Are we abusing the Request for Proposal process?
Both of us had issued and responded to RFPs, and both of us felt guilty about the hoops we'd made our vendors and suppliers jump through.
Ideson, a true Procurement Pro had had his own RFP process horror stories and was eager to compare notes. So we decided to turn the conversation into one of his infamous podcast episodes.
We shared practical on how to build and issue an RFP that brings real value to the eprocurement process and actually enhances our vendor relationship management.
See some of the highlights below or download the full episode, and find out the the biggest mistakes Buyers make when they build and issue an RFP, why it's hard for sellers to respond to bad RFPs, and the easiest way to make your next RFP more effective.
What's a guy like you doing in a (procurement) place like this?
[Philip Ideson] "So Dave's had a really varied career. Including a spell in teaching, consulting, and in the Kansas Army National Guard. Dave also provided medical support and training in Saudi Arabia, Uganda, and Djibouti.
"How did you go from that into procurement software?"
[Dave Hulsen] "During my job as a consultant, the internet was in it's infancy and we were doing a lot of projects to help pretty big brands find e-commerce solutions, and marketing solutions, and I did a lot of vendor analyses.
"There were all these Excel spreadsheets going back and forth, which I soon learned were Requests for Information and Requests for Proposals (though I probably didn't call them that at the time).
"And looking back I feel so bad at how inefficient this process was that we required our vendors to go through.
"All these multiple tabs of Excel spreadsheets and this system that was just wrought with red tape and bureaucracy... and finally I said to my business partner, 'man we've really got to solve this problem.'" [More about us and our story here.]
[Philip Ideson] "And from the outside it's a pretty crowded marketplace. Oftentimes, an RFP software is just part of a broader end-to-end solution set.
"So I was interested to hear your motivation for building something that focused solely on the niche of the RFP."
[Dave Hulsen] "We've been involved with some RFPs through the SAP Ariba platform and many RFPs in the IBM platform, and Bravo as well.
"These RFP solutions are all parts of these big suites of platforms, and while they do provide a lot, they require consolidated effort. Especially in a big organization.
"We were frustrated with the standard solutions because we still ended up having to push around documents.
"For example, I recently received an invitation, opened it up, and here's this vendor portal, and all it was was a collection of 15 Excel spreadsheets. And I thought, man this is so disjointed.
"It's not true vendor management software. You're just passing data back and forth, missing so many opportunities for critical connection and feedback because you're using these static documents."
Beware bad RFPs
[Philip Ideson] "Not doing research before we issue an RFP is a kind of lazy procurement - well lazy might be a bit harsh.
"But we're so busy in our day-to-day jobs that we just don't have the time to commit the necessary energy to being a bit more strategic in how we think we think about an RFP, and our data gathering in preparing for it.
"So we just use the RFP as an excuse to gather as much intelligence as we possibly can, see what comes in, and then start thinking about okay, who should we be using?
"Whereas, the most optimal use is to do all that research up front, so that when you are going to market, it's a very limited RFP, that's straight and to the point.
"That way you're not just fishing for intelligence, but rather you're trying to find out the specific capabilities of a provider."
[Philip Ideson] "So I've had the opportunity, for better or worse, to be on both sides of the table in terms of writing RFPs, and I've been guilty of a lot of the pitfalls we've talked about.
"You're strapped for time, so you just want to make it as easy as possible for yourself. But the flipside is, it creates a heavy burden for suppliers.
"As such a supplier, I've historically been responding to RFPs, and I'll look through some that come in and, think I just don't have the ability to provide all this information.
"Or, this is going to take too long, I'm not going to focus my best resources on doing this because it's going to take hours of work, and there's too much risk when I don't even know what the outcome is going to be.
"So Dave, how do you see companies successfully make the RFP a two-way process rather than the status quo one-way process?"
[Dave Hulsen] "The big client project we kicked off today is a great example.
"One of the brilliant things they did was start their RFP with an initial round of about six questions. Six very important questions.
"And what I loved about their approach was it was the result of past mistakes. Last year this company had had a huge 700 question RFP for a big North American distribution contract.
"We later found out that only five of those queries were critical make or break questions.
"And if they had simply asked those questions first, they could have let the vendors who couldn't deliver on the most important things exclude themselves.
"Doing this would have saved so much time and effort. Not only the vendors' time, which is an important consideration, but also the Issuer who has to prepare all this, and then grade the responses.
Case in point, they had 700 questions and 10 respondents, meaning 7,000 data points of responses.
"And if you're asking all these questions you need to be prepared to evaluate the responses, or else it's an unfair ask."
The first rule of vendor management best practices is don't overburden your suppliers and vendors with too many questions.
Great supplier management begins with a vendor management system that makes it easy for both buyers to issue RFPs and for vendors to respond.
How to write an RFP that brings real value
[Philip Ideson] "So how can we write and issue better RFPs?"
[Dave Hulsen] "Make your RFPs a multi-step process. Start with an RFI (or RFP rounds) and gather a broad range of capabilities first.
"Make it quick and easy so your vendors are initially spending 20 or 30 minutes, maybe an hour, putting together their responses.
"Then whittle down from there. It's good for procurement folk to see what's out there and the broad landscape of who's doing what.
"But then identify the real potential, because when we go into the RFP we want three, maybe 5, really serious vendors to spend time on responses.
"Another common pitfall is not setting internal value statement first.
"Before your market analysis, before even sending an RFI sit down with stakeholders. Ask: what do you want out this relationship? Identify the end goals and frame up each step of the process."
Clearly identifying these values will also help you customize your RFP template accordingly, and avoid irrelevant questions.
You might be abusing your RFP process if:
- If you're not cognizant of just how much you're actually asking of your suppliers
- If you're walking into RFPs unprepared (no research, vague goals)
- If you're not leveraging technology to make the process efficient as possible
Big thank you to Philip Ideson for instigating this podcast, and listening to my RFP horror stories. If you haven't already, subscribe to The Art of Procurement podcast, it'll be worth your while.
Cheers to working smarter, not harder, in our vendor selection process!
*Editor's note: some quotes were paraphrased for brevity and clarity.