Strategic Sourcing: RFP Mistakes

4 Top Common Sourcing RFP Mistakes

One of the more common tasks of companies undertaking a new sourcing project is issuing RFPs. Sometimes, the RFP drafting process is viewed as a relatively minor part of the entire project rather than being treated with the same degree of care as other aspects like scoring/evaluating. A thoughtful, well-considered RFP is a key stepping stone on the path to adding to or updating your vendor portfolio. Giving it short shrift, on the other hand, could have the opposite effect and negatively impact the company’s growth, profitability, and efficiency.

Here are four common sourcing RFP mistakes:

Mistake #1: Lazy Discovery

The overall success of a sourcing event depends on deftly handling every aspect of it, including the RFP. Too often, the list of possible providers is organized based on simple web searches and anecdotal information. Failure to devote adequate time and effort to the discovery process has the potential to jeopardize the entire project from the start.

Indeed, while maximizing “discoverability” through SEO and PR are two important areas of investment for many vendors, smart buyers are rewarded for doing deeper research rather than relying on what pops up on the first page of a web search. The number of prospective providers that should be invited to submit RFP responses depends on a variety of factors including, but not limited to, the category in question, the projected spend on the product/service, and the timeline for a purchase. As such, the line between running a sourcing event that is competitive and one that is unnecessarily onerous is not fixed in place. Buyers should look to generate a large list of prospective vendors and then narrow the field based on criteria that can be evaluated through research. (An RFI is often a useful tactic here as well.) This not only helps the sourcing team find the competitive sweet spot, but also is a good way to understand the marketplace. Ultimately, if you’re a buyer, you want to be selecting from several good options, which means the steps you took to generate your list of prospective suppliers is extremely important.

Mistake #2: Beginning the RFP Too Early

There’s a famous expression that underscores the importance of preparation: “Measure twice and cut once.” In a heavily connected digital world where so many of us have come to expect instant gratification, slowing down can feel unnatural. This can be compounded by colleagues and managers who want particular goods and services selected and delivered yesterday. Take a breath and remember that while an increasing number of organizations are adopting “strategic sourcing” practices, none that we’ve heard of are investing in a “tactical sourcing” strategy.

We’ve made the argument before that, for some, the RFP is really CYA. But think about it —  do you want to issue an RFP to identify the best supplier or to have plausible deniability? (If the latter is your answer, you might want to reconsider your motivations or your employer.) The task of actually writing the RFP should only start once the strategy and requirements have been finalized and the project roadmap developed. Get buy-in from stakeholders as they are ultimately the ones who will benefit (or suffer) from the end result of the sourcing event. In case you need reminding, having strategic sourcing systems that don’t communicate is bad. Once you have established the criteria, requirements, etc. and have gotten the “go-ahead” from your stakeholders, you’re ready to move forward with your RFP.

Mistake #3: Taking a Cookie Cutter Approach

Cookie cutters are great…for making cookies with particular shapes. Unfortunately, they don’t work so well with RFPs. The problem is that when you indiscriminately repurpose content and criteria from other (potentially unrelated) events, you risk getting the right answer to the wrong question. his doesn’t leave you in a strong position to draw conclusions.

It is important for the RFP to have enough specificity to inform the decision-making process.. Repurposing previous RFPs may seem like it’s an expedient way to proceed, which can be appealing if you’re under time pressure. However, thoughtlessly doing so almost invariably increases the odds of a bad outcome, which can be extremely costly in the long run.

Mistake #4: Picking a Winner before You Start

Perhaps this should have been first on our list as it’s the absolute definitive cardinal sin of sourcing. When you have essentially decided on which supplier will be awarded the contract before you’ve even run the sourcing event, it doesn’t matter how much time and care you invest into the RFP, it will have been wasted time. How does this even happen? There are probably a variety of reasons, but we’ve uncovered two scenarios that are particularly common.

  1. Stakeholders have run a shadow sourcing process and only include procurement after the decision has effectively been made. Procurement then faces a tremendous amount of pressure to justify the selection of the vendor or risk the wrath of the stakeholders. This is especially likely to happen with renewals, when there is an incumbent provider.
  2. The team responsible for sourcing a particular product or service feels like the risk of selecting any vendor, but the industry standard, exposes them to risk. While the competitors might offer rock-solid representations and aggressive pricing, the perceived cost of failure might undermine those benefits. This is actually not an unreasonable posture, but should be contemplated inside the RFP by expressing the concerns in the content of the RFP and weighting the responses appropriately.

Vendorful understands the importance of well organized, accurate, and effective RFPs. Our eSourcing platform is user friendly, regularly updated, and built to integrate with other systems.

Contact Vendorful to discover how we can assist you in the sourcing process, your first project is on us.