THINK FOR YOURSELF ! WOULD YOU CHOOSE THE LOWEST BIDDER ? Michael Ranieri

In my last article, I briefly looked at the global changes and the implications for Canadian culture and what you and I can do to affect change and not only be its result, with no control.

People in this culture do not seem to get together and have any directed effect as my main contention was that our society is so preoccupied by money (especially during our current economic climate) that the individual does not have any say i.e. does not have enough money except in their own back yard. So this time, let's discuss an economic and business perspective.

My own business experience has shown that to award a tender to the lowest bidder, without taking other factors into account, is an absolutely absurd bureaucratic position to take and benefits nobody. Our own business' policy has been to immediately dismiss the lowest bidder when we source goods for resale. Reason? Almost every business is goods and services, and the exact same business principles apply: the lowest bidder is a collection of the lowest bids from suppliers, subcontractors and other services. Even though purchasing and engineers specify minimum requirements, anybody in business knows how to get around this. No matter how many specifications you put out, there are suppliers who are constantly learning how to defeat this. Just as when I go to a restaurant, they all serve the same, sometimes at the same price, but I definitely have my favorites!

I could continue, but basically the point is this: a cost saving now almost always causes extra expense in the future. In our business we know that the lowest bidder has the weakest quality i.e. 'just passes specs', has the weakest after sales support, and has the most aggravating and unacceptable, but legally passable warranty service.

A natural consequence of this is poor business ethics and relations, and ultimately, low value.

People may argue that this is the reason for the rigors of the tendering process, but it simply doesn't work for the good of all concerned. What about after the job is done? There are always callbacks! How much time and money would be wasted in a critical situation?

Purchasing a large amount of equipment from a manufacturer / supplier whose reputation within the industry is not favourable saying that we have saved money by getting the lowest price, without considering the supplier's skill, competence, experience or ethics and long term accountability, then no value or real cost savings are achieved. Dealing with a reputable supplier overcomes a lot of costly measures.

Accompanying factors and consequences should be of concern in the original bidding. Long term and overall value cannot be specified in a bid request, hence the need for looking at experience, past track record and ongoing performance and satisfaction.

So little value is placed on people's experience and quality! Customers who tells me they can buy a product we sell cheaper elsewhere sometimes don't understand how a product can be called the same thing and sold as if it were, but not have any real quality in it, thus the customer is not getting the same thing!

The same analogy is true when it comes to people. Other cultures have acknowledged the need for higher value than just in commodities and the price.

Isn't this similar to an argument where one has or has not the choice to pick the best available, whether it be goods, services or PEOPLE ?

Our culture has to begin to recognize this. Hopefully, businesses will value people above lowest cost. If everything is sold to the lowest bidder, we will be reduced to no community at all. Isn't community the basis of culture? till next time ..

This article was originally published in Cross Cultures Magazine in Volume 1 - Issue 5 - 1992. Unauthorized copying, distribution or other usage without express written permission of the publisher is prohibited.