We’ve all been there: waiting in the middle of the night to score that incredible vintage treasure on an online auction site, only to have it taken away by someone placing a bid at the last second that outranked yours. “No, not again!” You pound your fist in frustration on your desk. That Mighty Morphin Power Rangers lunch box should have been yours! The whole bidding process seems designed to raise your hopes and then crush them at the last minute. Okay…maybe we haven’t all been there.
In the fresh food business, “bidding” means something different than you may have thought. In the bustling world of food retail and distribution, the term gets thrown around quite a bit, but it refers to a structured business process rather than a frantic auction. Understanding this process can make the difference between landing major accounts and missing out on significant business opportunities.
At Inline Plastics, we’ve been in the fresh food packaging game for over 55 years. We’ve gained valuable experience in the bidding process and would like to share our insights with you.
Let’s get schooled in the fascinating world of food industry bids. Feel free to bring your lunch box (sorry it’s not the one with the Pink Ranger you wanted so badly).
What Is a Bid?
At its core, a “bid” is a formal process that companies use when seeking to purchase products or services from suppliers. In the food packaging industry, retailers use bids to evaluate and select suppliers for their packaging needs.
Think of it as a structured way for these companies to comparison shop — except instead of browsing online reviews, they’re collecting detailed information about a company, their products, and pricing through a systematic approach.
The process typically flows through three main stages:
- Request for Information (RFI): A high-level questionnaire where retailers gather basic information about potential suppliers.
- Request for Quote (RFQ): A more detailed request focused primarily on pricing.
- Request for Proposal (RFP): A comprehensive document soliciting detailed information about products, pricing, and value-added services.
Why Do Companies Go to Bid?
Companies don’t just launch bid processes for fun (though the paperwork can be a real party). There are several strategic reasons why retailers initiate bids:
- Cost savings: The most obvious reason is to secure better pricing as their volume grows.
- SKU rationalization: Reducing the number of different products they stock (SKU stands for Stock Keeping Unit, which is an identifier for each unique product and packaging configuration).
- Contract renewal: In the food industry, contract timelines vary by category. Packaging agreements are typically set for a defined period to account for material changes and supplier evaluations. Food product contracts — such as those covering ingredients or private label manufacturing — tend to be shorter and more flexible, allowing companies to adjust to shifts in pricing, demand, or supply chain conditions. It’s common practice to regularly rebid areas like ingredients, co-packing, packaging, and logistics to ensure competitiveness and value.
- Operational improvements: Finding suppliers who can better meet their specific needs.
- External pressure: Sometimes, consultants recommend bid processes to push vendors for better pricing.
In recent years, the frequency of bids has increased significantly. What used to be rare is now common, and some suppliers are now handling several bids at once.
The Bidding Process: A Step-by-Step Guide
The dance of the bidding process follows a fairly predictable choreography, though each retailer might add their own flourishes or steps:
Step 1: The Invitation
The retailer sends an invitation letter outlining the parameters of the bid process.
Step 2: Request for Information (RFI)
Here’s where it starts to get interesting. This initial questionnaire helps retailers understand the basics about potential suppliers, including:
- Company size and structure
- Manufacturing capabilities
- Sustainability practices
- Financial stability
- Production capacity
Many retailers use this step to narrow their list of potential suppliers before moving to the next stage. They must know a supplier can handle the requested number of packages to be produced in a specific time frame.
Step 3: Request for Quote (RFQ) or Request for Proposal (RFP)
This is where things get serious. The retailer provides detailed specifications for the products they need and asks suppliers to submit pricing and other information. This might include:
- Product specifications
- Pricing information
- Delivery terms
- Volume capabilities
- Quality guarantees
Sometimes, retailers run several rounds of RFQs or RFPs. This lets suppliers “sharpen their pencils” and tweak their offers based on competing bids.
Step 4: Evaluation and Award
Once the retailer gathers all the needed info, they review the entries and pick a winner. If chosen, high-fives are totally okay! This decision could depend on price. It might also include factors like quality, innovation, sustainability, and overall value.
Step 5: Contracting
If selected, the supplier may enter into a contract with the retailer, which specifies pricing, volumes, and other terms for a set period. If no contract is in place, the retailer may simply begin the ordering process with the selected supplier.
The Hidden Challenges of the Bid Process for Suppliers
While the bid process might seem straightforward on paper, the reality can be quite different. Suppliers face numerous challenges when participating in bids:
Time Crunches
Perhaps the most common challenge is the tight timeframe. Many bids need replies in 5-10 business days. This can be tough if key team members are away or during the holidays.
Vague Specifications
Have you ever tried to build something with incomplete instructions? Bidding can feel like that when retailers provide minimal information about the products they need. Descriptions like “cookie container” without dimensions or other specifications make it difficult to provide accurate pricing.
Third-Party Platforms
Many retailers now use specialized third-party platforms to manage their bid processes. Each platform operates differently, requiring suppliers to learn new systems and navigate unfamiliar interfaces, often under tight deadlines.
Winning Supplier Strategies for Bid Success
Despite these challenges, food industry suppliers can employ several strategies to improve their chances of success:
Do Your Homework
Before the bidding process starts, visit stores to see what products the retailer currently uses. Make a reference sheet that links their products to yours. Highlight any advantages your products offer.
Highlight Value Beyond Price
Price matters, but highlight other benefits of your products.
- Tamper protection has become increasingly valuable to consumers since the COVID-19 pandemic heightened safety concerns. If your product offers both tamper-evidence and tamper-resistance, emphasize this dual protection as a key differentiator.
- Aim for a longer shelf life.
- Enhance the consumer experience.
These can help explain a higher price.
Be Strategic About Pricing
Know when to hold firm on pricing and when flexibility might win the business. Sometimes, maintaining quality and value is more important than winning at any cost.
The Retailer’s Perspective: Making Bids Work for You
For retailers managing the bid process, success looks a bit different. Here are some strategies for retailers to get the most value from their bid initiatives:
Clear Specifications Save Everyone Time
Providing detailed product specifications — including dimensions, materials, intended use, and current products being used — helps suppliers provide more accurate and competitive bids. This reduces follow-up questions and speeds up the entire process.
Give Realistic Timeframes
While there might be pressure to expedite the process, allowing suppliers adequate time to prepare their responses typically results in better offers. Avoiding holiday periods and giving at least 2-3 weeks for response preparation can yield better results.
Focus on Total Value, Not Just Price
The lowest bid isn’t always the best bid. Consider factors like product quality, supplier reliability, innovation capabilities, and customer experience when evaluating proposals. A slightly higher-priced product that performs better or reduces waste could provide better overall value.
Bidding Farewell
For both suppliers and retailers in the food industry, the bidding process can feel like an elaborate game of poker — everyone’s holding their cards close, trying to read the table, and hoping they’ve calculated the odds correctly.
Suppliers mastering this game turn intimidating bid requests into golden opportunities. For retailers, it means finding partners who won’t just show up with the lowest price but will stick around when the packaging hits the fan (or the shelf, rather).
Remember: In the competitive aisles of the food industry, anyone can slash prices to win today’s business. But it’s the supplier who consistently delivers quality, reliability, and innovation that earns the coveted end-cap display in a retailer’s long-term strategy. After all, great quality, low price, and excellent service — most businesses can perfect two. The third demands a decision. Sustaining all three without compromise? That’s the exception, not the rule.
Are you interested in learning more about operations in the plastics industry? Visit our Learning Center today. If you have any questions, don’t hesitate to reach out. We’re here to help.
