Three Benefits of Using Panel Arrangements in Procurement

A panel arrangement is essentially a safe procurement shortcut for a department or agency; it provides the organisation with an approved shortlist of providers to select from when it needs to purchase something. Panel arrangements can be an efficient and elegant solution to procurement, especially when certain categories of relevant goods or services are purchased regularly.
There are three key benefits of using panel arrangements.

1. Efficiency
Procurement policy in Australia often requires that departments and agencies seek quotes for goods and services above a certain value. However, undertaking a full RFQ process can be expensive and time-consuming. Panel arrangements can save time and money by allowing an organisation to carry out one initial competitive tendering process to establish the panel, after which tenderers can be engaged directly. While some effort and cost is involved in the establishment phase, panels can ultimately save your agency an enormous amount of time and money, particularly when dealing with goods and services that need to be procured regularly. This saving is also reflected on the side of the supplier, who avoids having to respond to a formal RFQ each time they propose to deliver goods or services.

2. Diversity
If goods or services were previously procured through a closed RFQ process, undertaking an open tender process to establish your panel can be a good way of updating and refreshing your preferred suppliers. The process also allows you to get a better idea of market prices and new service offerings, and most importantly, increases competition in your tender process. At the same time, it is critical that panel arrangements are not allowed to stagnate and that you build in regular points to open the panel to new applicants. If value for money is the key outcome of effective procurement, well-managed panel arrangements can be the best way to achieve this.

3. Effective strategic partnerships
Panel arrangements allow an organisation to develop long-term relationships with suppliers and to more easily manage those relationships over time. Panels connect you to suppliers on an ongoing basis, and provide formal mechanisms for performance management and quality control, which can be utilised to ensure continued value for money for the life of the panel.
 
In short, panel arrangements require an upfront investment but are an effective way to increase efficiency, maintain a diverse collection of suppliers, and effectively manage relationships with those suppliers over time. Agencies that procure similar goods or services on a frequent basis should consider a panel arrangement as a solution to their procurement challenges.