A well-executed RFP (Request For Proposal) or RFQ (Request For Quotation) process can greatly assist you to optimise your expenditure without over investing one of your most precious commodities – time.
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In this two part article series we will share 20 guidelines to assist you in co-ordinating an effective RFP or RFQ process, efficiently.
1. Be clear on why you are initiating this process
- What is it that you want to achieve?
- Are you merely benchmarking your current supplier(s)?
- Are you seeking to make a change in supplier?
- Do you want to utilise the information to initiate negotiations with your current supplier?
- Are you considering adding an additional supplier to reduce the risk of having only one approved supplier for a specific product or service?
- Do you want to utilise the information to make an insourcing or outsourcing decision?
It could be that you have never made this type of purchase before and need the information to incorporate in a budget or to determine the pricing for a new product or service.
Although this information should not be shared externally it is important for you to be clear on your goal(s).
2. Decide who you want to involve
How many proposals or quotations do you want to receive? Remember that not necessarily every business contacted will provide you with feedback on your enquiry.
Similarly you should not include too many participants as some suppliers may need to come out to your offices before they are able to provide you with a final proposal or quote and this could become quite time consuming.
Create a list of businesses and their contact information for the purposes of this process.
A good guideline is to include at least three participants. If you do not know where to start, some research may be necessary. You can do research via internet, obtain information on potential suppliers via the yellow pages or contact individuals in your network for references.
Some of your minimum requirements may by default eliminate certain suppliers from participating.
3. Determine your deadline
Ensure that your deadline is reasonable (ten working days is a good guideline to consider).
It is important to highlight the required deadline very early in your communication with potential suppliers. It is critical to enforce this deadline and not take any information received post the deadline into account.
4. Determine the specifics
What information would the supplier need from you in order to be able to provide you with a quotation?
Let’s illustrate with an example: If you contact a business to provide you with a quotation for doing painting work, they may need to know what you need to have painted (interior walls, exterior walls or your roof), the size of the surfaces, whether they should include the paint in their requirements, whether you have specific paint type and colour requirements, what surface preparation may be required, whether they need to have special scaffolding or ladders in order to complete the job, whether there are any constraints around when or for how long they could paint etc.
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By providing a comprehensive briefing when you send your request out, you can minimise unnecessary back and forth. This may require some research - analyse previous quotes received for similar goods or services or consider the fields required in online RFQ or RFP forms.
5. Obtain historical information or projections
Volumes, batch size information, order frequencies etc. will all be useful to enable suppliers to provide you with an accurate quotation. This step is critical, especially if you are involving suppliers completely unfamiliar with your business.
6. Clarify confidentiality
In the event that you may need to share information that could be considered confidential, ensure that you obtain internal authorization and have the participating suppliers sign a Non-Disclosure Agreement (NDA) in advance.
7. Create a template for participating suppliers to complete their feedback on
A table format indicating your decision making factors will make it much easier for you to analyse and compare the feedback received from various suppliers.
It will help to ensure that suppliers provide you with all the information you require and that you are able to compare apples with apples.
8. Carefully construct your communication
You may need to include a short introduction, if you are involving suppliers unfamiliar with your business. Make sure that your communication is comprehensive but concise, accurate, easy to read, error free and that it flows logically. Highlight critically important information.
We recommend that you mark your briefing as confidential. Request confirmation of receipt of the briefing, as well as an indication of whether or not the supplier intends to participate (this will enable you to proactively include additional participants if required).
These ten steps are of critical importance to ensure that you are thoroughly prepared before initiating the process. In part two of this article series we will guide you through the initiation to close out of a successful RFP / RFQ process.