Real value of reverse auctions

5 Things that Highlight the Value of Reverse Auctions

Many companies are leveraging reverse auctions as a way to save money. However, cost savings are just one benefit that reverse auctions can provide.

Reverse auctions have the potential to be a critical aspect of your strategic sourcing process, and knowing their full potential is the first step towards maximizing their impact. Below are the top benefits of reverse auctions for organizations.

1. Cost savings

It may be just one of the benefits reverse auctions can provide, but it’s still an important one! Reducing procurement costs can significantly impact a company’s bottom line. In this article by CIO.com, they note that reverse auction software, can lower the cost of procuring products and services by as much as much as 20 percent.

Pitting sellers against each other on an open platform can increase competition and help drive down bids so that a business gets the best price for a particular event. This can allow companies to enjoy short-term profit increases, and long-term savings and investment.

2. Process efficiency

Reverse auctions can help streamline the procurement process, allowing for ease and speed of transactions. Where traditional, forward auctions typically take weeks to complete, online auctions can be concluded—with favorable results—in under an hour.

Documentation can be centralized, allowing for better organization. Coordination with suppliers is also easier given that communication and scheduling can be managed using a single platform.

3. Access to a large supplier base

Reverse auction software can help your team cast a much wider net to find the right supplier. According to Greg Brandyburry, President of RPDE Inc., “Non-incumbents love the transparent and fair process and market visibility when given. What I have seen through the years [is that] small suppliers can compete very nicely with large suppliers when a fair, transparent, level playing field is established.”

The evidence is more than anecdotal. In 2016, FedBid reported that for the prior fiscal year 88% of contracts awarded through their reverse auction platform went to small businesses. When suppliers are selected on the basis of who can provide the best value, rather than who has the more effective sales force, buyers and suppliers win.

4. Improve buyer-supplier relationships

There’s a long-standing assumption that reverse auctions tend to put a strain on buyer-supplier relationships. However, when done right, it can actually help improve working relationships.

On the premise that you’re conducting the whole bidding process openly and with a focus on transparency, you will be able to fairly assess each bidders capability objectively. This implies that you’re making an effort to level the playing field for all participants, which reflects positively on your organization’s values.

Furthermore, reverse auctions are respectful of your suppliers’ time. The whole auction, from start to finish, will likely be wrapped up in under an hour, meaning your suppliers – and you – can spend less time on the selection process and more time delivering value.

5. Increase market efficiency

It’s very difficult to bring multiple suppliers and a single buyer together in an open and constructive bidding environment. Online reverse auctions can help achieve this.

On an eSourcing platform, suppliers are able to view bids from competing vendors and can assess whether their own bids are up to par. Not only are you able to easily review the bids, but it also fosters healthy competition between participating suppliers.

Since the entire process takes place online, it’s easier for you to extend your supplier reach outside of your geographical limitations. This could ultimately lead to global searches that will provide the best cost-savings for your project.

Adoption of reverse auctions is rising simply because it has demonstrated its efficacy in delivering valuable results for businesses. Cost-savings, while an important and significant factor for choosing reverse auctions, isn’t the only thing that it can offer. As detailed above, the benefits of using this platform can be significant. It’s just a matter of learning and recognizing its inherent value for your organization.

Take advantage of Vendorful’s eSourcing platform and find out how you can get the most value out of it for your business. Get in touch with us today.

Improve your procurement process

4 Ways to Improve Procurement Processes and Boost Organizational Value

Procurement teams…those are the people who find an organization’s suppliers, right? If you’ve adopted this sort of limited view about procurement (or are surrounded by people who have), you’re (or they’re) gravely underestimating the impact of these teams. The procurement planning processes themselves and the people who are responsible for implementing them can affect almost all organizational departments directly or indirectly — which is why its role in any business is critical.

So how can you ensure that your procurement processes boost organizational value for your company? Consider some of the following tips:

1. Review your current procurement process

“But we’ve always done it this way.” It’s a familiar refrain, particularly when an organization has reached a certain level of success. Complacency is not an attribute that should be nurtured, however. Indeed, reviewing processes is a critical first step in streamlining the workflow of your procurement team. Doing so will drive new efficiencies, which will ultimately have a positive impact across your entire organization. But first, you have to be willing to conduct an honest assessment of current processes and protocols.

Not motivated to dive in? Remember: beyond obtaining goods and services, procurement teams are responsible for sifting through — and engaging with — suppliers that could potentially become long-term partners of your business. These partners have to align with the big picture goals of the entire organization and should share the complementary priorities and values. Given the strategic importance of this alignment, you can hopefully use the high-stakes nature of this undertaking to motivate yourself to see if the existing processes support this vision and then amending them if they don’t.

2. Focus on increasing employee skills through training

Continuing the training and development of employees is one of the leading factors that contribute to an organization’s success. Yet, in a survey conducted by Middlesex University Institute, 74% of the research subjects felt that they weren’t able to achieve their full potential in the workplace due to limited development opportunities.

This statistic presents a huge opportunity — one that we’ve empirically witnessed in procurement — in that new technology has been adopted to help employees learn new methods to improve their job performance. So much of our attention is devoted to procurement tools. (And this makes sense because we’re in the business of developing procurement tools!) However, to optimize the value of the tools, procurement professionals should be well equipped to use them. Distance learning, on-demand training, and more have created unprecedented access training.

3. Leverage an eSourcing platform

Leveraging a strategic sourcing template for RFPs, RFIs, and RFQs can give your procurement team more transparency and visibility regarding potential suppliers. It should make it easier for procurement teams to acquire a better understanding of what each supplier can bring to the table; as well as identify specific qualities that will allow them to see if they are a great fit for the organization.

Procurement teams are lauded for their ability to provide cost savings for companies as they source the goods and/or services required by their organizations. However, the goal isn’t necessarily to find the lowest price but to optimize for the highest value, a calculation that undoubtedly includes price. A robust eSourcing platform will help disentangle the qualitative and quantitative data, enabling procurement to select the suppliers that provide the best overall value in light of the selection criteria. The result? Strategic sourcing replaces tactical purchasing.

4. Cultivate good supplier relationships

If your organization is large enough to have a procurement team, then the success of the organization will be significantly impacted by the quality of its suppliers. In addition to maintaining active relationships, procurement teams are expected to have a network of qualified suppliers to which they send out bid requests when the need arises. Granted, you can simply seek out new suppliers when a new project or requirement comes along, but that can take a lot of time and effort. Essentially, doing so will require you to start over from scratch each time. Such delays from the procurement team’s side could cause a domino effect across the whole organization.

Similarly, once the people on a procurement team are engaged with a supplier, it’s incumbent on them to be an active participant in the relationship. Be sure to treat your suppliers fairly and conduct business with the utmost professionalism.

Keep these tips in mind if you want to improve your procurement team’s effectiveness. Remember, it’s not just about saving money or about putting out the current fire. Effective sourcing practices can have a positive chain reaction to your entire organization. So take a long view, tighten your processes, and get set up for success.

Take advantage of Vendorful’s eSourcing platform and find out how we can help improve your business operations. Get in touch with us today.

Important RFP Elements

Does Your RFP Contain These Important Elements?

Your ability to attract and engage quality bids is dependent on how well you begin your procurement process.

After all, the search for the right supplier isn’t simply just about cost-savings. It’s important to establish a balance between budget and quality, and assure that you will be forging a partnership that mutually benefits you and the supplier.

In many cases, achieving this starts with crafting a high-quality RFP (request for proposals): when your RFP outline is sub-optimal, the whole sourcing process is likely to deliver sub-optimal results.

With that in mind, it’s crucial that your RFP online contains all the important elements you require. Browse through the checklist below before sending out your next RFP.

1. Statement of Purpose

Your RFP should offer a brief explanation detailing exactly what you need, your purpose for sending the RFP, and what you hope to gain.

It should also include an outline of your target timeframe. Are you seeking a long-term supplier or a partner for a one-time project?

This section should be able to set clear expectations regarding your needs.

2. Introduction

Provide comprehensive background about your company. Your prospective bidders are of course expected to do their own research, but giving them an introduction will point them in the right direction.

Try to provide as much information that you believe will be relevant to your supplier’s ability to deliver a great proposal.

3. Timeline

Map out how long the entire process will take by providing a timeline. Establish closing dates for submitting the intention to bid and be specific about deadlines.

Make sure you provide a feasible timeline for your suppliers. Give them enough time to craft their responses so you receive quality proposals.

4. Goals

Were you able to articulate a clear set of goals in your RFP? Spelling it out clearly for your potential suppliers helps them focus on delivering what you actually need. Think about what your priorities are and what you’re working towards.

5. Deliverables

Explain the deliverables you expect to receive from each proposal. Typically, this should include items such as the plan of action, timelines, and ways forward specific to your project.

6. Pricing Template

While not necessarily a requirement, best practice shows that providing potential suppliers with a pre-designed pricing format where they can detail their pricing structure makes it easier to compare one bidder from another. It also makes it easier to ensure that there are no requirements that were left out.

7. Terms and Conditions

Comprehensive RFPs typically provide a pro-forma contract that details pertinent information about the working engagement. Typically, this includes details such as payment terms, penalties, incentives, breach of contract rules, and dispute resolutions.

8. Criteria for Evaluation

A critical element of the RFP is anchored on knowing exactly how you will make your decisions when it comes to choosing the winning bid. Suppliers have to know what you are prioritizing. For example, are you putting more weight on budget over timelines? Or is price negotiable as long as they are able to ensure quality of service?

9. Wish List

Make sure that your wish list is separate from your non-negotiables. You may want certain elements that would be great to have in the proposal, but aren’t necessarily needed. These could also be items that you’re not quite sure will fit your budget. Regardless of what you want to include, if it’s not a priority or a must-have, be sure to include it as a separate list.

While there isn’t a cut-and-dried way to construct an RFP, ensuring that the above items are included when sending it will raise your chances of receiving high quality, thoughtfully prepared proposals.

Take advantage of Vendorful’s eSourcing platform and find out how we can help you write better RFPs. Get in touch with us today.

Reasons your organization is no adopting eSourcing

Top 4 Reasons Your Organization is not Adopting eSourcing and How You Can Overcome Them

For any business that has used an eSourcing platform, the benefits are evident. Using tailored technology to streamline its procurement needs can provide an organization with significant cost savings, faster cycle times, more transparency, and better control over its sourcing requirements.

Despite the demonstrable success and a strong ROI story, eSourcing adoption remains low. As Jeff Gilkerson asks in his article for Spendmatters, “Why do 30 percent of organizations not have eSourcing tools when the benefits are widely known and accepted, the technology has been around for decades, and the tools can be obtained for a relatively low investment?”

Check out the following top concerns and some ideas about how you can overcome them.

  1. Employees are generally apprehensive about change

Any form of new technology can be overwhelming and intimidating for an organization. This is especially true for procurement teams that might be used to doing things the same way for years. Despite the fact that traditional methods of sourcing are tedious and time-consuming, there is a certain comfort in knowing that you’ve already mastered the steps you have to take to get the job done. A well-worn groove might have compromised structural integrity, but it is comforting. Conversely, anything that might disrupt a familiar sourcing sequence becomes a cause for apprehension.

Addressing potential discomfort from change requires patience from management and a commitment to support the transition to the new tools. Take the time to talk about the advantages of using an eSourcing platform. Make sure you answer the questions and dedicate time to train your employees so that they can see for themselves how eSourcing can help improve their productivity and efficacy.

  1. Some companies assume their sourcing needs can’t be addressed by technology

Without a clear understanding of eSourcing technology and what it can do, it’s very easy to assume that the platform simply won’t fit your specific requirements.

With a little research, however, it’s easy to see just how broadly applicable eSourcing platforms are, regardless of industry or nature of the business. No matter how large or small your company is, no matter how complex your project may be, eSourcing will likely prove to be a useful tool to streamline the bidding process as you search for partners and suppliers. But if you’re not convinced and have lingering concerns? Ask for a demo. Have a discussion with an eSourcing vendor. At the very least, explore the opportunities in front of you before resigning yourself to doing the same thing you’ve been doing.

  1. Some employees feel overwhelmed at the prospect of full transparency

There are numerous advantages to transparency. In fact, this is one of the main advantages of an eSourcing platform. Transparency, however, can have its drawbacks. In certain professional environments, an open process is one that is ripe for judgment as well as micromanagement. The irony here is that a strong eSourcing tool should empower — not disempower — procurement teams.

The key to managing this is to focus on processes and protocols. Leveraging a tool should provide tangible benefits and the opportunity to rethink and re-implement processes. By creating the right framework around the tool, an organization can mitigate the potential “risks” of transparency while setting up its procurement team for success.

  1. Procurement teams tend to use it without proper planning

Inasmuch as eSourcing platforms are intended to make everything easier for employees, it does require a bit of planning to execute everything seamlessly.

Often, in the interest of meeting a procurement team’s urgent sourcing requirements, stakeholders may point to eSourcing as a quick and easy solution, expecting immediate results. However, as with anything in business, great results require some forethought. As detailed above, you should be rethinking the process, not eliminating it. Even a great tool can be used incorrectly. To that end, clear objectives should be identified and workable criteria for evaluation should be defined. Remember eSourcing is a tool, not a replacement for critical thinking. You have to give the tool the right context and inputs to deliver the results you need.

Working with your procurement team regarding the best way to begin the eSourcing process is a great way to ensure that you drive the best outcomes.

When it comes to procurement technology, eSourcing platforms can prove to be a boon for all kinds of organizations. And while there are risks and concerns with adopting any new technology, a thoughtful approach should allow you to address them head-on.

Take advantage of Vendorful’s eSourcing platform and find out how we can help improve your procurement process. Send a message to Vendorful today.

Create an RFP that gets results

How to Create an RFP that Gets Results

The efficacy of procurement teams is tethered to knowing and understanding what they are purchasing and why. Think this seems straightforward? Think again. Large enterprises might have vendor rosters numbering in the thousands that cut across numerous categories. And most of the ongoing vendor engagement is in the hands of stakeholders, who all too often, sit in virtual silos. So what can procurement teams do to address this? Actually, there are lots of things. But for the purpose of this post, let’s focus on maximizing the chances that the best-aligned vendors are engaged. A key tactic to engage involves leveraging procurement’s favorite three-letter acronym — the RFP (request for proposal). An RFP allows an organization to assess whether the supplier’s goods and/or services are actually going to meet its needs.

With that in mind, it’s critical that the RFP proposal is able to draw out the best answers from your potential suppliers. Therefore, it has to be prepared thoughtfully and with care.

The following steps will help to ensure this:

1. Do your research

Start by embracing the requirements gathering process. Engage with stakeholders and establish what problems they are trying to solve and understand both the parameters and constraints surrounding them. Collectively, you should determine what they actually need, which will help you draft an RFP proposal that drives specific results. Are there key areas that you want your prospective suppliers to address? Be sure to understand what elements are actually feasible and in scope. You want to take care to avoid wasting the supplier’s time — and yours — by providing an RFP to which they can reasonably respond.

If you’ve done your homework upfront, then you can be realistic about setting expectations and tie them to measurable and quantifiable company objectives.

2. Identify your ideal supplier

Different suppliers will provide different proposals. Each supplier endeavors to provide its unique viewpoint. Their approaches and solutions will vary and each one will likely have its own strengths and weaknesses. While some suppliers will focus on cost, others will attempt to win you over by providing the most comprehensive service. Others may focus on speed or support. Create a clear picture of your winning criteria to minimize the difficulty in assessing what each bid has to offer. As you write your RFP, be sure to also note what qualities your winning bid will have.

Remember: value is ultimately dynamic in nature and can change situationally. While you might be particularly priced sensitive with one purchase, you might find yourself more time-sensitive with another. By establishing the key drivers of your decision, and if possible, weighting your RFP accordingly, you increase the likelihood of strong alignment with the supplier you ultimately choose.

3. Organize your document

As a standard, any business-related document should be carefully and accurately written. This is especially true for RFPs. After all, your main goal is to find a vendor that will provide valuable goods or services for your company.

That said, be sure to outline what is needed in such a way that your priorities are clearly communicated to the potential supplier.

In general, you should be able to answer the following questions:

Why are you trying to find a supplier for this particular problem?

  • Who is the organization seeking this solution? (Provide a clear description of your organization.)
  • What is the nature of your project and what is required from your suppliers?
  • When do you need the proposal or bid completed?

From here, it is easy to create a brief introduction that summarizes key bid points.

4. Clarify your evaluation criteria

When it comes to evaluation criteria, you are at liberty to provide as much information or as few details as you like. Generally, however, suppliers need some insight you will be judging their bids in order for them to focus their answers on your actual requirements. Undoubtedly, you will be better served by conveying your priorities. However, we would caution you not to share specific weighting criteria as you don’t want suppliers to “game their responses.”

5. Provide a detailed timeline

Explicitly detail the timeframe by which your RFPs need to be answered. Suppliers must know how much time they have to prepare their responses.

For a clear and comprehensive reply, establish reasonable deadlines. Remember, complex bids require weeks of preparation (sometimes more!) and it’s unreasonable to demand that they be submitted hurriedly.

Keep these points in mind the next time you’re writing an RFP. These simple tips can help ensure that you send out an engaging and effective RFP that attracts the best bids from potential suppliers.

Take advantage of Vendorful’s eSourcing platform and find out how we can help improve your procurement process. Send a message to Vendorful today.

Types of Reverse Auctions

Which Type of Reverse Auction Should You Be Using?

Advancements in technology have allowed procurement teams to introduce new sourcing strategies and practices. A reverse auction software, for example, can automate and streamline the RFP process steps to increase cost efficiency without requiring months of negotiation. Before going further, we want to acknowledge that cost should not, in the vast majority of situations, be the sole driving factor in choosing a supplier. Indeed, sometimes cost and quality can be inversely correlated. Taking a holistic approach where cost is a key consideration will deliver better outcomes. But that’s for another blog post….

While you might be keen to start saving money in record time, a little homework—a tiny bit, really—is helpful. There are numerous reverse auction types and formats from which you can choose. And selecting the right one could help you reap the most benefits from this tool.

Let’s take a look at some of the most popular types of reverse auction software and examples to help you decide which one best suits your needs:

1. Ranked Auction

Ranked auctions are arguably the most popular auction type given how they can be effective for multiple industries and project types. Most companies choose ranked auctions when they want to engage numerous potential bidders that they expect would be bidding at similar price points.

The key information provided to the suppliers in ranked auctions is their position or rank against the other bids. At any point, the supplier with the leading bid is the only one who has knows what the current best price is.

One potential disadvantage of ranked auctions, however, is that participants who are in the second or third position might get the impression that they won’t have a shot at winning the bid. For that reason, you want to communicate that price is an important consideration, but that a contract won’t automatically be awarded to the low bidder. One benefit to consider regarding ranked auctions is that suppliers tend to prefer them over other auction types since it’s not a pure “race to the bottom” in terms of price. If suppliers feel strongly about the overall strength of their offerings, they will make competitive bids and expect that cost will be one factor in how total value is evaluated.

2. Open Auction (also known as an Open Outcry or English Auction)

In an Open Auction, everyone who has submitted the bid will have full knowledge of the value of the leading bid. Bidding typically starts high—or at a buyer-defined maximum—and falls steadily. This means that all the participants start with a level playing field and all have an equal shot to compete for the winning bid.

A supplier can only submit a bid if its numbers beat the current best price. The process works best when the buyer is comfortable with attaching a value to their project, allowing them to quickly settle negotiations. Bear in mind that this kind of reverse auction software is designed for commodity items where the price is likely the key differentiator.

One common misconception is that buyers are obliged to award the contract to the low bidder. While that is frequently the case, it’s not always so. Even with commodity goods, there can be considerations beyond price that influence the outcomes of these events.

3. Dutch Auction

Dating back to Tulip Mania in the 17th century, Dutch auctions have made their way beyond The Netherlands and out of flower markets. In fact, they’ve been used for public stock offerings.

In a reverse Dutch auction, the buyer will list a product, a quantity, and a price that it would like to pay. Suppliers can elect to opt-in or out for some or all of the quantity. For example, if a buyer wants to buy 10,000 widgets at $10 per widget, suppliers have three choices:

  1. Place a bid to provide all 10,000 widgets at $10/widget.
  2. Decide not to provide any widgets at that price.
  3. Place a bid to provide some portion of the widgets for $10/widget.

Prices increase at a predetermined interval as long as there is an outstanding supply. And in many cases, multiple suppliers can combine to meet the needs of a single buyer. Imagine, for example, multiple rounds of bidding with our widget example.

Reverse Dutch Auction table

In this scenario, four suppliers combine to meet the needs of the buyer. The market-clearing price, i.e., the price at which the buyer can be fully supplied, is $14. In the above example, even though Supplier A, B, and C were all willing to sell their widgets for less, each would receive the market-clearing price of $14. Buyers should take care to set a reserve price, which acts as a ceiling.

(Fun Facts: If you’re wondering if the buyer can buy the specified quantities at the bid prices rather than at the reserve price, they can…just not in a reverse Dutch auction. Rather, this would be the result of a reverse Yankee auction. In that scenario, Supplier A would be providing widgets at two price points and delivering at an average price of $11.33. And while the buyer would pay between $10 and $14/widget, the blended cost of all the widgets to the buyer would be $11.40.)

Although a Dutch auction offers loads of flexibility and can drive down prices, it can also introduce complexity into the supply chain. That complexity can, in some cases, undermine any savings realized in the sourcing process. It’s a useful tool for a buyer to have, but should be considered carefully before implementation.

4. Japanese Auction

Reverse Japanese auctions begin with the buyer’s sending an opening price to suppliers. To participate, suppliers must accept the opening price, signifying that they agree to the requirements defined.

As more bidders agree to participate, the bid price goes down at specific intervals—usually time contingent—with bidders being asked to accept or reject the new price. The whole process continues until there is only one bidder left. A Japanese auction is, in effect, a process of elimination.

A reverse Japanese auction type is ideal when the buyer wants to limit the information available to potential bidders. In addition, a buyer can run it even if there is only one participant on the supplier side. Note, however, that this is also the least popular method of eSourcing among suppliers as it gives them very little feedback. It’s also considered one of the more difficult auction formats for businesses given that it’s challenging to set-up and requires more attention to executing.

Keep in mind that each type of reverse auction will have its own strengths and weaknesses. Choosing the right one depends on what your objectives are and what you need to address. However, regardless of what type you choose, this process will ultimately help you get the most value for your budget, allow you to source suppliers easily, and simplify the complex process of procurement.

Take advantage of Vendorful’s eSourcing platform and find out how we can help improve your procurement process, get in touch with us today.

Write engaging RFPs

Why You Should Be Writing Engaging RFPs

What’s the difference between an acceptable RFP bid versus a stellar one that engages suppliers to put forward their best possible response?

Unfortunately, there isn’t a simple, cut-and-dried way to answer that question. However, there are guidelines that you can keep in mind to make sure you’re able to energize potential suppliers and draw out their best bids.

If you want to create engaging RFPs, try the following actionable tips:

1. Do your research

Creating a hastily researched RFP just for the sake of sending one out is a waste of time. Before you even begin writing a draft, you should learn every stage of the RFP process flow.

It’s important that you are able to identify what are non-negotiables and absolutely necessary for your company. Be thorough and explicit in identifying the areas that are absolute requirements and those that are optional. This gives your suppliers a clear idea as to whether or not they are capable of addressing your needs.

2. Have a clear idea of what your winning proposal will look like

RFPs can be responded to in various ways. Different suppliers will have varied strengths and areas of expertise. They will also have weaknesses. While some companies might compete based on their ability to reduce their costs, others will push their capabilities and focus on delivering quality. There will also be suppliers who will find a way to create a balance between price, quality, and expediency.

Paint a picture of what you need from your ideal supplier. If managing cost is your priority, make sure this is indicated in your RFP. If you want the fastest delivery time, explicitly say so. If money is no object, let your audience know. This way, your suppliers will know what your priorities are and can tailor their bids according to what you really need.

3. Provide a summary or brief introduction

The summary is where your company can briefly explain the project and capture the attention of suppliers. It also creates interest in your project. Be sure to include the key points of your RFP in the introduction that gives an informative, big picture overview of what your requirements are.

Start by indicating your company name — you’d be surprised at how many businesses forget this seemingly basic and simple element of an RFP! You might think this is obvious, but companies tend to forget the company name assuming that they are already recognized, or that everyone is waiting for them to send out RFPs. Then go into a brief explanation of what you need. Be sure to mention your target deadline and any other key dates as well.

4. Thoroughly explain your requirements

This is perhaps the most critical component of an RFP. To avoid miscommunication, be very specific about what you require. It’s important, however, that you avoid directly dictating how you want vendors to do their work for you. Be clear and detail-oriented but make sure you’re not making your vendors feel like you’ll be micromanaging every aspect of the project.

Divide your RFP into several sections for clarity, especially if your project has multiple working components.

5. Detail your selection process

Be specific about how you make your selection. Apart from meeting your requirements, what other factors will you be looking into? Who will be in charge of making the selection? Will you be following a point system?

RFPs are a great way to make sourcing more transparent for all parties. Providing more details surrounding how your business will make its selection can prove to be a great way to engage more suppliers to send in their best bids.

Consider these guidelines when creating your next RFP. You’ll surely notice a difference in terms of engagement and responses.

If you have experience with writing RFPs and can offer more helpful guidelines to boost engagement among suppliers, we’d love to hear all about it. Leave us a message below.

Contact us to find out how Vendorful can help ensure you and your suppliers benefit from eSourcing. Contact us today!

Five things to consider before sending your RFP

5 Things to Consider Before Hitting Send on Your RFP

Most businesses understand the challenges of finding a reliable supplier. Sure, there are “throwaway engagements” where your focus is purely transactional, the sole focus might be quickly identifying who can get the job time. But for larger, more strategic endeavors, the scope of your evaluation likely transcends the supplier’s current capabilities. Indeed, your looking to find a partner with whom you can build a long-term, mutually beneficial working relationship.

For many organizations, the first key step on this journey is issuing an RFP (request for proposal). A strong client RFP can streamline the sourcing process, attract great vendors and quality bids, and improve working relationships that drive better results.

These outcomes, however, are premised on your ability to send thoughtful and engaging proposals. So, before you hit send on that RFP, be sure to keep the following questions in mind:

1. Do you know exactly what you’re asking from your potential suppliers?

As you put your requirements together, focus on what you want your vendors to do. This includes what you expect from them, especially during the bidding stage.

Be very specific and considerate when it comes to the work requirements you’re asking them to fulfill. For example, will responding to your bid mean that they are committing themselves to a free trial or otherwise obliging them to produce work for which they might not be compensated? In some circumstances, this might be a reasonable expectation. In others, it might preclude some prospective vendors from bidding.

Be mindful of the fact that, at the end of the day, this is a business transaction. You might want to ask for the sun and stars in your RFP, but there is a simple calculus at play for any potential respondent. “Does the opportunity merit the amount of work we’ll need to invest in responding to this RFP?”

2. Are you being thoughtful about deadlines?

Insightful, well-written, high-quality bids require time to create. Although you’d like to get the ball rolling on your project and get approval from your team, your suppliers need time to respond to it.

Look, we’ve talked to enough sourcing managers to know that seemingly all stakeholders want the supplier decision to have been made yesterday. But think about how much time it will really take for suppliers to submit an RFP response. Creating unnecessary pressure by establishing a less-than-reasonable deadline could force your suppliers to pass on your project simply because they are unable or unwilling to rush something out the door, particularly at the expense of quality.

True, there are instances where suppliers will bend over backwards to accommodate your needs. However, they will also appreciate a little consideration on deadlines, especially when you consider that you’re laying the foundation for your possible future working relationship if they win the project.

3. Can you make yourself available for questions and clarification?

You may think that you have given your suppliers all the information they need to create a great bid. However, engaged and highly-interested suppliers might well reach out and ask questions about your project, request clarification on certain questions or specifications, and might even delve into your objectives and goals.

If you’re not able to set aside time to answer their questions, it could lead to responses with incomplete answers or responses that don’t make sense contextually. And then you’re stuck making important decisions on incomplete or irrelevant information. Here’s the thing — you can’t really blame them for it since they’re basing their submissions on incomplete or incorrect information. In some cases, your inability to give more insight into the project might put off potential suppliers altogether.

To avoid this, keep in mind that your responsibilities don’t get put on pause during the stretch of time between issuing and scoring your RFP. The role might be more reactive than proactive, but you do have a responsibility to address questions and concerns from potential suppliers.

4. Are you able to provide a budget?

A lot of procurement teams assume that holding back on budget information can help drive competition between suppliers and therefore, deliver more value. In many cases, perhaps the majority of them, this could be true. Sharing budget information may well be tantamount to negotiating against yourself. However, in certain circumstances, it can be particularly difficult for suppliers to create a good plan for your project without at least a ballpark budget number. This is particularly true when the scope of an engagement is determined as much by price as they are by requirements. Custom software development is a good example of a project that might benefit from some disclosures around budget.

Again, this is not to say that you should share budget information willy-nilly. Be thoughtful and you feel it’s appropriate to convey some financial parameters, consider doing so.

5. Are you clear about your goals?

Any project has to have a clear goal. All too often, however, RFPs get sent out with the requirements details, but without clear objectives. For a supplier, this creates a challenging lack of context. The requirements should exist in furtherance of a goal, not exist in a vacuum.

Having objectives in place makes it easier to identify criteria that will ultimately inform your decision. This is helpful not just for suppliers, but for you — the buyer! For instance, if your objective is to launch on a specific date, then it’s clear that the winning RFP response has to include timely delivery. On the other hand, if your goal is to ensure that the project needs to be completed at a certain budget, then it’s possible the bid with the lowest cost could have an advantage.

If you want your RFP to attract and engage the best suppliers and the strongest proposals, consider these points before you send your proposal. You’ll likely see a marked difference in the volume and quality of responses.

If you have more advice on how to manage a great RFP process, we invite you to tell us about it in the comment section below. To know how Vendorful can help improve your procurement process, get in touch with us today.

eSourcing should be your top priority

4 Reasons Why eSourcing Should Be Your Top Priority

As a business, streamlining your sourcing, allows you to save time and money, build better working relationships with suppliers, and ultimately ensures the success of your procurement cycle.

However, this isn’t the easiest thing to do. Procurement teams juggle so many responsibilities that it’s easy to forget just how important sourcing is to the entire procurement process. This is precisely the reason why companies are turning to technology and embracing eSourcing as a key tool to better manage their procurement processes.

To help you make the transition to eSourcing and understand its benefits, we’ve rounded up the top 4 reasons why companies should really focus on eSourcing and make it their top priority. Check it out below:

  1. Reduces costs

Saving money is a primary KPI of efficient procurement processes. eSourcing is a good way to achieve that.

According to Aberdeen’s research, companies report an annual average savings of 16% from eSourcing. In addition, procurement teams are able to access a broad range of suppliers and review numerous bids in a streamlined and centralized way. This guarantees favorable results for businesses as it allows them to connect, screen, review, and shortlist suppliers efficiently.

  1. Improves supplier relations

eSourcing tools can help businesses conduct the bidding process in a more open and transparent manner. This essentially levels the playing field for suppliers who know that every other supplier bidding for the project has access to the same information. In addition, it helps assure suppliers that the process is being conducted fairly, and without bias.

It also makes the entire bidding process more efficient for suppliers. With a centralized eSourcing platform, they no longer have to sift through numerous documents or manually collate data from various people. A sourcing event is, in effect, like a first date. Ideally, it is the beginning of the strong, long-term professional relationship that you hope to build with your suppliers.

  1. Enables effective communication and evaluation of suppliers

The eSourcing process allows businesses to send details of the project in a centralized and streamlined way. This means suppliers can receive detailed requirements in a single eSourcing platform, as well as communicate and coordinate throughout the bidding process seamlessly. All information can also be easily accessed if necessary, reducing or eliminating protracted email chains and lengthy conference calls.

Also, when it comes to evaluating your suppliers, an automated sourcing process ensures that the evaluation process is faster and more efficient as well. You can say, “Goodbye” to the role of “Excel jockey,”Excel jockey as copying and pasting replies should be a thing of the past. Instead, you can focus your energy on the assessment itself, evaluating potential suppliers based on their ability to meet technical compliance, as well as on cost and bid quality via a single platform.

  1. Ensures time efficiencies

Anyone who has attempted to source suppliers using traditional methods knows that it takes time to find quality vendors. eSourcing helps reduce the sourcing cycle by letting you cast a wider net.

Additionally, because eSourcing lets you deliver information in a structured manner, you are almost always guaranteed that suppliers are able to submit their bids in the same format, in compliance with all your requirements. Additionally, providing standard channels of communication minimizes a lot of back and forth between stakeholders, saving time and effort.

Highly collaborative professional relationships with suppliers that contribute to a company’s growth don’t happen by accident. Effective implementation of tools to support this goal and a strong dedication to make eSourcing a top priority in your company is a significant step in the right direction.

If you want to automate and streamline your sourcing processes, find out how Vendorful can help. Get in touch with us today.

Improve procurement team performance

5 Ways to Increase Your Procurement Team’s Performance

The role of traditional procurement teams is changing.

By definition, procurement experts are typically responsible for obtaining goods and services based on a company’s needs. However, these days, their role is expanding and they’re also in charge of staying on top of supply market trends and understanding how these can affect the business. Companies rely on them to use their expertise and insight to create new growth strategies and help them remain competitive. Procurement teams are also key players in business expansions with significant supply chain impact.

Given the importance of their role, it’s crucial that companies set their procurement team up to succeed. Here are five ways you can do just that:

  1. Be transparent

Be very clear about what you expect from your employees. This goes a long way towards getting the job done; especially for team members who juggle as many functions in the company as procurement professionals.

Procurement teams should know exactly what the company needs from them to ensure that they are focused on the right priorities. It helps to involve them in major company decisions as early in the process as is feasible so that their daily priorities don’t inadvertently drift too far from the company’s long-term strategic direction –.

  1. Provide constructive feedback

Employees rarely do well working in silos — this is especially true of procurement teams. They’re tasked to coordinate both with internal teams and clients, which means it’s especially critical for them to receive regular feedback from people they interact with.

Providing the team with constructive performance feedback lets them know exactly where they’re at and how well they are doing. It’s also a great way to let them know what areas of the job they can improve on.

  1. Give them incentives

Positive reinforcement is great. Giving your procurement team that extra push through incentive programs is essential to acknowledge that they’ve done a stellar job.

Proactively reward your team for a job well done. Try setting smaller annual goals that procurement teams can work on. Provide incentives when they successfully complete each objective. This will help them feel more accomplished and motivate them towards achieving the bigger, long-term company goals.

  1. Recognize individual expertise

Procurement teams succeed as a group. And within that group, there will be individual team members who will stand out for their specific areas of expertise. For example, one person may enjoy haggling directly with suppliers, while another may loathe it. Identify their particular areas of strength or what specific part of procurement interests them and leverage that as much as possible.

  1. Give them the tools to help get the job done faster

As the job of procurement continues to evolve your team now finds itself intricately involved in multiple aspects of business operations. Think of ways to ensure that they are able to efficiently do their jobs.

One way might be to streamline key aspects of the procurement process, such as writing effective marketing RFPs. eSourcing makes that process more transparent, promotes better adherence to best practices, and saves time for both your team members and your suppliers. Providing the tools to get the job done more efficiently shows your team that you are invested in their success.

If you want to enable eSourcing as a way to increase your procurement team’s performance, find out how Vendorful can help. Contact us today!