Thursday, March 5, 2015

Why Accepting Lowest Bid Blindly Often Lead to More Problems

Productivity & retirement funds (CPF) are the talk of town lately. With the hybrid regime practicing state capitalism, the mentality of choosing the lowest bid infects the govt-linked companies as well other than just the govt agencies.

Govt-linked companies(GLCs) = Pretty much the Govt. Thus mentality pretty much the same which is to play safe, don't make mistakes (risky) & collect their somewhat iron ricebowl $$$ for the top echelons. Middle & low level peasants working in GLCs playing safe & don't take risk is as good as waiting to be replaced by cheaper, younger foreign workers who excel in obedience nevermind their hidden costs.

The german economic model with their dominance of small & medium enterprises is a better route for us to emulate than the govt-linked companies dominance which resemble monopolies. SMEs are generally more open to innovative approaches than the big lumbering giants.

In order for state capitalism PAP style to end, the incumbent regime needs to take a severe beating at the polls. There is far too much conflict of interests be it parachuting its cronies like paper generals to top positions/directors & making profits high in priority than providing a reliable public good/service(eg public transport).

Like what the writer wrote, many of those civil serpents are pretty braindead - just choose cheapest without looking at overall value and/or hidden costs. I like his suggestion of incorporating key performance indicators of business process improvements to 'move' those serpents. His point of net customer satisfaction is something i can relate to. No point choosing the cheapest vendor for a product if it ends up the customer ends up wasting time with an unfriendly interface.

How Andrew Higgins Increase Profits with Change-Resistant US Coastguard
Speaking of civil serpents, i was reminded of Andrew Higgins in how he deal with those civil serpents. He is the man credited for making the D-Day landings on Normandy possible with his beach assault landing craft carrying the soldiers.

10min video. If you are impatient then watch 3:28 - 4:00 for how he increase sales/profits.
  • sell fast boat to US coastguard.
  • sell faster boat to smugglers. Hahaha
  • sell fastest boat to scared shitless US coastguard.

If those civil serpents don't buy the fastest boat to catch the smugglers, they would lose their jobs. Being scared shitless, that is a strong enough reason so they can continue to have their jobs. Double-headed snake entrepreneur. Have to admit he is damn good. Is advisable to watch the whole video for his contributions to the war effort.

Another case of cheapest will do nevermind the hidden costs of poor communications with customers. Such scenarios are rampant in the service industry(bus drivers, nurses, waiters etc). Short-term cost savings but damage to long-term profitability.

A response was triggered in which LTA countered that they list out the project's requirements & they weed out companies unable to meet them. Then they go on to choose among the vendors who have passed the requirements. Your guess is as good as mine in how they choose in the 2nd stage.

Despite LTA's rebuttal that Lowest bid doesn't mean highest risk in how govt & govt-linked companies select vendors, my recent experience at the museum(govt agency)'s SG history exhibition which is riddled with typos tell me otherwise - Hidden Cost of Cheapest - Bad Advertising to Tourists & Locals.

1 comment:

  1. "In order for state capitalism PAP style to end, the incumbent regime needs to take a severe beating at the polls."
    Frugal Introvert

    But how is that possible ? With the current state of the Sinkie opposition and with some of them behaving like "frogs", will the 60%, and much as some do not like PAP either, dare to vote the PAP out?