The
purpose of an RFP, regardless of what product/service you’re sourcing, is to
define your specific business requirements, identify vendors capable of meeting
those requirements, and recognize differentiation amongst bidders to select the
best suited candidate.
Too
often procurement teams go above and beyond the necessary requirements of an
RFP by creating complex content layouts, which contain far too many redundant
and/or irrelevant questions that do not reflect the capabilities of the vendor.
As a candidate receiving an invitation to participate in this type of RFP, it
can seem like an overwhelming and confusing task. In some cases, it can even
cause vendors to withdraw or decline participation simply because they do not
have the time, resources, and understanding to complete the over-complicated
RFP.
From
IMA’s experience in the data cleansing and catalog management space, RFPs are a
necessary evil to secure project contracts. The challenge is that many
manufacturing companies don’t have a clear understanding of what their data requirements
actually are, and therefore end up creating RFPs that are difficult for bidders
to interpret and respond to in a knowledgeable manner. In many cases, companies
provide their own pricing template that does not align with the bidder’s
pricing model, ask multiple questions that can ultimately be responded to with
the same answer, and do not allow for any subject matter expertise or best-practice
recommendations to differentiate candidates.
There are a few key components that should be incorporate into an effective RFP. Those components include:
1)
Compact and
Organized Layout
The layout of
an RFP sets the tone for the entire submission process, as it is the initial
impression that a bidder receives upon first glance at the document. The RFP
should be short, not 50 pages long, and should be laid out in an organized format,
which aligns with the set business requirements. RFPs that are lengthy and
complex often create a significant disconnect in response submissions, making
them difficult for the procurement team to review and evaluate. The objective
is not to challenge or confuse the bidder, but to educate them on the business
requirements at hand, while allowing them to propose their product/service offering
and capabilities.
2)
Defined Product/Service
Requirements and SOW
In
the Product/Service Requirements section of the RFP, it is important to clearly
define the Scope of Work and vendor capabilities that are required and/or
desired. Not only should this include product/service requirements, but also
unique business requirements such as desired terms and conditions. If you have
important requirements that are non-negotiable, make them known to bidders and
don’t just ask, demand them. The better you outline your requirements, the more
likely and capable bidders are to meet them.
3)
Clear and
Concise Questions
Questions,
questions, and more questions. This is what we tend to see in a typical RFP.
While there is no magic number of questions that an effective RFP should
contain, you should always use wise judgment to ensure your questions are not
redundant and serve an important purpose. If the question does not address a
specific business requirement or gain valuable information on the bidder’s
capabilities, then it is not necessary. Try sticking to a minimal number of
questions and consider breaking them up into categories. Based on the
categories, you can also develop a ranking and weighting system to prioritize
your requirements and help evaluate bidder submissions.
In
summary, an RFP does not need to be a complicated task; in fact, it is actually
designed to do just the opposite, simplify the strategic sourcing process.
Somewhere along the line, the purpose and format of an RFP has become buried in
technical verbiage and questions. We need to get back to the basics by defining
our business/project requirements, asking clear and concise questions that will
address those business requirements, and allowing bidders to differentiate
themselves from one another. The ultimate objective throughout the RFP process
is to secure the best-suited vendor, not just based on price, but on their
ability to meet business requirements and provide added value.
For more information on Strategic Procurement and related services, please visit www.imaltd.com or contact info@imaltd.com.
