Traditionally, procurement teams have run the show as suppliers did everything they could to make their offer more appealing. Procurement teams leveraged the RFx process to identify the most cost-effective supplier that met the business requirements and awarded them the business.
However, the dynamic has changed in the post-pandemic landscape. Suppliers are becoming more selective in the requests they respond to as they face intense pressure to deliver despite supply chain disruption and increased costs.
This blog will explore how procurement can:
● Make the RFx process easier and more appealing for suppliers
● Become the customer of choice
● Collaborate with suppliers in the RFx process
● Use technology to streamline the RFx process
The RFx process tends to be cumbersome, not just to suppliers, but also procurement teams and their stakeholders.
So, what are the major sticking points that affect the RFx process? Here are the top three:
Top suppliers are in high demand, but an over-complicated process full of red tape and too many questions make responding hard. This puts off suppliers, increasing the chances of them moving on to the next opportunity. You need to make it easier for suppliers to respond to requests.
To simplify the process:
● Make RFx responses and surveys easy to fill out
● Ensure form fields auto-load from previous years
● Use standardized information and datasets when possible
On average, the win rate for any RFx is 47 percent. If the RFx is too long, suppliers won’t be motivated to respond because they’re not sure they’ll win your business.
Include only the questions that matter to your company and provide the tools that make it easier for suppliers to respond to your RFx in the format that best conveys their value.
Ask questions in a manner that all suppliers can understand and respond to. The information you’re looking to gather should be clear and industry standard terminology should be used.
If you are trying to diversify your supply chain consider regional factors that might impact jargon utilized on surveys. Something as simple as using open-ended questions on a RFI may throw suppliers off that are used to only seeing close-ended questions. Or, sending out an RFQ that is not requesting pricing information may cause confusion.
Biased scoring may occur when sourcing teams searching for vendors see a name or solution they are already familiar with. Procurement teams should be scoring vendors based on the information presented, not what they think they may know about the vendor. Procurement gets better results when they are able to ensure the integrity of the bidding process.
Sourcing has been in crisis in 2021. Amidst the ongoing pandemic, the microchip shortage ravaging the automotive industry, lumber shortages, the Suez Canal, snow in Texas, and shipping container shortages (to name a few) have been wreaking havoc on sourcing teams.
The success of most procurement teams isn’t just being measured by their cost savings, they’re also under pressure to provide strategy, increase value, bring organizational alignment, and above all, keep supply chains intact. It is too easy for one event to have a cascading effect on profit margin.
That’s why businesses must strive to become customers of choice to their suppliers, which involves:
● Seeking feedback from and listening to your suppliers to uncover opportunities for improving communication and collaboration
● Willingly sharing market data with your suppliers (such as certifications, ESG, diversity data, Scope 3 etc.) in real-time to enhance transparency and visibility, as they become strategic partners
● Being easy to do business with by striving for simplicity, clarity, and consistency
And, when you’re in sync and have a strong relationship with your suppliers, they’ll give you:
● Preferential pricing
● First priority when materials or services are scarce
● Top-notch customer service
● Consistent, early access to new ideas, products, technologies, and services
Procurement often misses out on innovative solutions because of restrictive RFx processes that specify a solution that may not be the best option.
Working with your suppliers (who are the experts) to solve challenges creates new ideas that benefit you and them. Indeed, it could just be the creative spark your business needs to find new opportunities for building business value, saving costs, getting the quickest turnaround, and improving overall quality.
The right technology can improve your team’s internal process and provide a better supplier experience before the business is even awarded. Choose a tool that can provide:
● Faster and more accurate proposal analysis
● Anonymized proposal scoring to reduce bias
● Consistent evaluation through automatic scoring
● An auditable and transparent process
● Side-by-side proposal comparisons for easier decision making
● Faster vendor communication as you respond to queries, fix omissions and errors, or organize and catalog supplier responses
RFP360’s RFP management system is used by leading businesses worldwide. The platform’s centralized approach enriches the RFx process by streamlining both issuing and responding functions, making it easier to communicate and collaborate in real-time. RFP360 focuses on strategic sourcing with an emphasis on fair and objective vendor selection and customizable visibility settings.
A better supplier experience begins with the RFx. Discover how RFP360 can help you transform your request management process.