Does the RFP process have a bad reputation?
I'm curious to hear from both sides of the coin on this question (Procurement and Sales). I have found that many companies in numerous sectors look upon the RFP process with great disdain. Part of this, I think, is due to companies that use the RFP as a shotgun approach to sourcing, including as many companies as possible and then eliminating candidates with no real rhyme or reason.
My other thought is that the RFP can be unruly at times, and overpacked with questions and exercises that haven't been thought through, and thus, frustrate Sales people who feel that they'll do a lot of work, only to be subjected to elimination amid a large field of candidates.
So what can be done to both the process & the document to eliminate the bad rep the RFP gets sometimes?
Good Answers (3)
Michael M.
Corporate Vice President, Supply Chain at AMD
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Paul, I have not heard that the RFP process is laden with doubt or disdain.
The sourcing events that my teams have run are well communicated to the suppliers (existing or prospective) involved. Each RFP identifies the entire scope of the quote, the criteria for evaluation, provides opportunities for Q&A (where we share questions/answer with all involved), a schedule for responses, documentation required, and so on.
We let everyone know if the RFP is going to be a one or two-step event. If it is a two-step process, we tell the supply base that the top 2 or 3 quotes will allow them to get to the next phase.
Critical to the success of the RFP is total integrity on the procurement side. The RFP results cannot be used to go back to an incumbent and say "if you only change your price by ..." so that they feel extraordinary pressure from other non-current competitors. Conversely, if someone (incumbent or not) submits a result and they do not win, the procurement team cannot bow to their after-the-buzzer last offer.
If the sourcing company maintains a solid process, solid communications with the suppliers, and identifies clearly why a supplier won and lost - the process will be viewed as beneficial and fair.
Thanks.
Robert S.
Head of Product at Makerbot Industries
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I've found that ensuring that the RFP process is 'fair' is the selling point to get more support. So having the requirements AND scoring grid finalized (as best you can) prior to going out with the RFP - helps.
My model is to release RFP then have an open call, with the internal customer and ALL the suppliers for a Q&A session. So everyone hears the question and the answer(s). Also, with up front agreement from the suppliers, share the scoring results, but remove company names. So they can see the scores for Quality,Service and Price and how they ranked. A 'Thanks but no thanks' letters at the end of the RFP to officially close it out is a professional courtesy - but shows that you ran it as a true project vs. just a charade.
Most sales folks appreciate clear communication vs. just blowing them off and not knowing status.
My world is heavily focused on Services vs. Commodities - so please take that into consideration.
Thanks
Rob
Paul,
Communication and Time are key parts to a successful RFP process. Making sure that you are thoroghly communicating to the bidders and current suppliers throughout the process is very important. Both sides need to know what you are doing and why you are doing it. The second piece to this puzzle is to allow ample time for the bidders complete the bid. This can be tricky since there is a time limit as to how long the process can last. Most times a month is a sufficient amount of time. This of course depends on the size and depth of the category being sourced.
In regards to documentation, this is not so easy. Undoubtably you will most likely have a hundred page document. Ways to help manage all this information is to use e-sourcing tools where you can upload and download documents. They are also very helpful in the questionnaire section of the RFP. Most e-sourcing tools with have a "questionnaire" tool. This allows you to build the questionnaire and have the answers from each bidder aligned vertically for ease of grading and evaluating. These is still not an easy task, but it helps to eliminate a lot of the grunt work.
Hope this helps,
Mike Mohr
More Answers (6)
Having been in the middle at a distribution company I've been on both ends of this RFP process. Receiving the RFP's, and also sending them. I have to say things have probably been worse for my suppliers, then they have been for myself.
What I've noticed, is that my main customers (who are tier I auto suppliers) spend a lot of time on the up front sourcing and building relationships with their trusted suppliers based on cost, quality and other factors. Once they determine which supplier can serve them best, they stick with that supplier, or only a select few making their RFP process streamlined. They have a quality manual which is pages in length, and their RFP requirements, pricing terms, quality requirements for each part, are negotiated up front, making each individual RFP rather simple in communication because the expectations are up front.
For me on the other hand, I buy fasteners from a multitude of sources who are not all automotive in nature, so for every RFP I send I have to detail the exact quality requirements as stated by my customer. Yes this can be extremely cumbersome. I try to have a similar approach as my own customers, and narrow the recipients of my RFP's to the ones whom I know will be competitive. But with constant pressures to reduces prices (or else), we are often nickle and diming to resource, and find other lower costs. We'll send this complicated RFP to 20 vendors.
When there are lengthy proceses required for the RFP, I've found the best approach is to first aquire very basic cost information from the source without having them jump through hoops. Narrow your selection to 2 or 3 vendors from there and only have those vendors with a chance of being competitive, follow through with the rest of the lengthy requirements.
Simply put, can they match your price target? If so, then make them go through the engineering, and quality stages of the RFP.
Otherwise, get to know your select few vendors up front and don't send every RFP to 20-30 places. Especially if you are ordering a nut that will cost you $300.00/year. Just choose the supplier you've grown to trust. Make it an excercize to revisit your supply base every 1-2 years but don't haggle on every part. The RFP process will be less cumbersome and you'll receive better response when the bidder's know they have a fair chance at receiving a job.
Paul-
I am going to keep my answer short.
I think the RFP is a great tool if it is utilized correctly. The two things I would do in order to make it very effective are:
1. If I was not sure what companies I really wanted to participate in the RFP, did not know certain things about the industries, was not familiar with the organization I would issue an RFI first. I would inform the vendors that this would be the first cut in regards to the final bid. The RFI should not contain more than 12 questions.
2. Anyone I sent an RFP to must have been qualified through the RFI, DB, or other filters. This way the vendor knows they have an equal shot at the business. The decision on the business will be made on their solution and pricing in the RFP, not on a filter question in the RFP.
In closing the most important thing about the RFP process is that all the vendors know that they have a a shot and that they have been invited because you are already qualified them.
Paul,
RFP's are a great tool as long as they are used properly. Issuing RFP's on a daily basis will be time consuming for both you and your providers. I tend to agree Wade Hogle in regards to ensuring you know who you are sending your RFP's to.
To be frank, the RFP process is a little unattractive as you have both sides of the coin to deal with. First you place a lot of effort and time, money to produce a professional RFP then, during the process respondents incur the same in responding, time is critical in both cases.(Generally we don't have enough!)
To make the process attractive it needs to be short, precise and relevant to your requirements.
Also the feed back mechanism needs to be well thought out by someone who will involved in the end product. Too often organisations get an outside party to prepare based on little knowledge of culture and desired outcomes from a users perspective. It needs to be interactive to make it a good process.
I trust this helps.
Jason M.
Experienced Director and Governance Expert with superior knowledge on Program Governance, Audit and Technology
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Hi Paul,
as a consultant how sees three sides of the process (Strategic Sourcing Consultant, Responding to Client RFP's and Probity Advisor), I have some interesting views.
I think RFP's have their place, but I do like the process of having panels of suppliers for goods and service in place (pre qualification if you like), so that you can focus on the specific goods or services needed at a point of time rather than all the issues around the supplier.
Secondly, I think it helps if there are well developed templates for the suppliers to complete, as this helps the evaluation efficiency to ensure consistency and speed in review, but there must be some opportunity for the vendor to do the selling.
I think the benefit of the RFP, if done properly, the internal client will have to have thought through well what they are looking for and the key criteria for evaluation. Many purchases where there is not a RFP process fail because the internal client doesn' really know what they want, in terms of the actual goods or service or the value outcome.
Finally, where RFP's often fail is the lack of project maangement of the procurement function. I see and RFP as a project and therefore should have strong and robut program and project management. See below a white paper I have written on Program Governance for Procurement.
Hope this is of help.
Kind regards
Jason Masters
Links:
David K.
President at Confluent Forms LLC
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I've been on the receiving end of numerous RFPs, helped organizations through RFP processes, and built and maintain the RFP Database at http://www.rfpdb.com ... so maybe I'm qualified to answer this question, or maybe not.
I don't see anything wrong with the CONCEPT of the RFP process; it's the IMPLEMENTATION that can get hairy. More often than not the person running the RFP process has never run one before and read a 5-minute tutorial on the subject or is copy/pasting from a template they found... that obviously starts the process off on the wrong foot. After that, who to send the RFP to? How to evaluate the responses? How to answer questions from potential vendors? This is all assuming that the RFP had instructions for how to respond to the RFP (proposal format, information required, etc.) and that the vendors followed the instructions.
There is so much room for disaster that it's amazing that nobody has developed a better process... or have they?
I think a good RFP process is one that lays the groundwork for getting straight answers and information for an apples-to-apples comparison. Organizations need to really think about what questions and information they need in order to find the best vendor for the project and limit their questions to the ones they need in order to evaluate the submissions. At that point, I recommend that clients choose the 3 or so proposals that stick out in their minds as the best, and open up a dialogue. Introduce the human element, see if you like their ideas and their vibe, see if there is chemistry, if they have ideas to add to the conversation and if they're going to be the right company for you to partner with.
While this deviates from the "RFP process", I think of it as a means to an end. If the tool helps you along, make the best use of it but know when to put it down and start digging with your hands.
Best,
-David
