If your sourcing team is using Excel, Word or a system that was developed in-house it is a good bet that they are spending 30% or 40% more time than is really necessary managing each RFP. This is most likely having an impact on the morale of your staff. They are probably feeling stressed, frustrated and underappreciated.
For the last two weeks I focused on Sharp Spend Analysis© and the benefits to be gained by having better data sets available for your sourcing team.
This week I will share some of the issues I have heard from suppliers about RFP processes they are forced to deal with.
This example is based on an RFP I reviewed two weeks ago for a sales rep for a supplier. His team was having a difficult time figuring out how to respond so they could earn the business.
I have purposely reduced the issues to the most obvious weaknesses in this RFP process.
At the start of the process each supplier was provided with a Word document and an Excel file.
The Word document provided background information, basic summary data and some best estimates on total usage for the service.
The Excel file had six columns for calculations and one column for assumptions.
The following were the most significant issues that the supplier was struggling with to complete the RFP:
- All of the usage statistics and estimates were broad. There are significant differences in costs for this service in US and foreign locations. In addition, the service costs in certain US cities is markedly higher. A much more detailed breakdown of the statistics by location was needed to properly price the service.
- The Excel file was basic, it didn’t provide for different pricing levels based on usage that is pretty common in this industry.
- There was no provision for service pricing on a local level.
- There was a small box to note assumptions for each line item. The supplier was very concerned because another bidder could submit a proposal based on completely different assumptions for selected line items to better fit their pricing strategy. This would effectively eliminate an apples-to-apples comparison.
- The Excel file was not protected and this allowed any bidder to make changes.
The main purpose of an RFP is to obtain apples-to-apples proposals for comparison and analysis. This doesn’t mean that soft issues are excluded. At a base level the buyer should be confident that the costs submitted are comparable and based on the same assumptions.
In this example, the supplier was forced to submit a series of email follow-up and clarification questions to even produce their proposal. This took considerable time and was quite frustrating for them.
It is worthwhile to note that more than a month after the submission date the suppliers still don’t know where they stand. The company is “continuing to evaluate” the submissions.
The process that the company used to issue the RFP clearly made it a challenge for their suppliers to submit and for them to analyze it. It is also pretty likely that the company won’t make the best choice since they didn’t set up the RFP to get apples-to-apples proposals.
Action Step: What would be next logical step?
I would start by asking these questions:
Is our sourcing team having a difficult time getting comparable proposals through our RFP process?
Are we confident that we are getting apples-to-apples proposals?
If the answer to either questions is no or not sure, consider contacting me to review your RFP process.
Next week I will offer more insight so your organization can improve your bottom line.
If you would like to know more ways to truly reduce costs and increase efficiency without changing the way you do business simply give me a call or send me an email with your contact information and the best time to reach you. One of the companies I represent has tools that can make your strategic sourcing efforts much more efficient.
You Won’t Drift to Success©
Think about it.
Until Next Time, I Wish You Great Success in Your Business and in Your Life