Customer 1: Flat Panel Manufacturer
To set the stage properly, we will start with the failure. I have to admit, that I never saw the failure coming and it really had nothing to do with the company I was working for at the time. For months, there had been industry rumor about an RFP coming out for a new flat panel display manufacturing facility. With no further warning, late one Friday night, I was forwarded the 135-page RFP to read and digest. It was a cozy weekend, just me, the RFP, and a few pots of coffee.
The initial assessment indicated that the project was worth between twenty-five and thirty million dollars. I mapped out a plan for the resources required to bid the project. On Monday, the key people needing to compile the bid were notified and asked to validate assumptions and questions on various sections of the RFP. The customer declined my phone calls and instead hastily arranged a bidder's conference.
Wednesday I flew to the customer's site for group meeting. Bidder's conferences were new to me and I was interested to see how well it would work. There were eight bidders in the room and three on a speakerphone. The customer had two people in the meeting—one engineer and the head of purchasing. They were having difficulty understanding why there were so many questions. Feeling that the vendors were simply looking to spend all of their money, the purchasing agent refused to divulge their budget.
The customer was determined to make the process fair and shared all vendor's questions and answers in a forum. The rationale was honorable. However, the unintended consequence was that the vendors limited their questions fearing they would show their bidding strategy.
After submitting our bid, the customer did not respond for weeks. The response date came and went without a word of the award. Three weeks after the response date, an email arrived—the customer needed the vendors to rebid. The proposals were all in excess of twenty-five million dollars and they only had five million to invest in the project.
Since it was impossible to bid the request's entire scope and stay in his price constraint, I called the purchasing manager asking for their priorities on the features and functions. His response was that each vendor should remove what they thought was appropriate. He added that they were now three months behind schedule and rebidding needed to be complete as soon as possible. It was becoming apparent that the customer did not understand the complexity of the system or the concept of triple constraints.
In the end, we won the bid and the project started over six months late. Their original timeline was to complete entire project in eighteen months. The project never recovered the lost time and the customer kept changing the scope as they determined that the items chosen for implementation failed to meet their needs.
Customer 2: Semiconductor Manufacturer
About a year later, a rumor surfaced that another bid was in the offing. Learning from the sting of the prior project, I suggested that we start working on the project long before the RFP was released. The proposal was that another solution architect join me at the customer's location (overseas) as soon as possible. We would work with the local account manager to gain access to the customer's RFP team. My boss resisted, basing his concerns on the additional $40,000 needed to get a second architect on site. I replayed the costs of creating two bids for the prior project using full sized bid team. This new approach would take a much smaller team. The project we would be bidding on was estimated between $20 and $30 million. It was a small price to pay. He relented.
The tactic was to meet with the customer on a regular basis, preferably weekly, and have general conversations about factory automation systems. Jonathan, the other architect, and I would find or write white papers on the areas where we felt the customer needed help. Shortly afterwards we would deliver them, offering to meet and discuss them in detail. We continued this throughout the RFP generation process.
When the customer issued the RFP (two weeks earlier than originally anticipated), all the bidding vendors agreed it was one of the most complete and understandable RFPs they had ever received. The bids were all submitted on time and, as expected, they were all very close in price. This made the selection price neutral. The vendor differentiated the bids based on their feelings of which vendor understood their needs. We won about two-thirds of the project primarily because we were already aligned with the customer.
The project started on time and completed within budget and according to schedule.
The first case is a classic example of a vendor "throwing the RFP over the wall" to the vendor. There was no possibility of any vendor aligning with the customer, since the customer inhibited the communication. However, in the latter case, the customer had excellent communication with the vendor. This created alignment on nearly every aspect of the customer's system. Even in areas where the customer's expectations were aggressive and required significant innovation, there was a mutual understanding of what was required and the goals were achieved.
Does this Scale?
Often this is thought of as the worst case for gaining alignment—a customer and vendor who have limited access to each other. However, the problem is just as persistent, if not worse, inside companies. The reason is that in a customer-vendor relationship both parties know they are isolated from one another and they work to close the gap. Internally, the attitude is different. An internal services organization is not required to spend the time being the salesperson. They have a lackadaisical approach and are often missing the tools to identify poor communication or achieve proper alignment. The answer is for internal groups to act more like a vendor and get closer to their customer. It is not that the supplier needs to act like a business; they need to act like the business.