In his latest blog for Infologue.com, Bob Forsyth, Managing Director of MITIE Total Security Management discusses when to bid for contracts. Bob writes: “In a time when commoditisation is still blighting our industry, the bid/no bid decision is more important than ever. Recently, I have seen cases where companies are bidding at a loss or just breaking even in order to secure a contract.
“This approach is not sustainable in the longer term. It’s commercial suicide. I have found myself asking what is driving this insanity. If buyers insist on focusing on price, is it worth the time and resource of submitting a bid?
“I was very interested to read Stuart Lodge’s – CEO Lodge Service – recent post on the problem. He highlighted that in price-driven sectors, standards will flat line and ultimately damage our industry. I agree that in order to make our industry sustainable, we (as responsible and professional security providers) must not enter into practices that facilitate this damage.
“Facilities management is a low margin sector. Security personnel wages total 90% of contracts’ charge rate. This can only be exacerbated by a shrinking labour market. Low margin contracts, coupled with longer payment terms, could doom companies’ ability to viably trade in the longer term.
“My view has not changed in that margin is not relevant, price is. But, this demands a buying behaviour that understands value and has a flexible approach on service.
“It is this approach that is leading security providers to consider no-bidding for large contracts. The perceived value of security is encouraging commoditisation, causing an unsustainable lack of innovation.
“There is no doubt that some sectors feature higher on the no bid ratio than others. I don’t see this changing in the near future.
“This will inevitably mean smarter ways of working. Suppliers may avoid bidding for contracts within sectors that are inflexible in their approach to security. There are still some sectors that seem reluctant to embrace the integration of technology.
“We have stopped bidding for these contracts, a sensible move given the impossible situation created by reduced budgets and a continued focus on pure manpower specifications. Some may say this is a brave move; surely we should always pursue new business opportunities? We say not if the end result is a poor service and poor experience for the customer and our colleagues at the front end.”
As Shakespeare said once:
“this above all: to thine own self be true.”
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