Comparing public and private organisations in their quest to become a preferred customer of suppliers

Abstract

Purpose In industrial procurement, the concept of supplier satisfaction has gained increasing attention. Satisfied suppliers have been found to provide better prices, more innovations and priority in bottleneck situations. This paper aims to analyses in how far the concept of supplier satisfaction can be transferred to the public procurement domain. Design/methodology/approach Two large quantitative data sets are compared, one from a sample of suppliers evaluating their industrial clients, the other from a public customer being evaluated by its suppliers. Findings The same criteria which explain supplier satisfaction with its customer, which are relevant in the private and industrial case also hold true for the public case, namely, growth opportunity, profitability, relational behaviour and operative excellence are important criteria for distinction. Only relational behaviour by the customer scored significantly higher in the public sample, indicating that this is more an influencing factor for public organisations. Research limitations/implications Showing the relevance of supplier satisfaction also for the public domain paves the way to further research better understanding how to measure satisfaction and how to increase suppliers’ satisfaction. Practical implications Buying organisations are asked to apply a form of “upstream marketing”, in which they actively try to promote their organisation with their suppliers and increase its attractiveness. This is a new way to get access to better services from suppliers. Social implications Analysing supplier satisfaction, on the one hand, allows to improve public purchasing acts, which generate social benefits in better using public money. On the other hand, caring for the well-being of suppliers is per se contributing to a socially more desirable world. Originality/value Supplier satisfaction is a new concept in the public procurement domain. This is the first paper to introduce this approach.

Supplier satisfaction with public sector competitive tendering processes

“…This perspective reflects a trend within supply chain management literature, exploring the benefits of collaborative buyer-supplier relationships to improve organisational performance and outcomes (Cadden et al, 2015). In addition, it is closely aligned to the buyer attractiveness literature (Hald et al, 2009), which involves buyers competing for suppliers, not just vice versa (Schiele et al, 2012) and reflects a more recent interest in satisfying suppliers in the public domain, as doing so will ensure that they provide better prices, more innovations and priority in bottleneck situations (Schiele, 2020).…”

“…In addition, it is closely aligned to the buyer attractiveness literature (e.g. Hald et al, 2009), which involves buyers competing for suppliers, not just vice versa (Schiele et al, 2012) and reflects a more recent interest in satisfying suppliers in the public domain, as doing so will ensure that they provide better prices, more innovations and priority in bottleneck situations (Schiele, 2020).…”

“…Reflecting the nascent nature of this research (Schiele, 2020), an exploratory approach was necessary that was best suited to in-depth qualitative data collection. We conducted twenty open, unstructured, in-depth interviews with individuals from twenty suppliers involved in the public competitive tendering process.…”

“…Suppliers are not bound to supply only the public sector, as private sector suppliers meet the needs of a variety of buyers across the public, private and third sectors. If they are repeatedly frustrated and become dissatisfied with the competitive tendering process of public sector buyers, they can stop supplying to the public sector and focus their efforts elsewhere (Schiele, 2020), and this could limit choice of supply, increase costs and limit efficiency in the public sector.…”

“…To streamline public procurement and create a more service-oriented public procurement system, organisations need to develop clear and integrated tender documentation that is standardised, where possible, and proportionate to need (OECD, 2016) as well as engaging in "upstream marketing" to promote their organisation with their suppliers and increase its attractiveness (Schiele, 2020). The US National Institute for Government Procurement (NIGP) advocates ongoing dialogue throughout the procurement cycle to generate valueadded activities and services (NIGP, 2013).…”