Competitive Dialogue – it isn’t as challenging as you may think
The reality is that competition is the fundamental basis of our economies which allows businesses who understand it to excel. Unfortunately, however, not all businesses understand how to leverage their unique attributes or service offerings resulting in missing out on opportunities and of course, some of that prosperity.
The benefits of undertaking competitive dialogue most visibly manifest in the hard dollar and time savings that accrue when this approach is deployed effectively towards large, complex procurements.
Competitive dialogue is not new. However, refinements to it continue to be made, but in simple terms, competitive dialogue is all about asking a small selection from your particular market to aid you in the development of your specification before you actually seek offers and quotes.
This is the activity of engaging the supply market early, which occurs before a formal tender is released, and lets you create the opportunity to co-develop or co-design potential solutions with a number of viable proponents simultaneously. This activity results in a deeper understanding of the technologies, options, innovations, and market from which you are seeking offers.
Through this process, suppliers will feel a keen sense of competitive tension given they know that the next step is to open a limited market tender only to those that have been engaging the market early. Knowing this, vendors will want to ensure that they can demonstrate their competitive advantage to impress and improve their potential to close a deal.
Undertaking competitive dialogue under this approach has numerous benefits. The free-flowing of ideas allows the design process to iterate more rapidly which significantly decreases project risk, increases costing and budget accuracy, and almost eliminate contracting challenges usually associated with more traditional tendering activities. Furthermore, it helps each party to be more accountable for their part in the process.
So, five key points about understanding competitive dialogue to note in closing…
- It’s a three-step procurement methodology – an expression of interest, followed by co-design and collaboration between supplier and vendor, followed by a closed tender with limited release.
- It only works if everyone shares timely and relevant information.
- Completion of a detailed specification or requirements definition is the key objective, which then generates a more refined tender and offers a request.
- The tendering party needs to absolutely ensure confidentiality of the process – especially all commercially sensitive information shared in good faith by suppliers.
- If you choose to deploy the competitive dialogue approach, be sure to see it all the way through so as not to lose the confidence of the suppliers in whatever market you are engaging.
Hopefully, this has been somewhat demystifying and perhaps even a little enlightening. We would love to hear about your experiences, so feel free to share your comments if you’re keen to discuss this further.