Answer to Question #176956 in Economics for Charmaine Nompilo Zuma

Question

Discuss the source you would utilise to increase the pool of potential suppliers who be invited to tender

Answer 1

Organization of purchases is aimed primarily at ensuring the interests of the business and helps to receive better services, goods, and also to save money. Often the customer gets the feeling that he chooses suppliers and the last word is always with him. But this is not the case, since the supplier also chooses a customer for himself and can always simply refuse to participate in a particular procurement procedure.

To attract and retain quality suppliers, customers need to properly build relationships with a range of potential suppliers, motivating them to fruitful cooperation. Any supplier wants to maximize profits by generating additional revenue and at a reasonable cost (customer acquisition cost).

And since he wants the cost of attracting and accompanying a customer as a client was not higher than the average, then the customer must try to reduce the cost of participating in the bidding of the supplier he is interested in.

This can be done by automating the procurement activities of the enterprise, coupled with a couple of simples, but proven effective management methods. At the same time, the customer optimizes his resources for organizing and conducting purchases in parallel with the creation of acceptable conditions for the suppliers he needs.

Automation of procurement means the creation of a certain system (electronic trading platform, SRM, etc.), which is able to solve a lot of tasks, including planning procurement, holding tenders, monitoring the execution of contracts, etc. I will dwell on the methods of attracting and retention of suppliers at the stage of preparation and implementation of procurement procedures.