Tendering and other best practices for sustainable sourcing

September 6, 2021

The Partnership for Supply Chain Management (PFSCM), a procurement services agent and 4PL service provider, has extensive experience in managing tenders for health products and related services.

PFSCM uses full and open competitive procedures to facilitate the timely delivery of quality products and services at a reasonable cost.

The company has been using tendering as a procurement method since its inception in 2005.

 

Tendering in a nutshell

 

Tendering is a common procurement practice in the public health sector. It involves inviting multiple vendors or suppliers to submit proposals for a specific tender that was publicly issued. It allows transparency, equality of opportunity and the ability to demonstrate that the outcomes represent the best value.

For a vendor or supplier to be selected to fulfill the tender requirement, they must demonstrate their capability, history and readiness to execute the tender. In the competitive bidding process, negotiations may be necessary before the award. Negotiations are conducted fairly and with all bidders in the competitive range.

Tendering has many benefits; it stimulates healthy market dynamics for best pricing and service levels, and reduces the risk of production delays, recalls and quality issues.

 

PFSCM’s approach to tendering

 

PFSCM has first-hand experience in tendering for a wide variety of health products and related services. It is considered a standard practice that aims to increase the competitiveness of the bids, avoiding preferential treatments, and enabling PFSCM to get the best offer.

PFSCM’s tendering activities explained:

  • PFSCM has a well defined procurement process which staff are required to follow.
  • All tender information and records are documented in accordance with PFSCM’s ISO 9001:2015 QMS.
  • PFSCM focuses on competitive procurement to deliver best value to clients. PFSCM has different procurement methods guided by a dollar threshold/risk. There are some exceptions such as in the case of sole source procurements or single source justifications (country testing algorithms), emergency procurements (when a country is at or close to stockout) or low value procurements (under $10,000 where fair market value can be determined).
  • Solicitations are dependent on market conditions such as the availability of multiple sources.
  • Solicitations are open and fair competition. Solicitations are sent to vendors at same time, rules of engagement are clearly defined, questions received and answers are shared with all vendors (except in the case of proprietary information), and PFSCM performs landed cost evaluations for larger shipments where countries of origin or packaging sizes are different, etc., and when inco-terms differ.
  • PFSCM notifies all vendors who submitted a proposal of the award outcome. For large procurements PFSCM has a tender evaluation committee process where a team of technical and procurement experts evaluate bids.
  • The organization has a checks and balances process where a senior staff member and somebody other than the buyer checks and approves customers quotations. An additional senior staff member reviews and approves the purchase order.

The above activities ensure PFSCM’s procurement process is fair and transparent.

 

PFSCM’s approach to evaluating bids and selecting suppliers

 

PFSCM selects its suppliers based on best-value according to the following criteria, which may include, but are not limited to:

  • Lead time
  • Quality of products
  • Price of commodities
  • Customer service by the vendor
  • Maintenance and service agreements
  • Product training
  • Vendor performance and supplier (financial and operational) long-term viability
  • Compliance with World Health Organization or Stringent Regulatory Authority standards.
  • Compliance with the PFSCM Code of Conduct for Vendors & Suppliers.
  • Quality at the core of procurement processes

When it comes to evaluating bids and selecting vendors, PFSCM takes the utmost care to ensure the organizations we choose to partner with share our passion for-, and commitment to quality.

PFSCM upholds a strict product quality assurance (QA) policy that ensures patient safety, and prevents costly and wasteful product quality issues that may result in destruction or recalls.

PFSCM only procures products that comply with defined quality requirements as prescribed in applicable QA policies. This includes products that are either prequalified by the World Health Organization (WHO), approved by stringent regulatory authorities (SRAs), or the International Medical Device Regulatory Forum (IMDRF); and meet national regulatory requirements.

In addition, PFSCM uses a multi-tiered risk-based approach to flag and select products for sampling and quality control testing to ensure that the products continue to meet required specifications.

 

PFSCM’s Code of Conduct for Vendors and Suppliers

 

In 2019, PFSCM created a Code of Conduct for Vendors and Suppliers, thereby involving them in responsible business practices, and holding them accountable to PFSCM’s standards, and expectations.

The Code of Conduct clearly describes PFSCM’s expectations for building sustainable and reliable relationships with its vendors and suppliers.

The Code of Conduct covers the below topics:

  • Transparent, fair, accountable and honest procurement practices.
  • Compliance with applicable laws and regulations regarding fair competition.
  • Corruption, fraudulent, collusive, anti-competitive or coercive practices.
  • Exchange of fees, gratuities, rebates, gifts, and commissions.
  • Privacy of information, data, know-how and documents.
  • Compliance with country specific laws and regulations.
  • Financing and promotion of violence, and terrorism.
  • Money-laundering activities.
  • Maintaining complete records in appropriate books of account of all financial and business transactions.
  • Disclosing actual, perceived, or potential conflicts of interest.

 

PFSCM’s commitment to corporate sustainability

 

PFSCM is a member of the UN Global Compact and has taken practical actions to support the UN Global Compact Principles.

The organization has consciously reworked its ISO 9001:2015 certified Quality Management System to include the Ten Principles of the UN Global Compact in its documented Standard Operating Procedures, Working Instructions, Policies, and Guidelines.

PFSCM’s processes and procedures have been repeatedly inspected to ensure the organization advances the UN Global Compact Principles, and upholds ethical practices such as:

  • Always prioritizing product quality above all else to ensure the safety of patients, and success of health program outcomes.
  • Offers clients accurate and reliable advice on products and pricing, even if that results in sales elsewhere.
  • Offering clients accurate and reliable advice on product quantities even if that results in lower sales.
  • Offering clients accurate and reliable advice on maintenance, training, and service plans without the client incurring unreasonable costs.
  • Executing fair tendering processes which are free of bias, and leave no room for corruption, or discrepancies

For PFSCM, corporate sustainability through responsible business activities, is an inexpugnable company culture.

 

Positive tender outcome: supplier diversification

In 2020, the urgent need to access reliable COVID-19 diagnostic products prompted PFSCM to issue an open request for proposal (RFP) to identify and contract vendors for the supply of COVID-19 diagnostic, and ancillary products.

The tender was well received in the market, and has enabled PFSCM to onboard many reputable COVID-19 diagnostic suppliers thereby significantly diversifying its supplier base.
In sourcing terms, a wide and diverse supplier base, and product range, translates to less risk, more competition, and more opportunities for a healthy market.

A practical approach for mitigating sourcing risk suggests that two suppliers should be used with meaningful quantities allocated to both (at least 25% of orders to each), and that the suppliers’ manufacturing, warehouse and distribution sites are not all in the same region.

Having multiple suppliers in various locations, not only ensures supply continuity, but also promotes innovation, drives competition, and builds local economies (in the case of local sourcing). Therefore, the encouragement of competitive bidding helps both international and local markets grow.

The RFP process also helped PFSCM to:

  • Map the current products available for COVID-19 testing.
  • Understand production capacity and manufacturing locations as well as raw material supply.
  • Grasp suppliers’ priorities in managing supply and demand.
  • Understand the factors that influence product pricing.
  • Research the suitability of products for specific markets.

 

Positive tender outcome: quality control testing services

In 2020, PFSCM issued an open request for proposal (RFP) to identify and contract WHO prequalified and/or ISO/IEC 17025 accredited laboratories offering quality control (QC) testing services for antimalarial medicines, condoms, gloves, masks, gowns and overalls and syringes and needles.After careful evaluation, PFSCM contracted two QC laboratories for testing of medical devices in Malaysia and Singapore.QC laboratories that meet all PFSCM’s requirements are hard to come by, and PFSCM regards this tender as particularly unique, and the outcome as a resounding success.

 

Positive tender outcome: cost savings

In 2018, we achieved significant cost savings in excess of $800 000, for the procurement of a large order of malaria rapid diagnostic test (MRDT) kits for an East African country.

The savings came to light after PFSCM proposed competitive bidding for the order of 307,469 packs comprising 25 MRDT kits each. The shipment, comprising more than 10, 40-foot containers, was also tendered to ensure the best delivery and service was achieved.

 

Positive tender outcome: cost savings

In 2018, PFSCM managed a complex tender for laboratory equipment for the Malawi Pharmacy, Medicines and Poisons Board’s (PMPB) National Drug Quality Control Lab.

Products included high pressure liquid chromatography systems, spectrophotometers, automated volumetric Karl Fischer titrators, ultrasonic baths and gas chromatography systems besides others.
The equipment was funded by the Global Fund and the project is managed by the Project Implementation Unit of the Ministry of Health of Malawi.

According to products listed in the US Pharmacopeia the PMPB order was estimated to be $900 000, through competitive bidding PFSCM achieved a $300 000 saving on product procurement costs.
In 2020, PFSCM worked on the service and maintenance contracts for the installed equipment.

 

 

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