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…visit the RFP Response Page for more details.

Vendor Inventory

There are many types of arrangements aka vendor contracts you can enter into with your suppliers. If you are looking at employing a partnership philosophy, one to consider is Consignment Buying. What is consignment buying or vendor owned inventory? A definition of vendor owned inventory or vendor managed inventory (VMI) is when a supplier (the company you purchase from) maintains an inventory bank in the buyer’s facility which is under the buyer’s control. The buyer assumes responsibility for perpetual activity or accounting for withdrawals or usage of stock from the consignment inventory, payment for quantities used and notification to the supplier of the need to replenish inventory. Verification of quantities remaining in inventory is jointly done at periodic intervals.

This strategy has advantages for both the supplier and buyer. The buyer benefits by having reduced inventory investment which can free up funds for capital or other investments and the supplier is assured supply or captive volume. This type of partnership arrangement is often used in the distribution industry.

Some of the other benefits the buyer gains is it removes or eliminates the risk of obsolescence. Obsolescence is often overlooked and it is when the inventory no longer meets your requirements and therefore is returned or sold as surplus. Under a consignment arrangement, the Vendor still owns it therefore they assume the risk.

There is a cost associated with tying your vendor into a consignment arrangement. You can be assured that you will be paying more for your inventory vs a spot buy for the same goods but as a business owner you have to weigh the pros and cons and make your decision based on your existing financial and staffing requirements. For some, the opportunity of using your capital elsewhere, eliminating dealing with obsolete stock, managing the inventory surpasses the extra cost incurred or paid for vendor inventory.

What should a consignment contract look like? What should be included? Stay tuned or subscribe to our feed as the next post will answer these questions and provide further insight on sample consignment or vendor managed inventory agreements.

How To Succeed With Tenders

Tender Response How To:

Tendering skills are a critical component of the professional buyer’s job description however, responding to a tender or RFQ is vital to the success of any business. If you fail to succeed on receiving the award on your tender responses it is  likely you will not be in  business very long. What is the key to increasing your chances at winning more tenders?

Preparation is the key element if corporations and individuals are to expect success from the tendering process.

While some of this preparation we are referring to can be expensive if your representative is to perform a site visit or take part in additional training but not all preparation is costly. [Read more…]

Definition of Vendor

What comes to mind when you think of a Vendor . . . a coin operated snack dispenser, a sidewalk food service, or perhaps someone selling flowers or hand made jewelry on the corner? In fact these are all vendors as well as the local bakery, the service station or corner store and the door to door vacuum salesman. Read on to get our definition of a vendor when it relates to purchasing.

A Vendor is defined as a company which supplies parts, materials or services to another company or individual, also referred to as a supplier. This includes all companies that you do business with and help you bring your project to completion or provide you with a service to help you accomplish your tasks. They may provide uniforms or a cleaning service, prepare payroll, accounting or financial statements, deliver office/shop supplies, produce graphic layouts or manufacture tools, parts and equipment, provide transportation of goods or international relations assistance. Some Vendors you may deal with on a daily, weekly or monthly basis others you may do business with only once a year.

Vendors can and do many things which can make your business successful. These [Read more…]