Percentage of spend under management is a common KPI for mature procurement departments. If you’re looking to increase your amount of spend under management, you might consider sending out more RFPs, especially for services needed by other departments (e.g. Marketing, IT, etc.).
RFPs can be a good way to select suppliers that both meet organizational goals and stay within the project budget, but they will do you absolutely no good if no one responds.
Most likely, your original RFP can be salvaged; it will just need some tweaking before re-submitting it to suppliers.
As you begin to rewrite your RFP, ask yourself these 7 questions:
1. How much competition is there in the supplier market?
First and foremost, know the market. RFPs will not work in a market characterized by limited competition or monopoly. Ask yourself if there are enough suppliers to expect a reasonable amount of competition. Lack of competition in the supplier market will result in a failed RFP, no matter how detailed or well written it is.
2. Is the RFP feasible for the market?
Make sure what your requesting aligns with the limitations of your market. You can use the RFP phase to establish your own terms and conditions. An experienced buyer with an understanding of the supplier market will know what can be reasonably requested of suppliers and what conditions can be realistically expected. Your needs may not align with all of your suppliers’ needs, and they are free to offer their own conditions, but your request should fit within the market’s parameters.
3. Does this RFP align with the supplier’s business practices?
Look at how your supplier does business. Perhaps you’re dealing with a mom-and-pop supplier who still relies on phone calls and paper copies. Perhaps you’re trying to engage with a supplier in another country, and they speak limited English. Even if your e-sourcing solution is easy to use, it will do no good if your suppliers rarely check email or can’t read the language of your RFP.
RFPs will also get limited responses in business segments with high levels of corruption. These suppliers consider “under-the-table” costs as part of doing business, but they may not want to put it in writing. You will also have problems getting responses from segments with little interest in binding offers. For example, a construction company may bid deceptively low and then go over budget due to “unforeseen” costs and complications. The transparency and document trail of an e-RFP will not be in the supplier’s interest in these two situations.
4. Are we changing our RFP process?
If you’ve recently implemented an e-sourcing solution, have the courtesy to give preferred suppliers a heads-up. Even if your solution doesn’t require extensive training for suppliers, they might appreciate a quick walk-through and the assurance that the tool will make their job easier, too.
5. Have we included enough information?
An RFP only works if you’ve thought through what you’re requesting. After all, if you can’t express clearly what you want (or acknowledge what you might not be sure about), suppliers aren’t going to know how to bid. If your RFP isn’t specific enough, you’ll likely receive bids that are unnaturally high in order to compensate for many unknown factors, if you receive any bids at all. This article can help you outline the exact information you need to include.
6. Have we included too much information?
While it may be tempting to include every last detail of your project plan and 20 pages of documents passed on to you by the legal team, think first about the information your suppliers need to craft a complete proposal. Some of those details may not be necessary in the initial stages of an RFP.
7. How well were previous RFPs received?
They say elephants never forget. Well, neither do suppliers. Suppliers remember how you ran your last RFP. Did you treat all suppliers equally? Was your last RFP obviously prepared for only one particular supplier, knowing that all others would fail to meet the criteria? Did you announce the winning proposal and thank others for their participation in a timely manner? If past requests were perceived as unfair, then suppliers won’t want to do business with you in the future.
Still can’t figure out why your RFP isn’t getting the responses you had hoped for?
Try looking at things from the other side of the table. The folks over at Confluent Forms have seen so many RFPs that they’ve invented a drinking game about them. You definitely don’t want to drive your suppliers to drink!
Strategic Urban Solutions also has another great suggestion for troubleshooting your RFP: add another set of eyes. Have a colleague, especially someone from the procurement department if you have one, look over your RFP. You might be too close to the project, which could keep you from expressing yourself clearly to someone on the outside. A fresh look could help you get the responses you’re looking for.