Request for Proposal Documents

All too often, organizations have problems
with their suppliers.
Sub-standard goods, tardy deliveries,
inflated prices, and disrupted supply chains can all have an
obvious adverse impact on your organization's success.
So how can you help your company overcome these problems?
How can
you get the best possible product for
the lowest possible price?
And how can you ensure that your
business needs will be met on a timely and assured basis?
Part of the solution lies in starting the relationship with your supplier with a competitive
bidding process, by issuing a well-crafted Request for
Proposal (RFP) to the market. This competitive bidding process
seeks the best possible quotes for required products/services from
vendors, measured using common set of standards.
The RFP, also referred to as Invitation to Tender (ITT) or Request for Information (RFI), forms the
cornerstone of this bidding process.
A formal, written document, the RFP outlines information about the
organization, and details the products and services to be sourced
from external vendors. It lays out the specific requirements
that vendors need to keep in mind when responding to the bid, and
outlines how the company will review and award the proposals
received.
Although creating a RFP can be a long, drawn-out process, it is
well worth the effort for large one-off purchases, and for ongoing
supply contracts. In these cases, it yields many benefits:

It provides a detailed lead for vendors. They are therefore are
able to respond with their most competitive, comprehensive quotes
in terms of both quality and pricing.
Depending on how it is advertised, it allows for wide
distribution to many suppliers, and thus ensures that you get the best-matched
product for your needs.
It clearly outlines the risks and benefits upfront. This ensures
that only dedicated suppliers, interested in a stable
relationship, apply for the contract. This translates into a more
reliable supply chain.
Since an RFP essentially reflects your organization's needs in
writing, it formalizes the relationship between you and your
supplier and puts you in control over the desired levels of
service.
It lends clarity to any issues involved, because you identify
these up front.
It provides a common standard against which to compare each bid
submission. Because the format that suppliers reply in is the
same, it makes it much easier to compare solutions than it would
otherwise be.

Creating an RFP
Now comes the key question – how do you create a RFP? Procurement
requirements vary from industry to industry and company to
company. Within one company they also differ for different
products and services. Given this scenario, is there any general
framework you can apply to create a competitive bid?
Yes! While the specifics are unique to each situation, if you
follow the steps below, you'll be able to issue a competitive bid
in the marketplace.
Step 1: Look for Proven Formats in Your Industry
If you're operating within an established company or industry, the
chances are that there are established and proven RFP formats that
you can draw on. Spend some time researching these. If they
do, consider whether they're appropriate, and if they are, use them as a
starting point for your RFP.
For example, if you're sourcing a new IT system, use an RFP format
that specializes in this – your IT department will point the way,
and your RFP process will be much richer as a result. And if you
need an extension to your office, use an approach used in the
construction industry – an architect can help you out here.
You can save yourself a great deal of pain by using other people's skills, and by learning from their experience!
Tip:
If you find an existing RFP format, make sure it covers the
points below. And consider using these as a starting point
for less formal RFPs, or for RFPs in industries that don't
have established formats.

Step 2: Analyze Your Requirements
Start by defining exactly what you want to buy. This includes:
What are you looking to source and at what price? Gathering all
the information regarding the bid will enable you to make a sound
and factual estimate for the value of your RFP.

Deliverables: What do you want delivered? Make sure that you
spend plenty of time talking to the key people involved, so that
you can identify and document all of the requirements.
Scope: What is the scope of your requirements? Do you need
ongoing support after the installation of a piece of machinery or
an IT system, for example?
Timing: Is there a business-critical deadline by which you need
to have received the goods or services?
Vendor evaluation criteria: What are the factors you need to
consider, so that you get the best possible vendor, at the most
competitive price, with the most suitable product? What are the
criteria you will use when deciding which supplier you'll award
the contract to? This could be just price, or a combination of
price, delivery, quality and past experience.
Constraints: Are there any risks associated with the project?
What factors will affect the quality of the product or service you
want? What are the factors that can impact time schedules?

Step 3: Construct the RFP
Initial analysis over, we move to the drafting stage. All the data
you've gathered now needs to be converted into the RFP.

The key point to keep in mind at this stage is that the RFP is
much more, than a request for a price. It must elicit information
that will enable to evaluate the capability and trustworthiness of
the supplier to deliver what you require – which may need to take
place over an extended period.
Most RFPs will include the following headings (or similar ones):

Executive Summary: This covers the entire requirement, as well
as some brief background information about your company so the
vendors are aware of the basic nature of your firm. The objective
here is to showcase your importance as a buyer.
Project Description: An overview of the project or business
activity that the product or service sought will feed into, and
the objectives of that project or ongoing activity.
Design and Functional Requirements: Be very precise. The more
detailed the specifications are, the more accurately matched a
response you will get. (However, remember that there can be
different ways of achieving the same result – don't specify the
solution so closely that you exclude valid options.)
Request for supplier details: It is essential that you get
information about the vendor's competence and experience.
References are helpful here, as are profiles of named individuals
who will be carrying out work included in the deliverables. You
also need a summary of the vendor's corporate history and
financial details that will allow you to assess their financial
stability.
You also need to know the vendor's capacity to deliver and their
estimated delivery time. This will help you assess whether the
vendor will be able to support your required time schedules. You
can also cover this area under a prequalification screening if you
want to narrow down the list of vendors you eventually want to
distribute the bids to.

Your contractual terms and conditions .
Any other specific information, assumptions and clarifications .
Evaluation criteria: You may wish to inform vendors about the
bid evaluation criteria on which they will be analyzed. You may
also want to let them know any other specific requirements, terms
and conditions you might have.
Submission guidelines: Make sure that your RFP document includes
the name and contact details of the person to whom bids should be
submitted, and any other logistical details such as the format of
submissions required (hard copy or pdf, for example, and if hard
copy, how many copies you want).
Dates: The RFP should define timelines such as the proposal
return dates, project award date, project start date and any other
such date you consider important.


Tip 1:
Some people recommend specifying expected price ranges
within RFPs. While this may be useful in some situations, no
supplier worth its salt is going to quote below the bottom
of a stated price range, and many may pitch their projects
to fully use the maximum budget. In many cases, you'll get
best value if you conceal the project's budget from
suppliers.
Tip 2:
Responding to RFPs can take up a lot of time, and suppliers may choose to prioritize RFPs where they have a good relationship with the potential client. Don't be arrogant in the way you treat suppliers, ensure that they have the information they need, and make sure that they have a fair amount of time to respond. The last thing you want is to spend weeks preparing an RFP, and then to have only one supplier respond.

Step 4: Logistics
Think about what type of supplier is likely to be able to meet
your needs. How can you get the RPF to that supplier? Is there a
suitable website on which you can advertise it, or should you
contact a shortlist of potential suppliers directly?

Key Points
An RFP is a formal written document inviting vendors to bid for a
specific product or service that you require.
It should detail the company background and the deliverable
desired, and should give guidelines as to how the vendors should
respond. The RFP should also be used to seek details that
establish the vendor's reliability.
A well-managed RFP process helps you get best value for your
organization's money. It helps you procure the best products and
services, at the most competitive prices, with the greatest
reliability.