As a supplier, if you are one of many at an RFP Kickoff meeting, you have already lost the bid.
Here is an excerpt from a 2011 post:
“All this, of course, coincides with the revelation by former aide to New York Governor Mario Cuomo Al Gordon that 90% of all winning bidders are decided through a series of open, non-clandestine meetings in which the vendor gains what Judy Bradt has referred to as legitimate and transparent buyer preference.” – https://bit.ly/3KJHUja
The video interview within the post with Bradt is especially enlightening. One statement that stood out is that if you are just getting involved when you receive notification of an RFP, you have already lost.
CFIB VP Corinne Pohlmann talked about RFP “waning interest” among the 108,000 small businesses nationwide, who view the RFP process as overly cumbersome and largely ineffective.”
So the question that comes into play – especially with the increasing focus on SME engagement- is how do you know that you have the best potential suppliers at your kick-off meeting?
Before a general RFP kick-off meeting, do you know what percentage of your overall supply base has won bids, e.g., your business distribution?
While my research over the past 20-plus years has focused on the public sector, a similar trend exists in the private sector.
The case study of a major U.S. retailer purchasing Indirect Materials is interesting as their cost savings and access to innovation steadily declined when their core supply base was rationalized down to 100 suppliers.
I am not knocking RFP kickoff meetings. What I am saying is how do you know you have the best of the best attending when a large percentage of the overall pool of suppliers isn’t responding?
Going back to the previous comment, what is the distribution percentage of your overall business in your supply base? Is it growing, shrinking or remaining static?
From my standpoint, you need to know the above percentages before you even issue an RFP, let alone have a kick-off meeting.
Procurement Insights 
Daragh Knox
August 21, 2023
Thanks for this article. I think bias is inevitable, however always worthwhile in stating what is happening; “this RFP is a benchmarking exercise”, “this RFP is an effort to increase competitive bidding”, or “this RFP is focussed on broadening our supply base”. The depth of the RFP raises another consideration – how much paperwork is involved…
piblogger
August 21, 2023
Interesting points, Daragh.
There is no doubt that the introduction of S2P technology has streamlined the process and therefore eliminated a good deal of the paperwork. However, the benefactors have been mainly the 20% of suppliers who win 80% of the business.
It is reasonable to suggest that RFP or bid automation software has created a convenient and expedited engagement mechanism for SMEs. Let’s face it, an SME can quickly set up an account and establish the bid notification parameters to ensure they receive automatic notification of an opportunity. However, this is where we need to focus on SRM and RFP processes beyond automation; the cycles to respond to an RFP and the corresponding return on said SME investment of time and resources don’t result in enough revenue flow to keep suppliers coming back. The result is an unintended rationalization of the supply base.
Here is an excerpt and corresponding link to a post regarding Virginia’s eVA program that addresses the importance of business distribution across a supply base (now network).
“One of the most important questions I had asked Bob dealt with the actual increase in business distribution over the Commonwealth’s supply base both before and after the introduction of eVA. In the year before eVA’s launch, between 5,000 and 6,000 of the 20,000 registered suppliers received orders. In 2006 14,371 of the 34,000 suppliers received orders. So far, in FY07, the number is 14,756 (with 4 months remaining in the year). This hard data is further testimony to the effectiveness of Virginia’s methodology, in which true collaboration was a key element of the initiative. As emphasized in Part 4 of my Changing Face of Procurement Seminar Series titled “Winning Strategies for Vendor Engagement,” knowing if your e-procurement strategy is a “threat or a benefit” to your supply base is critical to the success of any initiative.”
Here is the link – https://bit.ly/3qHEyq4
Important note – I am not talking about complex acquisitions or PPP initiatives – although those have a different set of challenges that need to be addressed, e.g. the I-35W Bridge rebuild model – https://bit.ly/3saBzXw
Overall, I am saying that we need to assess our business distribution across our global supply networks for categories of spend, Direct and Indirect Materials and services to ensure that our policies, process, and technology optimizes the return for all stakeholders across the board.
Thoughts?
Daragh Knox
August 22, 2023
Thanks for the note and I had read that Neef book on e-procurement in the past. e-tendering and technology driven RFP’s are part of the technology drive so we’ve lived through them and watch them been applied in different industries and market segments. Having the “right” suppliers and engaging new ones that can make the difference is the key. Cost v price. RFPs as a stand alone exercise may reap dividends on their first run but then the broader supply base will quickly disengage.
For highly regulated industries for both direct and indirect the amount of documents required is considerable, even today. RFP’s work really well for sole sourced suppliers, fill out the form, submit your price and collect your documentation, load up the contract onto your ERP system and away you go. For non-commodity items it gets tricker; are we looking for price and delivery; then that’s fine, but how about packaging types, regulatory compliance, ways of working, replenishment models, volume splits, and critically relationship when something unexpected happens (it usually does).
So yes to RTP’s driven by technology married with people skills and expertise on the business. Keeping people involved.
Does that make sense, or is it too simplistic?
Daragh
piblogger
August 22, 2023
Sense and Simplicity reflect true understanding!
In short, you nailed it, Daragh! Thank you.
By the way, I think Neef’s book is – in many ways, as relevant today as it was when I first read it as it creates a pathway of understanding as to where we were, and where we are today.
On a side note, from an ESG standpoint Elkington’s Canibals With Forks i also a timely and timeless read. But that is a discussion for another post.