RFP Catch-22

You need lots of information, and time to properly pick the best supplier for the job.

But you don’t want to overload the supplier with questions if they have a small chance of winning. Not to mention you may not have a lot of time for the RFP, and the overload of questions could drive away potential suppliers (due to a low ROI). It’s a catch-22 situation.

So what’s a sourcing professional to do?

If you limit your questions to appease the supplier, you may not get enough information to make a decision. And quite possibly making you go back and ask a lot of follow-up questions.

But if you do include all your questions, some suppliers may bow out. There just isn’t the ROI for the smaller projects to go through all the PowerPoint, Excel, and Word documents for a lousy 10% margin.

Which ends up leaving us in a Catch-22 for RFPs.

Catch-22 Disagreement

Now I’m sure I’ll get a lot of sourcing or procurement professionals who disagree with me about the conundrum.  Professionals may suggest that we need to do the right thing, even if it’s at the expense of the supplier.

And that’s where we’ll have to agree to disagree.

My opinion is this – if you are engaging a supplier for a 500k project with a 10-20% ROI, asking them to spend 3-5 days is cutting too much into their profit. And at that point, they should decline.

Even if you can show them your business is doubling or tripling in the next 5 years, it’s still no guarantee. They have to continue to win the business.

And although you may benefit in the short term, there’s no way it’s sustainable for the long term. You’re just churning and burning through resources.

And that, in my humble opinion, just makes you a jerk. Plain and simple.

I’m sure there will be tons of people who are OK with this. That’s fine. It’s business after all. That said, there’s something about doing the right thing.

Solving the Catch-22 Conundrum

As a sourcing professional, therefore you have to use discretion. Realize the situation is a bit of a catch-22 to balance business requirements and needs with time spent.

I by no means am saying that you should exclude key criteria that are critical to the project. But what I am saying, is if you’re asking for 200 excel line items, plus a 30-page slide deck and prep for a 2-3 hour presentation, you better make it worth their while. And there are a couple of ways to do this.

1. Cut out all the extra BS. I’ve noticed lately the business may not be thinking through their scope and potentially have repetitive questions. Get rid of those, and use best practices.

2. Re-think what you are asking for. If someone can submit a financial statement of their business for the past three years vs. answering 20 questions – I’ll take this as a win.

3. Push back on the business and yourself if all questions are needed or will be used. Honestly, having them put their company name, email, phone number, best friend’s last name can be fillers. Take a second look at these.

4. Take a step back and see if you’d have the time to fill out what you are asking for. If you wouldn’t be willing to spend your time on it, odds are neither will the supplier.

5. Review the number of questions relative to the project size. It’s one thing if you are spending $20-30M. It’s another thing if you are asking 100 questions for 25k.

So use your discretion, and think through what you are doing. This is a catch-22 after all. And burying 5-6 suppliers in the paperwork for an RFP – you’ll never read through, just isn’t worth it. Especially if you value your own time and are going to ask them to present it in a pitch anyways.

And when all else fails, let the supplier know you are flexible with some of the questions/requirements. It can go a long way to motivating them on smaller projects.