Are there any secrets to creating efficient and effective RFPs?
Based on feedback I have received the answer is a resounding YES!
This is true whether you are using a cloud-based platform or offline tools like Excel.
This issue was creating a significant challenge with one company.
They created a list of the key issues that had caused delays in RFP events in the prior 5 years. I will share some of them. See if any sound familiar.
- The final negotiated price for an item or service was not updated in the actual event on the platform or in the tool. This is a common issue as many organizations conduct additional price discussions after all bids have been received.
- If the last price is not reflected, the starting point for the next RFP will be incorrect and so will any analysis that references that price.
- Changes in specifications during an event are often caused by incomplete planning. We have all heard the excuses, but this is a time killer and it doesn’t make suppliers happy when they must rebid.
- Not enough alternate suppliers had been vetted to create a competitive environment. If the incumbent has been very reliable or is a sole source provider, it is understandable that the list of alternative suppliers may be short or nonexistent.
- It has been my experience that problems with the incumbent rarely surface all at once. Looking back there is normally a pattern that might have been ignored. I would suggest that cultivating a backup list is a smart approach for all key items and services.
- Smaller companies are very vulnerable to production interruptions when a key supplier has issues. I remember a regional company that was nearly put out of business when a key component supplier suddenly closed due to a fire. It took over a month to bring someone else on board and the pricing was not favorable. The negative impact on profits lasted for nearly a year.
- Switching costs were fuzzy. Switching costs are often the best estimate but can be too optimistic.
- Understanding the impact of switching is critical and should be part of the evaluation for every key item or service.
- Missing or out of date documentation can mean a tough decision at the eleventh hour. Do you give the selected supplier time to get their documents in order or move to an alternate provider?
- This issue can get very complicated in large bids with many locations for service or production.
Once all the issues had been compiled several other “ah ha” moments occurred.
- Things that had caused delays in past events were not automatically flagged for correction.
- Fixing issues that had been identified never seemed to make it to the top of anyone’s to do list.
- Suggestions to improve the RFP process had been ignored and eventually the team stopped trying to improve. Instead, they were simply working to survive.
The good news is once these issues were identified they were addressed quickly.
There was one benefit that wasn’t anticipated.
Morale in the procurement group improved dramatically.
The efficiency gains meant staff could get home in time to have dinner with the family, attend their kid’s activities or just relax with a glass of wine with their spouse or significant other.
It all started with a question because the status quo was no longer acceptable.
Ask better questions, make changes and 2018 will be your best year ever.
Action Step: If you are uncertain where to start the process of change, a procurement professional like myself can provide guidance and expertise to help your organization achieve the results you want.
If you want to go explore this topic in greater detail, please contact me. I invite you to request 30-minute discovery conversation. In my experience the next step will be apparent at the end of the call. I never assume that what I have to offer will be right for everyone, so don’t expect a sales pitch. You can reach me at (973) 718-7071 x875. The call will be forwarded to my mobile phone if I am not in my office which is pretty likely.
If you would like to know more ways to reduce costs 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.
You Won’t Drift to Success©
Commit to taking the next step.
Until Next Time, I Wish You Great Success in Your Business and in Your Life