Vendors wish you knew this about RFPs

Top 5 Things Vendors Wish Businesses Knew About RFPs

As a business, you know how important it is to create quality RFPs. Good RFPs draw the best bids from vendors, foster better working relationships, and ultimately deliver better results.

To this day, however, there are a lot of assumptions, apprehensions, and misconceptions surrounding the process. So, we thought we’d gather insight straight from the vendors themselves on what it really takes to write and execute an RFP that will get you the best bids.

Here are 5 things vendors wish you knew about RFPs.

  1. The best RFPs are brief and concise

Organizations should understand that answering RFPs can be a tedious and time-consuming process for vendors. So as much as you probably want all your questions answered, you have to make a conscious effort to compress your queries into brief and concise questions. This will draw out the best and most thoughtful answers from vendors.

Shorter RFPs don’t mean the project is less of a priority for a business. In fact, brief RFPs actually reflect the time and effort your company put into writing it. We’ve been the in the shoes of vendors who have received 700-question RFPs. You open up the document and your stomach drops. There’s an internal debate about whether it’s worth investing the time. Then, if you agree to participate, you invariably get some degree of burnout as your responses go from comprehensive (in the beginning) to “just enough to check the box” (near the end). To maximize both the quality and quantity of vendor responses, remember to make your RFPs comprehensive, but not exhaustive. As the buyer, you’ll have plenty of time to dig deeper as you work your way through the process.

  1. You have to give vendors enough time to respond

If you want thoughtful responses from quality vendors, you have to give them sufficient time to respond.

RFPs aren’t the only thing that your vendors have to work on. And as important as it is to your sourcing process, it is likely just one among numerous other tasks that require their attention. Squeezing in time to create great bids along with everything else on their collective plates can prove to be difficult if they aren’t given enough time to complete it.

At the end of the day, vendors not only want to win the project but also use that as a stepping stone towards creating a lasting, long-term relationship with your organization. To do that, however, you have get past step one: the supplier selection process. By making sure that that you provide sufficient time for them to prepare their responses, you’ll increase your chances that you’ll select the supplier that is right for your organization.

  1. Don’t read too much into vendor questions…or silence

Vendors are dependent on the information that you provide. Sometimes, what’s obvious to the company itself may not be too clear to a supplier. And while you probably think that the context you’ve provided and the phrasing of your questions are enough for vendors to deliver a great bid, there will be times that they may need to reach out for additional information.

Do not assume that this is a sign that they’re doing a bad job. It is not a reflection of a vendor’s inability to grasp a particular request. In fact, doing so shows their engagement, interest, and dedication to getting the job done right. As a rule of thumb, you can put vendors’ minds at ease by having a Q&A period. The easiest way to do this is typically to set up a deadline by which all of the vendors have to submit their questions. When you respond, take care to broadcast clarifications and explanations to all of the vendors — whether they submitted questions or not — to make sure that all respondents have access to the same information.

  1. Be careful of what you are inadvertently communicating to vendors

There are certain things that you could be unknowingly communicating to vendors. The most critical one being that they have no chance of winning your RFP.

When buyers are slow to respond, especially when it comes to questions pertaining to RFP, or do not easily accommodate vendor requests for feedback/clarification, it can be discouraging and reduce the likelihood that the vendor invests time into submitting a strong proposal.

Similarly, the actual questionnaire can dissuade a strong supplier from participating in the bidding process. For example, imagine a company created an RFP questionnaire that focuses extensively on operating history, customer list, and profits, but for whom those things were tertiary considerations behind quality of the offering and price. Absent the broader context of knowing how those things stack up, a startup might assume that it has no chance at winning the deal, given its relatively short history and opt to invest its time elsewhere, rather than submitting a bid. By being thoughtful about what and how you communicate, you improve the odds of a strong outcome.

  1. Vendors know it’s not just about cost (but it doesn’t hurt to reassure them)

There’s a generally-held belief that vendors are apprehensive about bidding on RFPs because they know it’s a numbers game. The assumption is, the lowest bid always wins.

This isn’t necessarily true. Businesses use RFPs as part of their sourcing process because they want to manage cost and at the same time, ensure quality, maximize alignment, develop a strategic rationales, and more. Vendors know this. They also know that the lowest bid isn’t always the best option. Striking the right balance is the responsibility of the buyer and by clearly conveying the criteria, buyers better equip vendors to submit strong bids.

One last thing…

If you want the best vendors to bid and engage with your RFP, you have to make it easy for them to do so. You want to minimize the amount of work that they must do that are, in effect, unrelated to your bid. So unless otherwise required by statute or unbending policy, try to avoid asking to do certain things like printing and physically delivering the bid to your office, or requiring them to utilize slow, clunky tools, or submit the reply with smoke signals.

This is yet another the reason why you should consider an end-to-end intuitive and reliable RFP management software to streamline the entire sourcing process; enabling seamless collaboration (and enthusiastic participation) among and between key stakeholders.

Keep these things in mind when crafting your next RFP and you’ll see the difference in the responses, your options, and your ROI. If you have experience creating RFPs and have more to add to this list, please feel free to share it with us in the comment section below.

To find out how Vendorful can help ensure you and your suppliers take advantage of the benefits of eSourcing, get in touch with us today.

Reverse Auctions drive better business value

Reverse Auction Benefits: 3 Ways They Can Drive Better Business Value

We’ve dedicated quite a bit of time speaking to the virtues of the RFP process. Indeed, if you’re sourcing any complex good or service, running a Request for Proposal, is a great way to gather and evaluate the data the will ultimately support the decision you make. While running a comprehensive sourcing event makes sense in many scenarios, there are other situations where price is the overriding criterion. If that is the case, and the product/service being sourced is steeped in commodity rather than complexity, you might have a good candidate for a reverse auction.

When executed properly, reverse auction software can significantly reduce a company’s purchasing cost, while maintaining quality and service levels. By leveraging the right tools, you can enjoy a process that is efficient and expedient. And we’re not the only ones who think so. In fact, reverse auction usage saw a huge spike in 2017.

Evidently, more and more organizations are recognizing how reverse auctions can drive better business value. If you’re not using reverse auctions yet, you may be wondering, “What are they seeing that I’m not?” Here are some benefits that will support your efforts to drive adoption of this reverse auction technique.

1. Significant cost savings

Most people have only witnessed auctions on TV or in movies. The formula is almost always the same though…. A person in the front of the room points to bidders as the price for some item goes up, up, up. It makes sense then that the opposite dynamic is in play in a reverse auction. Vendors compete to provide a product or service, pushing the price down, down, down.

Smart sourcers will make sure that any specifications are clearly communicated the vendors. (Ideally, this should happen well in advance of the reverse auction itself!) Done right, reverse auctions can be one of the fastest ways to reduce cost without sacrificing the supplier’s quality of service. The data bears this out too, with buyers regularly reporting cost reductions around 10-20 percent.

2. Gets you to the finish line faster

Some sourcing processes are bound to be time consuming. If you’re buying a complex, mission-critical system, there’s no way around it. Using an eSourcing suite like Vendorful can automate much of the cumbersome pieces, but ultimately, you will be relying on human evaluation across a range of criteria. But in the event that you’re purchasing commodity goods, it does not necessarily make sense to use the same process. If your primary focus is on finding the provider with the lowest price, an RFQ might make sense in lieu of an RFP. And beyond that, a reverse auction software might make sense in lieu of an RF Anything.

Reverse auctions give buyers the opportunity to level the playing field, fairly and efficiently. They foster a transparent bidding environment where both buyers and vendors have a clear understanding of the specifications and the importance of cost. Weeks or months of verbal and written negotiation with potential vendors can be reduced to a few hours or less.

3. Helps build and maintain supplier relationships

If you work in sourcing, you might have raised your eyebrows when you read the heading. We, too, were surprised when we heard rave reviews about the reverse auctions from some vendors. Given the nature of the process, we, like many sourcing professionals, assumed that the tradeoff for better pricing could be a strained buyer-vendor relationship. So we were certainly heartened to hear such effusive praise from vendors. What did they like?

  • Transparency. Vendors might not like feeling like they are in “a race to the bottom.” However, when the buyer acknowledges from the beginning that price is the primary factor in the decision-making process and runs a high-integrity process, it’s much easier for vendors to get on board.
  • Speed. Like buyers, vendors have a fixed amount of time in their day. While getting top dollar for a product or service sounds ideal to a vendor, that needs to be balanced against the amount of time that is invested to win the deal. For commodity goods, the cost borne by the vendor in a protracted sales process can easily offset the somewhat higher price achieved by having done so. Put differently — the buyer is not the only one who benefits by quickly getting to the finish line.

Organizations that have not used an eSourcing tools probably haven’t even contemplated running a reverse auction. And even among those organizations who have embraced sourcing software, there may well be apprehension when considering running a sourcing event other than an RFX. But if your organization buys any sort of commodity product or service, reverse auctions can be powerful weapon in your sourcing arsenal.

If you have more questions on how reverse auctions can drive better business value for your organization, we’ve created an ebook for you: The Essential Guide to Reverse Auctions.

And if you want to learn more about Vendorful’s Reverse Auction capabilities — or even take reverse auctions for a test drive — please don’t hesitate to get in touch with us today.

eSourcing benefits buyers and suppliers

5 Benefits of eSourcing for Both Purchasers and Suppliers

The benefits of eSourcing may be clear for buyers, but streamlining the procurement process tends to be met warily by vendors. The apprehension stems from the impression that any level of process automation commoditizes their products and services, and that eSourcing platforms are largely one-sided in favor of the purchaser.

The fact is, however, that eSourcing platforms can facilitate real-time dynamic feedback and foster strategic communication so that it becomes a valuable tool for both purchasers and suppliers.

Here are some of the top advantages of eSourcing:

1. Unparalleled transparency through technology

Most eSourcing platforms are capable of providing real-time feedback via analytics tools and itemized ranking. This means that not only do buyers enjoy a big picture view of where all their suppliers stand and what they have to offer, but suppliers also get unprecedented competitive intelligence. Insight into what competitors are e.g. bidding in reverse auctions puts a supplier’s own pricing strategy into a clearer perspective.

2. Levels the playing field for all suppliers

eSourcing platforms ensure that all suppliers have equal access to the same information from the buyer. This promotes fair play among all participants and guarantees that everyone is able to see the same questions and answers. On the flip side, removing bias from the procurement process ensures that purchasers get the best possible bids and options from suppliers.

3. Improves trust between suppliers and develops relationships

Here’s how the typical procurement process works when done manually. Purchasers will start by briefing multiple suppliers on the details of their inquiry. From there, a supplier will come back to the purchaser with an offer. In order to negotiate the bids from all suppliers, purchasers will typically present the pricing offered by supplier A to supplier B (or vice versa).

The whole process is quite tedious and tends to foster an adversarial relationship between purchasers and suppliers. While purchasers may end up with their desired bids, suppliers may end up feeling shortchanged. This isn’t a great way to start a working relationship.

This is something that eSourcing handles easily. It’s the market that drives the price and because it’s out in the open, it can’t be pinned on a specific supplier or the purchaser’s negotiation skills.

4. Saves time for all parties involved

There’s a lot of back and forth when it comes to the procurement process. Briefings alone can take up hours — if not days — out of already busy schedules. And that’s excluding any negotiations.

Allowing both purchasers and suppliers to access standard templates and collaborate via a central system accessible to all relevant stakeholders can drastically streamline the process for everyone.

5. Offers more business opportunities

eSourcing platforms not only ensure that purchasers achieve operational efficiency, but also offer ease of use to suppliers as well. Once they familiarize themselves with how the platform works, it’s now easier for them to join bids for your company and win potential business.

One last note…

While software-enabled procurement is anchored in the same basic concepts of more manual processes, shifting to a digital platform will require some process changes for everyone involved. Both purchasers and suppliers will undoubtedly reap benefits from a high-quality strategic sourcing platform, but it will require a commitment to changing old habits and processes for eSourcing to truly shine in your organization.

Educate yourself and your suppliers so that key stakeholders in your organization can develop a positive view of eSourcing, understand what it can do for you, and start leveraging its benefits. If you have any experience with using eSourcing platforms, we’d love to hear all about it. Leave a comment below.

Talk to us to find out how Vendorful can help ensure you and your suppliers take advantage of the benefits of eSourcing. Get in touch with us today.

A great RFP attracts great proposals

7 Ways to Create Effective RFPs to Attract the Best Proposals

For business-savvy organizations, requests for proposal (RFPs) aren’t just simple procurement tactics. To them, each RFP represents an opportunity to drive value by engaging both future partners and stakeholders.

Writing a strong and effective RFP is a key driver to bring in great proposals that ultimately lead to strong vendor relationships. Conceptually, it’s simply. Great RFP leads to great supplier participation and better evaluation criteria. Then, you’re in a position to evaluate an optimally broad pool of responses along the specific dimensions that matter to your company. But while this is conceptually easy, putting it into practice requires work. So how do you develop a powerhouse team that consistently delivers great RFPs?

Here are 7 tips on how to write a good RFP:

1. Focus on creating a great executive summary

Everyone knows that you shouldn’t judge a book by its cover. On the other hand, when your RFP is stacked along with dozens of others, you can basically expect the recipients of your RFPs to judge them within the first page. You need your prospective providers to be engaged to maximize the chances of their participating. This is one reason why paying more attention to your executive summary should be a key priority.

The executive summary should clearly convey the scope of your organization’s needs and underscore the opportunity for the chosen supplier. While your RFP is not a marketing document per se, You want it to make it compelling, and at the same time, provide ample information about your company and project.

2. Be brief and keep it simple

One of the biggest challenges in the RFP process is trying to create a proposal that isn’t peppered with jargon and buzzwords to muddle the message.  And when it involves pages upon pages of seemingly irrelevant questions to be addressed, it might actually just put the vendor off. (Not to mention that a meandering or overdone RFP will be much more time-consuming to run and difficult to evaluate.) With this in mind, remember that it’s important for RFPs to be carefully crafted so that it draws quality proposals.

If you are seeking quality responses, then you’re well served by being succinct. Instead of taking the “more is the better” route, keep your document brief and focus on your objectives, without a lot of deviation.

3. Cover all your bases

Write your request for proposal with the goal that none of your key questions will be left unanswered, i.e., make sure that you are able to narrow down your list of prospective providers based on responses to your questionnaire. When your team and stakeholders sit down to do the evaluation, you want them to be scoring targeted, well-defined answers provided by the vendors.

4. Clarify your objectives and evaluation criteria

The RFP is a step towards achieving a business goal — it must fulfill a purpose. Don’t lose sight of that while writing your RFP. Otherwise, the proposals you receive risk not meeting your objectives. Before you even begin drafting the request, make sure you conduct an internal discovery process to understand and differentiate between the needs and wants of the stakeholders. In addition, it can be useful to share the RFP with stakeholders before sending it out to suppliers. This way, you can determine whether you are on target by testing it internally. If your colleagues are confused, it’s likely that your vendors will be too. If that’s the case, reevaluate and make the necessary adjustments to ensure your RFP is clear and focused.

5. Take care when using copy and paste

Thoughtlessly copying and pasting an RFP in its entirety and submitting it to vendors is rarely a good idea. You might have a foundation of content or template to get you started, but keep in mind that effective RFPs are customized and tailored to fit specific business needs. Think of a template — or a previous RFP with content that you can leverage — as the equivalent of a running start. It should help you get to the finish line faster, but not excuse you from running the race.

6. Proofread your document

Typos and grammatical errors in your RFP do nothing to communicate the professionalism and credibility of your organization. If you want to receive quality proposals, then you’ll help yourself by paying attention to the little details that exhibit a strong focus on quality.

7. Ask thoughtful, constructive questions

You want your RFP to draw actionable data from the responses of potential vendors. To achieve this, avoid stock questions unless the answers to them will provide meaningful insights in your evaluation process. Bear in mind that the goal is to generate responses that highlight a vendor’s capabilities as they specifically relate to your wants and requirements. Investing time to ensure that your RFP questionnaire is up to snuff should certainly pay dividends.

Did we cover everything? If you have experience writing RFPs and have more tips to share, feel free to tell us all about it below.

The RFP process is critical for businesses who want to attract suppliers that are best suited to meet their business goals. The process can be tedious, but technology now allows companies to automate much of the process. For a comprehensive explanation on how Vendorful can help you write better RFPs and drive quality responses,get in touch with us today.

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.

Vendor feedback helps!

3 Ways Feedback Can Improve Vendor Relationships

For any organization, ensuring that your vendors are able to meet your requirements and expectations is critical. However, this is not just a matter of choosing partners and then passively waiting for them to delight or disappoint: how you manage your vendor relationships can have a major influence on whether they succeed or fail.

One action customers can take to improve vendor performance is to consistently collect feedback from internal stakeholders. This proactive approach increases visibility into your vendor’s performance throughout the contract lifecycle, and ultimately enhances the business relationship.

Let’s delve into the nitty-gritty details of how feedback can improve vendor relationships with the explore the top 3 reasons to keep your lines of communication open.

  1. It helps clarify expectations between yourself and vendors

A study published in the Washington Post states that frequent feedback can help boost employee performance by as much as 12 percent. Why? A manager who is able to clarify his/her expectations to employees reduces the risk of miscommunication.

The same can be applied to vendors. Although you have a contract that may cover the basic service terms, it can leave a lot of room for confusion given the fast-paced nature of conducting business. Regularly scheduled performance evaluations can help to align expectations and ensure that operational and performance issues are addressed.

  1. It facilitates proactive performance management

According to a study conducted by the Harvard Business Review, “negative (redirecting) feedback, if delivered appropriately, is effective at improving performance.”

In the context of procurement, it’s typical for companies to provide performance surveys at the end of a contract. However, while useful for future reference, the retrospective nature of such an inquiry means that vendors are unable to address and possibly correct deficiencies as they arise, particularly if they are not specifically articulated. With regular periodic feedback, vendors can proactively address performance failures, thereby improving their operations in real time.

Doing otherwise could be a missed opportunity to strengthen your vendor relationships.

  1. It gives companies a chance to recognize good performance

Feedback need not be negative: buyers can certainly provide positive reinforcement as well. In general, people are more willing to go the extra mile if their efforts are recognized. It’s a great motivational tool.

However, it’s difficult to acknowledge a job well done if you are unable to pinpoint the reasons a particular operational flow is successful or showing marked improvement. If you wait to long to analyze and recognize successful outcomes, the key stakeholders might forget important context. Collecting feedback in the midst of an engagement allows buyers to accurately document strong performance and recognize it.

Good vendor relationships – with a strong focus on vendor performance – foster smooth operations, and promote relationship growth and longevity. Consistent feedback is one of the best ways you can facilitate such relationships. Intermittent feedback is better than no feedback, but a frequent, open, constructive dialogue – supported by stakeholder data – is best of all.

Technology has proven itself to be a game changer for many industries. Therefore, it’s no surprise that it has made a significant impact even in the very niche aspects of business operations, like vendor management. Platforms like Vendorful can make this process easy, painless and automatic. (And if you can think of ways to gather insightful feedback from your vendors, tell us about it below!)

For a comprehensive explanation on how to improve vendor relationships, get in touch with us today.

For any organization, ensuring that your vendors are able to meet your requirements and expectations is critical. However, this is not just a matter of choosing partners and then passively waiting for them to delight or disappoint: how you manage your vendor relationships can have a major influence on whether they succeed or fail.

Vendor feedback helps!

One action customers can take to improve vendor performance is to consistently collect feedback from internal stakeholders. This proactive approach increases visibility into your vendor’s performance throughout the contract lifecycle, and ultimately enhances the business relationship.

Let’s delve into the nitty-gritty details of how feedback can improve vendor relationships with the explore the top 3 reasons to keep your lines of communication open.

  1. It helps clarify expectations between yourself and vendors

A study published in the Washington Post states that frequent feedback can help boost employee performance by as much as 12 percent. Why? A manager who is able to clarify his/her expectations to employees reduces the risk of miscommunication.

The same can be applied to vendors. Although you have a contract that may cover the basic service terms, it can leave a lot of room for confusion given the fast-paced nature of conducting business. Regularly scheduled performance evaluations can help to align expectations and ensure that operational and performance issues are addressed.

  1. It facilitates proactive performance management

According to a study conducted by the Harvard Business Review, “negative (redirecting) feedback, if delivered appropriately, is effective at improving performance.”

In the context of procurement, it’s typical for companies to provide performance surveys at the end of a contract. However, while useful for future reference, the retrospective nature of such an inquiry means that vendors are unable to address and possibly correct deficiencies as they arise, particularly if they are not specifically articulated. With regular periodic feedback, vendors can proactively address performance failures, thereby improving their operations in real time.

Doing otherwise could be a missed opportunity to strengthen your vendor relationships.

  1. It gives companies a chance to recognize good performance

Feedback need not be negative: buyers can certainly provide positive reinforcement as well. In general, people are more willing to go the extra mile if their efforts are recognized. It’s a great motivational tool.

However, it’s difficult to acknowledge a job well done if you are unable to pinpoint the reasons a particular operational flow is successful or showing marked improvement. If you wait to long to analyze and recognize successful outcomes, the key stakeholders might forget important context. Collecting feedback in the midst of an engagement allows buyers to accurately document strong performance and recognize it.

Good vendor relationships – with a strong focus on vendor performance – foster smooth operations, and promote relationship growth and longevity. Consistent feedback is one of the best ways you can facilitate such relationships. Intermittent feedback is better than no feedback, but a frequent, open, constructive dialogue – supported by stakeholder data – is best of all.

Technology has proven itself to be a game changer for many industries. Therefore, it’s no surprise that it has made a significant impact even in the very niche aspects of business operations, like vendor management. Platforms like Vendorful can make this process easy, painless and automatic. (And if you can think of ways to gather insightful feedback from your vendors, tell us about it below!)

For a comprehensive explanation on how Vendorful can help a company improve their vendor and customer relations, get in touch with us today.

Deconstructing 4 of the Top eSourcing Myths

Hercules is a mythological. eSourcing? Not so much.

For a lot of businesses, a well-considered and thoughtfully-implemented eSourcing strategy could offer numerous benefits. Increasing sourcing efficiency, bringing down overhead costs, and improving supplier relationships are just some concrete examples. Given that, it’s almost surprising that businesses are all too willing to overlook these advantages due to certain eSourcing myths.

(Thanks, Charles Le Brun for the great Hercules painting! Greek myths…now, those are interesting.)

To address this, we’ve collected four of the top myths about eSourcing in order for you to understand the real value of eSourcing to a business. Hopefully, identifying these pervasive misconceptions about eSourcing will show you how it really works, lead you to informed decisions, and ensure your company has a reliable sourcing strategy.

Myth 1: My category can’t be eSourced

You might think your category is too specific or complex for eSourcing. The truth is, any spend category that you traditionally source using an RFI or RFP process can be eSourced, as long as

  1. your category has a set of definable requirements and
  2. suppliers can evaluate how they can meet the aforementioned requirements

In fact, choosing to automate your workflows via an eSourcing tool means you are able to follow best practices, implementing more stringent buyer guidelines and ensuring more accurate responses from suppliers. Take out your notebook (or simply download what we’ve compiled) and learn the RFP process steps.

Essential Guide to the RFP Process

Myth 2: eSourcing is only about the money

Many organizations assume that eSourcing is only ideal when price is not only a priority, but in fact the only consideration. However, good eSourcing solutions are built to support and provide solutions that go beyond simply cost. They are specifically designed to capture and gather bid information in a streamlined and centralized way to allow thorough and expeditious analysis. Such features can be used to both quantitatively and qualitatively evaluate bids on total value, rather than simply defaulting to the lowest price.

Myth 3: You can’t use eSourcing with trading partners or existing suppliers

Every supplier wants their customers to be customers for life. It’s therefore understandable to expect that some of your current suppliers might feel threatened when they are invited to participate in an eSourcing event. You can reassure them that simply because they are being asked to participate in a competitive sourcing process doesn’t necessarily mean that you’ll be making a change. Moreover, a robust eSourcing tool should provide value for suppliers as well as buyers. Indeed, after dealing with messy inboxes and collating data into different documents, suppliers may well be relieved to use a platform that supports collaboration, consolidates information, and more.

Myth 4: My company is too small for eSourcing

It’s possible, but we doubt it. Today’s tech-centric business landscape demands efficient solutions that will address business needs—regardless of size. Many of the newer eSourcing tools are also subscription based and scalable depending on a company’s needs. Such features actually make eSourcing more affordable and generate a better return on investment, particularly when compared with doing things “the old-fashioned way.”.

While eSourcing must have a strong ROI story and commercial rationale, it is strictly focused on helping organizations squeeze the last pennies out of potential vendors. There is a broader value story at play here. A good platform should enable you to  define and implement better processes that will benefit your business in the long term. Opting to implement an eSourcing solution will help you create a better, more transparent and scalable process for stakeholders as well as the organization at large.

Can you think of more eSourcing myths that weren’t tackled here? Feel free to add any to the comments section below.

For a comprehensive explanation on how Vendorful can help you respond to RFPs and ensure consistent value, get in touch with us today.

4 Biggest Challenges in Your RFP Process

Procurement teams face a number of challenges as companies take an increasingly critical look at their processes in the hopes of producing more value. It might not surprise anyone that the value-driving RFP process is still regularly met with resistance from departments outside of procurement. Even procurement teams have been known to push back, describing the process as too time-consuming and antiquated. Sourcing professionals know that RFPs are critical components of well-run procurement practice, but pressure — both external and internal —  can result in teams’ skirting or completely abandoning the process altogether. The risks are significant as the organization is far more likely to be dealing with the consequences of an ensemble of mismatched services and low-value purchases as a result. Here are the 4 of the biggest challenges facing your Request for Proposal process today.

  1. Costly RFPs – Even if one ignores the common gripes about RFPs taking too much expertise and being an arduous process, there’s the very real issue that some companies are running RFPs that cost more than they are worth. If the cost to run an RFP for a $300,000 purchase is $50,000, you’re going to have a very difficult time proving to your company that you can justify the cost of the sourcing event. There are a number of different factors that lead to expensive RFP processes, but the most important thing is to understand how much you are spending on procurement process flow. From there, you can identify what conditions need to change for your RFPs to become the value-driving tool that they are supposed to be. Otherwise, if the process itself is too costly, it undermines the rationale for leveraging the RFP for strategic purchasing decisions.
  2. Lack of Internal Expertise Think of an RFP like a polygraph test; it’s only useful if you ask the right questions. If your team isn’t establishing relevant questions, appropriate evaluation criteria, and a painless way for internal stakeholders to communicate then there’s a good chance that you won’t see value from your RFPs. A lack of internal expertise can lead to suboptimal outcomes. There might not be an easy fix; not even an organization has category managers and there is a natural information asymmetry between buyers and sellers, but this concern can only be addressed if you are aware of it.
  3. Communication between Stakeholders – With mounting pressure to make today’s decisions yesterday, a sourcing process that — by design — prevents impulse buys is bound to frustrate some. Billowing email chains, interminable conference calls, and answering the same questions over-and-over causes massive frustration on both sides of an RFP. Examples of critical communication checkpoints in an RFP include developing clear objectives, evaluating the competing proposals, and having specific evaluation criteria. Fortunately, many of the problems people have with RFPs can be solved with streamlined communication… which also has the added benefit of directly reducing the cost to run RFPs.
  4. Vendors Refusing to Respond – When you’re a Fortune 500 company, you can ask suppliers to respond to an RFP via smoke signals and the odds are decent that you will receive multiple proposals. However, when the perceived stakes for suppliers are lower, some may not even want to respond. Much of the frustration experienced by buyers is mirrored by vendors. The vendor procurement process shouldn’t be managed manually, but the reality is that it’s difficult for sales professionals to commit to spending both their own time and the time of internal subject-matter experts, responding to a lengthy RFP that is being sent out to a number of competing vendors. From the perspective of a sales department, dealing with RFPs is a necessary evil. Most salespeople would prefer to invest their time in developing relationships with prospects — not filling out forms. The relationship between buyer and prospective supplier is important, but should not, on its own, dictate how a contract is awarded. To maximize the odds that vendors respond to your RFP, offer them an experience with streamlined communication, collaboration, and more. If you make the RFP response process better for them, you are more likely to have strong competitive bids for your business.

I’m fond of the expression, “The road to hell is paved with good intentions.” Such is the case with the RFP. The intention is clear — optimize supplier selection. But the road to get there can be riddled with potholes and distracted drivers. Here’s the good news. These challenges can be addressed quite easily. By recognizing and then eliminating the frustrations that others have with the RFP process, you can drive increased engagement by stakeholders and suppliers alike, improving the quality of your outcomes.

Learn more about effective RFPs in our Essential Guide to Understanding the RFP Process.

Essential RFP Checklist

Essential Tips for Every Stage of Your RFP Process

It’s easy to get lost in a sourcing event. In addition to making sure you nail each step of the RFP process flow itself, you’re also trying to wrangle data, vendors, and internal teams across a variety of communication and management platforms — none of which seem to speak to each other. There is an understandable temptation, and sometimes even pressure, to cut corners for expediency’s sake, but you’re fully aware that cutting corners will lead to a less-than-ideal outcome. While for some organizations, the RFP has devolved into a box to be checked, top sourcing professionals understand the value of running a high-integrity, rigorous process. Below, we’ve put together a list of RFP process steps and tips to keep your team on track, and maybe even show you some things you didn’t know were missing. Read more

Vendor Relationships

How to Tell if Your Supplier Relationship Management is Successful

Supplier relationship management is tricky, and many organizations are unknowingly mismanaging their supplier relationships. From tunnel vision to a dangerous vendor “lock-in,” a mismanaged supplier relationship almost always impacts your bottom line… even if — and probably especially if — you can’t see the problem.

Mismanaged relationships are more common than you think.

Less than 48 hours before I started drafting this article, I had dinner with someone who works in city government. He told me a story about engaging with a technology consulting firm to build timesheet software. The rationale for choosing this particular vendor, he said, didn’t make sense. But even after the decision was made, there was still an expectation that a product would be built on time and on budget. Regrettably, the proverbial ball was dropped by the buyer. Perhaps it’s not surprising then, that after years of delay and cost overruns, the city finally sued the firm.

While most mismanaged supplier relationships don’t result in litigation, they are almost invariably costly. And though it might be hard to pin down the percentage of client-vendor relationships that are mismanaged, it seems as if everyone who works in an organization with some degree of scale has a story about the subject.

Problems arise at any point in the relationship.

Challenges relating to supplier management are particularly insidious because they can arise at any point in the relationship, beginning in the discovery stage. Even an organization that runs an RFP process using best practices might be challenged by not finding — and subsequently including — the right suppliers. Those organizations that nail discovery, but make compromises on their RFPs, might also end up with the wrong suppliers.

Like any relationship, the client-supplier dynamic can change over time. In some circumstances, the goals of the client’s business and the supplier’s business diverge over time. Even when things go well, there can be complications. One example is when a vendor’s strong performance leads to additional selling into the buyer’s organization. Liz (Brady) Witherspoon, a Principal Consultant at Forrester Research, explained:

“It is not uncommon for a division to have the same software implemented 15 times in 15 different locations in 15 different ways, when maybe it could have been implemented one time across the board.”

Interestingly, one of the biggest challenges that organizations face is far more mundane. A surprising number of organizations don’t even know whether a supplier is delivering as promised. Unreported dissatisfaction will typically not result in change. And, with certain kinds of engagements where the passage of time makes a supplier’s solution “stickier,” it can become increasingly difficult to get disentangled from a bad vendor.

In fact, in some situations, the vendor might exhibit better staying power than the buyer’s employees. Absent a mechanism for maintaining and transitioning institutional knowledge, the buyer risks ceding control of systems and business processes relating to the vendor’s product or service, raising the risk of “lock in.” The ramifications of breaking from “lock in” can be significant in terms of cost, time, and lost production. When an organization wants to free itself from “lock in,” it is essentially looking at a reboot with the added expense of migration. Unsurprisingly, breaking a “lock in” may well require significant reorganization of the company, production loss, and cost.

How to spot a mismanaged relationship

So how do you know if your supplier relationships are being mismanaged? Check if any of these apply to you and your company:

  • Your company awarded a substantial contract without a proper sourcing process
  • There are multiple, partial, or wholly redundant contracts with the same vendor
  • You don’t know what contracts you have
  • You lose the ability to switch suppliers easily due to lock in
  • Your contracts terminate and/or auto renew without anyone’s being aware in advance
  • Spend increases slowly, but significantly, over time without anyone’s noticing
  • You lose track of “market pricing” and you don’t know how your suppliers’ pricing competes with those of their competitors

How to avoid and get out of a bad relationship

Break-ups hurt, but a thoughtful “conscious uncoupling” can be less painful than a continuing relationship. Here’s how to avoid and catch bad vendor relationships before they become a bigger issue.

1. At a minimum, you should be keeping track of all of your suppliers, contracts, and some indicia of vendor performance somewhere. Paper and spreadsheets aren’t the best way to keep track of your business relationships, but if that’s all you have, then it is better than nothing.

2. To reduce the risk of being locked in with a particular supplier, invest in supplier management software that simplifies the process of keeping track of all of your supplier-related data and information. This not only removes the likelihood of losing notes and data, but the software would likely give you greater insight into your relationship with your suppliers.

3. If you really want to level up your management game, marry supplier management software with a Vendor Relationship Management Office. A VMO is in charge of evaluating products and services, maintaining vendor relationships, and covering the day-to-day communication with vendors.

4. Should you relate to any of the mismanaged relationship red flags listed above, choose a way to steer your vendor relationships in the right direction before they own that portion of your business completely.

Looking for other ways to choose the right vendor? We’ve laid out the benefits and disadvantages of the three different methods to manage your sourcing process.