December 8, 2017
By Jennifer Kim
In a tender process, a company would seek out multiple bids to fulfill requirements for a specific initiative. This practice is very prominent in healthcare, and heavily affects budgeting and supply chain management in multiple industries. Naturally, the most common difficulty as a supplier of tender process is the uncertainty of demand materialization.
Due to the design of the process, it is challenging to forecast the potential demand for the upcoming months. The large volume associated with each tender order, combined with a wildly fluctuating possibility of winning the bid, results in either overstaffing & excess procurement (conservative) or excessive overtime expenditure & express shipping fee (risky).
The best approach to managing the uncertain demand pattern is to develop a multi-factor model for predicting the likelihood of materialization. The selected factors for this model should be independent of other factors and have a material impact on the outcome of the bid. The developed model should be simulated using historical cases and vetted by seasoned experts prior to full utilization.
The tender simulation based on the developed scorecard should be managed in an up-to-date database of open, ongoing, and closed tenders. If the closed tenders were missed, the root cause analysis for the missed revenue should also be recorded to align the organization’s next steps to the needs of the market.