and to invite as many suppliers as possible into the process. They are required by the regulations to advertise.

Question 10

What important information should be included in advertising?

Answer 10

• Awarding body/company - which organisation will be awarding and managing the contract.
• Overview of awarding body/company - Brief description of the type of organisation, history, vision, and mission.
• Project description - details of the requirements of the contract.
• Experience/qualifications/accreditations - Any specific requirements that are critical to the awarding of the contract.
• Deadline - The date and time by which bids must be received.
• Contact - Details of a contact for any queries.

Question 11

What is request for information (RFI)?

Answer 11

A document used to gather information about suppliers and their capabilities prior to a formal procurement process.

Question 12

How does RFI help procurement professionals?

Answer 12

A request for information (RFI) is a standard process used within procurement.

It collects information from potential suppliers to help the buyer evaluate a potential supplier’s suitability to work with the buying organisation.
RFls are sent to many potential suppliers across the market to get as much data as possible. This helps the procurement professional to create a strategy on how to carry out the procurement.

Question 13

What does the RFI process look like?

Answer 13

Buyer
- Procurement professional seeks information from potential suppliers with the objective of creating a list of capable suppliers.

Supplier
- Suppliers submit response in the required format answering the questions and providing relevant information to highlight it’s suitable.

Buyer
- procurement professional receives the RFI response and evaluates the information to pre-qualify or reject the supplier.

Question 14

Do potential suppliers have to respond to RFI?

Answer 14

No

Question 15

How might a buying organisation send out a RFI?

Answer 15

A request for information may be sent in the form of a letter or e-mail to a Potential supplier, simply asking for details about them and their capabilties, or it may be a more formal document with a lot of questions.

Question 16

Is a pre-qualification question a form of RFI?

Answer 16

Yes

Question 17

What does RFI typically gather information on about potential suppliers?

Answer 17

• financial position
• capabilities
• capacity
• mission and vision
• ethical and sustainability policies

Question 18

The information gathered from RFI’s is useful to procurement professionals as it generates what following data?

Answer 18

• number of capable suppliers
• number of suppliers with capacity
• amount of supplier competition
• amount of product/service competition
• acceptable lead times
• any market trends
• any expected changes in the marketplace

Question 19

What can information received in response to RFI enable procurement professionals to do?

Answer 19

from the information received in response to RFls, the procurement function can create a suitable strategy for sourcing and begin to plan for the negotiation. If the information shows that there is a high level of competition in the marketplace, they can build a strategy for negotiation on the fact that the buyer has the power. fan agreement cannot be reached, the buying organisation can walk away and tiny to create a contract with another pre-evaluated supplier.

Question 20

Does a PPQ or RFI have to be issued before a RFQ?

Answer 20

No, on lower value contracts, RFQ’s can be issued as the first step. However, all ideally all suppliers should be ore-qualified, so RFQ’s can be sent to any suppliers that are left in the process after the responses from RFI’s have been received and evaluated, that is, to the pre-qualified suppliers. It asks them to provide a cost for supplying goods and services documented.

Question 21

RFQ can contain what following information?

Answer 21

• Specifications
• Technical Drawings
• Samples
• Quantities
• Delivery requirements
• Length of contract
• Terms and conditions
• Details of how the suppliers quotation will be evaluated

Question 22

What does a RFQ attempt to assess?

Answer 22

An RFQ attempts to assess which supplier can achieve the Five rights of procurement for the buyer’s defined need, in the most cost effective way.

The right quantity
The right quality
At the right time
From the right place
At the right price

Question 23

What are the 5 rights?

Answer 23

The original
‘five rights’ of procurement are traditionally: the right quantity, the right quality, at the right time, from the right place, at the right price

Question 24

What are the purposes of RFQ’s?

Answer 24

• To align corporate strategy: RFQs form part of the procurement process which relates to organisational objectives and values

• To ensure a fair and transparent process: RFQs ensure that all suppliers receive the same information and have the same chance to win the contract. An RFQ is issued to potential suppliers so they can all submit bids on the same basis. This means the buyer can carry out a consistent evaluation

• To allow opportunities for many suppliers to bid: as a standard document, RFQs enable many suppliers to receive them and provide a quotation

• To enable procurement professionals to evaluate the market and obtain the best value for money: by receiving responses to RFQs, procurement professionals can establish trends in the market, determine levels of competition and ensure they achieve the best deal

Question 25

What is the problem if buyers use the same suppliers all the time?

Answer 25

There is a risk that the suppliers may become complacent and the best value may not be achieved.

Question 26

Why might procurement professionals carry out regular benchmarking through comparing quotations received in response to RFQ’s?

Answer 26

This can help them to understand the current market situation and to compare the prices that they are currently paying against what the competition could offer.

By conducting regular benchmarking and being open about it, long term suppliers can be made aware that they should not be complacent and that their prices need to remain competitive to avoid the buying organisation moving the contract elsewhere.

Question 27

What is an advantage of moving suppliers periodically?

Answer 27

Moving suppliers periodically (if possible and if acceptable within the organisational strategy) can promote innovation and help the buying organisation to develop in areas it is not strong in. Other suppliers may be able to bring new ideas, improve processes or re-engineer products to add further value to the organisation.

Question 28

What are the difference if RFI and RFQ’s?

Answer 28

RFI
- Objective is to learn about suppliers
- Sent to large and varied supplier base
- Helps ti develop strategies
- Relatively informal processes
- Generic

RFQ
- Objective is to obtain costs for comparison
- can be sent to pre-qualified supplier base
- helps to achieve best value
- structured formal process
- specific

Question 29

What following examples are services that are often put out to tender?

Answer 29

• IT contacts
• HR contacts
• Construction contracts
• Healthcare equipment contacts
• Cleaning contracts
• Maintenance contracts
• Catering contracts
• Office supplies contracts
• Security contracts
• Consultancy contracts

Question 30

Explain the tender process?

Answer 30

(1) Develop tender and evaluation criteria
(2) Send out RFI to all potential suppliers
(3) Create a pre-qualification supplier list
(4) Issue an ITT to pre-qualified suppliers
(5) Hold tender briefing cross-functional meeting
(6) Receive bids from suppliers and evaluate
(7) Create a supplier shortlist from the bids
(8) Carry out further due diligence
(9) select the best value bidder
(10) offer the contact
(11) supplier accepts/rejects contract
(12) award the contact

Question 31

What is the difference between a RFQ and ITT that procurement professionals should be aware of?

Answer 31

When sending out an RFQ, procurement professionals are aware of their exact need. When sending out an ITT, procurement professionals are often more open to suggestions on how to carry out the contract in a way that constitutes the best value for their organisation.

Question 32

Which type of tendering process depends upon several factors.

Answer 32

• Does the procurement professional function know it’s potential supplier base?
• Does the procurement function want to increase its potential supplier base?
• Does the procurement function know exactly how it wishes to achieve delivery of the contract?
• Does the procurement function assume that there will be limited interest in the tender?

The answer to these questions help to choose which type of approach is best to tendering.

Question 33

What departments may need input when creating an evaluating a tender?

Answer 33

• finance
• logistics
• engineering
• sales
• operations

Question 34

Why is it beneficial to involve other departments in the tender process?

Answer 34

By involving other departments, the procurement professional can better understand the services required and have help available to answer any technical queries that may arise. A team that involves people from different departments within an organisation is a cross functional team.

Question 35

What is a cross functional team?

Answer 35

Teams that involve individuals from different departments who work together towards a common goal. This could be a group of
people working on a defined project who come from different functions or departments of the company. It can also include members who are from outside the company, such as suppliers

Question 36

Can external stakeholders be involved in cross functional teams?

Answer 36

Yes, in a food manufacturing company may include a sample panel of customers to test, rate and give feedback.

Question 37

What is general data protection regulations (GDPR) mean?

Answer 37

European regulation which sets out how personal data must be managed, applying to any data relating to any person in the EU - and the UK following Brexit - whether they are a European citizen or not, and to all organisations doing business in Europe, regardless of the nationality of the business ownership

Question 38

What is the impact of timescales in public sector procurement?

Answer 38

in the public sector however, there are often a number of rules that define what timescales are appropriate when tendering, and these can vary from country to country. The UK Public Contract Regulations 2015 specify the minimum time periods within which the buyer must apply at different stages of the procurement process.

These timescales exist to allow all tenderers a fair and reasonable amount of time to prepare and submit their bids. Buyers must plan their tenders around these timescales to be compliant under EU and UK law. Buyers are able to reduce timescales if tenders are being received by electronic submission exclusively (in the interest of fairness to all tenderers), or if a prior information notice is released with the advertisement in the OJEU.

Question 39

What is the impact of timescales in private sector and non-for profit procurement?

Answer 39

when sourcing, the purchasing organisation will be planning its procurement activities in line with its schedule (production, sales, etc.).
Naturally, this schedule will be built around specific deadlines that need to be met. Private and not-for-profit sector organisations are able to define their own sourcing processes, meaning it may be possible to carry out tendering activities that meet the deadlines, in order to save money and meet schedule demands.

Question 40

What is conflict of interest?

Answer 40

Where an individual is unable to remain impartial due to personal, professional or public relationship.

Question 41

What is a key factor of ethical behaviour?

Answer 41

Acting fairly and transparency

Question 42

Give an example of a best practice tender arrangement.

Answer 42

1) Preparation - Detailed and clear specifications are prepared by a cross-functional team, setting out exactly what is required of the supplier so that bids can be fairly evaluated.

2) Approach - Tendering process is chosen and should be justified.

3) Timescales - Decisions are made on how long the process is going to take. Dates for the PQQ’s ti be sent and received, the invitations to tender etc.

4) Advertising - the opportunity to bid is advertised carefully, choosing locations in line with any regulations or legislation

5) Documentation - the documentation to be sent with the invitation to tender is collated

6) Consistency - All suppliers receive the exact same documentation at the same time which includes responses to all questions

7) Submission - All bids are submitted and received by the buying organisation by the set deadline. Any that arrive after that date should not be included in the tender process. All bids that have arrived by the deadline are opened together.

8) Analysis - Careful and stringent analysis is carried out, in accordance with the criteria outlined at the preparation stage.

9) Decision - A decision is made based on the criteria, which results in the most suitable supplier and best value bid being chosen.

10) Verification - Final supplier verification is carried out if required, i.e. requesting samples, prototypes or demonstrations.

11) Negotiation - Final arrangements are agreed and any fine-tuning carried out. Once the best bid has been chosen, post tender negotiation (PT) can take place to see if there is any room for further improvement in the offer.

12) Contract Preparation - The contractual documentation is drawn up in accordance with the bid and any amendments that have been agreed.

13) Contract awarded - The supplier is awarded the contract and both parties
Sign

14) Notifications - Any notification that needs to happen to comolv with internal procedures or regulations should take place, such as advising which supplier has been awarded the contract.

15) Feedback - The unsuccessful suppliers are informed and debriefed followed by a standstill period.

16) Debrief - There is an internal discussion of how the process ran that considers any improvements that could be made in the future.

Question 43

What is post tender negotiation (PTN)?

Answer 43

Negotiation that occurs after the best value supplier has been chosen. This is to see if any further improvements can be made before the contract is awarded