Dynamic purchasing systems are an increasingly common procurement method, but unfortunately not many suppliers, and buyers, are fully aware of them. Or, understand their advantages and disadvantages.
In our simple guide we explore everything you need to know about them, including a simple definition of what they are, how you can find the opportunities, the pros and cons, and most importantly how to successfully get onto one for maximum business success.
What is a dynamic purchasing system?
A dynamic purchasing system (DPS), is an electronic method of procurement, used for the supply of goods and/or services. It’s different to traditional procurement routes as it operates an ‘open market’ for suppliers to join either constantly or very frequently. This allows buyers to continually expand their network of suppliers and welcome new businesses that can meet their changing needs.
DPS tenders are most popular in public sector procurement, created to help streamline procurement processes, provide greater flexibility, and speed up contract awards with a fully electronic route to market.
How a dynamic purchasing system works
One of the main benefits of a dynamic purchasing system is that it is open for suppliers to join it on a frequent basis, so suppliers aren’t restricted to wait another year, or four, until the next procurement cycle.
Of course, similarly to all tenders the first challenge is to actually find the right tender, framework or DPS opportunity. There’s a number of tender software options out there to scour the market, including our purpose built Tender Pipeline software which pulls all live tenders into one simple to use tool. It also allows you to sign up to receive email notifications of specific contract opportunities tailored to your searched keywords so you won’t miss out!
Once you have found an opportunity it is always recommended that you read as much information provided by the buyer and distinguish whether it is worth progressing for. They are typically; one-off project tenders, framework agreements, or dynamic purchasing systems. Depending upon the type of tender the process here after can be slightly different.
So, for a dynamic purchasing system it will be as follows;
- You find the opportunity on an online portal. You then express an interest through the portal and receive more information along with the option to download the tender documents.
- You should then review the tender documents in detail and decide whether it is worth your time and efforts.
- The most important factor here, that is the difference between other tenders, is that this dynamic purchasing system opportunity may not have a closing date on it, or it will have a closing date that will then be reopened on a regular basis. So, if you did miss it you can keep an eye on it coming back open in a few weeks/months time.
- You will then complete the tender documents, which is typically shorter and less work for a dynamic purchasing system, to become an approved and preferred supplier.
- If accepted onto the DPS you’ll be notified and you will essentially enter the pool of talent amongst other suppliers.
- The buyer can then submit their specific project requirements to all of the suppliers on the dynamic purchasing system to bid for those works. This is often called a ‘call off’ or a ‘mini competition’.
- You can then evaluate the project and decide whether you want to move forward with a tender for these works.
- You’ll put your tender in, and price, and await the outcome from the buyer.
What’s the difference between a dynamic purchasing system and a framework?
The key difference between a dynamic purchasing system and a framework is that a DPS will be either continually open or be regularly re-opened for the buyer to build up a pool of suppliers that they can call upon whenever they need it. Whereas a framework is much more restrictive with the application window and its frequency. Frameworks typically last from one to four years.
Alongside being an ‘open market’, DPS are also more flexible in terms of the amount of suppliers they allow into the network. A framework on the other hand will determine a number of suppliers required when it is put out to tender.
Sometimes on a framework buyers can offer direct award contracts, without the use of further tenders or mini competitions, but this is not the case with a DPS. All works or services that are required will need to be tendered for.
The pro’s & con’s of a DPS for both the supplier and the buyer
Given the differences between a DPA and a framework there’s naturally benefits and downfalls with both procurement methods for businesses and buyers. Which one is the most suitable depends on your needs, and they should be explored in detail before making a choice on how to procure goods or services.
Below we’ve broken down the main pros and cons of a dynamic purchasing system for both the suppliers and the buyer.
|Either continually open or regularly re-opened to join||Open market to build up a network of suppliers and pool of talent to call upon. This is particularly beneficial for those that have changing needs.|
|Without any public sector experience some suppliers struggle to get onto frameworks or win tenders, getting onto a DPS is typically a more accessible route into tendering and securing public sector contracts.||This is an increasingly popular procurement method for the public sector including; health & social care, NHS, supply of nurses & equipment, healthcare contracts. Also, the transport industry.|
|Suppliers can build up their experience and skills in tendering and delivering these types of contracts for future case studies and references.||Buyer isn’t restricted to a certain number of suppliers. There’s much less risk from a buyer’s perspective.|
|Typically less time, effort & documents required to get onto the DPS.||Welcomes more SMEs and other suppliers whom may be put off by the bigger framework contracts.|
|Ultimately, there’s no guarantee of work. Once you are on a DPS project will be tendered for as mini competition or call offs, but you may still be unsuccessful in being awarded them. However, as above the pros of saying that you are on the DPS and are competing may provide you with added benefits for the future.||The buyer could build up the supplier list through the DPS but with a lack of work and successful projects the list may quickly become exhausted or disjointed. The buyer could end up with a supplier list that is not being effective and lose close partnerships.|
|A larger pool of suppliers means more competition.||There is a larger administration task to pre qualify, welcome and add new suppliers to the DPS network.|
Should I tender for a dynamic purchasing system?
There’s an increasing number of dynamic purchasing system opportunities available for businesses of all sizes and industries. So whilst ultimately there’s no guarantee of contracts, you still have to be in it to win it!
Being on a DPS can be of benefit to many SMEs, offering a foot in the door for public sector work. As bid writing experts we help many businesses reap the benefits of tenders of all kinds, providing guidance and expertise for maximum success.
Expert Tip: Do your research! Is there any information about a previous DPS that the buyer has, who else was on it? How much work was tendered for through it? Who is likely to be your competitors?
If you need more expert tips, guidance and services then get in touch with our team today.