There are, of course, two sides to any RFP: the procurement process and the response.
But, as a vendor, if you knew more about the procurement process—like how and why RFPs are issued, how procurement teams source vendors, and the criteria they use to evaluate responses —would it impact your RFP response process?
We’re here to tell you the answer is a resounding “YES!”
In this post, we’re flipping the script and demystifying the procurement process so you can get better at effectively answering (and winning) more RFPs.
To help, we’ve enlisted procurement pro Pallabee Bera, Vice President of Procurement for Jacksonville, Florida-based Acosta Sales & Marketing.
Q. What’s the procurement team’s involvement in the RFP process?
A. Procurement’s involvement in an RFP depends on how the opportunity emerged, and that’s usually through a procurement or corporate-led initiative, or at the request of a business stakeholder.
1. A Procurement-Led Opportunity
Procurement is consistently studying financial and operational trends within the company. Those metrics provide insights on opportunities for cost-savings as well as operational efficiency and future innovation. Procurement uses indicators like volume of spend, ability to consolidate spend, market forecast on pricing, familiarity with the product or service, risk of supply, and existing supplier performance to identify whether issuing an RFP will provide a strategic opportunity to create more value for the business.
2. An Enterprise-Driven Opportunity
Determined by corporate strategic projects, the objective of a corporate-led RFP is to focus on either cost-cutting within the enterprise or finding opportunities for innovation. Procurement will take the lead on the opportunity and work with an executive stakeholder team to execute the RFP.
3. A Stakeholder Requested Opportunity
Requests can come to procurement proactively based on the willingness of a stakeholder to involve procurement. In this scenario, procurement may take the lead on the RFP, but may alternatively take a consultative support role instead. This partnership allows the stakeholder to manage the vendor relationship and keep the RFP moving forward, while procurement keeps the process on course. Procurement will consider deal value, risk of supply, and maturity of the industry into account when assessing RFPs with the stakeholder.
Tip: By sussing out the particular pain points or needs the stakeholder is looking to address through the RFP, you can better tailor your answers to how your company or solution can deliver on their specific needs. And, by determining whether the customer’s focus is on cost-cutting or innovation you’ll be able to further focus your responses.
Q. What’s the procurement process for sourcing vendors?
A. There are innumerable ways to find vendors to participate in an RFP. Traditional places to find vendors like trade shows and conferences can be helpful—but they’re not always the most cost-effective option for procurement teams.
If the RFP is in an existing category of spend, the incumbent’s direct competitors are a good starting place. Procurement will also solicit recommendations from a network of clients and employees. Many procurement teams also have a roster of vendors that have previously sought out opportunities with the company and are already eager to engage.
In addition, leveraging online tools like industry association directories, industry award-winner publications, and referrals from the procurement community through the ISM (Institute of Supply Management) or LinkedIn, are helpful starting points for the vendor search.
Tip: For vendors that cold call to get on procurement’s radar, sharing relevant thought leadership content with procurement—such as a white paper or webinar—is an effective way of leaving a memorable impression. Otherwise, word-of-mouth, events, and industry-specific publications and associations are still a solid way to be seen by procurement teams.
Q. How do you evaluate an RFP response?
A. Setting up the RFP evaluation criteria and weighting before issuing an RFP is an important part of the process. We align with stakeholders on core business criteria, including what is nice to have versus what is a must-have.
Procurement typically looks at vendor evaluation in three segments:
- Price. We approach price with a straight-line “apples to apples” comparison. That is not always easy to do, but it allows for the most transparent evaluation of total cost.
- Ability to meet the basic RFP requirements. Basic RFP requirements are typically evaluated in the same manner, making it very clear whether the vendor can meet the company’s needs or not.
- Value-added. Value-added is where evaluation can be more difficult. Stakeholder feedback is critical to the successful evaluation of the vendor, particularly when the value-added impacts the vendor’s pricing proposal. Understanding the business operations is important in determining how the potential relationship with the vendor can support the current business needs and/or growth.
Each segment is evaluated individually, given a score, weighted, and then reviewed as part of the total performance of the vendor in the RFP. Overall, the evaluation of an RFP needs to be a joint effort between procurement and stakeholders.
Tip: You likely can’t change your pricing or your ability to meet the basic RFP needs with the flip of a coin. However, you can focus on winning over key stakeholders by highlighting your competitive differentiators or your solution’s ability to deliver on value they may not even have known they were looking for. It could be the best way to beat out competitors and avoid discounting.
Q. What makes an RFP response stand out from the pack?
A. The most pleasantly surprising proposals are those where the vendor clearly demonstrates their ability to solve your business problems in the RFP response.
These two things in particular really stand out in an RFP response:
- Thoughtful questions in the question and answer period. This demonstrates to procurement teams that you have thoroughly read the RFP and are eager to win the business. It gives procurement insights into RFP content that needs to be clarified for all vendors participating.
- Thoroughly demonstrating an understanding of business needs and how the vendor can solve them. Answering RFP questions clearly and concisely, speaking to the business problem and the core RFP criteria is the key to success. When a vendor does this well, it ensures there will be interest and openness to any value-adds that the vendor can demonstrate.
Tip: Don’t forget to ask well thought-out questions. Collaborate with team members from different areas of the business to get fresh ideas for this section of your response.
Q. What Should Vendors Not Do When Responding to an RFP?
A. Don’t color outside of the lines. Simply put, provide RFP responses within the framework requested. That applies to everything from respecting the timelines, utilizing question and answer periods, staying within a word count limit, and responding within the requested pricing structure. (I cannot emphasize this last point enough.) A source of frustration for procurement teams is RFP submissions that don’t follow the rules. There could also be valuable information provided in the RFP response that gets overlooked because it did not follow the RFP requirements.
Tip: Uploading your RFP responses in the exact format it was released it in can be tedious. (And require a lot of copying and pasting). Loopio’s easy import and export features make working in various RFP formats easier.
A few other don’ts to consider are:
- Don’t submit a response if you aren’t going to make an effort. It’s obvious when RFP responses are cut and pasted from other submissions.
- Don’t backchannel to get information. Use the Q&A provided. Unethical behavior in the RFP process does not leave a positive impression and can be disqualifying.
On a positive note, a few dos to keep in mind are:
- Be clear. Transparency and clarity are critical to an acceptable RFP submission.
- Focus on the core criteria of the RFP. Demonstrate that you can meet the business needs first versus focusing on value adds.
- Know why you are better than your competitors and make sure it stands out in your responses.
Q. What are some of the more innovative procurement methods in the market?
A. There are so many methods that procurement teams use, from traditional techniques like open tender to more progressive technology-based solutions.
One tool that has stood out over the past decade has been the e-auction capabilities of sourcing software. It’s not always the most popular option in the vendor community, and it doesn’t always fully capture the total value of the vendor relationship, but it does allow procurement teams to push vendors to deliver the lowest cost in an efficient manner.
Consortiums are a great way to source products at prices that many companies would not otherwise get based on the size of the spend in that category. They also help to keep the negotiation and contracting process efficient.
Looking to the future, there is an opportunity for the procurement and vendor community to work together differently. Innovation will come from deeper partnerships between vendors and procurement on the development of not only cost-cutting but also revenue-generating opportunities; moving away from the “low hanging fruit” cost savings and into the value-added deliverables for their business stakeholders.
To hear more procurement perspectives on the RFP process, check out the Procurement Panel that took place at Loopicon19, Loopio’s first-ever customer conference.
Pallabee Bera is the Vice President of Procurement for Acosta Sales & Marketing, a sales and marketing company driving greater sales and market share for manufacturers and retailers around the world. Pallabee leads the transformation of procurement strategy and operations across North America, with a focus on direct and indirect spend category management to deliver bottom line savings.