RFP and bid management

A case study of a successful negotiation

When a large US-based aircraft manufacturer resolved to outsource parts marketing and logistics for one of its components, our client was presented with an opportunity to bid for this $50 million contract. The US company required the successful service provider to purchase its existing parts inventory, and manage the ongoing supply.

Though it had no doubts about its capability to provide the service, the New Zealand company had no experience in the management of a large-scale RFP process involving a major global company, and largely unknown global competitors. It recognised that time was its biggest unknown, and it was most at risk if it could not manage the process effectively.

Analysis and assembly of a vast amount of data required to support the RFP could take a year. It was time the company did not have, when it already had a core business to operate, and there was a two-month deadline on the process.

Our client knew it needed help. But in investing in consultancy support, the company was not just seeking a contractor for work it could do itself if it had the resources. It wanted to invest in a “Ferrari” – a partner that it was sure could get it first across the line.

The process began with an indepth planning session with key management. The outcome of this was a clear understanding within the group of the company’s strategic position in relation to the competition, and the negotiation strategies that needed substantiation.

Over a six-week period, we developed the data necessary to build a comprehensive RFP that in the end was far ahead of the competitors. Indeed, the US company told our client that it was astonished with the depth and quality of the information we had presented. For every criteria, the RFP response detailed not just the specific operational processes that would support the desired outcome, but at a broader level, how its HR programmes, health and safety management, and corporate values, would add to the overall service quality. Strategic Sourcing sold the company as a service provider it simply couldn’t turn down.

For the client, enlisting our support was a worthwhile investment that is paying off in a far greater way than initial expectations.

Key benefits

The quality of its process:
Our client became the technical information provider, we took away all responsibility for research and analysis. All information – and learnings - were documented.

The speed of the process:
Preparation of the RFP took six weeks – it would have taken the company 12 months to manage it itself.

The depth of analysis around the offer price for the inventory:
We crunched a range of “unclean” data and at the end of the process the company clearly understood where the value lay. That made our client a much better negotiator when the time came to agree the price for the inventory.

Understanding of the company’s business and strategic intent:
Winning the contract has added a $50 million revenue stream. An additional benefit comes in the flow of US dollars into the business. The company is not just making a profit out of the parts, the wider business now has a lot more options in how it manages foreign exchange.

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