Forms used by Procurement

Typical Forms used by Procurement Professionals

In order to manage the need to purchase supplies and services purchasing professionals utilize certain forms to obtain the internally requested products or services.

Some standard forms you might be familiar with would be: Request for Quotation; Request for Proposal; Invitation to Bid; and there are others.

While most of these procurement forms are relatively straightforward, the Request for Proposal process is a tool that has continued to evolve since its first started to appear in the early ’80’s. Since then RFP’s have become more prevalent, have continued to be refined and in some cases are all some companies issue (not what we recommend). Regardless, companies that purchase goods and services need procurement forms to help manage their business. These forms are needed when your selection criteria might use factors other than price, like service capabilities or technical support.

Role players in an RFP / RFQ

Typically there are 3 or 4 role players when it comes to the RFP or RFQ process. There is a Tenderer aka Bidder / Offeror / Vendor; then there is the Owner which is the parent company — the user or internal department making the request — and last the procurement officer who is the person managing the RFP / RFQ. There are others like the accounting department which will pay the vendor and so on.

Supplier/Vendor: A seller of materials and/or supplies who submits a proposal or quotation on your requirements.

If you find the RFP Process overwhelming or too time consuming hang tough as Our Step by Step RFP Guide will be released soon and it will simplify the RFP Process by providing all the sample forms typically used when issuing a RFP to help carry you from start to finish. All forms will be provided in edit friendly Microsoft word documents. This comprehensive guide and template pack will be provided at a discount to all our subscribers with past and present customers receiving additional discounts over and above discount offered to our subscriber base.

Evaluating your Spend

Every business needs to be constantly evaluating spend regardless of how big your company is. What does it mean to be evaluating your spend? If you asked your accounting department to provide a list of the top 20% vendors in relation to how much money you spend with them annually this would be the start of how to evaluate spend. This list of suppliers should represent close to 80% of your operating budget spend.

Prudent business owners will dedicate a large portion of their time or their purchasing department’s time analyzing this 80%. These are the target vendors you need to be keying in on. Requesting price concessions for your guaranteed or long term business, requesting they partner with you to provide productivity improvements and so on.

There are multiple ways to approach this:
1. Gather specific details on this spend. How many widgets am I buying of a specific product in a 12 month period? This is known as your annual usage. What is our cost to procure these items? Is there a better quality product which will perform the same function and reduce operating costs? Are there other vendors that can provide a similar material or service?

2. Approach your existing vendor directly or by way of a RFQ and request firm pricing for a 12 month period. In exchange for this commitment, you are asking for preferred pricing. This does two things, stabilizes your costs for the next 12 months; reduces ordering costs as items can be covered under a standing order contract.

3. Competition is the best way to achieve fair market pricing for goods and services. To achieve this you would need to issue a Request for Quotation (RFQ) for the above item(s). If your spend warrants, you should do your homework and pre-qualify vendors for these items. Ensure they are of similar quality by asking for samples and get a sense whether these suppliers can meet price and delivery timelines based on your existing requirements. No use getting something for 10% less than what you are presently paying if the new vendor cannot deliver.

4. It gives the vendor comfort knowing they have your business for the next 12 months in exchange for better pricing. By granting them a contract for the next year, the expectation is the vendor would guarantee they carry relevant inventory in their local branch which would then allow you to reduce on-hand inventory. In this instance you are reducing carrying cost, cash outlay for inventory and achieving preferred or reduced item unit costs. Savings all the way around!

Issuing a RFQ (Request for Quote) to determine present market pricing is always the preferred way of doing business. It is ethical, transparent and begins to condition your suppliers of your intention on watching your spend. It sends the message that your company is focused on ensuring you are receiving the best possible product at the best possible price.

If creating a RFQ to help manage costs is now on your radar, there are many sample RFQ templates available on-line or the team at RFQPro would love to help you get the ball rolling.

See a list of our templates and forms by visiting our In the Pack Page

Here is to your success — Mark.

How effective are your RFP’s?

How Effective are your RFP’s?

That is the question and unfortunately many professionals do not have this question on their radars. They often roll them out the door not truly realizing how ineffective they are.

Request for Proposals are quickly becoming the go to procurement form. They are on the rise because more and more companies are using them for all kinds of project work. Whether this is the right form they should be using for the task at hand is another blog post altogether! In this post we are going to focus on how to improve the effectiveness of your RFP which will help you produce the desired results and how to write a RFP without spending extensive amounts of resources.

To get right to the point, you will save time, money and energy if you focus your efforts on the content you include in your RFP. Increasing and including the correct content will increase its potential for success.

What determines the effectiveness of the RFP you have spent hours developing?

  • Is it the number of questions your supplier’s ask during the response period? YES, if you are getting lots of questions then the Statement of Work is not detailed enough.
  • The actual number of quality vendor responses received?  YES, responding to a RFP is expensive and vendors will put in the effort to provide a quality response if the deliverables are clear. A win for both parties.
  • The prices quoted by your vendors? YES, this will be a factor. If your RFP content is clear the quoted prices will reflect this. Removing unknowns will reduce costs.

[Read more…]

How our Quotation Forms can Help

Creating a procurement form from scratch is not in every business manager’s top 20 list of items they want to be doing at work each day. For most of us, it is not even in the top 100! Purchasing people are results oriented…they want to be reporting to management on $ savings, contracts, trends and not that they spent their day writing a tender.  The RFQ and other procurement related forms are important and do require an attention to detail. Is there an easier way to accomplish this task so you can spend your time on more fruitful projects?

At RFQPro.com we supply sample Procurement Templates for a variety of potential quotation requirements and this is how our quotation forms can help you in your day to day tasks.

Here is a link to the list of some of the forms we offer: http://www.rfqpro.com/pack-breakdown

In this list you will notice we provide both generic and specific types of tender documents which can be used [Read more…]

The Dreaded RFP Response

Dreaded RFP Response

As a vendor or supplier of product or services, one of the biggest challenges you have in today’s marketplace is finding the time to respond to all the information requests you receive from your customers in any given week. Your responses need to be professional, representative of your organization, accurate and detailed enough to ensure you are shortlisted for potential projects.

Information requests might be for price and delivery, product specifications, tenders or quote requests and even the dreaded RFP response which is likely the most time consuming task out of all the inquiries presently filling up your inbox. RFPs are on the rise because more and more companies are using them as a catch all for dealing with requirements the purchasing department receives from internal departments.

If the purchasing department does not receive a clear scope or specification on a need, they will often use a RFP to solicit a response and hopefully a solution from a vendor. What is often over-looked by the Buyer is the amount of time and effort the Vendor has to put into generating a worthy response and you cannot blame them as they have enough fires of their own to put out and most supplier’s understand responding to a request for proposal is a cost of doing business. Are there ways to mitigate the cost of responding to RFQ’s and RFP’s?  Yes and no and we will address this piece shortly.

As a vendor you should keep track of your success rate and the approximate cost of preparing your response. If you are spending $10,000 to submit a response and being awarded a $150,000 contract then you can clearly justify your ROI. If you are spending the same $10,000 to be awarded a $15,000 contract then not so much unless it leads to further work or a long term relationship with a new client.

I am not sure most companies can answer how much it costs to deliver a RFP response or tender call however I do know that if they can find a way to do this quicker, save money and achieve better results then everyone would consider doing it. Having a clean versus cluttered response is a start and taking the time to have more than one person review the RFP request are two solid ways of improving your chances. Each RFP response you craft requires a specific or unique response however some of the pieces and verbiage used in the response can be cookie cutter.

Your company references, testimonials, company bio, contact coordinates, past project successes, financials, safety and equipment lists can be prepared ahead of time. Other areas like your cover letter can also be saved in a format which allows you to tweak and go. All these pieces will help you get your responses out quicker and quicker means cheaper.

Since 2008, RFQPro has been helping both Buyers and Suppliers succeed with the request for quote and request for proposal process by providing web-based RFQ Software and edit friendly procurement related word templates to help users expedite this process and improve departmental productivity. Why start from scratch?