In some countries the use of competitive tendering is mandatory for government agencies. Closed competitive tendering is where the invitation to tender is issued to a predetermined, or restricted number of suppliers. This method is most commonly used in government organizations.Ģ. Open competitive tendering is where the invitation to tender is publicly available for all interested suppliers to respond. Competitive tendering can be broken into two main types:ġ. In some countries the tendering process is called "bidding". The losses would be one of those unknowable figures".Ĭompetitive tendering involves a purchasing organization advertising business and requesting tenders to supply that business. It destroys any possibility of a good relationship between customer and supplier. Most relevant is Dr Deming's comment in The New Economics that states "The idea of several suppliers for any one item, competing with each other for lower prices (as advocated by some authors), makes good talk, but as a practical matter it is only talk, even under long term contracts. Discuss potential barriers to implementation of the improved procurement model.ĭr Deming wrote important sections on customer supplier relationships. Discuss who is generally blamed when competitive tendering produces bad results.ĥ. Outline the disadvantages of competitive tendering.ģ. List the perceived advantages of competitive tendering.Ģ. This paper will explain why the result of competitive tendering is often inferior, poor quality product or service. This paper challenges that belief and shows why competitive tendering is rarely an efficient and effective procurement method. The idea behind competitive tendering is that it forces suppliers to compete and consequently the purchaser will gain better "value for money". Why Competitive Tendering Fails to DeliverĪuthor's email - tendering (bidding) is a widely used procurement method.
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