For anyone that has ever run an eSourcing project, there is a typical flow that most processes follow. The project kicks off, and everyone’s focus is split between costs and known issues with the incumbent suppliers(s). Procurement uses historical spend to put together a list of line items with quantity and specification data. The company’s standard list of supplier questions is loaded into the eRFX system, along with any additional questions for suppliers that relate to the category of spend in question or new developments in the industry being sourced from. Everyone works frantically until the day the RFP opens and then – you wait. The project comes to a complete standstill for the two weeks (e.g.) that the RFP is open. Then the mad dash begins again as you wade through and evaluate supplier responses, pricing, and attachments.
One of the simplest, and in my opinion the most underutilized, tools in the eSourcing toolkit is the Request for Information or RFI. This simple event type can accomplish amazing things very quickly and can either level-set team workload during a project, or can give the team an opportunity to absorb new information in waves and factor it into later rounds of information collection. Members of the Buyers Meeting Point group on LinkedIn recently got into a discussion of RFI usage in response to a post about how to write better RFP questions. So, as this week’s eSourcing Wiki-Wednesday article is about making strategic use of RFx capabilities, it seemed wise to stop and consider all the advantages of the unsung hero RFI.
When to use an RFI
For the sake of clarity, it is worth saying that an RFI only collects non-pricing information, at least from a bid perspective. That being said, there is a lot more to an award decision than pricing information. So when do you turn to an RFI?
- When you are qualifying a large number of new prospective suppliers: Almost every company has their standardized list of questions covering contact information, financials, IT security, and corporate background. Why not collect that information up front so you can review it while the RFP is open or as a gate to participation in the bidding process.
- When you aren’t familiar enough with the spend category to write detailed item specifications for use in an RFP/RFQ: The good thing about most eSourcing solutions is that they give you the opportunity to standardize item specifications for all items available for bid. Unfortunately, it means that if you can’t write a sufficiently detailed specification, you are going to end up with the proverbial (and dreaded) “apples and oranges” scenario. Collecting data from a number of suppliers before putting together your RFP/RFQ is a structured way to pick the brains of your suppliers before deciding exactly how to put your business out to bid.
- When your purchase of a product or service is not immanent but you are interested in collecting information from prospective suppliers so you can move quickly when the time comes: Only collecting non-pricing information from suppliers communicates a much different expectation to suppliers than an RFP/RFQ. So if your company is considering a new purchase in the future or if you are looking to see what alternatives exist to your incumbent supplier(s) – either so you can switch or for rick mitigation – an RFI will give you enough information to move the project quickly when the time is right.
How an RFI Affects Project Timing
One of the choices relative to RFI use that I have alluded to above, is how you factor the additional event into your project cycle. You can either use RFI responses to spread your work out, making use of the RFP open time to review RFI responses, or you can pause in between rounds of data collection to use the information collected during an RFI as a gate or barrier to participation in later rounds.
In many cases, the information collected in an RFI is basic: like contact info, financials, and security requirements. If this information will not eliminate a supplier from bidding or change the structure of pricing collection, why not collect it up front so you and your internal stakeholders can review it while the suppliers are busy completing their proposals? You will also benefit from keeping your internal team engaged, and even if the process takes a few days longer in the long run, the team will feel more productive because they never come to a complete stop.
Significant time, cost and effort are required to review pricing information, and as we have learned in our trips to The Flip Side, it is costly to assemble a proposal. If a supplier is not qualified for whatever reason it is in your (and their) best interests to eliminate them early. From the procurement perspective, this means less proposals to review. From the supplier perspective, this means less time down the road to nowhere – and hopefully some appreciation for the company that saved you time. It might even increase a supplier’s willingness to bid again in the future if they trust that you will only have them bid on business they are qualified to win.
So the next time you start a sourcing project, don’t simply dismiss the RFI for being “just a bunch of questions”. Think about how you can make use of this reliable technology to pick up the pace of your project.