I was recently invited by Sigma (a joint initiative of the OECD and the European Union) to present YPO’s expertise in the use of Dynamic Purchasing Systems to the public procurement teams in both Turkey and Ukraine.
Sigma have posted the full presentation if you want to read it all but for this blog post I thought I would just concentrate on eight reasons why you might want to use a DPS and therefore why it should always be an option that you consider.
If you first need some in-depth background reading on what a DPS is and the legal regulations then I recommend this set of articles from Bevan Brittan – 1, 2, 3.
So, here they are, YPO’s eight top reasons for considering the use of a DPS:
1. You're buying a category that is difficult to bulk buy and to achieve economies of scale.
Due to the length of time a DPS remains available and the potential for re-submission in the event of a rejection, the ease of inclusion (measured in required resource to submit bids) encourages a variety of suppliers (from large providers to small businesses) to submit a request to participate. Organisations who will require only small call-offs of goods can take advantage of smaller suppliers, who are more likely to be willing to tender for such a requirement as opposed to global suppliers who would be interested in bulk selling opportunities.
2. Your strategy is to use a local bespoke offering and engage local businesses.
DPS is likely to support the engagement with small businesses, who have the facility to offer tailored solutions to bespoke organisational needs. Suitable, also if organisations want to support local business and the local community.
3. There is a high level of innovation and new market entrants.
A traditional framework would not be suitable for markets where there is a high level of innovation or new market entrants during the term of the framework. A DPS allows for new submissions during the life of the DPS. In new and emerging technology markets, it is very likely that the best suppliers at the start of a framework may not be the best suppliers four years on.
4. You're buying in a price sensitive market.
A DPS is a great way to engage a competitive number of suppliers and to ensure that every requirement is tendered to achieve the lowest price possible on that day. Clearly this is not always a suitable strategy but there are markets where this is an excellent option.
5. There is a large number of potential suppliers.
A DPS would allow an organisation to take advantage of the competitive nature of the supplier market without limiting the scope of competition.
6. The market has a large volume of transactions.
A DPS unifies large volumes of transactions into a single, manageable process to allow the transactions to be approached in bulk. This is an indication of a dynamic market where suppliers and prices may also change frequently.
7. You believe that there are capacity issues and you want to have the opportunity for market shaping.
Where there are capacity issues, a DPS will help to ensure that there are sufficient suppliers of alternative types of goods or services. The buyer may want to encourage new entrants into the market to address capacity issues and a DPS allows for these new entrants to be included.
8. There are low barriers to entry for supply markets.
When new suppliers constantly enter the market (e.g. due to nature of goods being homogenous and goods are substitutes for each other) a DPS enables gathering all the potential providers on one platform for the achievement of best value for money.
You can find details of all of YPO’s DPS solutions in the frameworks section of our website and if you need any further information, please get in touch.