A comparison of the essential differences between a price-centered "bidding agent" and the broader focus of a Consultant -Advisor.

1. Bidding Agent or Consultant – Advisor….which is better for your business? Jim Agnew August 2011

2. Presentation Objectives How Bidding Agents Operate Bidding Basics Understanding the Difference Making the Decision - Bidder or Advisor? Asking the Right Questions When Is Advising Not Appropriate?

3. Bidding is Big Business…. Buying Groups, Associations, Networks, Clubs, Reverse Auctions One simple objective – lower prices Cost – above all else – is the goal; product quality, application, fitness for purpose are a distant second IS PRICE THE ONLY CRITERIA??

4. Components of Cost-Based Approach Bidding Agents focus all their efforts on a select few points – with success measured by a single result – Driving down costs. Quality, application, suitability are not included

5. Bidders Have a Limited View… Most believe that their clients are driven solely by reduced costs Few Bidders actually ask the Client about other needs / priorities Many lack aggregated data to negotiate with Suppliers on any basis but price Believe they are providing valued services to their Clients 70% 23% 60% 90%

6. Advisors Operate on a Different Plane Detailed Product Knowledge Multi-Faceted Approach ProcurementExperience In depth Analytical Skills beyond price Negotiation Specific Application Information Ask, Ask, and Ask Again 6

7. Looking Beyond “Price” Client Corporate Initiatives Employee Work Schedules Environmental Impactors Operating Hours Labor Component Collateral Costs Waste Questions Personal Preference Life-Cycle Costing Methods Operating Efficiencies Equipment Application Methods Supplier Scheduling In-Use Dilution Cost 7

8. Bidder Advisor What Items Do You Buy? How Did You Come to Use These Items? Who Are Your Suppliers? How Did You Select Your Current Suppliers? What Are Your Current Prices? What, Besides Price, Is Important to You? How Often Are the Rest Rooms Cleaned? In Rest Room Care, what is most Important? How Often Are the Floors waxed? What is the standard for floor appearance? Do You Use Brown or White Towels? Is There a Standard for Hand Drying? Are You Happy With Your Supplier? Based on performance against standards, how does the current supplier stack up? It’s All About the Questions………….

9. Some Common Challenges to Overcome Believing suppliers are looking out for our best interests Current practices are based on logical decision-making Companies don’t clearly understand why they do what they do Bidding Vs. Advisory Consulting Belief that price is the only important objective Suppliers don’t respond to quality / application questions Buyers always consider all components in the buying decision Staff and Management have adequate time to address Non-price issues Employees with limited purchasing experience make the buying decisions The only way to realize savings is to buy cheaper 9

12. Negotiate with senior supplier management

13. Allow for cost-driven price increases and recognize savings derived from other than lower unit costs

17. Negotiate with sales reps instead of management

19. Understanding of Processes and Scope of Work

20. Detailed analysis of past and future spend activities

21. Resistance to “First Answer Acceptance”

22. Development of alternate methods, products, solutions

24. Investment Options