In the next question we explore the type of relationship that the Buyer is seeking.

Partnering - means a close working relationship, evidenced by the contract. In this kind of relationship, the supplier and Buyer work together to solve problems, and accept risk mutually.

Panel - means two or more suppliers engaged under the same terms and conditions (heads of agreement). The Buyer usually "picks and buys" from any pre-qualified supplier off the panel.

Single Supplier - means the Buyer intends to only select one contractor. In rare cases they may select two and split the work up.

This model will help you to work out your pricing strategy, and so you can better answer the next question.....

The Procurement Quadrant

If a Buyer is procuring strategically, then they will have different decision drivers for different types of procured items. Please refer to Figure 1 below:

Purchasing non-critical items require the simplest procurement process. These are generally commodity items, that can be bought under the radar in small quantities with little impact to the business.

Leverage Items are high-value items that can be bought from any supplier. If one fails, there is another one to take its place. Buyers can shop around for the best price .

Bottleneck Items are generally low-value but failure can slow or halt the business. Examples include spare parts, specialty items where the number of ready suppliers are limited.

Strategic Items are generally high impact, usually service based, and include outsourcing and offshoring. The impact of failure is significant to the business, and changing suppliers can be expensive.