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Thursday, August 21, 2014

A Good RFx Relies on In-House Preparation

DpastoreLast month, Source One’s article laid out what makes for a good RFx. As trends and expectations change and the industry grows to meet them, the elements of an RFx also will change. Based on Source One’s opinion, “In-House Preparation” was listed as the most important element.

To put it another way, the most important things an organization should do in preparing an RFx is to develop the requirement, define the scope of work, and produce questions on its own or through a third party augmenting the organization’s team. This should be done without the help or counsel of its suppliers.

Why should an organization produce an RFx itself when a supplier can prepare the document for the organization? Having already put in the R&D time to develop products for the market, isn’t the supplier more knowledgeable of the needs and requirements that a product or service fulfills?

The purpose of any sourcing initiative is to identify the best solution for the organization’s needs. Period. Whether the end goal is identifying cost savings, a best value solution, best in class service levels, or whatever else an organization may find important, a sourcing initiative should be conducted to identify the optimum solution for that company rather than to rationalize an identified solution that may not be best suited to the organization. A supplier-written RFx can inhibit this process by unfairly steering the search towards their own products or by unintentionally limiting the value of the responses.

Reason #1: Supplier Bias

The explanation for this can be quickly summarized through a number of proverbs, including “Never ask a barber if you need a haircut” and “When your only tool is a hammer, everything starts to look like a nail.” A supplier with products in the same market category that its customer is researching has a very real sales opportunity in its hands, and the temptation to subtly steer a customer towards their own offering is one that very few suppliers can pass up. Due to the sales potential, their own familiarity with the market, and their own list of preferences as to what features/components are important, the requirements and questions in the supplier-produced RFx do not qualify potential suppliers so much as they disqualify them.

These are some tell-tale signs of supplier-drafted inquiries that we have seen in RFx documents sent to us:

  • Features of little use, only offered by one or two suppliers in the market, that are listed as critical.
  • Artificially limited questions. That is, inquiring in such a way that elicits only a specific process or problem-solving measure, when the issue can be properly addressed in a variety of ways.
  • The use of trade language, specific to one supplier’s product or services, to describe a requirement.

In theory, these can seem innocuous. When read by a potential supplier, however, these are disqualifiers and may discourage the supplier from participating. By limiting the participation of suppliers this way, an organization is unable to see the totality of solutions in the market, and may miss out on the best fitting one.

scale_measuringReason #2: Decreased Value of Responses

In Source One’s experience, a supplier-prepared RFx inquiry limits the quality of the results, not only from potential bias, but from translation errors. This is not to suggest that a supplier would somehow send a query to English-speaking suppliers written entirely in Dutch. Rather the purest delivery of an organization’s needs and intentions can only be delivered by the organization itself or from a third party ingrained into the organization’s culture.

When judging the responses to an RFx, Source One has found it difficult to evaluate responses to questions we did not write. Without the precursory supplier knowledge, a non-integrated supplier is unable to write the question to the proper group. Without knowledge of a question’s context, an organization is forced to score and evaluate the answers cold. Both of these factors do not allow for a full and optimum evaluation and comparison of the bidder organizations and offerings.

While it seems easier, and possibly beneficial, for an organization to let a supplier draft an RFx document for a sourcing initiative, those benefits are superficial and short-lived. For an organization to harvest the full benefit of a sourcing initiative, and identify the optimum solution for their specific needs and goals, it should rely on documents produced in-house or through a third party working solely for their benefit and with a full understanding of their organization and its objectives.

 

David Pastore is a director at Source One Management Services LLC and leads its telecommunications and information technology practice. He works with a team of experienced subject matter experts and works closely with clients from project kickoff and data gathering through implementation and continued management to ensure optimal and sustainable results are achieved. With a technology background, his focus is on process transparency and knowledge transfer to ensure that all client stakeholders are engaged and provided with the knowledge and training required to own and sustain their results.
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