Would you start your search by immediately soliciting marriage proposals from say, 8-10 potential suiters? Would you entertain the potential of a serious commitment from total strangers with whom you have never spoken to, met or even dated?
What does casual dating versus seeking a serious commitment have to do with the RFP process? The current, and widely practiced Request for Proposal (RFP) process includes companies (the buyer) soliciting formal, written business commitments from several suiters (vendors/suppliers) before ever meeting or speaking. The problem with the RFP process is similar to problems some have encountered with online dating.
Anyone can write an amazing dating profile, but until you actually meet, speak and/or spend time get together, do you really know what you’re getting into? How can each person evaluate a good fit based on reading online profiles and exchanging written communication? Do the written words really provide the information needed to determine if the other person is a good potential match? Are the words alone a true and good reflection of the other person, or in the case of RFPs – does the written proposal provide a comprehensive and full representation of the potential vendor? Remember, if you are a buyer, you’re not just buying a service or product, you’re also buying a business partner that is an extension of your company and is representing you in the marketplace. You’re buying a culture, personalities and processes.
The Current Situation
The typical RFP process goes something like this:
- The soliciting company issues an RFP invitation containing on average, 50-150 questions.
- These questions are then distributed to 8-10 or more, potential vendors – many of whom they have never met or spoken to.
- Potential vendors respond to the RFP with a final proposal averaging anywhere from 50-150 pages, or longer.
- Soliciting company reviews all proposals, and depending on their business type/organizational structure, this review process might include several different personnel from a host of internal departments and from multiple country locations.
- Soliciting company narrows down their potential vendors to a short list who are invited for in-person presentations.
- After in-person meetings, soliciting company narrows down their list again to one or two potential vendors for a best and final.
- These vendors are invited for a second round of in-person presentations.
- Soliciting company may make a site visit to one or two finalists’ offices.
- Company finally awards the business.
The Problems
1. Time = Money
What’s wrong with the above RFP process? For starters, time = money. According to WHR Group, Inc. (WHR) President, Paul DeBoer, “We welcome RFP inquiries, but we also believe there is a more efficient and cost-effective way.” WHR is a global employee relocation company and responding to RFP requests is a normal part of doing business. DeBoer thinks the process is not the best given the amount of human resources, time and costs spent by client companies as they not only prepare their RFP questionnaires for bid, but also as companies’ personnel review completed 50-150 page RFP responses from an average of 8-10 bidders.
The current process is lengthy and costly; and many of the above steps are done even before the company has met or spoken to potential suppliers explains DeBoer. It’s common for a company to utilize their internal personnel from many different departments to prepare RFPs and review written responses. “If you think about the costs of an HR manager, a payroll manager, a procurement manager, a tax manager, an accounting manager and a logistics manager, all with their combined total hours spent planning and reviewing bid solicitations, this gets into the tens of thousands of dollars.”
Once all staff reviews responses and the company has shortened the list and invites several prospective vendors for in-person meetings, how many staff members are taking part in those meetings? What are their annual salaries and how many hours is each employee spending in pre-planning internal meetings, vendor presentation meetings and post presentation internal reviews?
Finally, after meetings at the client’s site, the list will be shortened to one or two vendors who are typically invited back for another round of best and final meetings. Based on each employee’s salary and the time spent, you can calculate the total cost per employee. “You would see it’s just not a cost-effective process,” says DeBoer.
2. Dancing with Strangers
So much of the time spent explained above is before a company even speaks with potential suppliers to learn about the supplier’s mission, values, goals, objectives, vision, hiring standards and key personnel.
The same holds true for the potential vendor, who only gets a glimpse of the buyer through the RFP solicitation paperwork, or by scouring a company’s website or social media. How can a vendor truly position themselves as a potential consultative partner before even having a good understanding and conversation about the company’s pain points, challenges, successes, needs, weaknesses or reasons for pursuing a new vendor?
Executive Vice President at Powell Relocation Group, Bridget Ritchie, CRP, GMS, says, “It is well known that moving is one of the top life stressors a person can encounter. As part of a corporate relocation process, it is also one of the most personal portions of the relocation. When a company is taking into consideration who will enter their employees’ homes and handle all of their personal items, they shouldn’t even be inviting potential partners to the dance floor until they know the basics about them.” Ritchie believes that a buyer should already know about a potential vendor partner’s culture and background up front. Powell Relocation Group is a 60-year-old moving company.
In Ritchie’s household goods (HHG) moving arena, it’s not uncommon for RFPs to be commoditized. “While not all, there are many companies who make the RFP process a machine when in reality, it’s a very personal end process for a customer’s employee experience. HHG providers are physically touching your employees’ personal items. Do you really want to make a decision about who is doing that before meeting them, understanding and asking about their culture?” Ritchie believes a better practice would be for companies to first sit down with their three favorite potential providers and discuss what’s most important to them.
Typically, no one person is reading the RFP in its entirety, explains Ritchie. Rather, the RFP responses are split up by applicable company departments including human resources, IT, compliance, etc., with each reading their own sections. Ritchie believe the process is cost prohibitive and archaic for clients if you consider the number of questions/responses and multiply that by the number of bidders.
Ritchie compared the current RFP process to dating apps saying, “On dating apps, you already enter your necessary criteria you’re looking for in a partner; the necessary basics before you’ll even consider them as a partner. Then all the possible candidates pop up, and you start scrolling. You have to be god, judge and jury just based on someone’s profile picture and brief description, before you decide if you even want to read their full profile. While it may seem like a waste of time to meet someone in person early on to decide if you want to consider a future relationship with them, I would never want to start a relationship based simply on words they wrote about themselves. Meeting someone first can save a lot of time invested in the process. While on paper they met all my criteria, meeting them allows me to see the real them; to get a feel for if I want to start dating them, much less be in relationship with them.”
If it really just comes down to who has the lowest price, explains DeBoer, “then issuing an RFP without prior conversations or meeting might make sense.”
The current RFP process takes place before companies even determine suitability. Or as compared to dating, before the right suiters are even identified. When your company hires, do you conduct interviews with every candidate who submits a resume, or do you screen candidates first and determine a short list of viable candidates based on fit and who can solve the need identified by the employment opening? Once those viable employee candidates are identified, doesn’t your company usually begin dialogs with those candidates? Customarily, candidates are given the opportunity to speak with a perspective employer to discuss how they might be a good fit for one another based on goals, skills, personalities, values and experience. It’s a conversation that includes meeting, talking, asking and answering questions, all to help determine suitability.
Partner, Executive Vice President, Heather James, CRP, GMS, and Executive Vice President, Karl Thuge, both of Nomad Temporary Housing weighed in on the current RFP process. “Part of the success in the vendor selection process is asking the right questions and often many companies don’t,” said James.
Thuge believes the vetting process should be tighter, and that companies should issue a Request for Information (RFI) first before an RFP, with no more than 10 questions. “That way, if you need someone with offices in international locations, or if you a need high tech solution or if you want a provider with a no voicemail policy, you can weed out unqualified bidders right from the start,” said Thuge.
Thuge firmly believes an RFI should include references and companies should check those references before inviting providers to participate in the formal RFP bidding process. Both Thuge and James also believe that soliciting companies should talk to trusted industry colleagues and find out if the colleague’s current provider is a good fit or not, and why.
According to independent Mobility Consultant, John B. Sculley, SCRP, companies should do their internal research and due diligence before even thinking about going out to market for bids. Sculley helps companies with their employee relocation needs including internal policies, service administration, selection of providers and assisting the buyer team in provider selection.
“Companies need to do their internal homework,” said Sculley. “They need to take a hard look at their business users and business function specialties so that what the company ultimately buys will really anticipate the needs of their business environment. Some companies think they are doing a potential provider a favor by throwing them into the RFP process before the company even considers if the provider would actually be a good fit.” Sculley recommends that companies pre-screen before inviting bidders to ensure those bidding meet the company’s general qualifications.
Sculley explains that he has seen RFPs with over 600 questions and eight bidders. If you do the math that equates to almost 5,000 responses! Companies struggle to evaluate and score this volume of responses and can get overwhelmed. “Companies should only ask questions that directly support their own criteria and not cut/paste RFP questions from other sources. A better approach is to decide which criteria is most important to the company and only ask questions relating to that criteria. Only go as deep as needed. Determine if a potential vendor’s work style and culture are compatible with your company’s work style/culture.”
Lastly, Sculley recommends companies separate pricing from all other qualitative information and go through qualifying data separate, scoring/ranking it before even looking at pricing. “Knock out bidders before looking at price so your company is only looking at the best qualified providers,” said Sculley.
“The biggest problem I have with RFPs and particularly blind RFPs”, says DeBoer, “is that you are hiring a company to manage or provide services for the most important asset in your company, and that is your people. Don’t your employees deserve a true business partner that is going to act in your best interests?”
How do you want to conduct your organization’s RFP process? How much time and money do you want to spend on the process? How important is it to find the right fit for your company? If you truly want to find a collaborative long-term partner, you may want to consider treating the process like a courtship and not just casual dating.
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