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complex RFP

4 Common Sense Rules for Running RFPs

eRFX technology has transformed the way we run RFPs, enabling us to easily collate and evaluate huge amounts of information from bidding suppliers. Great, right? Well, like all powerful tools, eRFX platforms can also be used in a bad way. Having run hundreds of RFPs and now being in a position where I am receiving them, I often despair at the quality of the RFPs that come through, particularly via eRFX platforms. I would implore anyone running one to consider the following principles:

1. Only ask for the information you really need.

We recently received an RFP with over 200 detailed questions plus requests for 25 pieces of documentation, all for a non-critical, standard SaaS solution. Needless to say, my initial reaction was “Is it worth it?” and then, being unsure of the answer, “How do we avoid spending huge amounts of time on this?” Ask the questions that are genuine “go/no go” criteria, and ask the questions that will help differentiate the wheat from the chaff, but keep it brief. You will end up with more responses and responses of a higher quality if you do so.

2. Don’t make it completely impersonal.

It’s possible to run the entire process with no verbal or physical contact, and this may seem efficient, but how much are you missing by doing this? Unless you’re buying a genuine commodity in which case you’re more likely to be running an RFQ, make a point to talk to all the bidders prior to releasing the RFP. Explain the process, make sure they understand where you’re coming from, get a feel for whether they’re the kind of people you would like to work with or not. Verbal communication builds trust so much more quickly than written and it’s important that the supplier trusts you as well as the other way round.

3. If you have a scoring system, have one that makes sense.

There’s been a lot written about this, but many organisations create elaborate weighted scoring systems without understanding how they work. Any system that splits price and non-price criteria will mean that at some point a poor solution will score better than a good one if it’s significantly cheaper. Make sure you understand and agree with where that cross-over lies. In addition, ensure the suppliers understand something of which aspects of their response will be regarded as important, so they’re not shooting in the dark.

4. Think about the specific product or service you are buying.

There’s no one-size fits all for running RFPs so use common sense rather than slavishly following a fixed process. In some cases, you may want to meet with the bidding suppliers first to understand more about their offering prior to inviting them to bid, in other cases this can wait until a later stage. In certain instances 200 questions may be appropriate, in others 10 may suffice. Sometimes an eAuction will be the best method of negotiation, but sometimes not. Think about what’s important and create the most efficient process (for both you and the suppliers).

eRFX technology is great for finding the best fitting solutions at the optimum cost in the most efficient way, but it only works well if we don’t switch off our brains while we use it!

Keeping RFPs simple

E-Sourcing tools have enabled procurement professionals to relatively easily create, distribute, collate and analyse extremely complicated Request for Proposals. Complex weighted scoring mechanisms, even combinatorial auctions have become the norm. However, it’s tempting to get carried away using complex templates and scoring criteria that are in all honesty overkill for the product or service that is being procured.

At a simple level, suppliers will assess RFP opportunities either knowingly or unknowingly using 3 main criteria:

  • The cost of bidding. How much resource and effort do I need to navigate the bid process to get to a potential agreement?

  • The likelihood of being successful. Is this a genuine level playing field? Am I an outside shot? How have I fared previously in similar bids?

  • The attractiveness of the contract. How much do I really want this business? What are the short and long term benefits?

If the supplier has a negative feeling about at least 2 of these, then there is a fair chance that they will either not bid, or perhaps put minimal effort into the early bid stages.

To combat this, buyers should consider the following guidelines:

  • Keep the RFP as simple as possible, using an e-Sourcing tool that’s extremely user friendly for suppliers.

  • Only release the RFP to selected genuine potential suppliers and let the suppliers know this. You need enough to generate competition and reach the market price but not so many that suppliers lose heart.

  • While the prime aim for the contract is to suit your own business’ needs, try to make it as attractive as possible for suppliers, for example a reasonable contract length, reasonable review frequency, good volume forecasts etc.

 Not only will this increase supplier engagement, but it will also make the process more efficient from the buying perspective too.