Sourcing 101 – Creating Dynamic RFPs
Creating dynamic RFPs that will help your organization meet expense reduction goals while satisfying quality requirements is achievable with preparation and the right tools.
I will focus on a commodity type purchase with alternative choices to demonstrate sound RFP practices.
Picture that your organization wants to replace existing laptops with newer more powerful ones. Here are some essential steps to cover to ensure you end up with the right device for your organization.
The success of the process is based on how clearly you define the purchase up front. In other words you want to create a funnel so suppliers are not allowed to submit bids that don’t meet the defined criteria. This will allow an apples-to-apples comparison which is essential to fair competition and good decision making. We don’t want suppliers whispering in your ear outside of the process.
Clearly define the requirements needed to support the users.
- Research pluses and minuses with current devices. Provide current users with an easy to use format for their input.
Define the essential attributes.
- There are very likely reviews of the latest devices available and the pros and cons of each.
- Separate the essential attributes from the nice to have or luxury ones.
- You shouldn’t eliminate features at this point – your suppliers will determine if they will fit in your budget.
Create the minimum functionality that you will accept for the new devices.
- Create a second, third or even a fourth alternative to have your suppliers submit bids on. You could have more alternatives but this is likely to muddy the water and make it more difficult to make the selection.
Based on the criteria you have established, identify as many vendors as possible to invite to the RFP. In this case, five or six viable vendors should be available.
- If the vendors have not already been vetted then you will need to include the vetting process for those vendors as part of the RFP process. Qualified vendors will be able to skip this step.
Now you have the basics to request the best bid from each participating supplier.
At this point you can compare the bids and eliminate suppliers that haven’t been able to meet the budget criteria or other specifications.
If you have done a thorough job in the RFP you will be in position to request final and/or best bids.
Creating competition is essential to gaining the most leverage in the purchase.
There are many advanced tools and tactics available that can help you maximize savings.
One note of caution, if your procurement team is using Excel, Word and email then the process will be more difficult to control. Self-contained systems that have all the elements of the RFP in one portal are a better choice. They will allow you to eliminate bids that change the game by changing the submission criteria.
Action Step: What would be next step?
I would start by asking these questions:
Is our procurement team having a difficult time getting comparable proposals through our RFP process? Am I confident that we are getting apples-to-apples proposals?
If the answer to either questions is no or not sure, consider contacting me at 973-936-9672. to review your RFP process.
EC Sourcing Group is one of the companies I represent because they help procurement teams deliver quantifiable cost and time savings. If you want to know how, I invite you to request a demo or 30 minute discovery conversation so you can experience the platform, process, people, and tools.
Next week I will continue on this same theme so your organization can improve your bottom line.
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.
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Until Next Time, I Wish You Great Success in Your Business and in Your Life