According to research from Compass Management Consulting, Public sector outsourcing contracts are 75% above the going market rate.
Public sector procurement focus is to drive costs down meaning suppliers feel pressured into lowering their bids, sometimes to an unprofitable level in the early stages in the contract, and often try and claw back their initial loss by increasing prices.
Many suppliers price their contract up to 18% below the market rate. From the first day of the contract they increase the price, with many getting 30% above the market rate.
Even the threat of retendering is often meaningless as the power is embedded with the supplier.
These issues can be controlled through the use of E-procurement applications such as Claritum.
Claritum’s Contract Pricing capability enables print buyers to enforce pre-negotiated prices from approved suppliers for a wide range of print specifications. This ensures the agreed pricing is maintained for the life of the contract and will not be flexed up at the supplier’s discretion.
Claritum’s Print Procurement software also has the capability for users to “spot buy” printed materials, through both instant estimating and Fastrack RFQ platform.
Instant Estimating interrogates thousands of options at hundreds of suppliers to deliver optimum prices within seconds. Suppliers can flex their prices up or down to reflect changes to capacity on an hour by hour basis, if required.
For more complex specifications, Claritum’s Fastrack RFQ profiles supplier capabilities against the production requirements to ensure only appropriately profiled suppliers are sent a request-for-quote. Spot prices can often be lower than contracted prices, comparing both will give the buyer the best price possible.
The system controls the complete processes of quoting, ordering and invoicing meaning suppliers can’t quote low then add additional costs at invoice stage.
Claritum’s vendor management capability enables real time monitoring of supplier performance against SLA’s or KPI’s. The solution enables buyers to rate performance against criteria such as quality, response times, adherence to delivery schedules and compare quote, order and invoiced costs. Not only does this ensure supplier performance is monitored on a job-by-job basis, buyers can assess changes in performance over time.