Private sector tendering — where the buyer is a private sector organisation — works differently from public sector tendering. Since the private sector supply chain does not tend to account for the spending of public funds, it is governed by fewer regulations, which means it is less restricted.
Unlike public sector bodies, private sector businesses do not need to offer an equal playing field to suppliers in the supply chain. This makes private sector tendering extremely lucrative and an excellent market for small and medium-sized enterprises (SMEs) looking to boost their procurement possibilities.
Supply chain opportunities often have a private sector organisation as a buyer, something that SME businesses interested in private sector procurement should take advantage of.
Would you like to access more opportunities in the private sector marketplace and learn more about the private sector procurement process? Find out how below.
How the Supply Chain Works
Many private sector tenders are issued as part of the supply chain for larger projects. Opportunities for projects like HS2 will be advertised by large private sector companies that require additional or specialist support.
Often, as with HS2, the overall project is in the public sector. A private sector company or companies win the initial large public sector contract but cannot themselves provide every aspect of the goods, works and services required. The private sector company, therefore, seeks subcontractors and, in doing so, becomes a buyer for a private sector tendering opportunity. Sometimes the subcontractors then need to further subcontract for aspects of the contracts they have won and so on — a supply chain is formed.
At each stage, a private sector company becomes a buyer and becomes involved in private sector tendering to find suitable suppliers.
Differences between Public and Private Sector Procurement Supply Chains
Supply chain procurement in the private sector can differ significantly from public sector procurement. While private sector organisations profit from the procurement of goods and services, the public sector gets funding from the government and public and is responsible for delivering public services.
While both focus on the procurement of goods, works and services, the public and private sectors have different financial goals and get funded and regulated differently, which affects the procurement process.
Public sector organisations receive funding from government departments and taxes but can also raise revenue commercially, while the private sector gets financed privately from shareholders, investors, or loans. Private sector organisations can move their money quickly, while public sector organisations lack this flexibility.
Public and private sector procurement procedures also get regulated differently because the public sector is responsible for spending taxpayers’ money and is, therefore, more constrained by legislation.
High Speed 2, more commonly known as HS2, will be a high-speed railway network that will link routes between London, Birmingham, the East Midlands, Leeds and Manchester.
HS2 contracts worth £6.6bn were awarded to larger companies in 2017. These were large contracts with many elements, making it inevitable that the main contractors would distribute work to smaller companies. This was welcomed by the Trades Union Congress, which said that subcontracting would “maximise the potential benefits of HS2 to the UK supply chain”.
Many SME businesses will benefit from this agreement and from the HS2 project as they will be the best match for specific operations that require experts and specialists.
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Tips for Success: Private Sector Tendering
If your SME would like to win opportunities in the private sector marketplace, there are certain things your business can do to get ahead of the competition.
Offering the private sector added value will give your business an edge over competitors. Private sector buyers tend to be guided by profit and price, but if your business offers something unique as part of the contract agreement, they may be swayed towards your organisation. Make sure that when you are tendering for private sector contracts, you explain how your products or services work completely. For example, if your business sells furniture, does it also set up the furniture? Do your employees remove and dispose of the packaging carefully? Do you offer a guarantee?
These things are classed as added value and may be the reason why your tender price is more expensive than a competitor’s.
Always mention the add-ons that are included in your price. By giving the buyer a full picture of all that your product or service can offer, you are differentiating your business from the competition.
Start Receiving Private Sector Leads
If your business wants to expand, private sector tendering can help you do this.
Tracker posts thousands of public and private sector supply chain tenders that could be valuable to your SMEs.
How can your business find private sector tenders? Our Market Leads tool gives our users instant visibility of hundreds of private sector leads. This tool will give your business a heads start over the competition, which means your business can engage early and start conversations with buyers before they have officially tendered.
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Private Supply Chain Procurement Made Simple with Tracker
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When you sign up with Tracker, you have all the tools and insights you need to find, bid on and win quality procurement opportunities in the supply chain sector.
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