The efficacy of procurement teams is tethered to knowing and understanding what they are purchasing and why. Think this seems straightforward? Think again. Large enterprises might have vendor rosters numbering in the thousands that cut across numerous categories. And most of the ongoing vendor engagement is in the hands of stakeholders, who all too often, sit in virtual silos. So what can procurement teams do to address this? Actually, there are lots of things. But for the purpose of this post, let’s focus on maximizing the chances that the best-aligned vendors are engaged. A key tactic to engage involves leveraging procurement’s favorite three-letter acronym — the RFP (request for proposal). An RFP allows an organization to assess whether the supplier’s goods and/or services are actually going to meet the its needs.
With that in mind, it’s critical that the RFP is able to draw out the best answers from your potential suppliers. Therefore, it has to be prepared thoughtfully and with care.
The following steps will help to ensure this:
1. Do your research
Start by embracing the requirements gathering process. Engage with stakeholders and establish what problems they are trying to solve and understand both the parameters and constraints surrounding them. Collectively, you should determining what they actually need, which will help you draft an RFP that drives specific results. Are there key areas that you want your prospective suppliers to address? Be sure to understand what elements are actually feasible and in scope. You want to take care to avoid wasting the supplier’s time — and yours — by providing an RFP to which they can reasonably respond.
If you’ve done your homework up front, then you can be realistic about setting expectations and tie them to measurable and quantifiable company objectives.
2. Identify your ideal supplier
Different suppliers will provide different proposals. Each supplier endeavors to provide its unique viewpoint. Their approaches and solutions will vary and each one will likely have its own strengths and weaknesses. While some suppliers will focus on cost, others will attempt to win you over by providing the most comprehensive service. Others may focus on speed or support. Create a clear picture of your winning criteria to minimize the difficulty in assessing what each bid has to offer. As you write your RFP, be sure to also note what qualities your winning bid will have.
Remember: value is ultimately dynamic in nature and can change situationally. While you might be particularly price sensitive with one purchase, you might find yourself more time sensitive with another. By establishing the key drivers of your decision, and if possible, weighting your RFP accordingly, you increase the likelihood of strong alignment with the supplier you ultimately choose.
3. Organize your document
As a standard, any business-related document should be carefully and accurately written. This is especially true for RFPs. After all, your main goal is to find a vendor that will provide valuable goods or services for your company.
That said, be sure to outline what is needed in such a way that your priorities are clearly communicated to the potential supplier.
In general, you should be able to answer the following questions:
Why are you trying to find a supplier for this particular problem?
- Who is the organization seeking this solution? (Provide a clear description of your organization.)
- What is the nature of your project and what is required from your suppliers?
- When do you need the proposal or bid completed?
From here, it is easy to create a brief introduction that summarizes key bid points.
4. Clarify your evaluation criteria
When it comes to evaluation criteria, you are at liberty to provide as much information or as few details as you like. Generally, however, suppliers need some insight you will be judging their bids in order for them to focus their answers on your actual requirements. Undoubtedly, you will be better served by conveying your priorities. However, we would caution you not to share specific weighting criteria as you don’t want suppliers to “game their responses.”
5. Provide a detailed timeline
Explicitly detail the timeframe by which your RFPs need to be answered. Suppliers must know how much time they have to prepare their responses.
For a clear and comprehensive reply, establish reasonable deadlines. Remember, complex bids require weeks of preparation (sometimes more!) and it’s unreasonable to demand that they be submitted hurriedly.
Keep these points in mind the next time you’re writing an RFP. These simple tips can help ensure that you send out an engaging and effective RFP that attracts the best bids from potential suppliers.
Take advantage of Vendorful’s eSourcing platform and find out how we can help improve your procurement process. Get in touch with us today.