Requests For Proposal: End the Madness!

By on January 19th, 2011

Many of my posts originate in my head as rants, are subsequently doused with antacid (and some form of sedative) and thoroughly edited down to civilized business speak. Today I think perhaps I should just “let ‘er rip!”

Let’s face it, most participants in the RFP process (from either the Issuer’s or the Responder’s perspective) don’t profit from it. You would think that the Issuer would always benefit but, in fact, they usually only achieve cost savings in trade for:

  • A slow and expensive buying process that takes focus away from day-to-day operations and revenue generation;
  • A “new” solution that typically mimics what they currently have (state of the art 1980’s solution) at a lower cost than they are currently paying;
  • Damaging relationships with current vendors, and potential new vendors through a, let’s just say it, dehumanizing process of on demand hoop-jumping.

Except in very rare cases of extremely well-crafted and needs-driven RFPs (those where a new solution or approach to a problem is being investigated, where current service levels are unacceptable or where there are major opportunities to consolidate vendor relationships) the sole beneficiaries of the RFP process are the procurement professionals themselves. The way most procurement operations are incented causes them to treat every possible purchasing relationship as a commodity and drive it into a box that can have an SKU and a price code slapped on it. And when you think you’re in the box buying business – everything starts to look like a box. This process also does not take into account how much it cost to build “the box” in the first place or how much it will take (in time and distraction as well as dollars) to build “the box” somewhere else.

And another pet peeve …

I can’t tell you how many times recently I’ve read that print is a commodity. Paper may be a commodity – but print is not paper. Print is a process – particularly any kind of variable print. Personally, I like to buy the best, most innovative, most reliable process I can get. “Print” may look like a bank statement or a personalized direct mail piece when it hits the mail – but, I prefer to work with a company that has a robust customer-self service and reporting portal and a top-notch postal management solution rather than one that lets me burn incense and pray while trucking my mail to a comingler in another State. But, maybe that’s just me.

Issuers reading this are saying to themselves “but wait – I have to save money. I have to squeeze X% out of all my vendors every 3 years.” Quite frankly, if that is your only goal, the RFP is probably the least effective way to get it. If you’ve been doing a sizable amount of business with a vendor for at least 2 years, that vendor should be able to come up with at least 6 ways to save you money. In many cases, saving you money may lower their revenue but actually boost their profit. I often see suppliers trying to save their customers money and they can’t get anyone’s attention. I’ve had to row that boat myself a time or two. If you’re thinking about issuing an RFP – make sure you really understand what you’re trying to accomplish and consider whether the RFP is the best way to achieve your goals.

Many suppliers have strong opinions on the RFP topic. John McMahon, VP at Madden Communications had this to say:

“If a current client takes you to an RFP and you’ve been unable to sell your way around that, face the facts and understand you’ve already lost. Don’t respond. If you compete on price you’re already dead. RFPs force you to compete on price – you should be dragged kicking and screaming into the RFP process.”

I don’t  agree that you shouldn’t respond to ANY RFP from an existing client – but, I do agree that you should be kicking and screaming first. Sadly, due to the formerly referenced box jockeys, your client may be REQUIRED to go to RFP no matter how much they like you. So, what’s a poor supplier to do? Here’s my top 10:

  1. Be measurable and get measured! Work with your client to develop a weighted scorecard for the services you provide and get them to complete it quarterly.
  2. Meet with your client every quarter to review the scorecard and discuss ideas for improvement (even if you have a perfect score.)
  3. If your scorecard is not perfect, make sure to respond in writing with a timeline and approaches to remedy any problems – or to document that you have already taken corrective action.
  4. Get acknowledgement of corrections from the client and the speed with which corrections were made.
  5. Don’t be afraid to talk to clients about service issues that stem from their side. However, you should also come to the table with proposed solutions (and documentation.)
  6. Be proactive! Come to the client frequently with ideas for improving processes, cutting costs or delivering better reporting or invoicing detail.
  7. Communicate broadly. Use personalized emails, blog posts and/or direct mail to let many people at the account know about regulatory changes, tips and tricks for using tools, or sources of information (like TheDigitalNirvana right?) that will help them do their jobs better.
  8. If you have a significant improvement to offer, consider doing the work at a discount or for free in exchange for a contract extension of 6 months or a year. Don’t ask for too much – but keep nudging the ball a little further out and tighten up the relationship more and more through value.
  9. Make sure your client knows about all of your capabilities. I’m not talking about feeds and speeds, I’m talking about services. Clients tend to remember the last thing you did for them and forget about everything else.
  10. When you talk to your clients about services – don’t talk about what you do – talk about how you can help them. You may not sell more print – but you may take on more of the process from the customer. That will embed you firmly in the client’s organization and dramatically increase your value.

With a little effort, any company can do what I’ve listed above. If you do, your client may still issue an RFP – but you will be in a much better position to win it if they do.  Face it – you don’t win with existing clients through sales. You win through service.

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    12 Responses to “Requests For Proposal: End the Madness!”

    1. Roger Albert Says:

      Elizabeth, you need to rant more often! I was ready to bust out the pom-poms and start cheering as I read the top half of the article.

      Your later points are also well taken, and to me it all comes back to (all other things being equal) relationships. We call it “service”, but service does not happen without people; people who take on the interests and needs of the client being served as if they were employed by the client (and, in fact, they are).

      You hit the nail on the head in regards to the devaluing of the existing relationship – as a very human process takes on an inhumane element, at least for a season – and everyone starts breathing again when it is all over.

      Make no mistake, I have made some wonderful connections with a lot of great people as a direct result of being involved in the RFP/bidding process, but at the end of the day we would probably have preferred to sit down over a meal (or many meals), hash things out, shake hands and move ahead.

      And now you know my true stripes….so I’ll get off MY soapbox and move ahead as well.

      Thanks for your great insights.

      Roger Albert

    2. Elizabeth Gooding Says:

      Roger – thanks so much for the kind words. I’ve also worked with some really great people on RFP projects. It’s generally not individual people that are the problem it’s the overall corporate dysfunction that has been systematized and incorporated in governance over the past two decades. There was a lot of discussion in the WSJ today about Washington efforts to streamline regulations for businesses. Maybe it’s time that businesses considered doing the same!

    3. Roger Albert Says:

      To borrow from another blog, “Leaders that put the bottom line above all else will eventually find themselves at the bottom without the line.” – Dawna Maclean.

    4. Joel Salus Says:

      Great post, Elizabeth! Having, unfortunately, been a participator in the RFP process many, many times over the course of my 40+ year career in the reprographics industry, I am totally aware of the aggravation and frustration that the RFP process creates. Personally, I think “government-sector” RFP’s are the worst, because, most of the time, the “Purchasing Dept” teams, who author those RFP’s, don’t have a good understanding of what reprographers/printers really bring to the table, beyond “just the printed piece.” But, beyond the aggravation and frustration, I actually did not mind RFP’s, but that’s because I won my fair share and was able to use their (the RFP authors’) lack of knowledge to my company’s advantage, often resulting in higher revenues and profits, even though they were after “lowest cost.” Three years after we sold our company and I retired, I actually wrote a letter to the County Administrator to “fess up” as to how I had taken advantage of that county. In that letter, I also explained that I had, through suggestions to improve the County’s RFP’s, warned (for lack of a better word) them to revise certain elements of their RFP. But, they never listened. So, after “fair warning,” I felt no guilt in taking advantage of the County. Your article was very well written and it certainly struck home. Unfortunately, if most of Digital Nirvana’s readers are “printers”, then you’re preaching to the choir. How about publishing your article on the web-site of the Government Purchasing Association? I publish a blog about the Reprographics Industry, and I’ve placed your article on my blog-site: http://reprographics.blogspot.com Again, thank you for ranting.

    5. Elizabeth Gooding Says:

      Thanks Joel. A lot of the readers of this blog are in the print industry – but we are also gaining quite a few readers from the “buy side” which is why I try to give both perspectives. I’m also hoping that printers will be able to use some of the information I provide as an independent source when approaching these topics with their clients. Meanwhile … thank you so much for putting a link to the article on your blog. Links, tweets, “likes” and the rest of the social media wire helps to get the word out. Maybe big brother in the govt. procurment office is listening too (although I’ll probably get audited for calling them box jockeys!)

    6. Bob Raus Says:

      The RFP process has become antiquated and frustrating for both sides. There is a HUGE amount of work preparing the RFP by companies, a HUGE amount of work by multiple vendors responding to it, then a HUGE amount of work by companies reviewing all the data submitted, and yet at least another round of clarifications, inquiries and responses by both sides. How many 1000′s of hours are invested by both sides? I am curious if anyone knows of any white papers or studies that examine the ROI of the RFP process?

    7. Elizabeth Gooding Says:

      Hey there Bob. I’ll see if I can find you some good sources. Meanwhile, take a look at this slideshare from RFPMonkey (don’t we often feel like monkeys responding to these?) http://tinyurl.com/46uqsx2

      It has and ROI calculator designed to sell you their services – but I think it’s interesting just to plug in the quick costs of what you spend responding to (or sending out) RFPs.

    8. David Svenson Says:

      And to think, our entire space program, putting men on the moon, was built by the lowest bidder.

    9. Heath Says:

      Interesting read.

      Ultimately with the dynamics of this industry poor print providers haven’t survived. As a result, unless you have special print needs most common print is very close to being a commodity if not a commodity. Some providers specialize in VDP and it has become a strong revenue stream but for most it is more effort than the revenue it generates and it will never be a core revenue source.

      The buyer’s job is to get what they want at the best price. As your example illustrates, the RFP process generates a great deal of uncertainty with the vendor and that is the leverage point for ensuring that they be as competitive as possible. It is a mirror for the vendor because it will be written to reflect the intentions of the buyer (unless it is a true commodity).

      Printing technology, solutions, etc however are very much failed by the RFP process unless the buying department more or less pre-arranges the result by correctly defining the requirements and more or less negotiating what to expect on the bid response. This happens all the time with government RFPs and the quality of the purchasing individual dictates how clean the process is.

    10. Elizabeth Says:

      Heath – I can understand what you are saying from the Mimeo.com perspective. Mimeo has build their value into the front end customer portal and users can just upload what they want printed and get a price. They can go and compare that at Fedex Kinkos etc. in a matter of minutes. But, obviously there are many other types of print – large volume commercial print including financial print, personalized direct mail, transactional (statement) print, digital print and fulfillment logistics etc. etc. etc. Many of these are quite complex and may be bid on a business unit or even corporate basis rather than an individual job basis. It is expensive to bid on and expensive to move in many cases. As you note – correct and complete requirements are critical. Unfortunately, the procurement individual rarely has the requirements themselves and is dependent on a level of cooperation from their business “client” who is often themselves dragged kicking and screaming into the RFP process. Not an easy situation for the procurement professional either. I think that there are a lot of practices that have to be put in place in front of the procurement process to make the whole system work better. (But that’s another post!)

    11. Heath Says:

      Elizabeth,

      Actually – my thoughts were not related to Mimeo.com at all. I was coming from the perspective of a vendor when I sold at Xerox focused on public sector and then as a purchaser when I managed production at a top 25 inplant.

      What are your thoughts on software like NowSource or E-Lynxx / others that allows procurement to be “reverse-auctioned” or shopped to a set of vendors that the buyer has approved as sources?

    12. Elizabeth Gooding Says:

      Hi Heath – the whole reverse auction discussion is worthy of a post in itself so I will try to work something up on that aspect of the procurement process. There’s quite a bit of science involved in that – looking at the balance between Profit Impact and Supply Risk (my background is econometric modeling.) The model changes dramatically if you are talking about strategic supply chain versus commodity purchases. There are a few schools of thought on when and where reverse auctions are appropriate. I’ll try to get this on the calendar soon.