Analyzing RFPs: Methodology for Best Practices
There are substantial benefits to using a formal RFP in the procurement process. Buyers can outline in detail exactly what they need, helping sellers understand clearly these needs to craft an accurate response.
Sometimes, however, the RFP process can become bogged down in unneeded detail, and suppliers can become confused as to what precisely are the products or services the buyer desires. The process can also become a simple chase for dollars, as the quest for true value becomes a mere price list.
If the RFP becomes the be-all and end-all of the process of fleet services contracting, valuable information and interaction can be lost. If used as one of many tools available to a fleet manager to ultimately decide upon a vendor, an RFP can be an invaluable aid.
Begin with Available Vendors
Companies seek information on potential vendors for a variety of reasons.
- An existing vendor, having been given the opportunity to provide a service or product, simply has not performed up to expectations.
Company policy mandates that all contracts for products and/or services are regularly put out for bid.
Buyers, unfortunately, often decide to go “fishing.” There may not be a particular problem with an existing vendor, nor a corporate policy requiring contracts to be bid; however, a fleet manager decides to “see what’s out there.” If there’s a better deal to be had, a change is made. The downside, of course, is that if there is no price benefit, all the work is for naught.
Among these and other reasons, the first two are legitimate: one seeks better performance and the other is generally out of the fleet manager’s control. “Fishing” expeditions, however, can be a colossal waste of time and money, both for the vendors who make the effort to respond, as well as for the fleet manager, whose time is doubtlessly better spent elsewhere.
Assuming the fleet really is looking to award its business to a new provider, the first step in the RFP process is to determine which vendors are capable of providing the service. Most fleet managers are well informed about available providers, no doubt having spoken to or met them in the normal course of doing business during the year. Many such contacts end with a request to “send some information.” If the fleet manager has kept a file of such material, the list of potential vendors is ready.
established, contact should be made with each. One contact method can be a request for information (RFI), in which the buyer first notifies sellers what product or service is needed, asks sellers if they are interested in bidding for the business, and finally, obtains basic information on the company (corporate headquarters, how long they’ve been in business, financial information, etc.). The request can be in hard copy (mailed) format or electronic (e-mailed Word document to be completed). Whatever form is used, make certain a response deadline is included.
Basic fairness to all vendors also requires making clear the reason for the request. If the purpose is to “fish” for possible deals, say so. Those vendors who prefer not to commit the time and expense of preparing a response can decline.
Finally, the competition for new business in the fleet industry is keen, and it is almost certain that a bid at least competitive with (if not better than) any existing program will be received. Assure potential bidders that the provider who wins the bid will indeed be awarded the business.
What the RFP Document Covers
What is included in the RFP document itself and how it is assembled can go a long way toward making the process more efficient and effective.
Increasingly, some level of participation by a purchasing or procurement function in the company is required in the search for fleet management products and services. This involvement can be both a blessing and a curse, depending upon the level of participation, the authority the purchasing function carries, and how well purchasing staff understand what is being sought.
One result of involving purchasing in the process is mandatory inclusion of so-called “boilerplate” language in all RFPs. This language can be limited to a page or two or can encompass dozens of pages. There is nothing wrong with including boilerplate language; indeed, it can clarify the terms and conditions under which the RFP will be analyzed, including the important confidentiality agreements of great interest to any bidder. The difficulty arises when the purchasing boilerplate is “mixed” in with the RFP itself, causing confusion and lengthening the time it takes to prepare a response.
Any and all standard purchasing language unrelated to fleet program specifics should be segregated and clearly marked. “Corporate Procurement Terms and Conditions,” as opposed to “Fleet Maintenance Management Program RFP” enables responding vendors to work concurrently on both. Their legal departments review the terms, while the sales and service departments can concentrate on the nuts and bolts of the response. Indeed, such boilerplate can even be sent separately, prior to the RFP itself, so that legal issues can be dealt with in advance, and both buyer and seller can concentrate on the program response.
What of the RFP content? What kind of information should be requested and in what form? Two words should be kept at the forefront throughout the process: specificity and simplicity. For example, when a new supplier is sought for an existing program, the fleet manager should know exactly what new program is required, whether it is something already being used or something not yet available.
Using a maintenance management example, a key component of a successful program is reporting capability — how information generated by the maintenance and repair process can be viewed and analyzed. Rather than asking respondents to merely describe, in general, reporting or data mining capabilities their program provides, fleet managers can describe in detail exactly what report formats they want, i.e., “Does your program provide the following reports?” followed by a list of specific report formats. This list would include, again, reports the fleet manager already has and found useful, as well as formats that he or she would like to see, but are inaccessible.
Asking what the responder can provide, rather than what the fleet manager wants, forces the fleet manager to wade through far more information than necessary. A concluding request, such as “Provide any other reports or report formats that your customers have found to be useful,” offers the opportunity to view reports that may not have occurred to the fleet manager, while separating the “wheat from the chaff” in the analysis.