How Many Suppliers Should You Compare Per Tender?

Key takeaway

Most construction companies compare 3 to 4 suppliers per tender because they do not have time for more. Industry data shows that increasing the comparison to 8 to 10 suppliers reduces material costs by 5 to 12 percent on average. Beyond 10, the additional savings diminish while admin effort continues to grow. For a company spending 500,000 euros per year on materials, moving from 3 to 8 supplier comparisons could mean 25,000 to 60,000 euros in annual savings. The barrier is not willingness but time, and this is exactly where automation changes the equation.

The current reality

Ask a procurement person at a mid-size construction company how many quotes they collect per purchase, and the answer is almost always the same: three, maybe four.

This is not because they believe three is the right number. It is because collecting each additional quote takes time. You have to identify the right contact at the supplier, write or call with your requirements, wait for the response, and then manually enter the price into your comparison spreadsheet. Multiply that by 10 to 20 material categories per project, and you can see why people stop at three.

The result is a procurement process optimized for speed rather than value. You get materials on time, but you pay whatever your usual three suppliers charge.

What the data says

There is a clear relationship between the number of suppliers compared and the price achieved. This follows basic market economics: more competition among suppliers means lower prices.

The price curve

The sweet spot is 8 to 10 suppliers. Below that, you are likely missing better prices. Above that, each additional supplier adds less savings while requiring the same amount of admin work.

Why diminishing returns kick in above 10

After you have quotes from 8 to 10 suppliers in a given material category and region, you have covered most of the available market. Suppliers 11 through 15 are typically either:

Smaller operations with less competitive pricing

Located further away, adding delivery costs that offset price advantages

Suppliers you have not worked with before, adding risk

The point of diminishing returns varies by material and region, but 8 to 10 is a reliable benchmark for most construction materials in EU markets.

The real cost of comparing too few

Consider a concrete tender. Your project needs 470 cubic meters of C25/30 concrete. You call your usual three suppliers:

Supplier A: 73.50 euros per cubic meter (including delivery)

Supplier B: 75.00 euros per cubic meter

Supplier C: 73.00 euros per cubic meter

You go with Supplier C at 73.00. Total cost: 34,310 euros.

But if you had compared 8 suppliers, the range might have been:

Cheapest: 68.00 euros per cubic meter

Most expensive: 78.00 euros per cubic meter

Your best from 3 quotes: 73.00 euros

The cheapest option at 68.00 euros saves 5.00 per cubic meter. On 470 cubic meters, that is 2,350 euros on one material on one project.

Across all material categories on all projects over a year, these savings compound into serious money. According to McKinsey Global Institute, construction companies that systematically compare more suppliers save 5 to 10 percent on total material costs.

The time barrier and how to break it

The reason companies compare fewer suppliers than they should is not ignorance. It is capacity. A procurement person managing 3 active projects with 15 material categories each would need to send 45 to 150 individual requests if they compared 3 to 10 suppliers per category. That is 45 to 150 emails written, sent, tracked, and followed up on. Plus reading and entering every response into a spreadsheet.

This is where the math breaks down for manual procurement. There are simply not enough hours in the day.

There are three ways to break this barrier:

Option 1: Hire more procurement staff. This works but is expensive. A procurement coordinator costs 35,000 to 55,000 euros per year in most EU countries.

Option 2: Standardize your RFQ format. Using a template for supplier requests saves time on each one. But you still have to send, track, and enter data manually.

Option 3: Automate the process. Procurement automation sends requests to all suppliers simultaneously, collects responses as they arrive, and builds the comparison table automatically. Comparing 10 suppliers takes the same effort as comparing 1.

The automated approach changes the economics entirely. When adding a supplier to the comparison costs zero additional time, the optimal number of suppliers to compare becomes "all of them."

Practical recommendations

For companies doing it manually

If you are not ready to automate, you can still improve:

Increase from 3 to 5 as a minimum. Even two additional quotes significantly improves your price position.

Rotate suppliers regularly. If you always call the same 3, you lose price pressure. Add at least one new supplier to every tender.

Create a standardized request template. This cuts the time per RFQ from 15 minutes to 5 minutes.

Track every quote you receive. Over 6 months, you build a price database that tells you whether a new quote is fair.

For companies ready to automate

Upload your full supplier list (not just the 3 you usually call). Most companies have 50 to 200 supplier contacts accumulated over years. Many of these are never used because there is no time to include them.

Run your first automated tender on a current project. Compare the results to your manual process. The price difference will tell you exactly what automation is worth for your business.

Set a target of 8 suppliers per category. This is the sweet spot between savings and effort.

FAQ

Is there a legal minimum number of quotes for private construction projects in the EU?

For private projects, there is no EU-wide legal requirement for a minimum number of quotes. Public procurement rules under the EU Procurement Directives apply only to publicly funded projects above certain thresholds. Private companies can choose how many suppliers to compare. The recommendation of 8 to 10 is based on economic optimization, not legal requirements.

What if I only have 3 suppliers for a specific material?

In some niche categories, the supplier market is limited. If you genuinely only have 3 available suppliers in your region for a specific material, comparing all 3 is the right approach. However, for common materials like concrete, rebar, insulation, and dry mixes, most EU regions have 10 or more suppliers within reasonable delivery distance. The issue is usually not market availability but the time required to contact them all.

Does comparing more suppliers damage supplier relationships?

No. Suppliers expect to compete on price. A standardized, professional quote request actually improves the relationship because it gives them a fair opportunity to win your business. What damages relationships is asking for quotes and never ordering, or always choosing the cheapest option regardless of service quality.

How often should I re-tender materials I buy regularly?

For materials you purchase on every project (concrete, rebar, etc.), re-tendering every quarter or every major project keeps prices competitive. For one-off purchases, tender each one individually. The key is that suppliers should know they need to remain competitive to keep your business.

Can comparing more suppliers slow down procurement?

Manually, yes. Comparing 10 suppliers takes 3 to 5 times longer than comparing 3. This is the core problem that automation solves. With automated procurement, comparing 10 suppliers takes the same time as comparing 1, because the system sends all requests simultaneously and collects responses in parallel.