Why Does a Company Need a RFP Software?
Why Does a Company Need an RFP Software?
Still searching through old files, emails or chasing teammates for RFP responses? Then you will almost definitely benefit from an RFP software.
Almost every work task can be automated. Considering the number of tools available today, it is not a matter of determining if a task can be automated, however the best way to do it. RFPs follow a similar process. How do you know when to rely on RFP automation, even though it may save you a lot of time? Are there any parts of the RFP process that should be automated versus those that should be handled by a human?
Below, you can find out more about RFP automation, what it is, if it’s right for you and the benefits an RFP automation tool will bring.
Should I Automate My RFP Process?
The process of automating RFPs is relatively easy, but, as with any process change, it requires commitment to make it work.
Automating the RFP process allows teams to create eSourcing activities in minutes instead of hours. RFP software automates the RFP process with digitalisation of your current RFP processes, keeping all of your previous RFP’s searchable and documented, giving you the information you need at your fingertips when making commercial decisions or creating new RFPs where results from past ones could give you valuable information.
When people think of RFP’s, thy usually recount comparing pricing from suppliers across multiple spreadsheets in all different formats, correcting units of measure, chasing suppliers for responses and digging around for revised document in their emails sent past the deadline where the responses are completely different from the suppliers first submission. RFP software eliminates all of these issues.
Can RFP Software’s Save Me Time?
Using automation software for RFP creation can let you focus your and your team’s resources in less tedious and repetitive tasks. Pretty much all industries across the globe utilise some sort of RFP process automation and with the advance of SaaS products on the market, RFP software’s are no longer just for enterprise companies. SME’s are now starting to utilise such software’s now that they’re becoming more readily available and for a cost-effective price, with most even able to save a company money, resource and drive higher procurement savings.
What is the RFP Process?
The following RFP process does not need to be used in its entirety, but it should still be considered.
- Determine your company’s needs. The most important aspect of any RFP is to identify what your company needs. You need to consider what the whole company actually needs from the RFP process before starting to create it. To measure the effects of changing suppliers, it is essential to communicate with all locations, departments, and stakeholder groups involved. For example, does a contract exist already? Do other departments depend on this supplier for critical functions? Could another department offer some guidance here? Is there any disruption to the business? This is a key area of the strategic procurement process.
- Establish a budget for the entire process.
- Invite potential suppliers. Some may view this as a quick and easy step (finding ten suppliers who they think can provide what is required and sending an RFP to a generic company email). However, think about this carefully as it could save time and money in the long run. Getting to know your suppliers beforehand is a good idea, so you can determine their capabilities, ensure they will pass any future vetting process, and identify any potential red flags. This is the beginning of the supplier management process.
- Prepare an RFP (For more information, see below)
- Establish a set of scoring criteria and values. Usually, companies do this after sending out their RFPs to their selected suppliers. We recommend always creating them beforehand. While creating the RFP, it is crucial to know what you are planning on scoring the supplier’s responses against as well as what is significant to your company and your internal stakeholders. Often, scoring criteria is based on a weighted calculation that reflects your priorities. As an example, you may have ten areas to score on, but one of these areas might account for 30% of the overall score if it is one that your company is very interested in.
- Send the RFP. Depending on the strategy you choose (digital or traditional), you can now send your RFP to your suppliers. You will usually have multiple sections or documents. First, an RFQ document (a summary of your goals, key dates such as the submission deadline, questions from the suppliers, and contact info), a questionnaire, and the scoring criteria (this enables suppliers to provide more relevant answers to your specifications).
- Answer supplier questions. Each company interprets RFP’s differently and no two are exactly the same. As we mentioned in point 6, we recommend allowing suppliers to contact you with a list of questions they may have, and for you to respond as fully as possible. Give them a deadline to send you the questions, as well as an extended response period once they receive your responses to the RFP.
- Review responses. This is the easy part if you conduct your RFP on a digital platform. You will be able to compare your supplier’s costings with their responses to the questionnaire automatically through the procurement system. The traditional method requires that you consolidate each supplier’s response into a centralized spreadsheet and perform calculations as well as validations to make sure there are no errors in any of the responses. Following the completion of the analysis, it is important to present the results to all internal stakeholders involved (point 1). In addition, this is a great opportunity to involve other departments of the company, such as Commercial, who can review a supplier’s Scope of Works, or Finance, who can review the supplier’s costing.
- Score the responses and select a supplier. As a result, you may decide that it makes sense to remove some of the suppliers you believe won’t be a good fit. You can learn more about shortlisting suppliers here. In this stage, it may be helpful to narrow the number of suppliers to perhaps three. You can now score each supplier according to the responses they submitted using the scoring criteria you developed earlier during the RFP process. You should not notify any suppliers that you believe have been unsuccessful yet.
- Negotiate and sign a contract. Now that you know what to expect from them, you need to meet with them to discuss the contract. A request for proposals is not a legal contract, so both parties have the opportunity to negotiate and reach a final agreement based on the information provided in the request for proposals (make sure your Legal and Commercial departments are involved). Once the contract has been approved and signed, you should now notify the unsuccessful suppliers involved in the RFP process. The last stage is done just in case an agreement cannot be reached with the initial supplier.
What are Benefits of a RFP Software?
RFP Software has many more benefits than just making RFPs easier to create.
Time Savings & Productivity
Procurement departments benefit most from automation when it comes to time savings and productivity. You have more time and energy for higher-value projects when you spend less time on mundane, routine tasks.
Automating RFPs has many advantages, but it can also be used to automate RFIs, RFQs, security questionnaires, and any other requests issued by your procurement team.
Team Collaboration and Insights
RFP software streamlines collaboration all of your current and historic RFP’s in one central repository.
When all proposal-related conversations are in one place, you can make sure your company stays aligned on RFPs as well as having valuable insights from previous RFPs and suppliers’ responses in one system.
Data Analysis
A RFP software platform can automate processes so that data is captured and analysed more easily. If more reliable and widespread RFP data were collected, supply chain risks could be predicted, acquisition costs could be evaluated better, and supplier performance could be evaluated better.
Savings (Cost Reduction and Cost Avoidance)
Companies are increasingly investing in digital solutions to drive efficiencies and financial savings across every area in their business. One area that these solutions deliver significant financial savings is in procurement with the solutions often recording projected and realised savings delivered by both cost reduction and cost avoidance measured against actual baseline spend.
Use our Savings Calculator to discover how much you could save using a RFP software
Additional Resources
These external articles contain useful points to consider when choosing an RFP software:
