The success of any sourcing initiative is largely dependent upon successful request for proposal (RFP) planning. In today’s edition of PurchTips, we’ll cover three tips for planning a successful RFP. In a future edition, we’ll share four additional tips.
RFP Tip #1: Make your RFP the appropriate length. “The easiest way to ensure that you’re paying too much is to put out an RFP that is painful for a supplier to respond to,” says Bill Dorn, Vice President of Operations for Source One Management Services and the co-author of Managing Indirect Spend: Enhancing Profitability Through Strategic Sourcing. Dorn has observed that an RFP may start out as a generic template then, over years, morph into a “monster that has a whole bunch of unnecessary questions” that require irrelevant responses. Before issuing an RFP, he recommends that you “go through every single question and ask ‘Is this question directly relevant to this spend category?'”
RFP Tip #2:Avoid using supplier-provided RFP content. If you use RFP content provided by a supplier, “you’re pretty much guaranteed that you’re going to be buying from that company” that gave you the content, according to Dorn. With regard to supplier-provided RFP content, Dorn says that “first, it only has questions in it that really make the person that wrote it look really good [and], second, it’s likely to have specifications in it that are completely irrelevant to you, the buyer, but serve to exclude the competition.”
RFP Tip #3: Use an RFI before an RFP if it makes sense to do so. If one supplier is your main source of market information, you can first issue a request for information (RFI) to learn more about the market. “Companies are too quick to list a bunch of specifications in [an] RFP,” believes Dorn, citing that as a suboptimal approach. “The best way to approach the market is identify a problem or a pain that you have and let the experts in that particular spend category tell you how they would resolve it.” He stresses that buyers can be pleasantly surprised by the responses, which would not have been captured in a specification-heavy RFP process.