We’re finding that more and more procurement, especially government purchasing, is being done through panel-based arrangements...
...So, if you want to sell successfully, you need to understand how these work and strive to be included in what many term as ‘closed shops’.
What is a panel arrangement?
According to the Australian Federal Department of Finance, “a panel arrangement is a tool for the procurement of goods or services regularly acquired by entities. In a panel arrangement, a number of suppliers are selected, each of which are able to supply identified goods or services to an entity”.
Panels normally include a number of pre-qualified providers, who can be approached privately or by select RFQs to provide goods and services for a defined period, after which the panel is often ‘refreshed’ by going back to the public market.
Panels come in various shapes and sizes: some lock all selected panel members into set pricing and conditions; others comprise a shortlist of potential suppliers who will be required to bid for each order.
Why are they popular?
Panels are great for purchasers, because they only have to deal with their selected panel members. They also require less administration, reduce the number of times an organisation has to go to tender and generally achieve cost reductions, because they are predicated on competitive and volume-based pricing. Panels are also useful for regular volume-based purchases, where a single provider might struggle to meet the organisation’s requirements. In organisations with decentralised or centre-led procurement structures, panels also allow procurement professionals to ‘hand the deal’ over to the people in their organisation who can do the purchasing directly, allowing procurement staff to move on to their next challenge.
What are the implications for suppliers?
In all procurement, there are winners and losers. With panel arrangements, the losers know they haven’t made the cut, and there’s not much they can do to get back into the game. Failure to make it onto a panel is a double whammy, because losers don’t even get to see what business they’re missing out on. They just have to wait until the panel is refreshed - or quietly hope that the incumbent panel suppliers fall over or fail to deliver.
For winners, there’s still a degree of uncertainty. There’s no guarantee they’ll get any business. All they’re assured of is that they’re in the game. But most suppliers would rather know they’re in the wider squad than not having made the cut at all.
How can you make it onto panels?
Due to the constant pressure to consolidate and streamline purchasing, we’re seeing more organisations issue public invitations to appoint supplier panels in various categories. So, the first step to being selected is obviously knowing about appropriate opportunities as they arise and then throwing your hat in the ring.
The challenges of being selected onto any panel require the same skills and disciplines that apply to all tender submissions. You need to show your capability, a strong value proposition, a willingness to work with your buyers to meet their needs, and some degree of flexibility. You may even have to work with your competitors in some cases. And once you make it onto the panel, you need to be able to respond to requests quickly and efficiently - and be prepared to submit tenders/quotes when required.
So, what’s the bottom line?
The golden rule with panels is that you have to be in to win. But once there, you have to prove yourself worthy. Making it onto the panel doesn’t guarantee you’ll gain any business, but if you do, make sure you deliver. Do that and you’ll earn a reputation as a supplier of choice, which will open up more opportunities for you in the future!