Almost half of all supplier collaborations fail. While there may be a raft of reasons for these failures, it’s often because the procurement relationship didn’t start off on the right foot. High churn in the supply chain usually means lost productivity, wasted resources, and frustration for everyone.
Building better relationships with your suppliers starts at the very beginning of engagement, and that often begins with an RFP. A good RFP will set the tone for future dealings. Yet these important procurement documents aren’t always as straightforward as they appear. To communicate your organization’s needs clearly and comprehensively requires spending some extra time and effort to establish the foundations of a successful partner relationship. Here’s how to write an RFP that not only gets you the goods and services you need, but also attracts your ideal supply chain partners.
The term RFP stands for Request for Proposal. Many people think an RFP is simply a document that explains the items that an organization wants to purchase. This description is true, but it’s also simplistic. When a company needs to procure a commodity, service, or valuable asset, it will write an RFP to communicate that need to prospective suppliers and subsequently review submitted proposals. When the proposals come in, the company will usually arrange a bidding process to find the best price, specifications, and all-around fit for their needs.
RFPs are more often used if the company needs to find a good or service that requires technical expertise or a specialized capability to deliver—or if the item being requested does not even exist. In a bid to win business, suppliers often spend enormous amounts of time poring over RFPs to prove their worth and come up with a proposal that best meets the customer’s needs.
Yet an RFP’s function is more than simply serving as a detailed shopping list. It’s really a tool procurement uses to introduce themselves to prospective suppliers and to build the basis of their supply chain partner relationships.
For an RFP to be successful, it needs to communicate a host of important information to prospective suppliers. RFPs must explain the bidding process and contract terms while providing clear guidance on how proposals should be presented.
The RFP should detail the nature of the project or need, including a clear account of how the bids will be evaluated—the criteria for evaluation and the method for grading proposals.
Often RFPs will require vendors to provide a Statement of Work—an explanation of how they will go about providing the solution, including tasks to perform and a project schedule. When writing an RFP, delivery timelines and expectations always need to be communicated clearly. To find the right supplier and to help build trusting relationships with your business partners, a good RFP will always include as much information about your company as possible—the nature of your business, what you’re trying to achieve with this new procurement, your company’s culture, and how it likes to conduct business.
Many different types of organizations use RFPs in many varied ways. Engineering firms use them to find manufacturers of component parts. Pharmaceutical companies issue RFPs to procure composite chemicals. Management consultants use them to identify specialist subcontractors. Property owners write RFPs to locate local service providers like plumbers, electricians and janitorial service providers. There are as many ways to use RFPs as there are types of business relationships.
A good RFP is an honest representation of your company. Putting one together can be time-consuming. But an RFP that’s clear and meaningful will produce high quality bids and improved relationships with your suppliers.
The first step in the RFP process is writing a clear RFP—and yes, that’s easier said than done. The trick is to be as clear and comprehensive as possible. It doesn’t pay to make prospective suppliers guess what you want. Tell them:
And don’t forget to proofread and revise your RFP several times. This document represents you and your company, so give it the best chance to shine.
Writing a successful RFP requires thinking not only about what you need, but also what your suppliers need. Remember that when you ask people to respond to your RFP, you’re creating a lot of work for them. Respect their time and capabilities. Only invite as many vendors as you’re willing to evaluate.
It’s important to limit your requests to the number of suppliers you’re willing to evaluate—but you should be willing to evaluate as many as possible! The more bids you can process, the better your potential cost savings and ultimate quality. The trick is to increase your vendor pool without increasing workload by using RFP management tools.
These days, RFPs don’t need to be written from scratch. Smart procurement professionals take advantage of the host of RFP tools on the market—like Fairmarkit’s request management solution. RFP automation tools help you draft your document, providing shortcuts and best practice prompts (and RFP response templates help suppliers respond to your request). RFP management tools walk you through the entire process, from initial document creation to evaluation.
Give prospective suppliers as much information as they need to give you the information you need to make a decision. Ask specific, uniform questions so that you can compare vendors to vendors. And be nice. There’s nothing to gain from being adversarial. Transparency and honesty is the best way to begin a mutually beneficial business relationship.
There are plenty of RFP templates out there to make drafting your request a whole lot simpler. Here are a few very basic templates that may suit your purpose.
At their most simple, some RFPs will only need the following sections:
More complex requests will require greater detail:
1. Project Overview
2. The Company
3. Scope of Work
4. Budgets and Timelines
5. Submission Requirements
A good RFP is clear. It provides the relevant background information and lays the foundations and expectations for a mutually beneficial relationship between two businesses. The RFP is only the beginning of your communication with potential partners, so it’s important to manage the RFP process proactively and communicate clearly at every step. That’s where RFP software can help. For more advice on managing a smooth RFP process, check out Fairkmarkit’s blog, The Source.