RIP RFP?
Old habits die hard. Like some sort of comfort blanket, procurement seems to cling to the trusted request for proposal (RFP) process. But if you want to work with suppliers in a new way, you may have to ditch the old assurances.
Two speakers at a recent event run by Prestige Purchasing told the invited audience that many suppliers felt they were wasting their time bidding for work through RFPs.
The context was IT purchasing. Both presenters felt that RFPs gave suppliers too little scope to innovate. Suppliers were unable to give their customers what they really wanted when they stuck to the limited context of the procurement documents, they argued.
Steve Todd, head of sales and marketing at Karlson UK, which provides managed printer and copier services, said that procurement should first find the right supplier in terms of culture and fit with the business, and then work on a contract once the vendor has put forward different ways of delivering a service.
Instead of rounds of requests for quotes and RFPs, buyers should get their favoured suppliers in the same location for a three-day “bid summit”, suggested Andy Main, managing director of Galeotes, which provides advice on the procurement of network services.
With a bid summit, buyers have the opportunity to ask questions they may have neglected to include in RFQ and RFP rounds, while suppliers can come up with ideas of what to provide based on a better understanding of the business need. The two then work towards a “win-win” solution in rapid rounds of discussion, Main said.
I found the discussion interesting, but as a relative novice to the field I am unsure. Maybe it’s the sceptic in me, but I’m yet to be convinced that procurement culture will change rapidly to abandon such a tried and trusted approach.
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For leverage categories I’m sure RFP’s will continue and still provide the best way of obtaining value for an organisation. For strategic categories I do think different approaches such as those mentioned will allow more value to be obtained. To do that we need to ensure we examine our beliefs about suppliers and collaboration and allow trust into the equation.
I think this is one are where the public sector have it right and the use of the negotiated or competitive dialogue procedures work really well in these complex situations.
I believe that RFPs are still important, however where the supplier has gained trust or has a good and proven competence in an industry, it wouldn’t be a necessity.
The point that there are many questions which buyers “may have neglected to include in RFQ and RFP rounds” certainly rings true- but surely the solution to this is not to throw out the entire process, but rather to look at why those questions were omitted in the first place? It is indeed the case that a contract can be ‘RFxed to death’, but a carefully considered and crafted eRFP remains the most efficient way to narrow down suppliers before going on to more intensive processes with the front-runners.