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In the private sector, relationship development is a critical aspect of the procurement process — it is obviously critical to the success of relationship-based procurement.

In some cases, the supplier and customer are given access to each other’s strategic plans, relevant cost information and forecasts so that they can work out a joint procurement/supply strategy under which risks and rewards are addressed openly and divided fairly between them.

The open, transparent and fair competitive process for the award of municipal contracts qualifies the extent to which municipal contracting can be conducted on a relationship basis.

Nevertheless, every municipality should strive to have a good supplier-customer relationship. Even in the most competitive process there is no reason why municipalities cannot discuss with prospective suppliers how to govern their pricing policies.

Municipalities need to become familiar with the concerns that influence the pricing of the goods and services they are likely to buy. The tender and RFP process allow municipalities considerable control over the terms in which they conduct trade, but since terms adjust the risk allocation to a supplier under contract, the price paid will inevitably be affected by the terms that the municipality sets.

An informed and constructive dialogue between the municipal customer and its private sector suppliers can lead to a better understanding on the part of the municipality of the cost implications of addressing certain concerns.

On the other hand, if suppliers are familiarized with those concerns, they may well be able to bring forward less expensive alternatives for addressing them than those that have been chosen by the municipality.

Most businesspeople are probably wise enough to understand the local municipality can be and should be one of their prized customers in view of the potential volume of business it offers to the market.

For this reason, the business that they operate should be prepared to accommodate the municipality where this can be done without taking on excessive risk.

An improved supplier-customer relationship can also lead to improved levels of service. Often, the senior management of a supplier has little immediate knowledge of the dealings between the municipality and the supplier.

Therefore, if a municipality is having difficulty with its supplier or requires an improvement in service, contacting those managers — not in a hostile way, but to discuss how service might be improved – can lead to significant progress.

Clearly, it is the purchasing manager who has the critical role to play in this area as the natural interface between the client department and the supplier.

It is not necessary to decide whether the supplier or the municipality should take on the primary responsibility for improving the supplier-customer relationship.

The critical point to note is that both have so much to gain from doing so, that if one does not, the other should do so.

Once steps have been taken to initiate more of a partnership arrangement, a process should be agreed to share issues and needs in relation to such matters as price, service level and cash flow. Generally, municipalities are notoriously slow payers, which does very little to improve the supplier-customer relationship.

The goal of this process is not just to maintain existing supply relationships. It is to expand them. As I have discussed in previous articles, many private sector entities shy away from competing for government work.

One of the most common reasons advanced in explanation for their reluctance to bid is that government work is subject to “too much red tape.”

From the context in which this term appears, many businesses shy away from government work because they have had bad experiences resulting from the exacting demands imposed upon the conduct of a government contract under the law of tender.

In a disturbing high number of cases, highly qualified bidders fail to submit a qualified bid.