This blog is a part of our “Complete guide to RFP” blog series, where we share our insights regarding the RFP process. We at Sievo have participated in hundreds of RFPs in recent years and we wanted to ease your burden by sharing our knowledge on how to avoid misunderstandings and save time through a well-constructed and comprehensive RFP-process.
Request for Proposal (RFP) is alive and well, despite the increasing criticism and murmuring in the market. RFP is under scrutiny because it is seen as time-consuming effort that ties organizational resources and kills differentiation. Well-constructed RFP is a rare treat. At their best, RFPs are still the method of choice when tendering a product or service. For evaluating specialized competence and sophisticated solutions, RFP may not be the best fit approach – at least without a proof of concept (POC). The RFP process, when properly managed, is transparent, objective and fair. A poorly drafted document causes stress and uncertainty for the candidate, resulting in lots of clarification questions, multiple iterations, and sub-standard submissions. A well-crafted RFP document defines the quality of the submissions, key business requirements and the time it takes to conclude a contract. Effective RFP aims for improvements in customer satisfaction, service quality and business value.
Why do Requests for Proposals (RFPs) take so long?
The end-to-end RFP process usually takes from six weeks to.... well, forever. There may be no strategic alignment within the organization on the desired outcomes. Business requirements and priorities may be misunderstood. The RFP team could have overlapping projects and responsibilities. The RFP team may be lacking competence and substance understanding. The RFP process within the organization may be broken. The main problems hindering an agile way of doing an RFP are often administrative. Many companies are still stuck in the 20th century using manual drafting processes and email-based RFPs despite the wide availability of sourcing software solutions. Sending documentation back and forth via email requires patience and precision. Response document comparison and evaluation in excel requires multiple screens and long nerves. The elapsed time depends on the complexity of the project, the size (and relevance) of the team, number of potential suppliers, number of RFP rounds, amount of information required and need for contract negotiation. Sourcing a new commodity or service for the first time takes longer than a repeat purchase from approved or preferred suppliers, because the definition of requirements (together with business stakeholders) takes its time.
The following steps serve as a checklist and practical guide to completing RFP in no time. As a disclaimer, the purpose of this blog is only to give ideas on how to streamline your RFP process - not to rush you into making a major decision carelessly.
From scoping to handover in 4 weeks
Graph: The 4-week RFP - how to complete an RFP process in 20 business days
Identify sourcing potential with spend analysis
Spend analysis can reveal sourcing potential and opportunities for consolidation. A business owner may have requested you to conduct an RFP, or you have identified an opportunity and have a buy-in from business stakeholders for the project. Either way, before kicking off the RFP, you must have identified that there is a potential return on this resource and time investment. An experienced category manager gets to know their market domain and does their market research in advance. Ensure market availability for the product/service you had in mind. One way of market scoping is to have intro call with potential suppliers. Your understanding on the offering will increase and you might find elements you did not consider before. In intro calls you can give a hint of possible tender coming up so the market can reply to demand as needed.
Scope and specification – 2 DAYS
Spending time on defining the scope before creating an RFP is vital. Organize a kick-off meeting with your internal stakeholders to ensure maximum commitment and alignment. Harness the know-how of your organization in drafting specifications and key business requirements. Stakeholders, subject-matter-experts (SMEs) and end-users need to be fully aligned on the desired outcome. Your stakeholders most likely hold valuable market intelligence and information on potential suppliers to involve. Poor strategic alignment derails many sourcing initiatives. If you are having difficulty with defining the scope, go back to the stakeholders and get clarity.
Ensure availability of your RFP team upfront. Book meeting slots in advance with SMEs and senior management for reviewing the scope, processing the responses, supplier presentations, evaluation, and potential negotiations. The stage can be referred to as front-end-loading.
RFP preparation – 2 DAYS
The RFP should explain who you are in a cover letter, and why this product or service is important to you. Tell the candidates everything they needs to know about your current state and desired outcome. Translate the specifications, key requirements, and user needs into RFP questions and templates.
- A Complete Guide to RFP: What Questions to Ask & How to Write a Cover Letter for Vendor
- A Complete Guide to RFP: Detailed Template
Here are some time savers:
- Keep the number of candidates limited to focus your efforts. Involve only such candidates that have a fair chance of winning. Consider your time investment in reviewing responses, questions and comments – the number of candidates is the multiplier.
- Provide a cover letter. With good briefing you avoid multiple questions from candidates later on.
- Use pre-drafted RFP questions to assess functionality. Focus on the essential.
- Provide pre-defined forms to complete and tables for pricing. This makes evaluation of responses easier for you later on.
- If you wish to mitigate unwanted surprises, introduce your mandatory requirements, compliance forms, terms for non-disclosure, information security requirements and code of conduct upfront.
- Request potential suppliers to submit their SLA for review. Depending on the service and established industry practice, the suppliers may prefer to use their SLA for all their clients (as in the case of SaaS). Reviewing different SLAs allows you to compare suppliers' service coverage.
- Never assume that suppliers are familiar with all your internal jargon. Introduce internal concepts and acronyms.
- Provide contact details for requesting additional information and a preferred date and time for doing so.
- Provide RFP timeline for potential next steps, such as presentation or negotiation dates. Communicate intended start date for the service.
- Give clear instructions on how to submit the RFP response. Explain what documents you need from the candidates.
- Use electronic sourcing and e-signature tools. E-sourcing enables smooth distribution of RFP materials, audit trail and storing of responses. E-signing helps you mitigate delays in signing and secures document version control.
Await the RFP responses – 10 DAYS
It is possible to complete the publish-to-receive stage within two weeks. If you are tendering a simple product or service that can be catalog prized, time given for submitting responses may be shorter. Responses to large and high-value RFPs are often handled by professional bidders. If you give them a too-tight deadline, the answer is likely to be a NO-BID. Level of familiarity with RFP candidates impacts on time required: if your RFP candidates are contracted suppliers or familiar with your company, processes, and requirements, it may be more straightforward for them to submit a response.
Awaiting the responses should not be time wasted. Use this time to plan and prepare for the following steps. Provide one week for candidates to ask clarifying questions and ensure their questions are replied shortly.
Evaluation and supplier selection – 2 - DAYS
For fairness and transparency, evaluation criteria must be agreed prior to sending out the RFP. Forms and tables, fully and correctly completed by candidates, make it easy to compile, apply the agreed weightings, and evaluate. With the help of analysis tools, this step can be completed in a matter of minutes. Securing internal alignment and buy-in on the other hand may not come easy. Open-ended questions often require human attention. Sourcing software can help you by providing ready-made scoring and recommendations, but human effort is needed for qualifying responses and making the decision. This phase can include more detailed supplier qualification, such as reserving one day for site visits, presentations, financial audits or product testing. You may want to consider setting up a POC project. Planning and preparing a POC that delivers good results would likely be outside the 4-week window.
Negotiation and contracting – 3 DAYS
Before negotiations short-listed candidates may be asked to provide more information on clarification questions. Best and final offer (BAFO) negotiation may take place with several shortlisted candidates. Consider setting up an e-auction for transparent bidding of prices. E-auction as such is not a viable option if you are seeking for multiple proposals for a specific challenge, but for products and services that can be compared apple-to-apple.
Contract negotiation happens with the preferred candidate. It’s fair to say, that complex negotiations can take weeks if there is unclarity on specifications, service requirements, and/or responsibilities between the parties. Negotiations can cause major delays if they are not pre-scheduled, and target of the negotiation is unclear. Preparation is vital, align with your internal team on what is considered as minimum-viable-contract before you engage with the supplier. Ensure both parties have their legal and subject matter expert resourcing reserved for the scheduled time of negotiation. To speed up the process ensure everyone has access to the same data, latest documents, and define the role of each person on the negotiating team. Good planning, engaging supplier(s) in iterative definition of the requirements and familiarizing yourself with supplier’s standard SLA for common ground reduces the amount of effort required in negotiation phase.
Implementation and handover – 1 DAY
Communicate the award first to internal stakeholders, then to the winning candidate and then to other suppliers. Explain the scope, contract terms, SLA and KPIs with relevant stakeholders and end-users. Ensure you have nominated a contract owner and a relationship lead that will monitor the KPIs and collaborate with the supplier. Ensure supplier is activated in relevant systems. Agree on future procurement involvement and governance arrangements. Agree on practices related to validating prices along the contract period.
Analyze lessons learned on each RFP process and collect feedback from internal stakeholders and candidates. Continuous improvement of the RFP process and alignment of interests will ensure your stakeholders are eager to support sourcing projects in the future. It is good practice to provide feedback to unselected candidates on why they were unsuccessful and how they could potentially improve in the future.
This concludes our step-by-step guidance on fast RFP process. RFPs are heavily criticized when they are used just to test the market or to ratify a purchasing decision already taken. Be authentic to your potential future business partners and transparent about your desired outcomes for the RFP. Benchmark with industry peers and engage with potential suppliers in building an RFP that delivers best results.
Header picture by: Joe Hu (unsplash)