A request for proposal (sometimes referred to as a request for pricing), or RFP, is usually a document that describes a companies needs (usually goods and/or services). Typically it will consist of a list of the goods and services that they need to purchase from a supplier. A company will then send this to a number of suppliers to get pricing, obtain timelines and get answers to any questions they might have. The RFP process acts as a critical process that can help companies to procure goods and services, ensure they are delivered in a timely manner and that they know more about the suppliers they are working with.
The RFP process can often be made complex and time-consuming however it is much simpler than you might think We have detailed below how you can take the right approach when creating an RFP from scratch with a detailed a step-by-step proven process for success and speed.
Before making a start you need to understand if an RFP process is the right one for you. We have detailed three main justifications for creating and sending an RFP to your supplier(s).
Once you have decided to run an RFP you will need to work out the best way to run it in an organised and fair manner. There are two main options for you to choose from:
Depending on what you are trying to procure from a supplier is key when evaluating the above two processes for an RFP. If you are procuring a single ‘good’ and asking two suppliers for their prices then a traditional way might not be so bad, however, if you are wanting pricing for multiple goods or service’s from more than two suppliers then you need to think about the time it takes to write and distribute a good RFP and collate the responses. Issuing a procurement document for office suppliers (pencils and pens) can be thousands of product lines that a supplier needs to fill in, and therefore thousands of product prices that you will need to analyse and evaluate. Digital platforms will do this work for you, and instantly.
You may not need to use every step of the below RFP process however they should still be considered.
RFP templates off of the internet are available and can be a good starting point however will very rarely meet your company’s needs. Ensure that information is correct such as dates and contact info. Cloud-based procurement software will build the RFP for you automatically. Although each RFP is unique, most will contain the majority of the following sections:
As mentioned above, creating scoring criteria while creating your RFP will save you time in the long run and is seen as best practice. This is the time you will want to include your internal stakeholders from the business to give them final input and say on the supplier selection process. If you have done a digital RFP then this can be carried out on the procurement platform however if you have done a traditional method then this will have to be done manually via the creation of a scorecard. An example can be found here. Assign a score against each of your scoring criteria for each of your suppliers. You should put in a calculation if you are doing this via a manual spreadsheet if you’re using a weighted method. E.g. if you give ‘Supplier A’ a score of 3 for the criteria of ‘Sustainability’ on a scale of 1 to 10 and you’ve given that criteria a 30 percent weighting, you should assign this vendor 9 points. You can ask more than one person to score which you can then work out an average per supplier. Usually, the supplier with the highest score at the end should be awarded the contract.