developing effective and efficient bids - school …...•use features of excel, word and adobe pdf...

Developing Effective and Efficient Bids

Timothy W. Goossens, SNS

July 11, 2016

Key Topics

• Research your market

• Properly plan and manage your bid

• Use technology

• Have well designed forms and documents

New Hampshire Buying Group

• Began in 1998 with 7 districts and about 6,000 students

• The group now represents 48 districts and over 80,000 students

• Our first bid was a single page and 32 items

• We now produce a 350 item grocery bid, a non-foods (paper) bid, and an ice cream RFP

• Began in 1998 with 7 districts and about 6,000 students

• The group now represents 48 districts and over 80,000 students

• Our first bid was a single page and 32 items

• We now produce a 350 item grocery bid, a non-foods (paper) bid, and an ice cream RFP

• In 2015, we started a new group in Northern NH, the North Country Buying Group

Key Assumptions

• Primary goal is to increase competition thereby ensuring the best possible value for your program

• Bidding to distributors

• Properly developed bid will be more attractive to vendors and more useful to districts

• Fixed price for a period of time • Escalation and rollover or extension language • Both too short and too long time periods can be

disincentive

• All or nothing bottom line award

Know your Market

Why is this important?

• You are trying to have as many competitive bids as possible. In order to engage the maximum number of distributors, you need to consider the following when planning your bid:

• Ability to expand

• School market participation

• Delivery footprint

• Experience with other groups

Know your Market

• Schools are more and more of a specialty segment

• Distributors can no longer casually sell to schools – they are either in or out of the school market

• Major investment in people and inventory

• Crucial to know your potential distributors to know how aggressive you can be

• Want every possible vendor that can reasonably participate to do so

Know your Market

• Bid release should not be the first time they learn about you

• Meet or communicate with all vendors regularly so they stay informed about you

• Do not share any information from vendors

• Do not discuss upcoming bid specifics

• Get references

Get references

then call the others!

Ask Questions

• What impact has the HHFKA had on your business? • (Do you know what the HHFKA is?)

• What are your biggest selling school items?

• What schools do you currently service? • (Are you currently in the school market?)

• How many items do you stock that are eligible for NOI? • (Do you know what NOI is and are you approved?)

• What is your delivery footprint? • (Can you service all of our schools?)

Vendor must:

• Provide one primary contact person

• Train on ordering system

• Guarantee uniform pricing for all members

• Deliver to all members

• Stock all items unless agreed upon in advance

Know your Market

• Knowing the vendors in your market, their business focus, service area and ability to expand are key factors that affect how you plan and manage your bid!

Plan and Manage the Bid

Plan and manage the bid

• Bid, RFP or both?

• Line item or bottom line bid

• Bid to distributors for delivered price

• Manufacturers and distributors separately

When to use a Bid:

• You want distributors to bid on a specific list of items that you have established

• OK to use hard specs

• The items you want are available from multiple vendors

• Price is the main determining factor in the award

• “tell” more than “ask”

When to use an RFP:

• Specific brands or items not as important to members

• There are few common items between vendors

• You want to consider factors other than price in the award

• Equipment terms

• Credit terms

• Delivery frequency

• “ask” more than “tell”

Bottom Line award

• Less work

• More aggressive bidding - vendor knows potential volume before award

• Vendor must bid on every line

• Single vendor on site

• Easier to meet minimums

• More vendor loyalty

Line Item award

• Vendor unsure of volume - potentially higher pricing

• Vendor may withdraw if not enough volume

• Have to deal with multiple vendors

• May have more small deliveries

• Difficult to meet minimums

• Greater administration

Bid directly to manufacturers

• Must have significant volume

• Good option if group cover a large geographical area

• Distribution cost is procured separately

• More transparency

• More distributors to manage

• More difficult to get competition at manufacturer level

Bid to Distributors

• Better for smaller volume groups

• Distribution cost is included in price

• Usually one winning vendor for a bottom line bid

• Easier to create competition among manufacturers if there are multiple approved items

Item Specifications

• Several different ways to spec each line • Hard Spec

• Multiple Spec

• Distributor’s Choice

• Product Descriptions

Hard Spec

• Specific brand and item number

• You know exactly what you are getting

• Sets standard for alternate requests if allowed

• May be a new item for some distributors

• Distributor can follow Alternate item process

• Group decides if an item is equal

Multiple Spec

• More than one brand and item number per line

• Retain control, but gives vendors some latitude

• Creates competition at the manufacturer’s level

• Offers a good mix of control and flexibility

• Offers items distributor may already stock which is huge for them

• Make sure items are actually comparable in terms of nutrition, CN etc.

Distributor’s Choice

• Distributor can bid any brand

• Usually results in good price for the line

• Use when specific brand is not important

• May be used in conjunction with some minimum standard or grade

• Allows distributor to supply house labels

• Potential quality issues

• Need way to adjust for different pack sizes in calculation

Remember…

• This will most likely be a Formal purchase procedure • Must comply with all Federal, State and Local

regulations • 7 CFR 210 • First Choice Manual • ICN • Your state purchasing department • Your state CN agency • Your district’s business office

• Small purchase threshold (Simplified Acquisition Threshold (SAT)) Federal $150,000 - states or local may be less

• Micro purchase for off bid items

Things to Avoid

• Having every item you use on the bid regardless of volume

• Too many low volume specialty items

• Restrictive terms or language • Vendor will deliver to all districts in the state by 7 am

Monday morning

• There will be no opportunity for price changes regardless of market conditions

• There will be no minimum delivery threshold

Things to avoid:

• Too many flavors of similar items

• Term too short or long

• Volume Issues – drop size

• Fad items – come and go during bid cycle – interest and volume can wane

Things to avoid:

• Too many flavors of similar items

• Term too short or long

• Volume Issues – drop size

• Fad items – come and go during bid cycle – interest and volume can wane

• Fixed price on volatile items

Sept. Oct. Nov. Dec. Jan. Feb. March April May June

Cost of Item

Drop size is key!

• The highest minimum amount for free delivery will be no more than $500.00 AVERAGE per district, per delivery day. For example, if a district has 3 drop locations on a specific day, one at $1000, one at $300 and one at $200, the average drop on that day for the district is $500

District average drop size =

The key to keeping a bid manageable,

attractive and efficient is to have a

Process for evaluating new bid items!

Proposed New Item

Comparable to existing?

Nutrition and CN OK?

Fad Item?

Volume?

Price Similar?

Nutrition and CN Similar?

Price Lower?

Add as new line Do not

Add as alternate

Replace Line

Plan and manage the bid

• Evaluate projected usages vs actual to determine viability of bid item

• Bring in new mid year items as social orders if volume in uncertain

• Add / delete items mid year or between years

• Process for deleting slow moving items

• Must find balance between getting the new items we want and driving everyone nuts

Use Technology

Use technology

• Use features of Excel, Word and Adobe PDF as much as possible

• Bid becomes groups working document for the bid cycle

• Consider a website and webmaster • Disseminate information to vendors

• Communicate and share within group

• Marketing tool for prospective members

• Storage for previous bid information

Bid Documents

• Bid Specifications • Key Bid document

• Details expectations and responsibilities

• Used as a fall back in case of issues

• Escalation, nonperformance, delivery Nutritional information requirement HACCP policy

Bid Documents

• Signature documents distributor read and will comply with Bid Specs BEFORE submission

• Award Page after bid is awarded

• Contractor’s Certificate of Eligibility – debarment

• Distributed with bid in a zip file

Bid Documents

• Bid Specifications – covers all the details

• Submission process overview - What to submit and how to submit it

• Debarment statement (Contractor’s Certification of Eligibility)

• Signature or Acknowledgement of Terms

• Full Member Listing

• Alternative request process

• Alternative Request submission

• Special Order process

• Special Order submission

The Bid Tabulation worksheet

• Line numbers

• Merged cells

• Brokerage info

• Protected cells and messages

• Case size calculation

• Data validation

• Hyperlinks for nutritional and CN information

• Grouped columns for items entered after award

Take Aways

• Know your market

• Properly plan and manage your bid

• Use technology

• Have well designed forms and documents

Thank You!

Timothy Goossens, SNS

www.thebuyinggroup.org

North Country Buying Group

www.ncbg.weebly.com

www.food4schools.weebly.com

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