RFP Process - Step-By-Step Guide
RFP processes (part of the eSourcing process) are often complex and time-consuming, despite their importance. There are many obstacles to overcome, but if you use the right approach and resources, you can find success faster. You will gain confidence managing RFPs by using the tools we offer in this blog. As a starting point, we’ll discuss the different types, roles, and steps of the RFP process.
What is a Request For Proposal (RFP)?
Requests for proposals are formal requests in which an issuer asks suppliers to present proposals that demonstrate how a product or service they offer can address one or more of the issuer’s key business needs. RFPs have played a large role in business for many years. As a result of RFP’s, issuers can vet the offerings of various suppliers while suppliers can display the unique benefits of their solutions.
RFP Process Steps
In addition to providing crucial information for making informed and strategic decisions, RFPs provide a lot of vital information by definition. Preparation, research, and skilful execution are essential for achieving that goal.
Despite its complexity, the RFP process has six essential steps that make it fairly straight forward.
Collecting RFP Requirements
RFPs that are successful often lead to partnership opportunities. To find the right partner for your business, it’s important that you provide vendors with background information and context to help them better understand the needs of your company. As a result, vendors will have a better understanding of the situation and can provide the right response.
It is important that issuers provide vendors with details of the problems they hope to resolve in their RFP. As noted above, it is clearly in the issuer’s best interests to provide this document with as much clarity as possible. This will make the proposal more accurate and useful, and make it easier for supplier to understand.
Three primary considerations should be made when gathering internal requirements from key stakeholders. Vendors should be able to provide effective responses if the RFP details each of these elements.
Identify the needs of stakeholders first. What do you need? Is your desire to partner with a long-term company or to find a solution for a one-time project? What challenges are you addressing? Outline the RFP’s purpose using this information. It is a good way to establish expectations early and narrow down the pool of potential suppliers to those who are qualified.
Describe what the company wants to achieve next. Find out how stakeholders expect the vendor to reach your aims. You should also inquire about the vendor’s role in helping you succeed. How would success be measured?
Identify the most important factors of the solution by discussing them with stakeholders. Based on your assessment, which are the most important for you to consider? In order to make a good decision, which information will be the most important? Almost every RFP will have its own specific requirements. Usually, price, availability, speed of the solution, sustainability and customer experience are the most common important factors included when scoring suppliers in an RFP.
Creating Your RFP
It is common for RFPs to be accompanied by questions. There is no limit on the number of questions that should be asked. The goal should be to minimize the number of questions in the RFP so as to simplify evaluation. By reducing the length of the RFP, you will not only make selecting the right vendor much easier, but you will also increase the efficiency of the procurement process and eliminate the possibility of vendors declining to respond.
As you gather information from stakeholders, you should formulate questions based on the information that you gathered. In order to eliminate unqualified or underqualified suppliers quickly, ask your questions in a yes or no format for essential requirements. However, if you need a deeper understanding of a suppliers offerings, open text answers can encourage suppliers to give more detailed information.
Questions regarding companies’ industry should be asked by RFP issuers. If you are looking for a vendor, it is essential to determine if they understand your business’s challenges and if they are able to apply their experience to be successful.
In the course of creating an RFP, it may be useful to save them as templates so that you can access them later. Always remember to review your templates and make sure they no longer contain questions that are unnecessary or irrelevant. Many RFP software providers such as oboloo, offer dynamic templates that are divided into sections to make this part of the RFP process easier.
Initial Evaluation of the RFP
RFP issuers can begin an evaluation of vendors’ proposals after they have submitted their proposals. A subset of vendors most appropriate to address the issuer’s requirements will be identified at this stage. A shortlist is created.
How to select your shortlist:
- Assess vendor strengths and weaknesses based on critical factors
- Identify incompetent vendors and eliminate them
- Determine key factors of differentiation for detailed comparisons
Vendor evaluation questions
- Have they provided an accurate proposal in a timely manner?
- What is the supplier’s experience in the industry?
- Are they capable of meeting your needs in the future?
- Did a peer or network recommend this supplier to you?
- Does the vendor belong to a reputable organization, trade association, or has certification from an appropriate government agency?
Managing Shortlisted Vendors
- Involve the shortlisted vendors in the evaluation process
- Focus on critical factors by asking any follow-up questions
- Create weighted scoring criteria
- Request an presentation or demo from shortlisted suppliers
It’s important to differentiate among the remaining vendors’
In order to get noticed, vendors need to be able to show how their offerings are different from those of their competitors. At this point, it should be obvious to the issuers what their needs and concerns are, allowing them to deliver a targeted message to them. products at this point, while maintaining leverage with respect to the remaining vendors
Selection of the Winning Vendor
The RFP issuer should have a detailed understanding of the offerings from each vendor and should be able to award to a final supplier.
Vendors should be compared side-by-side for proper evaluation. Scores can be assigned strategically, such as with weighted scoring – where sections or questions representing the biggest concerns are given the most weight.
Finalists should be evaluated and scored by key stakeholders. In the case of individual scores, there is an opportunity to identify and address areas of disagreement as necessary. In this manner, stakeholders are more likely to buy in and ensure that every point of view is taken into account. Scoring may require the involvement of additional stakeholders in some cases if procuring for a specific category or department.
It is recommended that issuers review their scoring of vendors internally before making their final selection of vendors. Should the scoring process not provide conclusive results or group consensus cannot be reached, you may wish to schedule additional interviews or follow-up demos in order to resolve any lingering questions.
Contract Creation and Completion
The issuer must document its choice of vendor, as well as its subsequent steps, once it selects a vendor in preparation of the contract management stage. These steps should include:
RFP Roles and Responsibilities
The coordination required to respond to requests for proposals is extensive. In order to identify a need, gather information and explore solutions, various stakeholders must come together.
Your organization will develop an effective RFP process if you organize and document roles and responsibilities.
Who’s who in the RFP process:
It’s the experts job to understand their categories needs and explain them in the RFP. In addition, they pick qualified vendors, communicate with them and assess their qualifications.
RFPs are typically created by the procurement Manager. To figure out what’s wrong and what’s the best solution, they need to work with different team members. Furthermore, vendors are contacted initially, progress is monitored, questions are answered, and responses are evaluated.
The business stakeholder
The department, unit or team that requests the purchase or solution. Many participants will contribute to the development of the solution by identifying key factors or features that should be considered, as well as providing input on what should be accomplished. A business stakeholder may also participate in the evaluation and scoring of RFP responses.
Chief Financial Officer
For a solution to be financially viable, the chief financial officer (CFO) will evaluate costs and return on investment (ROI).