Years ago, suppliers and buyers lined up at auction houses to wheel and deal, negotiating in person to find the best product at the best price (for both parties). It goes without saying that the Internet killed the auction house for everyday B2B solicitation, but the model remained. Though negotiations were digitized and distant, most vendors and procurers underwent a manual, human-driven process. Over the past ten years, procurement has basically been an analog system managed digitally.
But artificial intelligence (AI), machine learning (ML), and automation are changing that framework in a way as dramatic as shifting from the auction block to a laptop. It's called e tender or e tendering, and it's changing the way companies manage their procurement cycle in a way that’s less time-consuming, stressful, and ultimately safer in many ways for all parties.
E-tendering has revolutionized the way businesses handle procure-to-pay processes. It is a digitized, streamlined, and efficient process that eliminates the need for time-consuming and error-prone paperwork.
But how exactly does e-tendering work, and what benefits does it offer? That’s what we will explore in this easy-to-understand guide. Let's delve into e-tenders and their benefits and discuss how to automate your electronic tendering process.
What is e-tendering?
E-tendering is an online process for submitting bids and proposals for goods, services, or projects. E-tendering is all about maximizing efficiency and transparency in the procurement process. It's a digitized approach to sourcing that involves publishing, inviting, receiving, and evaluating tenders online.
As referenced above, eTendering is a full transition from legacy procurement action (live negotiation or protracted back-and-forth) to an online AI-powered model. Instead of an auction block, vendors and buyers leverage a middleman hosting the e-tender systems. This is an important point – adaptation to the new model is simple, considering you don’t have to buy and install pricy hardware or navigate complex software systems. In most cases, the user experience is like you’d expect from any online transaction.
E-tendering covers the entire lifecycle of a standard tender but is automated. We’ll look at the nuts and bolts of how e-tendering works in a moment, but, in a nutshell, the procuring party submits standard documentation, and the e tender platform works behind the scenes to marry appropriate and qualified suppliers with that buyer while satisfying the spectrum of documentation and compliance requirements.
How Does e-Tendering Work?
E-Tendering allows bidders to submit information in response to a request for proposal (RFP) by a set deadline. It involves generating, exchanging documents with e-signatures and messaging, and evaluating suppliers for the procurement opportunity.
When soliciting bids through an e-tender platform, a procurer issues a standard request for proposal/quote (RFP/RFQ), an invitation to tender (ITT), or a notice inviting tender (NIT). Furthermore, a solicitor can prescreen applicants by including a pre-interview questionnaire and can often exclude certain attributes if the online procurement platform allows it.
Next, online tendering facilitates easy screening and engagement. Procurement employees can dig through documentation, run due diligence on the potential vendor directly from the platform, and contact vendors for further discussion. The days of digging through email threads and attachments to find a specific data point are gone, as the entire procurement lifecycle lives in one centralized hub.
Likewise, e tender or online tender platforms let reviewers “rack and stack” vendors according to their due diligence and what each vendor offers. This helps create a one-stop shortlist to easily compare choices or send up the chain to senior leaders for final approval.
Finally, with many online tender platforms, once the procuring party wants to pull the trigger on a particular vendor, the process triggers automatically upon approval. This includes sending or confirming final terms pre-negotiated alongside final documentation necessary for compliance and records management.
e-Tendering in the Real World
Web tendering is largely done at the highest levels, i.e., business-to-government (B2G) and enterprise business-to-business (B2B). Often large and inherently bureaucratic due to their scope, these entities typically have the greatest friction when managing procurement and bidding. To that end, online tendering is a game-changer for these large-scale operations.
B2G Web Tendering
Global governments are increasingly pivoting to electronic tendering platforms to manage bid solicitation. Since regulatory and legal concerns are paramount to government procurement, keeping the procurement lifecycle on a centralized, accessible, well-documented platform negates many of the headaches associated with legacy bidding systems. Likewise, a constant focus on cost efficiency means eTendering is a prime choice to reduce paper waste alongside countless saved employee work hours.
Though e-tender platforms expanded their scope and reach in recent years, they’ve been pivotal to government contracting for more than a decade. As far back as 2007, London officials used eTendering services to solicit bids for more than 2,000 work contracts to prepare for and support the 2012 Olympic Games.
In this case, the platform kept construction contractors and vendors abreast of current and future contracts to let them best position themselves for a competitive bid. At the same time, the process saved London officials countless hours by consolidating the entire process spanning thousands of contracts onto a single source system. The move also enforced compliance and ensured accurate record keeping that remains auditable today, shielding procurers from litigation or other concerns associated with highly competitive contract bidding.
B2B Online Tendering
Thermo Fisher Scientific, a large US company supplying a range of healthcare and scientific research devices, is a pioneering user within the B2B electronic tender space. The company published a case study highlighting how transitioning to a digital procurement model effectively revolutionized its B2B procurement systems and processes. Leveraging emergent tech lets Thermo Fisher customers fight their biggest pain points: unsynchronized purchase order flow and laborious approval processes. Using the new platform:
1. Users securely browsed Thermo Fisher’s online catalog, adding items to their cart.
2. Ordering teams then submitted the cart to management for approval.
3. Management pushed an electronic purchase order through the system once approved.
4. Throughout the process, decision-makers across the enterprise had visibility while maintaining accurate records for later use.
While this model aligns more with “procure and pay” than electronic tender, the processes and systems are comparable. In this case, the procurer solicits a sole vendor (Thermo Fisher). Expand the scope only slightly to multiple vendors hosted on a third-party procurement platform, and the effect of web tendering is clear. In this hypothetical:
1. The procurement party submits a request for bid on the third-party e-tendering platform.
2. Vendors, including Thermo Fisher and competitors, send their proposals alongside a digital catalog or inventory sheet.
3. Procurement employees browse each opportunity, narrowing its selection to a shortlist for approval before making a final decision.
In this case, web tendering offers the same benefit as the “procure and pay” platform Thermo Fisher developed, with a key benefit: rather than relying on single-source suppliers, the buyer could have created a competitive bid atmosphere, ensuring it got the best product at the lowest price, alongside whatever other stipulations the procurer wanted (post-purchase support, recurring order flow, etc.).
Benefits of e-Tendering
While our Thermo Fisher example highlighted some granular benefits to procurement teams, the enterprise-level strategic benefits stand out across electronic tendering platforms – benefiting users at the team level while simplifying things from a managerial perspective:
- Cost savings: a primary benefit of eTendering is that you’ll reduce labor costs alongside material costs associated with analog procurement.
- Better perspective: by evaluating each vendor on their merits within a closed-loop ecosystem, you can easily assess each bidder’s relative strengths compared to one another rather than discretely analyzing proposals manually.
- Documentation and transparency: since the entire process lives within the platform, everyone is on the same page regarding scope and qualifications. All documentation remains stored within the digital framework indefinitely or hosted locally after procurement to satisfy regulatory demands. Furthermore, while uncommon, maintaining records through e-tender or online tender platforms helps mitigate and remediate vendor fraud when it does occur.
Challenges in e-Tendering
Of course, as with any new or emergent tech, stumbling blocks and friction is inevitable. Likewise, beyond simply adopting and integrating the tech, users will likely find that e tendering has some challenges compared to legacy processes:
- Learning curve: though most procurement platforms offering e tender or electronic tender services are intuitive and easy for digital natives, you'll still need to onboard your employees to ensure they fully leverage the service and use the system properly.
- Greater up-front work for suppliers: depending on the buyer's specifications, vendors may have to complete more pre-screening paperwork or document submission than otherwise expected.
- Unique bid restrictions: some vendors offer innovative pricing structures beyond a basic fixed-price bid. In these cases, eTendering platforms may not facilitate this pricing opportunity as it isn't easily compared to other bidders.
E-tendering has been around for a while, but AI and automation developments kicked the industry into high gear over the past two years. eTendering smooths the rough patches commonly associated with legacy procurement and helps vendors and buyers alike maximize their opportunities and secure the most mutually beneficial contract suited to the task at hand.
Within government contracting, in particular, the increasing weight of bureaucratic and regulatory demands is lifted by leveraging e-tender platforms. Instead of sifting through reams of bidder documentation to validate eligibility before assessing the bid, eTendering platforms pre-screen according to the buyer's parameters. And, since all documentation is hosted in perpetuity (if assured by the platform), buyers can rest easy knowing they have a transparent and accessible paper trail.